California Supreme Court Limits Monetary Relief Under California's Unfair Competition Law

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, March 14, 2003 Share this on FacebookTweet thisEmail this to a friend

California's Unfair Competition Law (UCL) - Business and Professions Code 17200 et seq. - is probably the most troublesome civil law in California, if not the country. It often seems that under the UCL any person can sue any other person for any conduct. These claims often include a request for an order requiring the defendant to "disgorge" all money or profits obtained as a result of the alleged unfair business practice, relying on a recent California Supreme Court opinion - Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116 (2000).

However, on March 3rd, the California Supreme Court issued an opinion clarifying that this monetary relief is not available to a private party under the UCL (Korea Supply Co. v. Lockheed Martin Corp., No. S100136). The opinion adopts the position taken by CMTA and others in an amicus brief filed with the Court. It rejects the proposition that a court can, "under the equitable powers of [the UCL], award whatever form of monetary relief it believes might deter unfair practices." The Court held that the only monetary relief available under the UCL is restitution, which the Court defined as the "restor[ation]" of "money or property that defendants took directly from the plaintiff" by virtue of the unfair business practice.

The Court took care to note that "while the scope of conduct covered by the UCL is broad, its remedies are limited" and that the Legislature "never intended" the UCL to be used as "an all-purpose substitute for a tort or contract action."

(Thanks to James F. Speyer, Arnold & Porter, for work on the amicus brief and for the information used in this article.)
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