What CLRA prohibits
Forbidden practices include misrepresenting the source of the good and services, representing reconditioned goods as new, advertising goods without having the expected demand in stock, representing a repair is needed when it is not, representing rebates that have hidden conditions, and misrepresenting the authority of a salesman to close a deal.
Deception by Omission in Fiduciary Cases
The failure to disclose a fact constitutes a deceptive practice actionable under the Consumers Legal Remedies Act when the defendant is the plaintiff's fiduciary, when the defendant has exclusive knowledge of material facts not known or reasonably accessible to the plaintiff, and when the defendant actively conceals a material fact.
Remedies under CLRACal. Civ. Code §1780 allows consumers who have suffered damage because of a practice declared illegal by §1770 to obtain actual damages; the total award of damages; an order enjoining the methods, acts, or practices; restitution of property; punitive damages; court costs and attorney's fees; and any other relief that the court deems proper. A prevailing plaintiff gets to recover their attorney's fees, but a prevailing defendant may not recover their attorney's fees.
News about CLRA
The Consumers Legal Remedies Act. The act which outlaws hidden fees in sales and service, was introduced to the legislature by Senator Bill Dodd, D-Napa, and Senator Nancy Skinner, D-Berkeley, as Senate Bill 478. This bill would make it unlawful to advertise, display or offer a price for a good or service that does not include all mandatory fees or charges other than taxes imposed by a government.
"To the companies that have been involved in these junk fees, We're saying that your days are ending with this practice. No more. It's inappropriate. It's unfair. It's wrong to consumers," Attorney General Rob Bonta said at the conference.
The Consumers Legal Remedies Act. The act which outlaws hidden fees in sales and service, was introduced to the legislature by Senator Bill Dodd, D-Napa, and Senator Nancy Skinner, D-Berkeley, as Senate Bill 478. This bill would make it unlawful to advertise, display or offer a price for a good or service that does not include all mandatory fees or charges other than taxes imposed by a government.
"To the companies that have been involved in these junk fees, We're saying that your days are ending with this practice. No more. It's inappropriate. It's unfair. It's wrong to consumers," Attorney General Rob Bonta said at the conference.
Cases of Note
Application of CLRA to Arbitration Agreements
Lhotka v. Geographic Expeditions, Inc., 181 Cal. App. 4th 816, 819, 104 Cal. Rptr. 3d 844, 847 (2010)Jason Lhotka was 37 years old when he died of an altitude-related illness while on a GeoEx expedition up Mount Kilimanjaro with his mother, plaintiff Sandra Menefee. GeoEx's limitation of liability and release form, which both Lhotka and Menefee signed as a requirement of participating in the expedition, provided that each of them released GeoEx from all liability in connection with the trek and waived any claims for liability “to the maximum extent permitted by law.” The release also required that the parties would submit any disputes between themselves first to mediation and then to binding arbitration.
It reads: “I understand that all Trip Applications are subject to acceptance by GeoEx in San Francisco, California, USA. I agree that in the unlikely event a dispute of any kind arises between me and GeoEx, the following conditions will apply: (a) the dispute will be submitted to a neutral third-party mediator in San Francisco, California, with both parties splitting equally the cost of such mediator. If the dispute cannot be resolved through mediation, then (b) the dispute will be submitted for binding arbitration to the American Arbitration Association in San Francisco, California; (c) the dispute will be governed by California law; and (d) the maximum amount of recovery to which I will be entitled under any and all circumstances will be the sum of the land and air cost of my trip with GeoEx. I agree that this is a fair and reasonable limitation on the damages, of any sort whatsoever, that I may suffer. I agree to fully indemnify GeoEx for all of its costs (including attorneys' fees) if I commence an action or claim against GeoEx based upon claims I have previously released or waived by signing this release.” Menefee paid $16,831 for herself and Lhotka to go on the trip.
The contract was found to be procedurally unconscionable because Lhotka was not given the ability to negotiate and GeoEx represented that other companies required similar agreements. The contract is also substantially unconscionable because the terms of the agreement were one-sided, requiring the injured to travel for mediation and pay for GeoEx’s attorney’s fees. Striking the entire contract was found to be appropriate because there are several unconscionable provisions.
Why this case is important
It clarifies the legal interpretation of procedural and substantial unconscionability. Procedural unconscionability was defined as existing where a party lacks the ability to negotiate the contract. Substantive unconscionability exists where the contract unreasonably allocates risk.Other Cases
The trial court found the arbitration provision was unconscionable under Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 99 Cal.Rptr.2d 745, 6 P.3d 669Other interpretations of Note
The Senate Bill 365 was chaptered by Secretary of State. Chapter 710, Statutes of 2023. This section amends California Civil Code 1294 to read:
An aggrieved party may appeal from:
(a) An order dismissing or denying a petition to compel arbitration. Notwithstanding Section 916, the perfecting of such an appeal shall not automatically stay any proceedings in the trial court during the pendency of the appeal.
(b) An order dismissing a petition to confirm, correct or vacate an award.
(c) An order vacating an award unless a rehearing in arbitration is ordered.
(d) A judgment entered pursuant to this title.
(e) A special order after final judgment.
(a) An order dismissing or denying a petition to compel arbitration. Notwithstanding Section 916, the perfecting of such an appeal shall not automatically stay any proceedings in the trial court during the pendency of the appeal.
(b) An order dismissing a petition to confirm, correct or vacate an award.
(c) An order vacating an award unless a rehearing in arbitration is ordered.
(d) A judgment entered pursuant to this title.
(e) A special order after final judgment.
"This bill would provide that, notwithstanding the general rule described above, trial court proceedings would not be automatically stayed during the pendency of an appeal of an order dismissing or denying a petition to compel arbitration."
This amendment is unnecessary as judicial orders are already subject to appeal and not staying trial court proceedings are irrelevant to whatever legal matters are subject to disposition.
Vasquez v. Greene Motors, 302 P.3d 573 (Cal. 2013)
After plaintiff Gustavo E. Vasquez purchased a used car on credit from defendant Greene Motors, Inc., the vehicle's financing was assigned to defendant American Honda Finance Corporation. When Vasquez later sued Greene and Honda in connection with the terms of the financing, defendants petitioned the superior court to compel arbitration of the matter under a clause in the sales agreement. Vasquez opposed the petition on the ground the arbitration clause, contained on the back of a complex, one-page, preprinted document, was procedurally and substantively unconscionable.
(1) Procedural unconscionability focuses on the elements of “oppression,” which occurs where there is an inequality of bargaining power which results in a lack of real negotiation and an absence of meaningful choice, and “surprise,” which is a function of the disappointed reasonable expectations of the weaker party and results from misleading bargaining conduct or other circumstances indicating that a party's consent was not an informed choice. Cal. Civ. Code § 1670.5.
(1) Procedural unconscionability focuses on the elements of “oppression,” which occurs where there is an inequality of bargaining power which results in a lack of real negotiation and an absence of meaningful choice, and “surprise,” which is a function of the disappointed reasonable expectations of the weaker party and results from misleading bargaining conduct or other circumstances indicating that a party's consent was not an informed choice. Cal. Civ. Code § 1670.5.
(2) The more substantively oppressive a contract term, the less evidence of procedural unconscionability is required to conclude that the term is unenforceable, and vice versa.
Because the arbitration agreement was imposed on Vasquez without the opportunity for negotiation, and was therefore adhesive, the court found the transaction was procedurally unconscionable. In light of the minimal level of procedural unconscionability and the absence of significant substantive unconscionability, however, the trial court's decision was reversed on the defendant's petition to compel.
Vasquez v. Greene Motors, Inc., 154 Cal. Rptr. 3d 778 (Ct. App. (Apr. 23, 2013)
Other CLRA News
Greenwashing Class Action Litigation: An Emerging Risk for Companies' claims of Sustainability- National Law Review - August 2023Colgate-Palmolive is facing a class action over its alleged false labeling that its toothpaste tubes are recyclable. Roman Weingartner and Kristin Della, on behalf of themselves and those similarly situated, filed a complaint Aug. 11 in the U.S. District Court for the Northern District of California against Colgate-Palmolive Company alleging violation of the Consumers Legal Remedies Act and other claims.
The plaintiffs, according to their complaint, purchased Tom's of Maine and Colgate Total Toothpastes in 2022.
The plaintiffs, according to their complaint, purchased Tom's of Maine and Colgate Total Toothpastes in 2022.
They claim that Colgate-Palmolive is falsely labeling those brands of toothpaste as having a "Recyclable Tube" and "First of Its Kind Recyclable Tube." They further claim Colgate-Palmolive's recyclable claims and use of the universal recycling symbol are deceptive because only a small number of consumers live in communities where the tubes are recyclable.
The plaintiffs allege that the majority of municipal recycling programs in California and the U.S. reject the products because they are unable to distinguish between the defendant's tubes and conventional toothpaste tubes that are not recyclable.
They also allege the defendant's toothpaste tubes can not be completely emptied, which leaves contaminates in the recyclable water stream. The plaintiffs claim the defendant's marketing of the products as recyclable violated Federal Trade Commission Green Guides and Colgate-Palmolive fails to inform consumers, who have paid more for the products, that there are limited recycling facilities for the toothpaste tubes.
The plaintiffs are seeking monetary relief, trial by jury, interest and all other just relief. They are represented by Seth Safier, Marie McCrary and Rajiv Thairani of Gutride Safier LLP in San Francisco.
U.S. District Court for the Northern District of California case number 3:23-CV-04086-JCS
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