Class Action

Court of Appeal panel adopts third formulation of "unfair": Davis v. Ford Motor Credit Co.

By Kimberly A. Kralowec

In Davis v. Ford Motor Credit Co., ___ Cal.App.4th ___, 2009 WL 3859327 (Nov. 19, 2009), the Court of Appeal (Second Appellate District, Division Three) discussed in detail the split in authority over the definition of "unfair" in UCL consumer actions.  Slip op. at 14-17.  The court decided to adopt the third formulation, first established in Camacho v. Automobile Club of Southern California, 142 Cal.App.4th 1394 (2006) (Second Appellate District, Division Eight).   Slip op. at 17-19.   As explained in my original blog post on Camacho, the third formulation borrows the definition of "unfair" from section 5 of the Federal Trade Commission Act (15 U.S.C. § 45(n)).  

The Davis court held that the trial court had properly sustained the defendant's demurrer without leave to amend because, as a mattter of law, plaintiff could not satisfy the third formulation.  Slip op. at 19-20.  The most significant barrier was the third formulation's requirement of "an injury that consumers themselves could not reasonably have avoided."  Id. at 19 (citing Camacho). 

Before Davis, the only other case to follow Camacho's lead was another decision of the same three-judge panel, Daugherty v. American Honda Motor Co., 144 Cal.App.4th 824 (2006).  Other courts have declined to follow Camacho.  See, e.g., Lozano v. AT&T Wireless Services, Inc., 504 F.3d 718 (9th Cir. 2007); Overstock.com v. Gradient Analytics, Inc., 151 Cal.App.4th 688, 715 (2007) ("the California UCL contains no directive to interpret our consumer protection statute consistently with the FTC Act." Id. at 715.

This case might be a good vehicle for the Supreme Court to finally take up the question of what "unfair" means in consumer cases.  I note from the docket that a rehearing petition was filed last Friday. 

Full post as published by The UCL Practitioner on December 07, 2009 (boomark / email).