California Appeals Court Tosses UCL Claim Against Princess Cruise Lines for Plaintiffs' Lack of Reliance
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Despite conventional wisdom, cruises aren't for everyone. Roger and Vivian Wang took a two-week European cruise with their two daughters in 2005, and they ended up bringing a class action against Princess Cruise Lines over it. Their complaint, in a nutshell, was that the cruise line allegedly overcharged for shore excursions, and the Wangs sought to represent a class of "all California residents who were passengers on cruises operated by petitioner who paid prices for shore excursions that were 'in excess of the shore excursion operator's actual price.'"
The Wangs pled five causes of action, including violations of California's Unfair Competition Law, False Advertising Act, and Consumer Legal Remedies Act, as well as common law fraud and negligent misrepresentation. The trial court granted summary judgment on the two common law claims because the Wangs did not rely upon any alleged misrepresentations made by the defendant. But it refused to grant summary judgment on the statutory claims, holding that such claims do not require plaintiffs to plead or prove reliance.
This week the California Court of Appeal reversed, holding that the statutory claims should have been dismissed for lack of reliance. See Princess Cruise Lines, Ltd. v. Superior Court, 2009 WL 3747211 (Nov. 10, 2009).
The evidence on lack of reliance was clear. Neither of the Wangs had spoken with the defendant prior to purchasing the cruise, nor had they read any of defendant's materials. Moreover, Ms. Wang had told her travel agent that she wanted to go on the shore excursions whatever they cost. Thus, not only had the plaintiffs not received any alleged misrepresentations about the price of the shore excursions from defendant, but even if they had, they would not have relied upon them in making the decision to take the shore excursions.
The Court of Appeal looked to the California Supreme Court's recent decision in In re Tobacco II, 46 Cal. 4th 298 (2009), which held that although absent class members do not have to meet the standing requirements imposed on the Unfair Competition Law by Proposition 64, named class representatives do. As the Court of Appeal in Princess Cruise Lines explained, the Tobacco II decision was clear that named plaintiffs asserting a misrepresentation theory under the UCL must demonstrate actual reliance on the allegedly false or misleading statements. 2009 WL 3747211 at *4. Because the Wangs had no contact with the defendant, did not read its literature, and based their decision to take the shore excursions on reasons other than representations, "there is no reason to delve into the contention that what is at issue here is a prolonged advertising campaign and that the Wangs do not have to show individualized reliance on specific misrepresentations." Id. at *5.
The Court of Appeal also used the Tobacco II court's analysis of the phrase "as a result" to conclude that the CLRA also requires proof of actual reliance. Id. at *7. (The CLRA grants a cause of action to a consumer "who suffers any damage as a result of the use" of a proscribed act.)
Accordingly, the Court of Appeal held that the trial court should have granted summary judgment not just on the common law claims, but also on each of the statutory claims, for plaintiffs' failure to prove actual reliance. This decision is an important application of the new standard articulated by the California Supreme Court in In re Tobacco II, and we hope to see more decisions like it in the coming months.
