Examples of Unfair Competition Lawsuits filed by Private Attorneys

• Internet retailer chipshot.com was sued in Santa Clara County Superior Court by a San Diego attorney representing RETA, "a partnership formed to sponsor litigation," for not specifying the manufacturing location of clothing sold on its site. The lawsuit demanded the company "disgorge" gains from the clothing sold and that it make unspecified restitution to all customers using the site for the prior four years.
• A grocery store was sued under the UCL alleging a vending machine in which customers insert a quarter and utilize a crane to pick up a stuffed animal and drop it in a chute where the customer retrieves it is a "game of chance" and an illegal gambling device.
• Grocery stores have additionally been sued under the UCL alleging cosmetics, wallets and watches have deceptive price tags because they contain both an actual price and a suggested retail price.
• A pet food company was sued under the UCL after it accidentally sold contaminated pet food -- despite the fact that it spent $3.7 million in a recall and information campaign that included media announcements and a toll free number, reimbursing customers for veterinary expenses and other costs, and reimbursing distributors' expenses. The suit was eventually thrown out by an appellate court justice who wrote that the recall was "intentionally over inclusive" and that the company's conduct "clearly. . .does not fit the Å’unfairness' bill. . . . [T]he company's act was accidental and, once discovered, it moved quickly to abate the harm. . . . There is absolutely nothing deceptive or sharp about the company's behavior. To the contrary, its conduct was exemplary."
• Title insurers became victims of an UCL suit after refusing to insure property bought at a tax sale, despite the fact that such a business decision is entirely legal under the state Insurance Code governing their activity.
• Auto dealers all over California have been hit by lawsuits claiming that technical leasing and loan terms were omitted from its newspaper ads. Most of the suits were filed by the same law firm in the name of a Lake Tahoe man who make no assertion that he bought or leased a car, tried to buy or lease, read the ads, or even saw the newspapers that ran them. There was no allegation the omissions were intentional. Nevertheless, it was reported that these lawsuits were being settled in the $30,000 range. Dealers asking the law firm what it wanted to settle the case were mailed a copy of settlement documents from earlier cases.
• A number of software companies were sued for $1 million each because their retail packages were "too large" for the disks they contained -- even though no customer ever came forward claiming deception or even confusion. (In the one legislative success story involving the UCL, the Legislature in 1997 enacted AB 1496 to amend packaging statutes and end these ludicrous suits which were also being filed against perfume and toy manufacturers.)
• A toy maker and toy stores were sued because advertisements saying a child's oven would produce treats in under 10 minutes did not allow for the time to mix the snack powder and pre-heat the oven. . . .
• Approximately 140 ethnic grocery stores in the Central Valley were recently hit with a letter from an L.A. law firm accusing the owners of renting videos pirated in India and offering to drop action on a 17200 lawsuit if they gave the firm $2,000 as a "settlement" and agreed not to rent or sell the tapes in the future. A lawyer for some of the stores is telling the court the L.A. law firm's activity "is part of an improper scheme to use the courts as an instrument of terror for purposes of extracting monies from small and unsophisticated California shopkeepers."

A Legitimate History and Use
The Unfair Competition Law has a long history of protecting both consumers and businesses. It was originally intended to help district attorneys stop illegal merchandizing. However, it evolved to permitting private lawyers to bring suits and win attorney fees, and in this context its procedures are capable of being misused. The current definition of 'unfair' is such that private lawyers have advanced lawsuits when no law has been broken and no one has been injured. In many cases these private cases can be brought repeatedly despite the fact that a government agency has investigated and resolved the problem. The California Law Revision Commission studied these concerns and proposed a modest set of amendments in 1996, but all were killed by trial lawyer association lobbyists

• A maker of child wading pools was sued for selling pools 60 inches in diameter but saying they were 64 -- the difference related to the level of inflation. . .
• A woman who charged $70,000 in Internet gambling losses to her credit card sued her bank after it attempted to get her to make payments on the charges. She saw a UCL recovery possibility in the online casinos' display of charge card logos on their web pages.
• A Chico fraternity was sued for unfairly competing with other fraternities by allowing members to stage a hazing ritual involving serving alcohol to underage students.
• Universal Studios was sued for stating the movie "In the Name of the Father" was based on a true story.
• The maker of "Supersoaker," a squirt gun, was sued under the UCL by a lawyer who claimed the toy did not shoot water as far as advertised.
• An appellate court upheld lawsuits against drug stores for failing to post signs saying products with saccharine posed a possible health risk, despite the fact that the product packages carried a warning and the posting requirement was contained solely in a Federal Drug Administration regulation that was obsolete because it was intended as an interim measure until package warnings could be printed. Furthermore, FDA's regulation specifically prohibited private actions to enforce it. . .
• Retailers were sued for not saying whether or not software on their shelves would work it the Year 2000. . . . This is the first known instance of the UCL being used to attack a firm for its silence over a product or service.
• Two San Franciscans with no connection to schools or universities sued a cable company for allegedly violating an educational institution contract requiring free cable service to schools. A court of appeal let the case proceed.
• A cellular phone company was targeted with an unfair competition lawsuit for selling its phones at less-than-cost as part of a marketing campaign for its services. Despite the fact that this practice is legal under all state and federal laws relating to phone services, an appellate court let a case go forward under the UCL.
• A national mortgage company was sued under the UCL for not buying the same kind of property damage insurance as replacement for insurance its borrowers had allowed to relapse. The plaintiff used the UCL as the basis for a class action lawsuit on behalf of non-California residents on loans originated and made on property outside the state.
• A lawyer used the Unfair Competition Law as the tool to set up a private sting operation which used under-age teenagers to buy cigarettes from retail stores. He then gave stores an option of facing a UCL lawsuit or making a payment to the corporation he and his mother set up to bring the lawsuits. Despite a trial court judge finding this practice to be "extortion," this use of the UCL was upheld by the California Supreme Court.
• A plaintiffs' lawyer formed an unincorporated association consisting of himself, his girlfriend, his paralegal, and his paralegal's wife to sue a national direct marking company over its handling and shipping charges and demanded more than $20 million in "restitution" be paid to his association.
• Homeopathic drug manufacturers were sued under Section 17200 on the basis that homeopathic formulas are not proven to be effective, despite the fact that the drugs were determined to be properly constituted under homeopathic formulas regulated by the federal Food and Drug Administration and state Department of Health Services and met the labeling requirements of both agencies.
• Typewriter manufacturers were sued in a private UCL action claiming they exaggerated the some of their model's spell-checking capabilities.

The Unfair Competition Law in the Courts
While the appellate courts have been reviewing a continuing parade of UCL cases, the Supreme Court majority has generally taken the approach well-summarized by Justice Marvin Baxter in a 1998 UCL decision:

The . . . court is not unmindful of the abuses to which the UCL is subject. Many of those concerns are matters that should be addressed to the Legislature, not the judiciary, however. . . Justice Janice Brown, a regular dissenter in UCL decision, has called the act "a means of generating attorneys fees without any corresponding public benefit" and proclaimed that "No statute...in this state or the nation confers the kind of unbridled standing to so many without definition, standards, notice requirements, or independent review." In a dissent in a subsequent case she stated that . . . Orderly legal development is not advanced by placing this court's imprimatur on yet another unfair competition claim of dubious pedigree. . . [Quelimaine Company v. Stewart Title Guarantee Co, 1998, and Stop Youth Addiction v. Lucky Stores]

• Both a trial court and court of appeal rejected a UCL claim by former patients that a health plan was overcharging for copies of medical records. Yet after these rulings were made, other patients filed identical claims against the same plan and additional hospitals. The UCL and courts' interpretation allow the same cases to be brought over and over again.
• The UCL is being used by a California attorney through an organization "Kids Against Pollution" to accuse the California Dental Association and the American Dental Association of unfairly competing against associations that advocate eliminating all mercury amalgam filings. Courts have consistently thrown out for lack of evidence lawsuits attempting directly to win damages for use of mercury - some courts have referred to "junk science" in making the dismissals.
• A vitamin maker was sued by a private attorney who claimed its bottles were too large, even though the label clearly stated the number of pills inside and their dosage.
• The California Lottery was sued by a player for money he lost on a Keno game that was later prohibited by the state Supreme Court because it was not a "lottery" form of gambling and therefore illegal under state law.
• Dozens of manufacturers, wholesalers, and retailers of computer monitors were sued under the UCL by private attorneys over the same screen size issue that had already been litigated and settled by the Attorney General.
• The Supreme Court refused to hear an appeal of a case where lower courts let an insurer be sued under the UCL by people who were not customers of the company but who complained about its pricing, coverage, and claims practices.
• An apartment complex was sued for housing discrimination under the Unruh Act (which prohibits discrimination in accommodations) and the Unfair Competition Law. The complaint under the Unruh Act was dismissed because the association bringing the suit could not show that any of its members lived, tried to live, or desired to live at the apartments. However, the suit was still allowed to proceed under the UCL. . .
• Twelve manufacturers were targeted by "carbon copy" UCL lawsuits alleging labeling violations under the California Organic Foods Act. Some firms manufacture products not covered by the act. Others made food which met organic standards and affixed the proper label after being notified by a state enforcement agency. One firm sued makes a product not entitled to use an organic label, but nevertheless is being sued for not using a label it would be illegal in using. . . . In all cases, the plaintiff is demanding restitution and attorney fees from all defendants.