Home -> Law Blog Directory -> Class Action Blogs -> The UCL Practitioner

Class Action

: The UCL Practitioner

New Unfair Practices Act decision: Bay Guardian Co. v. New Times Media LLC

By Kimberly A. Kralowec

In Bay Guardian Co. v. New Times Media LLC, ___ Cal.App.4th ___ (Aug. 11, 2010), the Court of Appeal (First Appellate District, Division One) construed Business & Profession Code section 17043, which is part of the Unfair Practices Act (adjacent to the UCL).  Section 17043 reads:

It is unlawful for any person engaged in business within this State to sell any article or product at less than the cost thereof to such vendor, or to give away any article or product, for the purpose of injuring competitors or destroying competition.

(Emphasis added.) The Court of Appeal first addressed the statute's scienter requirement (which the UCL itself does not share), and explained:

The intent requirement imposed by section 17043 is an especially stringent one. ?Section 17043 uses the word ?purpose,? not ?intent,? not ?knowledge.? ? (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., supra, 20 Cal.4th 163, 174.) Therefore, the California Supreme Court has concluded ?that to violate section 17043, a company must act with the purpose, i.e., the desire, of injuring competitors or destroying competition.? (Id. at pp. 174?175; see also Chicago Title Ins. Co. v. Great Western Financial Corp. (1968) 69 Cal.2d 305, 323 [70 Cal.Rptr. 849, 444 P.2d 481]; Fisherman?s Wharf Bay Cruise Corp. v. Superior Court, supra, 114 Cal.App.4th 309, 330.)

Slip op. at 16.  However, "section 17043 does not require an anticompetitive impact. '[A]n injurious effect is not an essential element of the violation. The violation is complete when sales below cost are made with the requisite intent and not within any of the exceptions.' (People v. Pay Less Drug Store (1944) 25 Cal.2d 108, 113?114 [153 P.2d 9].)" Id.

The main point of contention was over the defendant's asserted "recoupment defense," i.e., whether "'objectively reasonable probability of recouping' losses 'through later monopoly pricing' must be established by the plaintiff in a section 17043 action." Id. at 11. The Court of Appeal answered that question in the negative. Id. at 11-20. 

The rest of the opinion focuses on several claims of instructional error and other issues. 

Full post as published by The UCL Practitioner on August 26, 2010 (boomark / email).