Gretchen M. Nelson
California’s unfair competition law since Prop 64 B&P code section 17200 turns up frequently in class actions. It had become a catch-all – a tool subject to abuse – until Prop 64 narrowed its reach
California’s unfair competition or
unfair business statute is found in Business & Professions Code section 17200, et seq. (the “Unfair Competition Law” or “UCL”). The UCL protects con- sumers and businesses from unfair busi- ness practices described in Section 17200 as follows: “unfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.” (Bus. & Prof. Code, § 17200.)
Protecting consumers and competitors
The purpose of the UCL is to pro-
tect consumers and competitors from business practices that impair competi- tion by “promoting fair competition in commercial markets for goods and servic- es.” (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949 [119 Cal.Rptr.2d 296].)1 Because section 17200 is framed in the disjunctive, a business practice need only meet one of the three criteria (unlawful, unfair or fraudulent) to be considered unfair competition. (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. [“Cel Tech”] (1999) 20 Cal.4th 163, 180 [83 Cal.Rptr.2d 548] [the UCL “‘establishes three varieties of unfair competition – acts or practices which are unlawful, or unfair, or fraudu- lent. . . . a practice is prohibited as ‘unfair’ or ‘deceptive’ even if not ‘unlaw- ful’ and vice versa’”].)
Damages and attorneys’ fees Actual damages are not permitted
for a claim brought under the UCL and awards are restricted to injunctive relief and/or restitution.2
Attorneys’ fees are not
generally awarded under the UCL, but, 74 — The Advocate Magazine JANUARY 2012
“if a plaintiff prevails in an unfair compe- tition law claim, it may seek attorney fees as a private attorney general pursuant to Code of Civil Procedure section 1021.5.” (Walker v. Countrywide Home Loans, Inc. (2002) 98 Cal.App.4th 1158, 1179 [121 Cal.Rptr.2d 79].) There is no countervail- ing provision for an award of attorney fees to a successful defendant. (Ibid.) Further, if a provision in a contract allows attorneys’ fees to the prevailing party and the contract is challenged in an action under the statute, attorneys’ fees may be awarded. (Shadoan v. World Savings & Loan Ass’n. (1990) 219 Cal.App.3d 97,107-109 [268 Cal.Rptr. 207].) But, attorneys fees may not be awarded to a successful defendant pursuant to a recip- rocal attorneys’ fees provision in a statute where that statute is merely a predicate to a UCL claim. (Davis v. Ford Motor Credit Corp. (2009) 179 Cal.App.4th 581, 601 [101 Cal.Rptr.3d 697].)
The UCL before Proposition 64 In the old days, the opportunities
for asserting claims under the UCL were boundless, and the courts were instructed to read the statute as broadly as possible to provide consumers and businesses with a remedy for unfair practices. Courts declared that the coverage of the UCL is “sweeping, embracing anything that can properly be called a business practice and that at the same time is forbidden by law.” (Roskind v. Morgan Stanley Dean Witter & Co. (2000) 80 Cal.App.4th 345, 350 [95 Cal.Rptr.2d 258] (citations omit- ted).) Further, the statute was found to have been framed intentionally in broad and sweeping language so that courts would be able to deal with “innumerable new schemes which the fertility of man’s invention would contrive.” (Id., at 351.) More significantly, the UCL author-
ized any person (including entities) act- ing for the general public to sue for relief
from unfair competition. There was no standing restriction on the right of any person to sue and no requirement that the person show injury or damage. In its landmark decision, the Supreme Court in Stop Youth Addiction, Inc. v. Lucky Stores, Inc. [“Stop Youth Addiction”] (1998) 17 Cal.4th 553 [71 Cal.Rptr.2d 731], held that a private, for-profit corporation that had suffered no injury, and that was formed expressly for the purpose of fil- ing the lawsuit, had standing to sue under the UCL for restitution and injunctive relief to prohibit retailers from selling cigarettes to minor children in violation of California Penal Code section 308. Over the years, the UCL became the
favored statute for challenging a host of unfair business practices and it became an integral part of California law. As the Supreme Court observed in Stop Youth Addiction, supra, “whenever the Legislature has acted to amend the [Unfair Competition Act] it has done so only to expand its scope, never to narrow it.” (17 Cal.4th at 570.)
Soup to nuts The UCL was used in a broad array
of claims involving, among others: • Restraints of trade, ABC Int’l. Traders, Inc. v. Matsushita Electric Corp. (1997) 14 Cal.4th 1247 [61 Cal.Rptr.2d 112] (claim for anti-competitive injuries arising out of the allowance of secret unearned dis- counts to certain buyers in the sale of telephone and electric products); • Consumer credit, Yu v. Signet Bank/Virginia (1999) 69 Cal.App.4th 1377 [82 Cal.Rptr.2d 304] (claims based on credit card company’s filing of debt col- lection actions in a venue defendant knew to be improper for the purpose of impair- ing card holder’s ability to defend); • Advertising, Mangini v. RJ Reynolds Co., Inc. (1994) 7 Cal.4th 1057 [31
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