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Attention, employment plaintiffs attorneys: Do you have a great employment case but the statute of limitations has expired? Or one with a large number of affected employees but not enough to justify going through the rigors of class certification? Maybe it’s a case with a lot of jury appeal but you can’t seem to fit it into the usual employment-related causes of action? Business and Professions Code section 17200 et seq., California’s unfair competition law, may be your answer. Section 17200 is a powerful and flexible tool that can be put to good use by plaintiffs’ attorneys in employment, consumer, environmental and many other areas of law. The power and potential of the statute has not been lost on business and defense interests, who have been clamoring since 1996 to defang it. Pointing to lawyers who they say have abused Section 17200 by suing thousands of small businesses for allegedly technical violations of law, opponents of the statute are seeking far-reaching changes, such as repealing its private right of action. California Attorney General Bill Lockyer, meanwhile, has stepped into the fray by asking the State Bar to investigate attorneys who allegedly abuse and exploit the statute to shake down small businesses. Section 17200 allows civil actions to enjoin any unfair competition, meaning any unlawful, unfair or fraudulent business act or practice and any unfair, deceptive, untrue or misleading advertising. A business act or practice is “unfair” under the statute if it is immoral, unethical, unscrupulous, substantially injurious to consumers or violates established public policy. People v. Casa Blanca Convalescent Homes (1984) 159 Cal.App.3d 509. Thus, even if a business practice does not violate the letter of the law but instead violates an ethical or moral code or public policy, it may be actionable under Section 17200. A Section 17200 action based on an unlawful business practice can be predicated on almost any federal, state or local law regardless of whether the underlying law has a private right of action. Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 604. Section 17200 actions have been brought based on anti-discrimination, antitrust, criminal, environmental, fish and game, housing, labor and vehicle laws. To show deception or fraud under Section 17200, a plaintiff must show only that members of the public are likely to be deceived even if no one was actually deceived or sustained any damage. State Farm Fire & Casualty Co. v. Superior Court (1996) 45 Cal.App.4th 1093. The strict requirements of common law fraud, including a showing of intent to deceive, are not necessary in a Section 17200 action. In fact, courts have described Section 17200 as a “strict liability” statute, one that does not require a showing that defendant intended to injure anyone. Podolsky v. First Healthcare Corp. (1996) 50 Cal.App.4th 632. Furthermore, a defendant’s good faith belief that the act or practice was lawful is not a valid defense. Hewlett v. Squaw Valley (1997) 54 Cal.App.4th 499, 520. In the employment context, Section 17200 actions have been successfully brought over improper deductions from employee’s pay checks ( Hudgins v. Neiman Marcus Group (1995) 34 Cal.App.4th 1109); failure to pay overtime wages ( Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163); violations of state and federal safety, minimum wage and overtime laws ( Bureerong v. Uvawas (1996) 922 F.Supp. 1450); false advertising of goods made in Saipan sweatshops and violation of federal law prohibiting shipment of “hot goods” in interstate commerce ( Does v. The Gap, Inc., N.D.Cal. No. CV-01-00031 and related cases.) Indeed, the possibilities of Section 17200 employment actions are unlimited. Conceivably, the statute can be used to bring an employment discrimination case in which the normal statute of limitations has expired. In Cortez, the California Supreme Court agreed that the statute’s four-year statute of limitations allows plaintiffs to reach back much farther than provided in wage-and-hour laws. Section 17200 also can be used in situations in which the employer’s acts are deceptive but where fraudulent intent cannot be proved. The question of whether Section 17200 class action plaintiffs have a right to a court trial when their claims are subject to an arbitration agreement is currently pending before the California Supreme Court in Cruz v. Pacificare Health Systems, S1010003. The court heard oral arguments in that case on Feb. 4. Remedies under Section 17200 are limited to equitable measures such as injunctions, restitution and disgorgement of profits. Normal economic or compensatory damages are not allowed. However, courts are empowered to take whatever actions necessary to deter unfair business practices, including ordering wrongdoers to disgorge profits from unfair business practices. Thus, a private party won $169,139 in restitutionary damages in a Section 17200 action in which a grape grower claimed a winemaker had underpaid the plaintiff for grapes. Bronco Wine Co. v. Frank A. Logoluso Farms (1989) 214 Cal.App.3d 699, 704. Section 17200′s equitable-only remedies, which might usually be seen as a drawback, may be helpful in assuring a trial even where a plaintiff is bound by an agreement to arbitrate disputes. The California Supreme Court has held that an action for equitable relief is not arbitrable. Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1084. While no decision is exactly on point, it would appear that a Section 17200 claim for equitable relief would have to be tried even if claims for legal damages in the same action were arbitrated. Because civil penalties of $2,500 per violation are also available in Section 17200 actions brought by city, district, county and state attorneys, an actual or threatened combination of private and public actions against an offender can present a formidable prospect to a defendant. In a state attorney action, a $100,000 civil penalty for multiple violations was assessed against the defendant in People v. Dollar Rent-A-Car Systems, Inc. (1989) 211 Cal.App.3d 119, 132. Attorneys’ fees are not authorized in a Section 17200 action. But depending on the circumstances of the case, fees may be available under a “common fund” or private attorney general theory. Fees might also be recovered if other causes of action are based on statutes, such as wage-and-hour or anti-discrimination laws, which include provisions for attorneys’ fees. The standing provision of Section 17200 provides great flexibility. An action may be brought by any person, corporation or organization acting on behalf of itself or on behalf of the general public. A person or entity bringing an action on behalf of the general public is not required to have been personally injured by the unfair business practice or to have standing under the code or statute prohibiting the business practice. The standing provision can help prevent a defendant from escaping litigation � especially where the plaintiffs are poor � by buying off the plaintiffs through offers to settle the case for much less than its actual worth. To avoid such a situation, one need only include as a plaintiff someone who cannot be bought off. A Section 17200 action may be an alternative in those instances where a class action is contemplated but where a class may not be certifiable or a class action is not feasible for other reasons. As Jocelyn Larkin of the Impact Fund has stated, “A Section 17200 plaintiff may often be able to obtain all the benefits of a class action, in much less time and at a much lower out-of-pocket cost.” However, if plaintiffs want a fluid recovery fund for defendants’ disgorged profits, the action must be certified as a class action. Kraus v. Trinity Management Services, Inc. (2000) 23 Cal.4th 116, 137. Whether or not its opponents will succeed in emasculating Section 17200 remains to be seen. But for now, employee-rights and public interest attorneys can deter and remedy civil and consumer rights violations through the effective use of the state’s unfair competition law. Brad Yamauchi is the managing partner of the employment group at Minami, Lew & Tamaki in San Francisco. He is a member of the National Employment Lawyers Association (NELA) and president of the board of Workplace Fairness, a nonprofit employee-rights group affiliated with NELA. John Ota is an associate at Minami, Lew & Tamaki.

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