Mere Failure to Get Regulatory Approvals Does Not Constitute "Injury" or "Economic Harm" Necessary for Standing to Bring UCL Claim
California's Unfair Competition Law has an admittedly broad reach, but Californians took an important step to rein in the abuse of this statute by passing Proposition 64, which requires UCL plaintiffs to have suffered an actual injury in order to bring a claim. Courts interpreting Proposition 64 have carefully enforced this requirement.
In Klein v. Avis Rent a Car System, Inc., 2009 WL 151521 (C.D. Cal. Jan. 21, 2009), plaintiff and/or his counsel had brought a total of 8 putative class actions against car rental companies. The defendants were alleged to have sold extended protection insurance coverage that they either underwrote themselves or with third party entities, at coverage rates that had not received the necessary approvals from California's Insurance Commissioner.
Although plaintiff alleged that at least once in 2007 he bought the extended coverage with a vehicle he rented, plaintiff did not identify whose coverage he purchased. Suing under California's Unfair Competition Law, plaintiff sought recovery on behalf of a nationwide class of people who bought extended coverage in California in the last 4 years. Plaintiff sought declaratory and injunctive relief, as well as restitution and disgorgement of all monies defendants had received from the class for extended coverage.
The defendants moved to dismiss the complaint, arguing that the plaintiff had not pled an injury that he suffered as a result of the alleged wrongful conduct. The District Court agreed, granting the motion.
As the court noted, Californians passed Proposition 64 precisely to limit the ability to bring UCL claims to only those people who have "suffered injury in fact and [have] lost money or property as a result of the unfair competition." Citing two recent California decisions, the court explained that the plaintiff did not suffer an economic loss as a result of the mere failure to get regulatory approval for the rates charged. He received the coverage he paid for, did not have a claim denied, and did not allege he paid more for the coverage than he would have if the defendants had obtained the necessary regulatory approvals of the rates. Thus, the plaintiff was barred by Proposition 64 from bringing a UCL claim.
The court did give the plaintiff leave to amend his complaint to identify the insurance he bought and to plead additional facts about the insurance he purchased that would establish an actual injury resulting from the lack of regulatory approval. But the import of the court's opinion was clear: unless plaintiff can establish that he paid more than he would have had to pay for Commissioner-approved coverage, plaintiff has no injury and no claim.
