life. A jury terminated both his parents’ rights, but the court of appeals reversed as to his father, Victor (also not his real name), a drug addict who admitted he wasn’t in a position to raise his son and didn’t know if he ever would be. The court said that the best interest evidence was insufficient because Jared was in a residential treatment center (RTC) due to anger issues and meltdowns that would cause him to spiral out of control; Victor had a steady job, paid child support, and had regular visits with Jared before the RTC—and Jared loved his father very much.
By the second trial, Jared had been released from the RTC, was living in an adoptive home with a coach, was making As and Bs in school, and was no longer having meltdowns. He hadn’t seen Victor in over a year, but Jared would regress at any mention of his father. Like many children in CPS care, no matter the abuse or neglect, Jared still loved his dad and wanted to see him. Victor’s attorney wanted to call Jared, a teenager now, to testify at the second trial in an attempt to defeat the State’s argument that termination was in Jared’s best interest. The caseworker, court-appointed special advocate (CASA), and Jared’s attorney were all concerned that the teen could not emotionally handle testifying in front of his father; they were afraid that, if put in public before a jury of strangers, Jared would simply shut down and physically hide under a desk or chair (something he had done in schools before his current placement). We had to protect Jared while affording Victor the right to have his son testify.
What to do in such a circumstance?
Unlike in criminal cases where a child victim usually testifies, it is unusual in CPS cases for children to testify against their parents. Because parents have no right to a blanket invocation of the Fifth Amendment in civil cases, parents are themselves usually the first witnesses called in a trial. In most cases, termination grounds can be proven with that testimony—trial admissions of failure to comply with court orders, drug use, or domestic violence are very common.
The parents’ attorneys may not call the child for a variety of reasons: They don’t issue the proper subpoenas, the child’s testimony will not help their case, or the attorneys know that backlash from the jury (who may see the lawyers as “beating up on the kid”) is not worth whatever nugget they may find. The caseworker will almost always admit that the child loves the parent, the parent loves the child, and, in fact, the child has said that she wants to return home to the parent.
However, there are times (as in Jared’s case) when the parent’s attorney will roll the dice and call the child. How do prosecutors protect the child from the trauma of testifying in court as well as protect the parent’s constitutional rights?
There are a few options when it comes to admitting a child’s out-of-court testimony and statements in civil court, but not all protect a child from having to later testify in front of his parents.
Texas Family Code §104.002 (“Prerecorded Statement of Child”) makes reference to recordings made prior to trial without attorneys present. These are usually the CAC (Child Advocacy Center) videos taken by a trained forensic interviewer. This taped statement is not to be used in lieu of testimony1 (such videos are “statements,” not “testimony”) and, even if found by the judge to be admissible under §104.006(2) (which is, by no means, a settled matter of law), there is nothing that prohibits an attorney from subpoenaing the child to testify at trial too.
Texas Family Code §104.004 (“Remote Televised Broadcast of Testimony of Child”) bears a resemblance to Texas Code of Criminal Procedure Art. 38.071, §3. As is obvious from the title, §104.004 is not a way to avoid the child testifying at trial because the testimony is taken at trial, just via closed-circuit TV. As with the Code of Criminal Procedure provision, the age for §104.004(a) is 12 or under, but there is no requirement that the court make a finding that the child is “unavailable to testify.” Also, while Texas Code of Criminal Procedure Art. 38.071, §3 has been widely litigated, there is a paucity of state court opinions directly dealing with the Family Code provision for closed-circuit presentation of live testimony of a child. Therefore, there is no caselaw indicating whether, after testifying in such a manner, the child may be recalled and required to testify (presumably in the same manner) later in the trial.
The child is sworn in and, if necessary, his capacity to testify is proven up before the questioning begins. The courtroom process is the same. Questioning by direct or cross-examination, including a second or even third round if necessary, occurs. Objections are made. Exhibits are shown to the child witness and identified. The video continues until all parties have passed the witness.
While this testimony can be taken in front of a judge, there is no requirement in the statute that a judge actually be present at the time of the video. With modern technology and the ability to edit video recordings, the judge is not necessary. Parties make the same objections as in a courtroom (“Objection, hearsay”; “Objection, asked and answered”; “Objection, assuming facts not in evidence”; etc.) and then the question is answered. At some point prior to playing the video, the court will hold a hearing and rule on the objections made. If needed, the objections and answers may be edited out of the testimony actually shown to the jury (and the original, unedited version can be made a part of the record solely for appellate purposes). At this same hearing, the judge will make rulings on the evidence identified and offered in the video (often photographs or letters) so that the recording can continue without interruption when played before the jury.
There is no requirement that a court reporter be present to take this testimony. Practically, though, the presence of a court reporter (in addition to the videographer) will make the process easier for the attorneys as well as the judge. The court reporter can swear in the witness, and later, the judge can use the reporter’s record to rule before showing the video; the record can also assist whoever is doing the editing. And of course, putting sticky notes on a typed page (as opposed to trying to hand-write exact quotes from a moving video) will always help the attorneys in preparing closing argument.
§104.003 allows for an “other person” to be present if that presence would contribute to the child’s welfare and well-being during the video testimony. While there is no rule prohibiting a therapist from sitting in, it is often the guardian ad litem or CASA who has developed a relationship of trust and reassurance with the child.
And because courtrooms can be large and imposing—and §104.003 mentions taking the testimony “outside the courtroom”—I like to take that literally. A comfortable room allowing the attorneys and child to sit around a conference table is a non-threatening atmosphere. Microphones make all the questions and answers audible so the entire testimony takes on a more conversational tone.
If a child’s testimony is being recorded to be played before a judge or jury during a trial, put the child at ease while letting the jury know this witness is more than a name on a piece of paper in a jury charge. I’ve asked about favorite school subjects, pets, and sports teams to get the child talking. It is the 21st Century and just about every child who can talk has been videotaped multiple times and will rarely be nervous about talking on camera. Ask the foster parent or placement if the child has made something that can be introduced into evidence (and explain that they probably won’t get it back). Homework and artwork are excellent ways to connect with the child, have the child talk about something that isn’t scary, and give the jury members something to “hold onto” when in the jury room. A drawing of a rose done by an abused child while in foster care can show the amazing resiliency of the human spirit.
Be prepared for answers you don’t like, and understand that this is not the time to be aggressive. If the 8-year-old says he loves his dad and wants to live with him, don’t try to change his mind. Instead, get him to talk about how different his life is now than it was when he lived “at home”: Does he get to go to the movies? Is he afraid anymore? Does he see anyone hit anyone else in his new home? Does someone make him do his homework and see that he gets to school on time? Ask about all those moments of childhood the jury members probably take for granted.
The attorney needs to make the big decision about whether you actually ask the child if the parental rights should be terminated. I personally do not recommend asking that question. “Termination” is a difficult concept to explain to a child, even a teenager. If the child is in an adoptive home, ask the general questions about whether he would like to continue to live there and, if he has voiced a desire to be adopted (even if he also has the contradictory wish to see his parents), ask him about that.
Finally, a provision in §104.005(b) permits taking the testimony of any child in any manner prescribed in Chapter 104 as long as the court finds that the child has a medical condition which does not allow the child to testify in court. There is no caselaw on this provision, but it seems to require a hearing, much like the one required for CCP Art. 38.071 with testimony and evidence that some medical condition exists of such a debilitating nature that the child cannot testify in a courtroom.
Though it is uncommon for parents’ attorneys to call a child to testify in a termination case, it does occasionally happen, and testifying against one’s parents can be very traumatic for a child. Prosecutors have a solid option in Family Code §104.003 to take a child’s out-of-court testimony that not only prevents the child from confronting his parents but also protects his parents’ constitutional rights to call and question the child witness.
1 In re S.P., 168 S.W.3d 197, 209-10 (Tex.App.—Dallas 2005, no pet.).


RUSSELL ALLEN NORDYKE et al., Plaintiffs and Respondents, v. MARY V. KING et al., Defendants and Appellants.
Richard Winnie, County Counsel; Richards, Watson & Gershon, Sayre Weaver, Paul Gutierrez Baeza and T. Peter Pierce for Defendants and Appellants.
Louise H. Renne, City Attorney, Joanne Hoeper, Chief Trial Attorney, Owen J. Clements, Chief of Special Litigation, Ellen M. Forman and D. Cameron Baker, Deputy City Attorneys for the City and County of San Francisco as Amicus Curiae on behalf of Defendants and Appellants.
Teresa Highsmith, Assistant City Attorney, for the City of Alameda as Amicus Curiae on behalf of Defendants and Appellants.
Law Office of Robert Zweben and Robert Zweben for the City of Albany as Amicus Curiae on behalf of Defendants and Appellants.
Manuela Albuquerque, City Attorney, and Matthew J. Orebic, Deputy City Attorney, for the City of Berkeley as Amicus Curiae on behalf of Defendants and Appellants.
Michael Biddle, City Attorney, for the City of Emeryville as Amicus Curiae on behalf of Defendants and Appellants.
Charles Dickerson, City Attorney, for the City of Inglewood as Amicus Curiae on behalf of Defendants and Appellants.
Charles Williams, City Attorney, for the City of Lafayette as Amicus Curiae on behalf of Defendants and Appellants.
Tom Curry, City Attorney, for the City of Livermore as Amicus Curiae on behalf of Defendants and Appellants.
Daniel S. Murphy, Principal Deputy City Attorney, for the City of Long Beach as Amicus Curiae on behalf of Defendants and Appellants.
James K. Hahn, City Attorney, and Carmel Sella, Assistant City Attorney, for the City of Los Angeles as Amicus Curiae on behalf of Defendants and Appellants.
Jayne W. Williams and John A. Russo, City Attorneys, Randolph W. Hall, Assistant City Attorney, J. Patrick Tang, Barbara J. Parker, Doryanna M. Moreno and Kandis A. Westmore, Deputy City Attorneys, for the City of Oakland as Amicus Curiae on behalf of Defendants and Appellants.
Lombardi, Loper & Conant and George S. Peyton, Jr., for the City of Piedmont as Amicus Curiae on behalf of Defendants and Appellants.
Michael H. Roush, City Attorney, for the City of Pleasanton as Amicus Curiae on behalf of Defendants and Appellant.
Daniel J. McHugh, City Attorney, for the City of Redlands as Amicus Curiae on behalf of Defendants and Appellants.
Samuel L. Jackson, City Attorney, and William P. Carnazzo, Chief Assistant City Attorney, for the City of Sacramento as Amicus Curiae on behalf of Defendants and Appellants.
Robert Lazone, City Attorney, for the City of San Carlos as Amicus Curiae on behalf of Defendants and Appellants.
George Rios, City Attorney, for the City of San Jose as Amicus Curiae on behalf of Defendants and Appellants.
Roy Abrahms, City Attorney, for the City of San Mateo as Amicus Curiae on behalf of Defendants and Appellants.
Marsha Jones Mourtrie, City Attorney, for the City of Santa Monica as Amicus Curiae on behalf of Defendants and Appellants.
Rene A. Chouteau, City Attorney, for the City of Santa Rosa as Amicus Curiae on behalf of Defendants and Appellants.
Michel Jenkins, City Attorney, for the City of West Hollywood as Amicus Curiae on behalf of Defendants and Appellants.
Lloyd W. Pellman, County Counsel, Larry Hafetz and Judy W. Whitehurst, Deputy County Counsel, for the County of Los Angeles as Amicus Curiae on behalf of Defendants and Appellants.
Patrick Faulkner, County Counsel, and John F. Govi, Assistant County Counsel, for the County of Marin as Amicus Curiae on behalf of Defendants and Appellants.
Thomas F. Casey, County Counsel, and Brenda B. Carlson, Deputy County Counsel, for the County of San Mateo as Amicus Curiae on behalf of Defendants and Appellants.
Ann Miller Ravel, County Counsel, and Debra L. Cauble, Assistant County Counsel, for the County of Santa Clara as Amicus Curiae on behalf of Defendants and Appellants.
Steven M. Woodside, County Counsel, for the County of Sonoma as Amicus Curiae on behalf of Defendants and Appellants.
Barrie Becker and Juliet Leftwich for Legal Community Against Violence as Amicus Curiae on behalf of Defendants and Appellants.
David Durant for Youth Alive! as Amicus Curiae on behalf of Defendants and Appellants.
Law Offices of Jones & Mayer and Martin J. Mayer for California Police Chiefs Association as Amicus Curiae on behalf of Defendants and Appellants.
Munger, Tolles & Olson and Jeffrey L. Bleich for the Los Angeles County Bar Association, Beverly Hills Bar Association and Bar Association of San Francisco as Amici Curiae on behalf of Defendants and Appellants.
Law Offices of Donald Kilmer and Donald E. J. Kilmer, Jr., for Plaintiffs and Respondents.
Trutanich ·Michel, C. D. Michel; Benenson & Kates, Don B. Kates; and Bruce Colodny for California Rifle and Pistol Association as Amicus Curiae on behalf of Plaintiffs and Respondents.
Mark Barnes & Associates, Mark Barnes; Law Offices of Jeff Caufield and Jeff Caufield for National Association of Arms Shows, Madison Society, Second Amendment Foundation, Bruce Colodny and Jess Guy as Amici Curiae on behalf of Plaintiffs and Respondents.
We granted the request of the United States Court of Appeals for the Ninth Circuit, for certification pursuant to California Rules of Court, rule 29.5 to address the following question: Does state law regulating the possession of firearms and gun shows preempt a municipal ordinance prohibiting gun possession on county property? We conclude that the municipal ordinance in question, insofar as it concerns gun shows, is not preempted. Other aspects of the ordinance may be partially preempted, but we need not address these aspects in this case.
Plaintiffs Russell Nordyke and Sallie Nordyke (doing business as TS Trade Shows) (the Nordykes) have been promoting gun shows at the Alameda County Fairgrounds (Fairgrounds) since 1991. The Fairgrounds are located on unincorporated county land in the City of Pleasanton and are managed by an independent nonprofit corporation, the Alameda County Fair Association (Fair Association), under an operating agreement with Alameda County. The exhibitors at the show include sellers of antique (pre-1898) firearms, modern firearms, ammunition, Old West memorabilia, and outdoor clothing. In addition, the show hosts educational workshops, issue groups, and political organizations. The remaining plaintiffs are exhibitors and patrons of the show.
Alameda County passed in August 1999 and amended in September 1999 an ordinance (Ordinance) making it a misdemeanor to "bring onto or [27 Cal. 4th 881] possess on County property a firearm, loaded or unloaded, or ammunition for a firearm . . . ." (Alameda County, Gen. Ord. Code, ch. 9.12, § 9.12.120, subd. B.) The Ordinance recited as justification the epidemic of gunshot fatalities or injuries in the county ¾ in the first five years of the 1990s, 879 homicides were committed using firearms and 1,647 additional victims were hospitalized with gunshot injuries. The Ordinance also recited a July 4, 1998, shooting incident on the Fairgrounds resulting in several gunshot wounds and other injuries.
The Ordinance was subject to certain limitations and exceptions. County property did not include any " 'local public building' " as defined in Penal Code section 171b, subdivision c. (Alameda County Gen. Ord. Code, ch. 9.12, § 9.12.120, subd. C.) It exempted from the prohibition various classes of persons, including peace officers, various types of security guards, persons holding valid firearm's licenses pursuant to Penal Code section 12050, and authorized participants "in a motion picture, television, video, dance, or theatrical production or event" under certain circumstances. (Alameda County Gen. Ord. Code, ch. 9.12, § 9.12.120, subd. F.) The Ordinance would have, as one of its chief consequences, the effect of forbidding the presence of firearms at gun shows, such as the Nordykes', thereby making such shows impractical.
To prevent the Ordinance's enforcement, the Nordykes brought suit against Alameda County in the United States District Court for the Northern District of California. The Nordykes applied for a temporary restraining order, claiming that the ordinance was preempted by state gun regulations and that it violated the First Amendment's free speech guarantee. The district court judge treated the application as one for a preliminary injunction and denied it, finding that the Nordykes had failed to demonstrate probable success on the merits.
The Nordykes then filed an interlocutory appeal in the United States Court of Appeals for the Ninth Circuit, which subsequently certified to us the above question. We granted certification for reasons similar to those stated in the companion case also decided today, Great Western Shows, Inc. v. County of Los Angeles (2002) 27 Cal. 4th 853 (Great Western).
The Nordykes point out that the Ordinance is more restrictive than state statutes inasmuch as the latter provide more exceptions to the general prohibition on possession of firearms. For example, under Penal Code section 831.4, a security officer appointed by a sheriff or police chief for the protection of government property may be authorized to carry a firearm. There is no exception in the Ordinance for such security officers. There is also no exception for animal control officers, who may be authorized by their employing agency to use firearms (id., § 830.9), or for officers authorized to transport prisoners, who may carry firearms under certain circumstances (id., § 831.6), or for retired federal law enforcement officers (id., § 12027, subd. (i)).
In sum, whether or not the Ordinance is partially preempted, Alameda County has the authority to prohibit the operation of gun shows held on its property, and, at least to that extent, may ban possession of guns on its property.
George, C. J., Kennard, J., Baxter, J., Werdegar, J., and Chin, J., concurred.
The majority concedes that state law might partially preempt the county ordinance at issue here, but it concludes that the ordinance is enforceable against plaintiffs, because plaintiffs seek only to promote a gun show. The majority, in effect, reasons that, because the county could prohibit gun shows on county property, the county is free to enforce the totally different prohibition at issue here--so long as it does so against a gun show promoter.
The flaw in this logic becomes apparent when we consider a hypothetical involving the constitutional protection of free speech. Suppose the county enacted an ordinance prohibiting any and all speech favoring residential rent control--in other words, a content-based restriction of political speech that would clearly violate First Amendment principles. A billboard company seeks to display billboard advertisements promoting rent control and challenges the ordinance on First Amendment grounds. In those circumstances, I [27 Cal. 4th 886] doubt the majority would hold that, because the county is free to regulate billboard advertising (see City Council v. Taxpayers for Vincent (1984) 466 U.S. 789, 806-807; Metromedia, Inc. v. San Diego (1981) 453 U.S. 490, 507-512; City and County of San Francisco v. Eller Outdoor Advertising (1987) 192 Cal. App. 3d 643, 658-661), it can enforce its unconstitutional restriction of speech against the billboard company. Rather, the majority would likely hold that the ordinance exceeds the county's regulatory authority under the state and federal Constitutions. Put another way, the question before us is not whether the county might be able to enact some hypothetical ordinance prohibiting what plaintiffs want to do. The question is whether the ordinance the county actually enacted exceeds the county's authority, which it does.
Significantly, this case is not one in which we are asked to enforce an independent provision in an ordinance after severing a preempted provision. (See, e.g., Cohen v. Board of Supervisors (1985) 40 Cal. 3d 277, 292.) Rather, the provision that the majority enforces--the prohibition against possessing firearms on county property--is the same provision that conflicts with state law. Nor is this a case where the ordinance is ambiguous and might be construed narrowly so as to avoid preemption problems. (See, e.g., In re Cox (1970) 3 Cal. 3d 205, 220, fn. 18.) No one could reasonably construe a general prohibition against firearm possession to refer only to gun shows, and no one reading the ordinance without the benefit of a law degree and a careful study of our decisions would guess that the ordinance merely refers to gun shows.
In short, we consider here a local restriction on firearm possession that directly conflicts with state law. The majority seeks to avoid the obvious preemption problem by the expedient of rewriting the ordinance to prohibit gun shows instead of gun possession. Alameda County might have enacted an ordinance prohibiting gun shows, but it did not, and the ordinance it did enact exceeds its regulatory authority.
The majority attempts to make the issue quite small, involving a restriction applicable only to county property (maj. opn., ante, at p. 884); the litigants, on the other hand, insist the stakes are large. It does not matter whether the issue is large or small, though, if the government exceeds its authority. As Judge Kozinski has noted, the small and superficially benign acts of a democratic government can erode personal freedom just as surely, and to the same end, as the large and malignant acts of a tyrant or dictator: "Liberty--the freedom from unwanted intrusion by government--is as [27 Cal. 4th 887] easily lost through insistent nibbles by government officials who seek to do their jobs too well as by those whose purpose it is to oppress . . . ." (U.S. v. $124,570 U.S. Currency (1989) 873 F.2d 1240, 1246.) Because the ordinance conflicts with state law and because I believe the structural constraints on government authority are equally as important as the substantive ones, I dissent.
FN 2. As noted, the Ordinance specifically exempts from its purview all " 'local public buildings,' " as defined in Penal Code section 171b, subdivision (c). (Alameda County Gen. Ord. Code, ch. 9.12, § 9.12.120, subd. C.) The meaning of this exemption, which is debated by the parties, is not included in the certified question and we express no opinion on this matter.


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There are few aspects of company law which do not, in some way, involve a discussion of the director and their duties. The person who executes and run the company on daily basis is the director. As the company is not a natural body itself, therefore director plays the key role of dealing with the matters arising in the company on daily basis. According to CA 2006 S.154, every private company must have at least one director, and the public company must have at least two directors. A company must have at least one director who is natural person. The directors are then divided into two categories of executive and non-executive director performing the duties of running the companies affairs and managing the activities in the company. Directors in practice control the company, and its success or failure largely depends on them. They are fiduciaries and owe duties of good faith. There are potentially a numbers of individuals or bodies to whom directors might owe duties and which are the company, the members, the employees, the creditors and the shareholders. However, the general rule is that the directors owe their duties to the company as a whole (City University, 2008).
A director of a company owes fiduciary duties to the company simply by virtue of being a director, but they are owed to the company only. The directors of the company are said to be in a fiduciary relationship with the company. The fiduciary duties of the directors towards the company was traditionally a duty to act honestly and in good faith in the best interests of the company, and to use the power granted to them for the purposes for which they were coffered. The director of the company must hold their duties in the way to act only in the best favour of the company as a whole instead of their own profit or for the benefit of their associations. In different cases such as if the director of the company have a transaction in which the company is involved then the nature of the case must be disclosed to the other members of the board of directors in the company. So the director must make sure they do not place themselves in a position where the personal profit of the director clashes with the interest of the company and must not use company information or possessions to benefit themselves or a third party. The duty included a duty to take a proper care of the assets of the company; not to make a personal profit to (unless permitted in the articles or approved or ratified by the company); avoid conflicts with the company and not to compete with the company ( Webster, 2005).
The most arduous duties are imposed on trustees. A trustee has the legal title to property which must be dealt with for the benefit of the beneficiaries of the trust, not for the trustees benefit. The directors of the company must deal with the company’s property for the company benefit, not for their own benefit, but they do have the legal title to the property, which belongs to the company as a separate person. Therefore, directors are not trustees but they have trustee-like responsibilities because they have the power and the duty to manage the company’s business in the interest of the company (Mayson, French & Ryan, 2008).
The directors of the company deal with a lot of different matters of the company as in good faith of the company and they should not do it for the collateral reason. The directors must not involve themselves in the transitions which are made using the companies name but was outside the contractual duties or capacity of the company. Thus, duty to stay away from disagreement of interest in another essential fiduciary liability for a director. It is essential to be well-known with the fact that the directors owe their duties to the company rather than shareholders of the company. The case of Re W & M Roith Ltd. (1967) reveals the rule of a violation of the genuine responsibility. As the case explains one of the directors was sick and he occupied himself into a new contract with the permission of the board of directors that his wife would receive a generous pension if the director dies. The board of directors failed to expose to the company the poor health of the director. The director died almost immediately after and after the director’s death his wife claimed for the benefit of the pension but in response to this the court held that the directors intension were not in the good faith of the company but was to advantage his wife and said that the company was not bound by the contract signed by the board of directors of the company as their intensions were not for the good faith of the company.
Along with the performance of good faith to the company the directors must also have a realistic interest for the creditors and for the employees of the company. The directors should take steps as to decrease losses to the company’s creditors in case if the company was to become bankrupt. The directors should also keep in mind the benefit of the current and previous employees of the company and also of the shareholders. The S.247 CA 2006 requires directors to take account of the interest of employees as well as shareholders but the interest of the shareholders should be considered before the interest of the employees.
According to the S.175 CA 2006, the directors should not involve the company in any transactions, which they need to consider for their personal benefit. The general duties are based on certain law rules and reasonable principles as they apply in relation to directors and have effect in place of those rules and principles as regards the duties owed to a company by a director. As in S.171 CA 2006 that “directors must act in accordance with their company’s constitution and must exercise the powers for the purpose for which they were conferred” Directors must exercise their powers for proper purposes. The director must decide how to exercises but may only do so for he purposes which the powers were given. Thus, they must exercise their powers to achieve the objects of the company. As the case, Howard Smith v. Ampol Petroleum (1974) it was exposed that some directors help in the takeover bid to destroy the majority control of the tow directors but the allotment was voided as it was not in the good faith of the company but for a collateral purpose.
According to the S.172 CA 2006 that “the directors owe a fiduciary duty to promote the company success” A director of the company must act in the way he considers in good faith would be moist likely to promote the success of the company for the benefit of its whole. In exercising this duty, the directors must need to act fairly as between the members of the company and also interest of the company’s employees. The director must need to foster the company’s business relationship with suppliers, customers and others. Directors must needs to consider on the desirability for the company maintaining a reputation for high standards of business conduct. As stated in case of Shuttleworth v. Cox Bros& Co. (Maidenhead) Ltd  2 KB 9, the company appointed its director for life. According to the company constitution any member of board of directors should leave the company if his fellow directors requested him in writing that he should resign from his position in the benefits of the company. Similar case was Re Smith & Fawcett Ltd (1942), Smith and Fawcett of the director and the sole shareholders of the company. Fawcett died and the newly appointed director refused to register Fawcett’s shares in the name of executer unless he was willing to sell half of them to Smith, but the company article stated that “the directors may at any time and in their absolute and uncontrolled discretion refuse to register any transfer of shares.” The applicant claimed to be registered as the holder of the shares. The court said that the discretion was only subject to restriction that it should only be exercised bona fide in the success of the company. Another fiduciary duty of the director is duty to exercise independent judgement. A director of the company must exercise independent judgement (within the limits of his authority as conferred by the company’s constitution) S.173 CA 2006. This will not avoid a director from exercising a power to delegate, provided that this is permitted by the company’s constitution (Ottley, 2002).
The directors of the company also have a fiduciary duty to exercise reasonable care, skills and diligence according to the S.174 CA 2006. A director need not exhibit in the performance of his or her duties a greater degree of skills than may reasonably be expected form a person his or her knowledge and experience. In the case of Re Equitable fire Insurance Ltd (1925) when the court held that the director should only put into practice the knowledge which is expected of his knowledge and experience. Then later the rules were made tight under the S. 174 CA 2006 where the director has to be experienced enough and quite enough knowledge and skills as of the same person in the same position should have. Directors were not liable for mere errors of judgement. However the employed director had the implied duty to exercise reasonable care and skills (City University, 2008).
As in S.175 CA 2006 that “Director’s duty to avoid conflicts of interest and duty to arise and this equitable rule is strictly applied by the court and effects of its operations”, the directors of a company must not put themselves in a position where their personal interests conflict with their duty to the company. There is substantial case law on this. In such cases as Aberdeen Railway Co v. Blaikie Bros (1854), Transvaal Lands Co. v New Belgium (Transvaal) Land and Development Co. (1914) and Movitex Ltd v. Bulfield (1986). It was held that the directors must not involve themselves where the duty and the interest conflicts. In Regal Hastings v. Gulliver (1942), it was stated that directors could have protected themselves by obtaining a resolution in general meeting. In this case the directors of the company owned one cinema provided money for the creation of the subsidiary company to purchase two other cinemas. After the parent and subsidiary companies had been sold at a later date, the directors were required to repay the profit they had made on the sale of their shares in the subsidiary company on the ground that they had only been in the situation to make the profit because of their positions as director of the parent company. One obvious are where director place themselves in the position involving a conflict of interest is where they have an interest in a contract with the company.
Another fiduciary duty of the director must not accept benefit from third parties conferred by his being a director S.176 CA 2006. Unless the acceptance of the benefit could not reasonably be regarded as likely to give rise to a conflict of interest. A “third party” means the person other than the company, an associated body corporate or a person acting on behalf of the company. According to the S.177 CA 2006 that “the directors owe a fiduciary duty to declare interest in proposed transaction and arrangement” if a director of a company is in any way, directly or indirectly interested in a proposed transaction or arrangement with the company, he must declare the nature and extent of that interest to the other directors. A director need not declare an interest if it cannot reasonably be regarded as likely to give rise to a conflict of interest. The director must reveal formally or informally to the other directors if he/she has an interest in a proposed transaction directly or indirectly. No disclosure is needed if the other directors already know or where the matter engage a director’s contract as in the case Runciman v. Walter Runciman Plc. (1992) where it was held that as it was open to everyone in the management that the claimant had an interest in his own service contract so there was no need of a formal declaration to the board of directors’ of the company. The director must also disclose any interest in any of the existing contract along with the nature and extent of the interest as soon as possible but in the case where the board of directors already know abut the interest the disclosure is not necessary as explained in the S. 182 CA 2006 and according to the S. 183 CA 2006 if the director fail to obey with the disclosure he/she will be committing a crime and could be fined for this.
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Anthony F. Shelley, appointed by the court, argued the cause as amicus curiae for appellant. With him on the briefs was John D. Bates.
Kevin Razzoli, appearing pro se, was on the briefs for appellant.
Madelyn E. Johnson, Assistant U.S. Attorney, argued the cause for appellee. With her on the brief were Wilma A. Lewis, U.S. Attorney, and R. Craig Lawrence, Assistant U.S. Attorney.
This appeal puts in question the relationship between an en banc decision of this court and two recent Supreme Court cases. The latter require a prisoner to succeed in a habeas action before bringing a claim that challenges, even indirectly, the duration of his custody--for example a damages claim for due process violations made in the course of a decision revoking good time credit. See Edwards v. Balisok, 520 U.S. 641 (1997). Balisok has been read as mandating the use of habeas only when the claim, if successful, will inevitably necessitate invalidation of a decision creating, extending, or refusing to curtail custody. But in Chatman-Bey v. Thornburgh, 864 F.2d 804 (D.C. Cir. 1988), we found that habeas was the exclusive remedy even where a claim's impact on custody was only probabilistic. Chatman- Bey itself involved a decision on parole eligibility, a necessary but not sufficient step toward the actual grant of parole. Concluding that there is no inescapable conflict between Chatman-Bey and the later Supreme Court decisions, we adhere to Chatman-Bey: for a federal prisoner, habeas is indeed exclusive even when a non-habeas claim would have a merely probabilistic impact on the duration of custody.
Appellant Kevin Razzoli is a federal prisoner serving a sentence for attempted murder. He challenges an order by the district court dismissing his claims against the Federal Bureau of Prisons ("BOP") and the United States Parole Commission for declaratory relief and damages under the Privacy Act, 5 U.S.C. § 552a, and the Freedom of Information Act, 5 U.S.C. § 552 ("FOIA").
Razzoli's current troubles started when a prison official at the Allenwood Federal Correctional Institution claimed that on July 23, 1995 he had found cocaine and a razor blade in Razzoli's cell. After a Unit Disciplinary Committee hearing, Razzoli received a sanction that included the loss of 60 days statutory good time credit. A report on the incident was forwarded to the FBI for investigation, but no new criminal charges were brought against Razzoli. After the Disciplinary Committee action, but based on the same events, the United States Parole Commission withdrew Razzoli's recommended parole release date and established a new date twenty-four months later, in effect delaying his eligibility for parole by two years.
Razzoli filed a pro se complaint in district court here, alleging that the BOP staged the incident on which the actions of the Disciplinary Committee and Parole Commission were based. Although the complaint does not highlight the difference, it suggests that the Disciplinary Committee found him guilty only of possession and that the Parole Commission found him guilty of possession with intent to distribute. It further alleges that the Parole Commission conspired with the BOP and knowingly used false information against Razzoli. The complaint says that Razzoli never received a copy of any FBI report and suggests that the report must not have supported the Parole Commission's determination.
Before the complaint was served on either of the federal defendants, the district court dismissed the case sua sponte for failure to state a claim on which relief could be granted. The court found that Razzoli's claims amounted to collateral attacks on the actions of the Disciplinary Committee, and that under Balisok and the key predecessor cases of Heck v. Humphrey, 512 U.S. 477 (1994), and Preiser v. Rodriguez, 411 U.S. 475 (1973), "the sole federal remedy for challenging the loss of good time credit is a petition for habeas corpus."Razzoli v. Federal Bureau of Prisons No. 99-1711 (D.D.C. July 30, 1999). Under Balisok, a non-habeas civil action by a prisoner is not cognizable where " 'a judgment in favor of the plaintiff would necessarily imply the invalidity of his conviction or sentence,' unless the prisoner can demonstrate that the conviction or sentence has previously been invalidated."Balisok, 520 U.S. at 643 (quoting Heck, 512 U.S. at 487).
We review the district court's dismissal for failure to state a claim de novo. See Davis v. District of Columbia, 158 F.3d 1342, 1348 (D.C. Cir. 1998). Dismissal under Rule 12(b) (6) is proper if, taking all the material allegations of the complaint as admitted and construing them in plaintiff's favor, we find that he has failed to allege each of the material elements of his cause of action. See Taylor v. Federal Deposit Insurance Corp., 132 F.3d 753, 761 (D.C. Cir. 1997); see also Kowal v. MCI Communications Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). In addition, we are bound to read the filings of a pro se litigant liberally. See Haines v. Kerner, 404 U.S. 519, 520 (1972); Richardson v. United States, 193 F.3d 545, 548 (D.C. Cir. 1999). The application of Preiser, Heck, and Balisok complicates our task, for we must find allegations that are not only sufficient to make out claims under the statutes, but that also do not trigger the habeas-channeling rule. We appointed amicus curiae to argue the issues for appellant.
The theory of Razzoli's Privacy Act claim is that BOP and the Parole Commission violated 5 U.S.C. § 552a(e) (5) by maintaining in their files and using a false record, the report of the drug possession incident, even though they knew it to be false. We read the Privacy Act part of the complaint as having two dimensions, one clearly running afoul of Balisok, the other not so clearly.
What clearly runs afoul of Balisok is his apparent claim in relation to the recision of good time. If BOP knowingly preserved and acted upon a totally invented record of drug possession, plainly the recision of good time would have to be overturned, thus accelerating Razzoli's release. Indeed, Razzoli has already brought such a claim in the Middle District of Pennsylvania in the form of an action under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971), and the Third Circuit has found it barred under the Balisok doctrine. See Razzoli v. Swinson, No. 97-7558, slip op. at 4-6 225 F.3d 650 (3rd Cir. June 1, 2000).
But the amicus contends that Razzoli frames a second attack that implicates only the determination by the Parole Commission to postpone his parole eligibility. Under this reading, Razzoli is arguing that the Parole Commission decision was based on addtional inaccuracies in his record--the absence of the FBI report and the addition of "intent to distribute" to the possesion charge. The government resists this interpretation, but we think it within the range of plausible interpretations given the alleged absence of the FBI report from the record, the complaint's explicit attacks on the decision of the Parole Commission, and the distinction (slightly submerged, to be sure) between the Disciplinary Committee's charge of possession and the Parole Commission's finding of possession with intent to distribute.
The Supreme Court's trilogy addressing the relation between petitions for habeas corpus and other prisoner claims began with Preiser v. Rodriguez, 411 U.S. 475 (1973). State inmates who had been deprived of good time credit in prison disciplinary proceedings brought actions under 42 U.S.C. § 1983 seeking injunctive relief to compel restoration of the credit. The Court saw "the essence" and "traditional function" of habeas as being "to secure release from illegal custody." Id. at 484. The Court found that an attack on revocation of good time qualified as an attempt to secure such release. Such an attack is "just as close to the core of habeas corpus as an attack on the prisoner's conviction, for it goes directly to the constitutionality of his physical confinement itself and seeks either immediate release from that confinement or the shortening of its duration." Id. at 489. More critically, the Court found that the habeas remedy was exclusive. Comparing the general language of § 1983 with the specificity of the habeas statute and focusing on Congress's clear intent to assure exhaustion of state remedies in the latter, it found a congressional intent to provide only one remedy for attacks on physical confinement. Id. at 489-92.
In Heck v. Humphrey, 512 U.S. 477 (1994), the Court extended Preiser to cover a prisoner's § 1983 claim for damages for alleged constitutional violations in his arrest and conviction, observing that "establishing the basis for the damages claim necessarily demonstrates the invalidity of the conviction." Id. at 481-82. The Court went on to hold that "in order to recover damages for allegedly unconstitutional conviction or imprisonment, or for other harm caused by actions whose unlawfulness would render a conviction or sentence invalid, a § 1983 plaintiff must prove that the conviction or sentence has been [overturned]." Id. at 486-87.Finally, Balisok extended Preiser and Heck to cover a § 1983 damages action for procedural violations allegedly committed in a prison disciplinary hearing that deprived the plaintiff prisoner of good time credits. The Court rejected any distinction between procedural and substantive claims, saying that any such distinction "disregards the possibility, clearly envisioned by Heck, that the nature of the challenge to the procedures could be such as necessarily to imply the invalidity of the judgment." Id. at 645.
In each of the cases of the trilogy, the plaintiff's establishment of his claim would itself have been sufficient to entitle him to earlier release--subject, at least in the Balisok case, to the possibility of renewed revocation of the good time credit in a new hearing untainted by constitutional error. See Balisok, 520 U.S. at 647. But in 1988 this court read Preiser to require habeas for a federal prisoner's attack on a parole eligibility decision, reversal of which would merely give him a chance at earlier parole. Chatman-Bey v. Thornburgh, 864 F.2d 804 (D.C. Cir. 1988). We recognized both of the case's arguable distinctions from Preiser: first that Chatman-Bey was a federal prisoner and second that success on his stated claim would not lead either to immediate release or to a definite reduction in sentence. Id. at 808-10. We also rejected both, relying on the Preiser Court's finding of a congressional determination that habeas be the exclusive means for challenging the fact or duration of custody. Id. at 808 n.4 ("in the most practical sense, parole eligibility 'implicates' the duration of confinement"). Application of Chatman-Bey here funnels plaintiff's claim into habeas.
The amicus would have us hold that Chatman-Bey is no longer controlling. In Any anwutaku v. Moore, 151 F.3d 1053 (D.C. Cir. 1998), we read the Preiser trilogy as not requiring habeas for a District of Columbia prisoner's § 1983 attack on an adverse parole eligibility decision. Instead, we saw it as barring a § 1983 claim "only when, if successful, it would 'necessarily imply,' or automatically result in, a speedier release from prison." Id. at 1056. We distinguished Chatman-Bey on the ground that it involved a federal prisoner, and said that we need not consider whether it had any "continuing vitality after Heck and Balisok." Id. at 1057.Now we must.
Of course a Supreme Court decision flatly contradicting an earlier circuit precedent would control. See Dellums v. United States Nuclear Regulatory Comm'n 863 F.2d 968, 978 n. 11 (D.C. Cir. 1988). But, faced with the issue Any anwutaku left open, we find no such flat contradiction. First, none of the cases in the trilogy addressed claims with a merely probabilistic impact on the duration of custody; thus none had occasion to rule definitely on whether such claims need be brought in habeas. Second, as we noted in Chatman-Bey, the Supreme Court has made clear that habeas is proper for such a claim. See Braden v. 30th Judicial Circuit Court of Kentucky, 410 U.S. 484 (1973), cited in Chatman-Bey, 864 F.2d at 807. Third, although the Ninth Circuit has read Balisok as inapplicable to attacks on parole eligibility decisions, saying that their success would not guarantee a reduction in confinement, Neal v. Shimoda, 131 F.3d 818, 824 (9th Cir. 1997), the Seventh Circuit has given the trilogy a quite different reading, saying that it calls for habeas exclusivity whenever the proof necessary for a prisoner's claim "involves the proof of a fact that would also be essential to a habeas corpus action." Clayton-EL v. Fisher, 96 F.3d 236, 242 (7th Cir. 1996); see also id. at 244. Fourth, Chatman-Bey made clear that a major implication of habeas exclusivity in cases involving federal prisoners was its impact on venue. See Chatman-Bey, 864 F.2d at 805, 810-14. In non-habeas federal prisoner actions, a plaintiff could almost always name a defendant over whom the district court for the District of Columbia would have personal jurisdiction. But a habeas challenge must be brought against the custodian, a rule that channels such claims into the federal court with jurisdiction over the claimant's prison. Id. That consequence is, of course, every bit as applicable here as in Chatman-Bey itself, but had little or no relevance to Any anwutaku; even if state prisoners with probabilistic claims are relieved of the strictures of Balisok, the District of Columbia would generally not be a possible site for litigation.
Finding Chatman-Bey alive and at worst only modestly ailing, we conclude that Razzoli's Privacy Act claim--not only in regard to the good time decision but also in regard to parole eligibility--is not cognizable. In one respect, however, the district court erred on this claim: it should have been dismissed without prejudice. If Razzoli is successful in overturning the Disciplinary Committee and Parole Committee actions through a petition for habeas, he should be allowed to bring his Privacy Act claim at that time. See Fottler v. United States, 73 F.3d 1064, 1065-66 (10th Cir. 1996).
There remains Razzoli's FOIA claim. The district court concluded that not only the Privacy Act but also the FOIA claim was barred by Heck and Balisok. We do not see the logic. A FOIA claim wins, generally speaking, if the plaintiff has properly requested the document from the agency and no exemption applies. Razzoli evidently seeks the supposedly exonerating FBI report. Of course that report could possibly be helpful in both his good time and his parole eligibility claims. But a judicial finding that some agency must deliver this report to Razzoli would not itself establish some necessary element of those claims; so Balisok would not apply even under the comparatively broad reading that prevails in the Seventh Circuit. See Clayton-EL v. Fisher, 96 F.3d at 242.
Appellees contend that, quite apart from Heck and Balisok, Razzoli has failed to state a claim on which relief can be granted. In reviewing the decision of a lower court, we "can affirm a correct decision even if on different grounds than those assigned in the decision under review." Danielsen v. Burnside-Ott Aviation Training Center, Inc., 941 F.2d 1220, 1230 (D.C. Cir. 1991). This court has found that rule particularly applicable when reviewing a dismissal for "failure to state a claim,... a pure question of law which we review de novo." See id. (citing Securities and Exchange Comm'n v. Chenery Corp., 318 U.S. 80 (1943)).
Here, despite the efforts of the amicus to stretch our imaginations, we find little more in the complaint than a bald reference to the statute. Appellant mentions in passing that he did not receive the FBI report, but makes no reference to requests for this document. He later claims that he "has exhausted all other remedies available to him to attempt to correct the record, but was denied," but in the context of the complaint this seems to be a reference to the entire record of his cocaine possession. Complaint at 4, Razzoli v. Federal Bureau of Prisons, No. 99 CV 1711 (D.D.C. June 27, 1999) Even giving the pro se plaintiff the benefit of every reasonable doubt, we cannot make out a FOIA claim from this complaint.
The only question remaining is whether sua sponte dismissal without leave to amend was appropriate. The Prisoner Litigation Reform Act of 1995 not only allows but requires a district court to dismiss a prisoner's claim before the defendant answers if it finds that the complaint fails to state a claim. See 28 U.S.C. 1915A(b) (1). Even prior to the enactment of that statute, this court had approved of sua sponte dismissals for failure to state a claim in some circumstances.See Baker v. Director, United States Parole Comm'n, 916 F.2d 725, 726 (D.C. Cir. 1990) (per curiam). But nothing has altered our long-standing rule that a sua sponte dismissal for failure to state a claim without leave to amend is reversible error unless "the claimant cannot possibly win relief." See Davis v. District of Columbia, 158 F.3d 1342, 1349 (D.C. Cir. 1998) (quoting Baker, 916 F.2d at 726). This will be the case either when "the facts alleged affirmatively preclude relief, or because, even though plaintiff makes clear that he has facts to add to his complaint, he would not have a claim upon which relief could be granted even with those facts." Id. Neither of these formulations applies to Razzoli. Accordingly, although we agree with the judgment that Razzoli failed to state a claim, we must remand and order the district court to dismiss the complaint with leave to amend.
We vacate the order dismissing the Privacy Act claim with prejudice and remand for the district court to do so without prejudice. We also vacate the order dismissing the FOIA claim with prejudice and remand for the district court to dismiss with leave to amend.


New UCL/CLRA opinion considers the "reasonable consumer": Brady v. Bayer Corp.
In Brady v. Bayer Corp., ___ Cal.App.5th ___ (Sept. 7, 2018), the Court of Appeal (Fourth Appellate District, Division Three) held that the plaintiff's complaint adequately alleged that the defendant's product label was misleading to a reasonable consumer under both the CLRA and the UCL.
The front of the label called the product "One A Day" multivitamin gummies, but you had to read the back of the label to find out that you're supposed to take two gummies per day to get the recommended daily nutritional value. The opinion includes images of the front and back of the product label.
Among other past cases, the opinion considers and favorably cites the Ninth Circuit's decision in Williams v. Gerber Prods. Co., 552 F.3d 934 (9th Cir. 2008) (discussed in these blog posts).
New UCL, FAL and CLRA opinion: Rubenstein v. The Gap, Inc.
In Rubenstein v. The Gap, Inc., ___ Cal.App.5th ___ (Aug. 24, 2017), the plaintiff alleged that the defendant should have disclosed that clothing sold at its "Factory Stores" (including Gap and Banana Republic factory stores) was of inferior quality compared to the clothing sold at its "traditional" stores, and that the lesser-quality merchandise had never been offered for sale at the "traditional" stores. Slip op. at 2-3. The trial court sustained the defendant's demurrer without leave to amend. Id. at 4.
As a matter of law, Gap’s use of its own brand name labels on clothing that it manufactures and sells at Gap-owned stores is not deceptive, regardless of the quality of the merchandise or whether it was ever for sale at other Gap-owned stores. Retailers may harm the value of their brands by selling inferior merchandise at factory stores, but doing so does not constitute false advertising. Under these allegations, the trial court properly dismissed the FAL cause of action.
As explained in discussing the FAL cause of action, the SAC alleges no statement by Gap about the quality of factory store merchandise or that it was previously for sale in traditional Gap-owned stores. Gap’s use of its own brand names in factory store names and on factory store clothing labels is not likely to deceive a reasonable consumer for the simple reason that a purchaser is still getting a Gap or Banana Republic item.
The SAC states that “[r]easonable consumers believe outlet stores sell products that were previously available for purchase at retail stores,” but alleges no facts showing this to be true. Moreover, a consumer for whom the retail history of factory store items is material can ask Gap employees about this. A reasonable consumer would also inspect the quality of factory store clothing items before buying them and could return items after purchase if they turn out to be unsatisfactory. In the end, the allegation that Gap is not living up to the quality standards it has set for Gap and Banana Republic brands fails to state a cause of action for a fraudulent business practice under the UCL.
This part of the Court's reasoning appears to me inconsistent with a number of principles articulated in Kwikset. The Court even says that it is rejecting a series of contrary arguments made by the Attorney General in an amicus curiae brief in support of the plaintiff. See slip op. at 10-12.
On the UCL "unfair" prong claim, the Court applied the "section 5" test, without acknowledging the three-way split in authority (see this blog post). Slip op. at 13 (citing Klein v. Chevron U.S.A., Inc., 202 Cal.App.4th 1342 (2012); Camacho v. Automobile Club of Southern California, 142 Cal.App.4th 1394 (2006)).
The SAC fails to allege an unfair business practice. The injury alleged is not substantial because consumers are getting Gap and Banana Republic brand name items for low prices, and there is no allegation that Gap ever made any representations about the retail history or quality of factory store merchandise. A consumer who cared about whether the items were identical to other Gap merchandise could have asked a sales associate whether this is true. As for any quality issues, consumers could have examined factory store apparel before purchasing it, read the clothing labels for materials used in manufacture, and returned merchandise after purchase if it was unsatisfactory. Indeed, [the plaintiff] does not allege that any of the clothing items she purchased at Gap and Banana Republic Factory Stores had any quality issues.
Slip op. at 13-14. I have to respectfully disagree with this analysis. The allegation is that the stores are using their brand names to pass off inferior merchandise--not that the merchandise has obvious defects in materials or workmanship. If it did, and the customer returned it, the deception would have been insufficiently subtle, and would have failed. A merchant should not be allowed to get away with concealing material information by instituting a return policy, or one that says, "We'll tell you the truth but only if you ask."
Finally, the Court found no CLRA violation because no affirmative misrepresentations were made and the defendant had no duty to disclose. Slip op. at 14-15.
Back in October, I reported on an opinion in which the Ninth Circuit determined that the defendant had violated the CLRA and directed that summary judgment be entered in the plaintiff's favor on the CLRA claim. Gonzales v. CarMax Auto Superstores, LLC, 840 F.3d 644 (9th Cir. 2016).
In the present case, Gonzales’ Second Amended Complaint did “not seek damages of any kind” on his CLRA claim, but rather sought only an “injunction prohibiting acts or practices which violate the CLRA.” As the California Supreme Court noted, “section 1782, subdivision (d) contemplates the filing of a CLRA action for injunctive relief alone, and such actions are not subject to the requirements of subdivisions (a) and (b) of notice and allowance for voluntary correction,” which apply only to an action for damages. Meyer v. Sprint Spectrum L.P., 200 P.3d 295, 301 (Cal. 2009). Because Gonzales sought only injunctive relief for violation of the CLRA, CarMax’s correction offer does not bar Gonzales from recovering attorney’s fees.
Gonzales v. CarMax Auto Superstores, LLC, ___ F.3d ___ (9th Cir. Jan. 6, 2017), slip op. at 6 (footnotes omitted). The panel remanded the case to the district court for it to rule in the first instance on the other questions raised by the fee motion.
New Ninth Circuit UCL, FAL and CLRA opinion: Ebner v. Fresh, Inc.
In Ebner v. Fresh, Inc., ___ F.3d ___ (9th Cir. Sept. 27, 2016), the plaintiff asserted UCL, FAL and CLRA claims based on the defendant's labeling and marketing of its "Sugar" lip balm. According to the plaintiff, the statements of "net weight" are wrong and the "oversize" tubes and boxes in which the lip balm is sold "create the misleading impression that each unit has a larger quantity of lip product than it actually contains." Slip op. at 6. The district court dismissed the action in its entirety. Id. at 4-5.
The Ninth Circuit held that claims based on misstatements of "net weight" were properly dismissed because the federal Food, Drug and Cosmetic Act created a Cel-Tech safe harbor for such statements. Slip op. at 8-9. However, plaintiff also argued that the defendant omitted any "supplemental or clarifying statement" explaining that part of the next weight would be inaccessible to the consumer because of the tube design. Claims based on this omission theory enjoyed no safe harbor, nor were they expressly or impliedly preempted. Id. at 9-12.
Nevertheless, the omission claim failed, the Court held, because "Plaintiff cannot plausibly allege that the omission of supplemental disclosures about product weight rendered Sugar’s label 'false or misleading' to the reasonable consumer." Id. at 12. Basically, the Court held that reasonable consumers know how lip balm tubes with screw mechanisms work, and that they know the tubes can end up leaving some product behind at the bottom. See id. at 13-15. In this portion of the opinion, the Court distinguished Williams v. Gerber Products Co., 552 F.3d 934 (9th Cir. 2008) (discussed in these blog posts).
The Court then held that claims based on misleading packaging (as opposed to labeling) also failed "for largely the same reasons that the label-based claims fail." Id. at 16. In "the high-end cosmetics market, Sugar's elaborate packaging and the weighty feel of the tub is commonplace and even expected by a significant portion of Fresh's 'targeted consumers.'" Id. (citing Lavie v. Procter & Gamble Co., 105 Cal.App.4th 486 (2003) (discussed in this blog post)).
This opinion accompanies an order denying the plaintiff's petition for panel rehearing or en banc rehearing, which challenged an earlier opinion handed down in March. The main difference between the current opinion and the earlier opinion (which has been superseded) is that the current opinion spends more time distinguishing Williams.
Recent opinion addresses class notice in CLRA settlements: Choi v. Mario Bodescu Skin Care, Inc.
In the published portion of Choi v. Mario Bodescu Skin Care, Inc., 248 Cal.App.4th 292 (Jun. 21, 2016), the Court of Appeal (Second Appellate District, Division Three) affirmed final approval of a class action settlement involving UCL, CLRA and other claims.
In so doing, the panel rejected the objector's argument that, for purposes of the CLRA claim, the published notice was deficient because it failed to comport with Civil Code section 1781(d). Id. at 298-300. That section, the Court held, does not apply to settlement notices, which are governed by section 1781(f). Id. at 299. The published notice was fully compliant with the latter provision, which grants the trial court broader "discretion to fashion notice of a settlement class." Id. The trial court did not abuse its discretion in approving one-time published notice in Parade magazine. See id.
Furthermore, it is infeasible to comply with the requirement in Civil Code section 1781, subdivision (d) to give notice in “a newspaper of general circulation in the county in which the transaction occurred.” Determining in which counties around the United States sales of the creams occurred in this case would be impossible. Civil Code section 1781 does not appear to govern nationwide consumer class actions. The McLaren Objectors have not demonstrated that Civil Code section 1781, subdivision (d) applies to require four-times notice to a nationwide settlement class, particularly where other class claims were alleged and all of the remedies were obtained under causes of action other than the CLRA.
On August 10, 2016, the Supreme Court issued an order depublishing the Court of Appeal's opinion in Brooks v. CarMax Auto Superstores California LLC, 246 Cal.App.4th 973 (2016), which was handed down in April.
After a court trial on stipulated facts, the court ruled Brooks had suffered no damage from CarMax's alleged violations of [Vehicle Code] section 11713.18 [which governs mandatory CQI Certificates for "certified" used vehicles], and therefore concluded she did not have standing to pursue claims under the CLRA or the UCL. The court entered judgment for CarMax. Brooks asserts on appeal that reversal is required because she adequately demonstrated the type of damage necessary to prosecute a claim under the CLRA or the UCL or, alternatively, she was entitled to prosecute her claims under the CLRA or the UCL without showing any injury.
We agree with Brooks that the legislative scheme contemplates certain minimal standards must be met before a dealer may promote or sell a vehicle as certified, among which is that a dealer must provide a "completed inspection report indicating all the components inspected" to the buyer. We also agree that, if those standards are not satisfied, a vehicle marketed and sold as certified has been mislabeled, and a buyer who establishes they would not have purchased the vehicle absent that "certified" label has standing to pursue claims for violation of the CLRA and UCL under the rationale of Kwikset, regardless of whether the particular vehicle purchased might be as mechanically sound or intrinsically valuable as a certified vehicle.
Although the trial court premised its judgment on Brooks's lack of actual injury, we affirm the judgment as correct (Rappleyea v. Campbell, supra, 8 Cal.4th at p. 981) because we conclude both the content of the CQI Certificate and the mode it was provided to Brooks satisfied the requirements of section 11713.18, subdivision (a)(6).
Id. at 12-13, 20 (emphasis in original).
The successful depublication request was filed by Consumers for Auto Reliability and Safety, which presumably disagreed with the Court of Appeal's reading of the CQI certification requirements.
New UCL opinion: Rutledge v. Hewlett Packard Co.
The Court of Appeal (Sixth Appellate District) handed down an important new UCL opinion last week.
In Rutledge v. Hewlett Packard Co., ___ Cal.App.4th ___ (Jul. 22, 2015), the Court of Appeal reinstated a UCL "fraudulent" prong claim, and a CLRA claim, against a product manufacturer for failing to disclose material information about the product -- even though the nondisclosure was not about a safety-related defect, and even though for some class members the product did not fail until after the expiration of the manufacturer's warranty. Slip op. at 6-12.
Put another way, the opinion places some important limitations on Daugherty v. American Honda Co., 144 Cal.App.4th 824 (2006), and its successor opinion, Bardin v. DaimlerChrysler Corp., 136 Cal.App.4th 1255 (2006). (For more on Daugherty, see these blog posts. For more on Bardin, see this one.) Before this new opinion, the Court of Appeal's most recent word on these issues had been Collins v. eMachines, Inc., 202 Cal.App.4th 249 (2011).
HP argues [one of the named plaintiffs] and class members similar to him do not have a claim for fraudulent concealment under the UCL, because they received notebooks with inverters that functioned for the duration of the one-year warranty, and were not damaged by HP’s alleged failure to disclose the fact of the faulty inverter. However, a claim for fraudulent business practices “reflects the UCL’s focus on the defendant’s conduct, rather than the plaintiff’s damages, in service of the statute’s larger purpose of protecting the general public against unscrupulous business practices.” (In re Tobacco II Cases (2009) 46 Cal.4th 298, 312.) The question under the UCL is related to HP’s conduct in failing to disclose the faulty inverter, not on whether the notebook’s computer functioned for one-year. HP’s argument that the expiration of the warranty period precludes a claim for fraudulent concealment under the UCL is incorrect.
Slip op. at 10-11 (emphasis added).
Back in 2008, the same division of the Court of Appeal declined to disturb the trial court's order granting class certification of the UCL claim in the same case. My post on the 2008 opinion is here. In the opinion handed down last week, the Court of Appeal not only reaffirmed that result, but also held that certification should have been granted of a nationwide class. Slip op. at 23-29.
In Sarun v. Dignity Health, ___ Cal.App.4th ___ (Dec. 15, 2014; pub. ord. Jan. 6, 2015), the plaintiff's UCL and CLRA causes of action alleged that the defendant hospital failed to disclose that it charged uninsured patients more for emergency medical care than it charges other patients. The plaintiff himself received emergency medical care for which the defendant billed him over $23,000. By the time he filed suit, however, he had paid only a portion of the balance due, and he had not applied for any available discounts from the defendant. Slip op. at 1-4.
Based on the latter facts, the trial court sustained the defendant's demurrer without leave to amend, holding that the plaintiff had not suffered injury in fact or lost money or property, and therefore lacked standing. Id. at 5-6.
The Court of Appeal (Second Appellate District, Division Seven) disagreed, and reversed.
.... [And, a]lthough a further discount from Dignity’s “full charges”—even a complete elimination of the charges in excess of what Sarun already had paid—may have been available, the invoice as presented to Sarun (which was before the trial court after it granted Dignity’s unopposed motion for judicial notice) stated a $23,487.90 balance was due. Sarun was not merely “exposed” to the allegedly unlawful pricing system—that is, a list price expressly subject to negotiation like the sticker price on an automobile on a dealer’s lot or a shouted offer at the souk—Dignity’s invoice told him to pay the full remaining sum unless he sought relief. Indeed, the form admissions agreement Sarun had signed after arriving by ambulance at the hospital obligated him to pay Dignity’s full charges unless other discounts applied, but did not obligate him to apply for such discounts, and further provided he would be liable for attorney fees and collection expenses if the matter was referred for collection. As in Hale, upon receipt of this bill Sarun faced at least an imminent invasion of a legally protected interest.
Moreover, the Meyer Court, in discussing its earlier decision in Kagan v. Gibraltar Sav. & Loan Assn. (1984) 35 Cal.3d 582, also explained that incurring transaction costs to avoid the consequences of a deceptive practice “falls within the broad meaning of suffering ‘any damage as a result of the use or employment’ of an unlawful practice, whether or not those transaction costs are cognizable as ‘actual damages.’” (Meyer v. Sprint Spectrum, L.P, supra, 45 Cal.4th at p. 643.) Sarun was faced with just such transaction costs: To avoid the consequences of its allegedly unlawful “full charges” pricing structure for uninsured emergency care patients, Dignity required Sarun to apply for financial assistance, including providing tax return information and other personal financial data. The tangible burden of such an application process is far more than the “identifiable trifle” required to confer injury-in-fact standing.
Slip op. at 7-11 (italics in original; bold added).
Our conclusion is reinforced by Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758 in which the Supreme Court held retail pharmacies had standing to assert UCL claims against pharmaceutical companies that had allegedly engaged in price fixing even though the retail pharmacies were able to pass on any overcharges to their customers. (Id. at p. 788 [pharmacies “lost money: the overcharges they paid”].) The Court rejected the pharmaceutical companies’ argument the pharmacies ultimately “suffered no compensable loss because they were able to mitigate fully any injury by passing on the overcharges,” explaining “[t]he doctrine of mitigation, where it applies, is a limitation on liability for damages, not a basis for extinguishing standing. [Citation.] This is so because mitigation, while it might diminish a party’s recovery, does not diminish the party’s interest in proving it is entitled to recovery.” (Id. at p. 789.) Dignity’s argument Sarun was required to apply for financial assistance to perfect his claim (that is, to allege injury in fact) would be akin to requiring Sarun to mitigate his damages as a precondition to suit. As in Clayworth, that is unnecessary here.
Id. at 11 (bold added).
In Flores v. West Covina Auto Group, ___ Cal.App.4th ___ (Jan. 11, 2013), the Court of Appeal (Second Appellate District, Division Eight) affirmed an order compelling arbitration in a putative class action brought under the CLRA.
In sum, the CLRA’s prohibition against class waivers is preempted by the FAA. The waiver of class arbitration rights in appellants’ sales contract is not unenforceable under the CLRA. The poison pill provision ‑‑ which makes the arbitration clause unenforceable if the class arbitration waiver is unenforceable ‑‑ is thus not triggered.
The Court of Appeal reached a similar conclusion in Caron v. Mercedes-Benz Financial Services USA LLC, 145 Cal.Rptr.3d 296 (2012) (discussed in this blog post). The Supreme Court granted review in Caron on October 24, 2012. Caron v. Mercedes-Benz Fin. Servs. USA, No. S205263. Briefing has been deferred in Caron pending resolution of Iskanian v. CLS Transportation, No. S204032.
Like Caron, Flores creates a split in authority with Fisher v. DCH Temecula Imports LLC, 187 Cal. App. 4th 601 (2010) (discussed in this blog post). A "grant and hold" order is very possible here as well, if a petition for review is filed.
The December 2012 issue of California Lawyer has an article, "Software and the CLRA," by Daniel K. Slaughter of Stein & Lubin.
New Ninth Circuit UCL and CLRA opinion: Sateriale v. R.J. Reynolds Tobacco Co.
In Sateriale v. R.J. Reynolds Tobacco Co., ___ F.3d ___ (9th Cir. Jul. 13, 2012), the Ninth Circuit affirmed dismissal, for lack of standing, of UCL and CLRA claims based on alleged misrepresentations surrounding R.J. Reynolds' termination of its "Camel Cash" customer rewards program.
Before addressing the UCL and CLRA claims, the court held that plaintiffs' complaint did adequately allege breach of contract and promissory estoppel. Slip op. at 8090-8105.
The opinion's detailed discussion of those claims is quite interesting and brings back many pleasant memories of first-year contracts class. Who could forget that the doctrine of mutuality of obligation, while fully applicable to bilateral contracts, does not apply to unilateral contracts? Id. at 8102. Or that "an enforceable termination clause that gives a promisor an unrestricted power to terminate a contract at any time" renders that contract illusory and unenforceable, at least so long as the contract remains wholly executory? Id. at 8103.
Because the plaintiffs’ UCL claim sounds in fraud, they are required to prove “actual reliance on the allegedly deceptive or misleading statements,” Kwikset Corp. v. Superior Court, 246 P.3d 877, 888 (Cal. 2011) (quoting In re Tobacco II Cases, 207 P.3d 20, 26 (Cal. 2009)) (internal quotation marks omitted), and that “the misrepresentation was an immediate cause of [their] injury-producing conduct,” In re Tobacco II Cases, 207 P.3d at 39. The complaint does not satisfy these requirements.
and the plaintiffs’ injuries, the district court properly dismissed the UCL claim.
As with the UCL, consumers seeking to recover damages under the CLRA based on a fraud theory must prove “actual reliance on the misrepresentation and harm.” Nelson v. Pearson Ford Co., 112 Cal. Rptr. 3d 607, 638 (Ct. App. 2010); accord Durell v. Sharp Healthcare, 108 Cal. Rptr. 3d 682, 697 (Ct. App. 2010); In re Vioxx Class Cases, 103 Cal. Rptr. 3d 83, 94 (Ct. App. 2009).
The plaintiffs have not satisfied these requirements here ... as we explained in connection with the plaintiffs’ UCL claim. We therefore affirm dismissal of the plaintiffs’ CLRA claim as well.
Slip op. at 8105-06, 8107 (footnote omitted).
New CLRA attorneys' fees opinion: Pierce v. Western Surety Co.
In Pierce v. Western Surety Co., ___ Cal.App.4th ___ (Jun. 22, 2012), the Court of Appeal (Fifth Appellate District) addressed the CLRA and its attorneys' fees provision in the context of evaluating the scope of a surety's liability for acts of its principal. Slip op. at 8-10.
In sum, [Vehicle Code] section 11711 does not provide for attorney fees. Therefore, attorney fees are not recoverable based on that section. However, a surety that issues a bond pursuant to section 11711 is subject to general surety law. Under Civil Code section 2808, a surety’s liability is commensurate with that of the principal within the express terms of the bond and any applicable statutes. Thus, if the principal would have been liable for attorney fees based on conduct secured by the bond, the surety is liable for such fees.
Slip op. at 10. Because the principal would have been liable for attorneys' fees under the CLRA, the surety was similarly "liable for such fees." See id.
"Why Materiality Does Not Equal a Safety Risk"
The Spring 2012 issue of Competition, journal of the Antitrust and Unfair Competition Law Section of the State Bar of California, is just out.
As this discussion will demonstrate, given what is and has been the prevailing materiality standard for years, the existence of a safety risk is clearly not a required element of this standard, and its absence should not be a basis for precluding otherwise viable CLRA and UCL claims that are brought to redress consumer wrongs. This article discusses why the imposition of a "safety" requirement for pleading materiality in omission-based consumer fraud claims is both contrary to controlling legal authority and to the express legislative purpose of the CLRA and UCL.
The article is worth a read. This is an important area of law and one in which we are seeing what is perhaps CAFA's most problematic side effect: federal judges making California law. Federal judges construe the law in removed class-action cases raising no federal questions, their rulings are cited by litigants in state courts, and those rulings are followed by state-court judges. The intermediate Court of Appeal opinion in Brinker is another example of this phenomenon.
New UCL and CLRA "safe harbor" decision: Alvarez v. Chevron Corp.
In Alvarez v. Chevron Corp., ___ F.3d ___ (9th Cir. Sept. 1, 2011), the Ninth Circuit applied the Cel-Tech safe harbor to a UCL claim and, citing Bourgi v. West Covina Motors, Inc., 166 Cal.App.4th 1649 (2008), applied a similar safe harbor to the CLRA claim.
Recent UCL "fraudulent" prong decision: Hill v. Roll Int'l Corp.
In Hill v. Roll International Corp., 195 Cal.App.4th 1295 (May 26, 2011), the Court of Appeal (First Appellate District, Division Two) held as a matter of law that "no reasonable consumer would be misled to think that the green drop on Fiji water represents a third party organization's endorsement or that Fiji water is environmentally superior to that of the competition." Id., slip op at 5 (emphasis in original).
The Court discussed the "reasonable consumer" standard in some detail (id. at 8-10), and concluded that "in these days of inevitable and readily available Internet criticism and suspicion of virtually any corporate enterprise, ... a reasonable consumer ... does not include one who is overly suspicious." Id. at 9.
We agree wholeheartedly that “labels matter,” all labels, including that here. Defendants obviously put the green drop on the label for a purpose, as their counsel had to necessarily concede at oral argument: that the green drop was for a “marketing” purpose, to signify “something to do with the environment.” Such concession notwithstanding, we hold—and it is all we hold—that no reasonable consumer would be misled to think that the green drop represents a third party organization’s endorsement or that Fiji water is environmentally superior to that of the competition.
Accordingly, the Court affirmed the judgment of dismissal following the trial court's order sustaining the defendant's demurrer to the UCL, FAL, and CLRA claims without leave to amend.
Two new opinions on no-class-action arbitration clauses: Fisher v. DCH Temecula Imports LLC and Walnut Producers of California v. Diamond Foods, Inc.
The Court of Appeal has recently handed down two new decisions addressing arbitration clauses with class action bans.
[T]he clear language of the CLRA does not allow a consumer to waive the provisions of the CLRA in advance, including the right to bring a class action. Since the plain language of the statute provides that a consumer “may” bring a class action if there is damage to other consumers similarly situated, he or she cannot be asked to waive this class action right in advance.
Slip op. at 24. This is an interesting argument that no appellate court had expressly adopted before. The Court held the entire arbitration clause unenforceable. Id. at 24-25.
In the second case, Walnut Producers of California v. Diamond Foods, Inc., ___ Cal.App.4th ___ (Aug. 16, 2010), the Court of Appeal (Third Appellate District) held that an arbitration clause with a class action ban in a commercial contract was not unconscionable. Slip op. at 12-25. The Court also held that an order striking class allegations from a complaint is appealable and reviewed de novo. Id. at 5-8.
The Complex Litigator also has a short post on these two decisions.
New CLRA and UCL "unlawful" prong decision: Vitug v. Alameda Point Storage, Inc.
In Vitug v. Alameda Point Storage, Inc., ___ Cal.App.4th ___ (Aug. 10, 2010), the Court of Appeal affirmed a judgment entered following a demurrer to CLRA and UCL "unlawful" prong claims predicated on alleged violations of the California Self-Service Storage Facility Act (Bus. & Prof. Code §§ 21700 et seq.).
New UCL "unlawful" prong decision: Nelson v. Pearson Ford Co.
In Nelson v. Pearson Ford Co., ___ Cal.App.4th ___ (Jul. 15, 2010), the Court of Appeal (Fourth Appellate District, Division One) addressed a number of interesting UCL-related issues. The most interesting one is the class representative's standing in an "unlawful" prong case. Slip op. at 32-34.
Pearson Ford does not challenge the conclusion that its violations of the ASFA support Nelson's UCL claims; rather its appeal is limited to the trial court's finding that Nelson had standing to pursue claims under the UCL. Pearson Ford focuses its argument on whether Nelson suffered injury "as a result of" its unfair competition under the UCL. (Bus. & Prof. Code, § 17204.) Relying on Troyk [v. Farmers Group, Inc., 171 Cal.App.4th 1305 (2009)], Pearson Ford contends that Nelson needed to prove he would not have bought the car if he had known that the second contract: (1) charged him pre-consummation interest; (2) misstated the APR; and (3) failed to separately itemize the $250 insurance premium. We disagree.
Slip op. at 34 (emphasis added).
This holding is consistent with the Tobacco II footnote explaining that "the concept of reliance" will have "no application" in many UCL cases. In re Tobacco II Cases, 46 Cal.4th 298, 325 n.17 (2009). In Nelson, the defendant violated the law, which meant that additional charges and incorrect interest calculations were incorporated into the plaintiff's sales contract. This occurred wholly apart from any "reliance" by the plaintiff. By contrast, "the lack of disclosure of proper charges, not illegal charges, violated the UCL in Troyk." Nelson, slip op. at 33.
The Nelson opinion goes on to discuss UCL restitution (slip op. at 35-38) (worth reading); UCL rescission (slip op. at 39-40) (which it holds is not an available remedy); unclaimed residual funds under Code of Civil Procedure section 384 (slip op. at 40-42) (see this blog post for more on that topic); the CLRA (slip op. at 45-47); and 998 offers in the class action context (slip op. at 48-52).
Another case interpreting Tobacco II has been handed down, and this one, like Weinstat a couple of weeks ago, refutes the Cohen court's interpretation.
In Steroid Hormone Product Cases, ___ Cal.App.4th ___ (Jan. 21, 2010), the Court of Appeal (Second Appellate District, Division Four) reversed an order denying class certification of UCL and CLRA claims. The case alleged that the defendant (GNC) sold nutritional supplements containing a controlled substance that was illegal to sell or possess without a prescription, and that the defendant failed to disclose to consumers that its product contained this illegal ingredient. Slip op. at 3-4. The plaintiff class consisted of all those who purchased the supplements. See id., passim.
The trial court denied class certification "on the ground that, with regard to both the UCL claim and the CLRA claim, an individualized inquiry would have to be conducted into whether the illegality of androstenediol products was material to each purchaser, to determine whether GNC’s alleged conduct caused injury to that purchaser." Id. at 8.
The Court of Appeal disagreed. Under Tobacco II made clear that "the standing provision added by Proposition 64 'was not intended to have any effect at all on unnamed class members.'" Id. at 10 (quoting Tobacco II, 46 Cal.4th at 321.) "Therefore, while a named plaintiff in a UCL class action now must show that he or she suffered injury in fact and lost money or property as a result of the unfair competition, once the named plaintiff meets that burden, no further individualized proof of injury or causation is required to impose restitution liability against the defendant in favor of absent class members." Id. (emphasis added).
This holding is directly contrary to Cohen.
GNC tries to avoid the required reversal by arguing in its respondent’s brief that the trial court’s ruling does not conflict with Tobacco II because Tobacco II addressed standing, while the trial court specifically stated that standing was irrelevant to the certification analysis. Although the court did state that standing was irrelevant, it nevertheless found that Proposition 64 added actual injury as an element of a cause of action for restitution under the UCL, and therefore injury must be established for each class member. Tobacco II made clear, however, that Proposition 64 only affected the named plaintiff’s standing in a UCL class action seeking restitution; it did not add an additional element to be satisfied by all class members.
Martinez’s UCL claim presents two predominate issues (other than Martinez’s individual standing), both of which are common to the class: (1) whether GNC’s sale of androstenediol products was unlawful; and if so, (2) the amount of money GNC “may have . . . acquired by means of” those sales that must be restored to the class (Bus. & Prof. Code, § 17203).
Id. at 13 (citing Vasquez v. Superior Court, 4 Cal.3d 800 (1971); Massachusetts Mutual Life Ins. Co. v. Superior Court, 97 Cal.App.4th 1282 (2002)) (footnote omitted).
the question that must be answered in this case is whether a reasonable person would find it important when determining whether to purchase a product that it is unlawful to sell or possess that product. It requires no stretch to conclude that the proper answer is “yes” -- we assume that a reasonable person would not knowingly commit a criminal act.
Id. at 14 (citing Civ. Code § 3548; Garnette v. Mankel, 71 Cal.App.2d 783, 787 (1945)). Finally, the court rejected the argument that a "reasonable bodybuilder" standard should apply instead, as well as the argument that "as a rule, bodybuilders care less about legality than non-bodybuilders." Id. Bodybuilders as a class will no doubt appreciate the vindication.
New Ninth Circuit UCL/CLRA pleading decision: Kearns v. Ford Motor Co.
In Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. Jun. 8, 2009), the Ninth Circuit held that "the heightened pleadings standards of Rule 9(b)" applied to UCL and CLRA claims that were "grounded in fraud."
In a recent post-Tobacco decision, a federal district court followed Kearns but determined that the complaint's allegations satisfied the heightened pleading standard because they "sufficiently identified 'the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations.'" Germain v. J.C. Penney Co., 2009 WL 1971336, *3-*5 (C.D. Cal. Jul. 06, 2009) (quoting Walling v. Beverly Enterprises, 476 F.2d 393, 397 (9th Cir.1973)).