The Ninth Circuit affirmed dismissal of a shopper fraud class motion pursuing restitution underneath California’s Unfair Competitors Legislation (UCL) as a result of the plaintiff failed to point out she lacked an enough authorized treatment. Sonner v. Premier Diet, No. 18-15890 (ninth Cir. June 18, 2020). In doing so, the Ninth Circuit resolved a break up within the California federal courts concerning whether or not plaintiffs might pursue solely equitable aid underneath the UCL, Shopper Authorized Treatments Act (CLRA), or False Promoting Legislation (FAL) when authorized damages underneath the CLRA can be found in the identical quantity for a similar alleged hurt. This determination has necessary implications for shopper class actions in California federal courts.
The Sonner criticism alleged that Premier Diet marketed its dietary complement beverage Joint Juice as supporting cartilage, lubricating joints, and bettering joint consolation, however that Joint Juice failed to offer these advantages. The criticism demanded injunctive aid, restitution underneath the UCL and CLRA, and damages underneath the CLRA. (For these not acquainted with the California statutes, the UCL authorizes solely restitution, not damages, whereas the CLRA permits each. Restitution is taken into account an equitable treatment, though it features equally to a damages award.)
Lower than two months earlier than trial, Sonner sought go away to file an amended criticism that dropped the CLRA damages declare. This was a clear strategic transfer — by dropping the CLRA damages declare, Sonner might request that the decide award $32 million as restitution in a bench trial, somewhat than having to influence a jury to award this quantity as damages. Premier opposed, arguing that Sonner’s proposed amended criticism would require dismissing the restitution claims as a result of there was an enough treatment at legislation for a similar harm. The district courtroom allowed modification, however warned that if Premier efficiently dismissed the restitution claims, the courtroom wouldn’t permit one other modification to resurrect the damages claims.
Undeterred, Sonner filed her amended criticism. Premier moved to dismiss, and the district courtroom granted the movement, holding that the UCL and CLRA claims have been topic to California’s inadequate-remedy-at-law doctrine, and the plaintiff had an enough treatment at legislation underneath the CLRA.
Intra-Circuit Cut up
The district courtroom’s holding positioned it on one facet of an intra-circuit break up. On one facet, courts held that plaintiffs alleging claims offering an enough treatment at legislation have been barred from pursuing claims for equitable aid, together with underneath California’s shopper safety statutes, until they may present why the obtainable authorized damages have been insufficient. See, e.g., Munning v. Hole, Inc., 238 F. Supp. 3d 1195, 1203–04 (N.D. Cal. 2017); Duttweiler v. Triumph Bikes, 2015 WL 4941780 at *8 (N.D. Cal. Aug. 19, 2015).
The opposite facet held that, as a result of the UCL and CLRA state that their treatments are “cumulative” to the treatments obtainable underneath different state legal guidelines, the supply of damages didn’t bar a declare for equitable aid underneath the UCL and CLRA. See, e.g., Luong v. Subaru of Am., Inc., 2018 WL 2047646 at *7 (N.D. Cal. Could 2, 2018); Estakhrian v. Obenstine, 233 F. Supp. 3d 824, 846 (C.D. Cal. 2017).
The Ninth Circuit Resolution
The Ninth Circuit affirmed Sonner, however on federal somewhat than state grounds. It held that federal frequent legislation controls a federal courtroom’s equitable authority, and state legislation can’t increase or restrict that authority. In consequence, a federal courtroom should apply conventional equitable ideas earlier than awarding restitution underneath the UCL and CLRA.
Consequently, earlier than awarding equitable aid underneath the UCL, CLRA, or FAL, a federal courtroom should discover that the plaintiff has an insufficient treatment at legislation. In shopper fraud circumstances searching for restitution, that can hardly ever be the case, as a result of the identical restoration obtainable as “restitution” underneath the UCL and FAL is usually obtainable as “damages” underneath the CLRA. That was the end result in Sonner as a result of the category sought the identical sum in equitable restitution — a full refund of the acquisition worth equaling $32 million — because it requested in damages to compensate for previous hurt.
Implications for California Shopper Class Actions in Federal Courts
The Ninth Circuit’s determination prevents plaintiffs in shopper class actions from eliminating the defendant’s proper to a jury trial by searching for financial restoration underneath the guise of “restitution” that’s equally obtainable as “damages.” Because the Sonner courtroom acknowledged, this is among the core causes for the inadequate-remedy-at-law requirement within the first place — to guard the constitutional proper to trial by jury.
Open questions stay. As an illustration, can a plaintiff pursue a UCL declare in any respect if they’ve a viable treatment underneath the CLRA? Sonner arguably suggests no, nevertheless it doesn’t immediately reply the query since Sonner deserted her CLRA declare, somewhat than pursuing it concurrently with a UCL declare. If shopper plaintiffs are certainly compelled to desert their UCL claims the place the CLRA affords similar aid, additionally they might be required to satisfy the CLRA’s extra demanding causation requirement, which might have an effect on class certification.
Equally, should a plaintiff allege an insufficient authorized treatment in her criticism to keep away from dismissal of equitable claims? That is one other challenge on which California federal courts are divided. Examine Robinson v. J.M. Smucker Co., 2019 WL 2029069, at *6 (N.D. Cal. Could 8, 2019) (dismissing UCL and FAL claims the place plaintiff’s criticism pled an enough authorized treatment underneath the CLRA), with Wildin v. FCA US LLC, 2018 WL 3032986, at *6–7 (S.D. Cal. June 19, 2018) (permitting plaintiff to plead “different treatments” for equitable and authorized aid). As a result of Sonner was selected the eve of trial, it doesn’t handle whether or not courts might or should resolve this challenge on the pleading stage.
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