New UCL "injury in fact" decision
January, 2008
California's Unfair Competition Law ("UCL") permits a party to bring a lawsuit for any act or business practice that is unfair, unlawful or fraudulent. Before 2004, any party could sue under the UCL so long as the party acted for the interests of the general public, even though that party had not been injured. This resulted in a flowering of lawsuits in the 1980s and 1990s brought by opportunistic plaintiffs. California's voters dramatically narrowed the UCL by enacting Proposition 64 in 2004. Now, a party filing suit must have suffered an injury and have lost money or property as a result of the alleged unfair competition. A recent California Court of Appeal decision recognized this remarkable change in law after Proposition 64.
In Hall v. Time, Inc. (January 7, 2008), Jeffrey Hall sued Time, Inc. under the UCL. Time offered its customers a 21-day "free preview period" during which the customer could receive a book of interest, review it, and return it to Time with no obligation to pay. Hall claimed that, after he agreed to the free trial period, Time sent him his requested book along with an invoice displaying a partial payment obligation. Hall did not pay the partial invoice. After 21 days, he received a second bill informing him that his free preview ended and that the full price of the book was due. Ten months later and after receiving several subsequent bills, Hall paid the obligation in full. Hall claimed that Time violated the UCL by "sending invoices before the expiration of the free trial period to obtain immediate payment for the book."
The court found that Hall was not a proper party to pursue this UCL claim. Hall was required to prove that (1) he suffered an injury, and (2) Time's actions caused him to lose money or property. Because Hall suffered no injury β he received precisely the book he ordered and paid only the amount due for it long after the trial period concluded β he was not permitted to bring a lawsuit. Time's invoice did not spur Hall to immediately pay the invoice before the "free preview period" ended and so he had no injury. Hall received the benefit of his bargain with Time and paid long after the "free preview period" had expired.
This case recognizes a complete reversal of the broad standing provisions in the UCL and provides needed relief for businesses of all sizes from the onslaught of UCL claims. Now, businesses can get a matter dismissed where a plaintiff fails to show an injury or a loss.
For more information, please contact your Bullivant attorney.