July 24, 2020

Abbott Laboratories v Superior Court (2020) 9 Cal.5th 642

In its opinion last month in Abbott Laboratories v. Superior Court (June 25, 2020, S249895) __ Cal.5th __ [2020 WL 3525181] (Abbott), the California Supreme Court expanded the authority of district attorneys to enforce the state’s Unfair Competition Law (UCL) (Bus. & Prof. Code, §17200 et seq.) and, in doing so, increased the potential for inconsistency in the law defining unfair business practices.

The UCL is an extremely broad statutory scheme barring any “unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” (Bus. & Prof. Code, § 17200.) Thus:

? In consumer cases, an “unfair” business practice has been variously and broadly defined as a practice that (a) threatens to or violates a statutory or regulatory provision; (b) is immoral, unethical, oppressive, or unscrupulous and requires the court to weigh the utility of the practice against the gravity of the harm; or (c) causes a substantial injury to consumers that consumers could not have avoided and is not outweighed by any countervailing benefits. (Drum v. San Fernando Valley Bar Assn. (2010) 182 Cal.App.4th 247, 256-257.)

? “ ‘[F]raud’ ” under the UCL “can be shown even if no one was actually deceived, relied upon the fraudulent practice, or sustained any damage. Instead, it is only necessary to show that members of the public are likely to be deceived.” (Podolsky v. First Healthcare Corp. (1996) 50 Cal.App.4th 632, 647-648.)

? The term “deceptive” extends to any representation that has the capacity to deceive the ordinary consumer regardless of whether anyone has actually been deceived. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 211.) 

? And, finally, plaintiffs, including local prosecutors, can “borrow” virtually any law or regulation to serve as the predicate for a claim of “unlawful” conduct in violation of Business and Professions Code section 17200, even if there is no provision in the statute or regulation for them to enforce it directly. (See People v. McKale (1979) 25 Cal.3d 626, 632-633; Saunders v. Superior Court (1994) 27 Cal.App.4th 832, 838-839; Samura v. Kaiser Foundation Health Plan, Inc. (1993) 17 Cal.App.4th 1284, 1299-1300; Consumers Union of United States, Inc. v. Fisher Development, Inc. (1989) 208 Cal.App.3d 1433, 1442, fn. 5.)

Both the Attorney General and district attorneys are authorized to enforce the UCL, and each may seek an injunction, restitution, and civil penalties. (Bus. & Prof. Code, §§ 17204-17206.) (In 2004, Proposition 64 “revised the UCL’s standing provisions for private individuals by providing that ‘a private person has standing to sue only if he or she “has suffered injury in fact and has lost money or property as a result of such unfair competition.” ’ [Citation.] Proposition 64 had no effect on suits brought by the Attorney General, the district attorneys, or other public prosecutors.” (Abbott, supra, __ Cal.5th __ [2020 WL 3525181, at p. *7])) In Abbott, the Supreme Court extended the authority of district attorneys, holding that each district attorney can seek civil penalties or restitution under the UCL based on conduct occurring outside the district attorney’s county. The Supreme Court noted the Attorney General can intervene as needed to ensure interjurisdictional cooperation. (Abbott, supra, __ Cal.5th __ [2020 WL 3525181, at pp. *8-*9].) But the Court discounted as theoretical and unsubstantiated the problems that decentralized, overlapping enforcement might cause for defendants, and the Court deferred to the Legislature for any changes needed to ensure uniformity of enforcement. (See id. at pp. *9-*10.) 

The potential for conflicting adjudications under Abbott is real. A unique aspect of the UCL is that local prosecutors can “borrow” the terms of another statute as the basis for establishing a UCL violation. Abbott, therefore, enables district attorneys to bring statewide actions for unfair or unlawful business practices based on each prosecutor’s interpretation of what a “borrowed” statute requires. And, statutes aside, a district attorney can pursue statewide actions based on the prosecutor’s individual view of what is unfair, fraudulent, or deceptive. 

While, as the Supreme Court noted, the Attorney General has discretion to intervene in these locally originated statewide actions in the interest of uniform enforcement (see Abbott, supra, __ Cal.5th __ [2020 WL 3525181, at pp. *8-*9]), limited resources and a possible reluctance to interfere with local prosecutorial discretion may, as a practical matter, restrict the Attorney General’s involvement. The result could be a patchwork of UCL actions that will further complicate and confuse California’s law of unfair business practices. As Justice Kruger’s concurring opinion in Abbott suggests, the Legislature may need to step in to address the “gap in the statutory enforcement scheme” that allows for such patchwork enforcement. (Id. at p. *11 (conc. opn. of Kruger, J.).)