Class Action

New UCL "safe harbor" decision: Yabsley v. Cingular Wireless, LLC

By Kimberly A. Kralowec

In Yabsley v. Cingular Wireless, LLC, ___ Cal.App.4th ___ (Aug. 19, 2009), the Court of Appeal (Second Appellate District, Division Six) affirmed a judgment following an order sustaining the defendant's demurrer without leave to amend. Slip op. at 1-2. The Court determined that the defendant?s conduct was protected by a Cel-Tech ?safe harbor? because it was affirmatively authorized in a statute or regulation. Id. at 9-12 (citing Cel-Tech Communications, Inc. v. Los Angeles Cell. Tel. Co., 20 Cal.4th 163 (1999)).

That part of the opinion did not seem particularly controversial to me (although I haven't reviewed the underlying statutes).  What was interesting was the Court's decision to then also address whether the plaintiff could satisfy the post-Prop. 64 standing requirements, and to hold (without citing Tobacco) that he could not.  Slip op. at 7-9.  That holding is entirely unnecessary to the opinion, given the Cel-Tech "safe harbor" ruling. 

The (unnecessary) standing discussion also contains a couple of instances of imprecise language that could lead to misuse of the opinion as a precedent. 

First, in a footnote in the UCL standing discussion, the opinion states that ?[t]he CLRA requires that before an action is filed, the consumer make demand on the retailer to rectify the alleged deceptive practice.? Slip op. at 7-8 n.4 (citing Civ. Code §1782). On the contrary, the CLRA requires a pre-filing demand only in actions in which damages are sought. See Civ. Code §1782(a) (?Thirty days or more prior to the commencement of an action for damages pursuant to this title, the consumer shall do the following: ....? (emphasis added)). Additionally, the CLRA permits an action for injunctive relief to be filed without any pre-filing notice as all, followed by a post-notice amendment of the complaint to seek damages (if the plaintiff wishes to seek monetary relief). Id. §1782(d) (?An action for injunctive relief ? may be commenced without compliance with subdivision (a).?).   Hence, it is incorrect to say that a pre-filing demand is required in every CLRA action. 

The Supreme Court had to correct a similar error recently, and modified its original opinion in Vasquez v. State of California, 45 Cal.4th 243, 252 (2008), to make clear that the pre-filing notice requirement applies only in actions "for damages." (See this blog post for more on that modification.)

The second imprecise statement in the opinion suggests that the ?legally protected interest? in a UCL case derives only from statutes or regulations other than the UCL itself:

The ?legally protected interest? for standing purposes must be an interest that is protected by a source other than the remedial provisions of the UCL or FAL. (See, e.g., Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., supra, 20 Cal.4th at p. 180 [??section 17200 ?borrows? violations of other laws and treats them as unlawful practices? that the unfair competition law makes independently actionable?].) The only independent statute Yabsley cites is Revenue and Taxation Code section 6051. ?.

Slip op. at 8 (emphasis added).  The problem with that statement is that it overlooks Cel-Tech's clear holding that:

The [UCL] does more than just borrow. The statutory language referring to ?any unlawful, unfair or fraudulent? practice (italics added) makes clear that a practice may be deemed unfair even if not specifically proscribed by some other law. ?Because Business and Professions Code section 17200 is written in the disjunctive, it establishes three varieties of unfair competition?acts or practices which are unlawful, or unfair, or fraudulent. ?In other words, a practice is prohibited as ?unfair? or ?deceptive? even if not ?unlawful? and vice versa.? ?

Cel-Tech, 40 Cal.4th at 180 (quoting Podolsky v. First Healthcare Corp., 50 Cal.App.4th 632, 647 (1996)) (emphasis added). In other words, it is not correct to say that the only "legally protected interest" in a UCL case stems from outside the UCL. That would mean that the ?unfair? and ?fraudulent? prongs essentially do not exist?an argument that Cel-Tech rejected and that the statute's plain language contradicts.

The easiest way to circumvent these problems and avoid any questions about the opinion's wording would have been to simply omit the standing discussion.  That discussion is unnecessary to the outcome of the case. 

Full post as published by The UCL Practitioner on August 24, 2009 (boomark / email).