Medrazo v. Honda of North Hollywood: No Showing of Actual Reliance Necessary under California UCL

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The California Court of Appeal has ruled that a showing of actual reliance by class members other than the named plaintiff is not required for claims brought under California’s Unfair Competition Law (UCL). See Medrazo v. Honda of North Hollywood, ___Cal. App. 4th ___ (Mar. 27, 2012), available here. The underlying claims in the certified class action were based on the plaintiff’s allegation that the defendant sold new motorcycles without the dealer tags required by two section s of the California Vehicle Code. See Slip op. at 4. The mandatory tags must show a motorcycle’s recommended retail price, as well as the price of each accessory and the amount by which the price being charged exceeds the recommended retail price. See Cal. Veh. Code §§ 11712.5, 24014 (West 2012).

 The appeal arose from the trial court’s granting the defendant’s motion for judgment, which had been filed immediately after the plaintiff presented evidence at trial. See Slip op. at 2. The trial court found that the plaintiff had failed to establish that either she or any other member of the certified class had been injured by the defendant’s conduct, and thereby entered judgment on the plaintiff’s UCL cause of action. Id. However, the Court of Appeal reversed the trial court’s entry of judgment on the UCL claim. Id.

Expounding on the California Supreme Court’s landmark “Tobacco II” decision, In re Tobacco II Cases, 46 Cal. 4th 298, (2009), the unanimous Medrazo panel explained its reversal of the trial court as follows:

As the Supreme Court explained in Tobacco II, the language in the UCL limiting standing to plaintiffs who lost money “as a result of the unfair competition” (Bus. & Prof. Code, § 17204) imposes an actual reliance requirement on the named plaintiff (and only the named plaintiff) in a UCL action based upon the fraudulent prong or false advertising because “reliance is the causal mechanism of fraud.” (Tobacco II, supra, 46 Cal.4th at p. 326; see also id. at p. 320 [the standing requirement to show causation does not apply to absent class members].) But the Supreme Court also explained that an actual reliance requirement does not apply to UCL actions that are not based upon a fraud theory. (Id. at p. 325, fn. 17). In those actions, the plaintiff must simply show that the alleged violation caused or resulted in the loss of money or property. Because, as discussed below, we find that Medrazo presented sufficient evidence to establish standing under the unlawful prong of the UCL, we need not address whether the fact that [the defendant] disclosed all of the dealer-added charges precludes her from establishing actual reliance under the fraud or false advertising prong of the UCL.

Slip op. at 14 (emphasis added).

This was the most recent appeal in a case that earlier saw the Court of Appeal reverse the trial court’s denial of class certification, with the affirmative order that the class be certified. See Medrazo v. Honda of North Hollywood, 166 Cal. App. 4th 89 (2008). Though originally designated as unpublished, the Medrazo opinion has since been designated for publication in the official reports. As such, it is expected to be an important and much-cited elaboration on the Tobacco II holding.