Standing Under Consumers Legal Remedies Act Requires Damage

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In Meyer v. Sprint Spectrum L.P. (2009) 45 C.4th 634, 88 C.R.3d 859, 200 P.3d 295, plaintiff customers brought an action under the Consumers Legal Remedies Act against a cellular telephone company alleging that an arbitration clause and other remedial provisions in defendant’s contract with them were unconscionable. The trial judge sustained defendant’s demurrer, finding that plaintiffs lacked standing because they had not alleged that they had been personally damaged or that defendant had attempted to enforce any of the provisions at issue against them. The Court of Appeal affirmed, agreeing that plaintiffs lacked standing. Held, judgment of the Court of Appeal affirmed.

(a) C.C. 1780(a), which identifies those who may seek relief under the Act, imposes the requirement of suffering “any damage.” While “any damage” is broader than “actual damages”--it could include, for example, certain types of transaction costs and opportunity costs--it denotes “some type of increased costs, as a result of the unconscionable terms in order to have standing.” (45 C.4th 643, footnote 3; disapproving dictum in Kagan v. Gibraltar Savings & Loan Assn. (1984) 35 C.3d 582, 200 C.R. 38, 676 P.2d 1060, 4 Summary (10th), Sales, §296, to the effect that “any damage” may include “the infringement of any legal right” as defined in C.C. 1770.) “Although the allegedly unconscionable terms may at some future time require plaintiffs to expend greater costs and legal fees should a dispute arise that requires arbitration or resort to other remedial provisions, it would contort the statutory language to conclude that the preemptive expenditure of fees for this litigation means that [defendant’s] alleged unlawful practices had caused ‘damage’ at the time the lawsuit was filed.” (45 C.4th 643.)

(b) C.C. 1782(d) relieves a plaintiff of certain procedural requirements where only injunctive relief is sought, and here that is all plaintiffs seek. C.C. 1780, however, remains the only section of the Act that sets forth the available remedies, including injunctive relief, so its requirement of “damage” remains applicable no matter how plaintiffs may have limited the relief they seek. (45 C.4th 644.) Neither can plaintiffs escape the damage requirement through their interpretation of the Act’s limitations statute, C.C. 1783, which refers to “the date of the commission of such method, act, or practice.” Under plaintiffs’ theory, the limitations period would start to run against consumers the moment their contracts were entered into, regardless of whether any of the allegedly unconscionable remedies were used against them. It is doubtful the Legislature intended this result. (45 C.4th 645.)

(c) Any rule that expands the ability of individuals to bring lawsuits has costs as well as benefits. In weighing those costs and benefits, the Legislature, in drafting the Act, set a “low but nonetheless palpable threshold of damage,” and did not want lawsuit costs to be incurred when no damage could yet be demonstrated. (45 C.4th 656, citing Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 C.4th 223, 46 C.R.3d 57, 138 P.3d 207, 13 Summary (10th), Equity, Supp., §124, for its discussion of the analogous rule imposed by Proposition 64.)

Witkin References

On Consumers Legal Remedies Act generally, see 4 Summary (10th), Sales, §296.

On standing requirement imposed by Proposition 64 on unfair competition actions, see 13 Summary (10th), Equity, §124.