This case arises at the intersection of the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.) and the Unfair Insurance Practices Act (UIPA; Ins. Code, § 790 et seq.). The question is whether insurance practices that violate the UIPA can support a UCL action. In Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287, 304 [250 Cal.Rptr. 116, 758 P.2d 58] (Moradi-Shalal) we held that when the Legislature enacted the UIPA, it did not intend to create a private cause of action for commission of the various unfair practices listed in Insurance Code section 790.03, subdivision (h).
We hold that Moradi-Shalal does not preclude first party UCL actions based on grounds independent from section 790.03, even when the insurer's conduct also violates section 790.03.
Here, plaintiff alleges causes of action for false advertising and insurance bad faith, both of which provide grounds for a UCL claim independent from the UIPA. Allowing her also to sue under the UCL does no harm to the rule established in Moradi-Shalal. The Moradi-Shalal court made it plain that while violations of section 790.03(h) are themselves not actionable, insureds retain other causes of action against insurers, including common law bad faith claims. Furthermore, UCL actions by private parties are equitable proceedings, with limited remedies. They are thus quite distinct from the claims for damages with which Moradi-Shalal was concerned.
Plaintiff Yanting Zhang bought a comprehensive general liability policy from California Capital Insurance Company (California Capital). She sued California Capital in a dispute over coverage for fire damage to her commercial property. The complaint included causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of the UCL. In her UCL claim, Zhang alleged that California Capital had "engaged in unfair, deceptive, untrue, and/or misleading advertising" by
California Capital demurred to the UCL claim, contending it was an impermissible attempt to plead around Moradi-Shalal's bar against private actions for unfair insurance practices under section 790.03.
"The rules by which the sufficiency of a complaint is tested against a general demurrer are well settled. We not only treat the demurrer as admitting all material facts properly pleaded, but also `give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.]' [Citation.] [¶] If the complaint states a cause of action under any theory, regardless of the title under which the factual basis for relief is stated, that aspect of the complaint is good against a demurrer. `[W]e are not limited to plaintiffs' theory of recovery in testing the sufficiency of their complaint against a demurrer, but instead must determine if the factual allegations of the complaint are adequate to state a cause of action under any legal theory....' [Citations.]" (Quelimane, supra, 19 Cal.4th at pp. 38-39.)
"Prevailing plaintiffs are generally limited to injunctive relief and restitution. [Citations.] Plaintiffs may not receive damages ... or attorney fees."
The question before us is the extent to which relief under the UCL is limited by the holding in Moradi-Shalal, supra, 46 Cal.3d 287. There, we reconsidered and abolished a UIPA cause of action that had been approved by Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880 [153 Cal.Rptr. 842, 592 P.2d 329] (Royal Globe). The Royal Globe plaintiff was a third party claimant who sued the insurer of property where she was injured. (Royal Globe, at p. 884.) She contended the insurer had violated section 790.03(h)(5) by failing to settle her claim promptly and fairly, and section 790.03(h)(14) by advising her not to obtain the services of an attorney. (Royal Globe, at p. 884.) The Royal Globe court decided that section 790.03(h), enacted in 1959 as part of a comprehensive regulation of the insurance business, permitted third party plaintiffs to sue insurers for unfair acts or practices proscribed by the statute. (Royal Globe, at pp. 884-885.)
We overruled Royal Globe in Moradi-Shalal, supra, 46 Cal.3d at page 292. The Moradi-Shalal court noted that Royal Globe was decided by a bare majority. (Moradi-Shalal, at p. 294.) Its decision to permit third party statutory bad faith actions had not been followed by other state courts. (Id. at pp. 297-298.) It had been criticized by legal commentators, and was inconsistent with the drafting history of the Model Unfair Claims Practices Act, from which section 790.03(h) was drawn. (Moradi-Shalal, at pp. 298-299.) Moreover, parts of the legislative history of section 790.03 itself, unmentioned in Royal Globe, indicated that only administrative enforcement by the Insurance Commissioner had been contemplated. (Moradi-Shalal, at p. 300.) Moradi-Shalal also noted that Royal Globe had spawned proliferating litigation, escalating insurance costs, conflicts of interest, complex practical problems, and various analytical difficulties. (Id. at pp. 301-303.)
In Zephyr Park v. Superior Court, supra, 213 Cal.App.3d 833, the court held that Moradi-Shalal's bar against actions under section 790.03(h) applied to insureds as well as third party claimants. But it noted that insureds retain the common law cause of action for bad faith settlement practices. (Zephyr Park, at pp. 837-838.) "There is simply no need, therefore, to perpetuate the availability of section 790.03(h) as the basis for first party causes of action." (Zephyr Park, at p. 838; accord, Tricor California, Inc. v. Superior Court (1990) 220 Cal.App.3d 880, 888 [269 Cal.Rptr. 642].) We cited Zephyr Park with approval in Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 35 [44 Cal.Rptr.2d 370, 900 P.2d 619].
After Moradi-Shalal, the law regarding UCL claims against insurers went through a rather complicated evolution, in a variety of contexts. First, a series of Court of Appeal decisions rejected attempts to state UCL causes of action against insurers in bad faith cases. (Industrial Indemnity Co. v. Superior Court (1989) 209 Cal.App.3d 1093, 1097 [257 Cal.Rptr. 655] (Industrial Indemnity) [Moradi-Shalal barred third party claim for damages under UCL]; Safeco Ins. Co. v. Superior Court (1990) 216 Cal.App.3d 1491, 1494 [265 Cal.Rptr. 585] (Safeco) [third party action; UCL "provides no toehold for scaling the barrier of Moradi-Shalal's]; Maler v. Superior Court (1990) 220 Cal.App.3d 1592, 1598 [270 Cal.Rptr. 222] (Maler) [first party action; "plaintiffs cannot circumvent [Moradi-Shalal's] ban by bootstrapping an alleged violation of section 790.03 onto Business and Professions Code section 17200 so as to state a cause of action under section 1861.03"
In Rubin v. Green (1993) 4 Cal.4th 1187 [17 Cal.Rptr.2d 828, 847 P.2d 1044] (Rubin), we relied by way of analogy on these Court of Appeal opinions. At issue in Rubin was whether injunctive relief was available under
The Manufacturers Life defendants argued that permitting a UCL action for an unfair insurance practice prohibited by the UIPA would seriously compromise Moradi-Shalal's bar against private causes of action for violations of section 790.03, even if the practice also violated the Cartwright Act.
We explained that Rubin had "analogized" an attempt to plead around the litigation privilege "to the attempts to avoid the bar to `implied' private causes of action under section 790.03, which several Courts of Appeal had held could not be avoided by characterizing the claim as one under the [UCL]. [Citations.]" (Manufacturers Life, supra, 10 Cal.4th at pp. 283-284.) "[H]owever, a cause of action for unfair competition based on conduct made unlawful by the Cartwright Act is not an `implied' cause of action which Moradi-Shalal held could not be found in the UIPA. There is no attempt to use the [UCL] to confer private standing to enforce a provision of the UIPA.
"This conclusion does not compromise the rule of Moradi-Shalal in any way. The court concluded there that the Legislature did not intend to create new causes of action when it described unlawful insurance business practices in section 790.03, and therefore that section did not create a private cause of action under the UIPA. The court did not hold that by identifying practices that are unlawful in the insurance industry ... the Legislature intended to bar Cartwright Act causes of action based on those practices. Nothing in the UIPA would support such a conclusion. The UIPA nowhere reflects legislative intent to repeal the Cartwright Act insofar as it applies to the insurance industry, and the Legislature has clearly stated its intent that the remedies and penalties under the [UCL] are cumulative to other remedies and penalties." (Manufacturers Life, supra, 10 Cal.4th at p. 284.)
Manufacturers Life had an impact on State Farm Fire & Casualty Co. v. Superior Court (1996) 45 Cal.App.4th 1093 [53 Cal.Rptr.2d 229] (State Farm), a first party bad faith action. Insured homeowners sought damages for breach of the implied covenant of good faith, breach of contract, professional negligence, and fraud, based on State Farm's alleged surreptitious alteration of their earthquake insurance coverage. They also pursued UCL remedies. (State Farm, at pp. 1099, 1101.) State Farm's demurrer was overruled and it sought writ relief, contending the UCL claim was an improper attempt to plead around Moradi-Shalal's bar against private actions under section 790.03. (State Farm, at p. 1101.)
The State Farm court denied the writ. Relying on Manufacturers Life, it acknowledged that the insureds could not borrow the provisions of section 790.03 to establish an unlawful business practice. (State Farm, supra, 45 Cal.App.4th at p. 1103.) However, it held that the UCL cause of action was supported by the insureds' allegations of fraud and common law bad faith, which included examples of all three varieties of prohibited business practices: unlawful, unfair, and fraudulent. (State Farm, at p. 1107.) In particular, the State Farm court found that the fraud and bad faith claims were "independent bases for plaintiffs' [UCL] cause of action [that] are not distinguishable from the independent Cartwright Act violation which the Supreme Court recently held was sufficient to support a claim for relief under the [UCL], notwithstanding that the acts complained of also violated section 790.03." (State Farm, at p. 1108, citing Manufacturers Life, supra, 10 Cal.4th at p. 284.)
The State Farm court noted that unlike the plaintiffs in Industrial Indemnity, Safeco, and Maler, these insureds had pleaded a proper UCL cause of action
State Farm argued that recognizing a right of action under the UCL for conduct proscribed by section 790.03 "would revive what the Supreme Court called the `undesirable social and economic effects of the [Royal Globe] decision (i.e., multiple litigation, unwarranted bad faith claims, coercive settlements, excessive jury awards, and escalating insurance, legal and other "transaction" costs).' (Moradi-Shalal, supra, 46 Cal.3d at p. 299.)" (State Farm, supra, 45 Cal.App.4th at pp. 1109-1110.) The court disagreed: "[W]e believe that this concern is overblown. The injunctive and restitutive remedies authorized under the [UCL] [citation] are of very limited utility. They are designed to prevent unfair business practices and to require disgorgement of money or property obtained by means of such practices. Damages are not available under Business and Professions Code section 17203. [Citation.] That means that no claim for compensatory or punitive damages can be recovered in a [UCL] action. It is therefore not at all clear to us how our application of the very clear language of the [UCL] will necessarily resurrect any of the perceived evils of Royal Globe." (State Farm, at p. 1110.)
In Stop Youth Addiction, supra, 17 Cal.4th 553, this court discussed the holdings in Rubin, Manufacturers Life, and the Safeco line of cases, without mentioning State Farm. The defendant in Stop Youth Addiction argued that, because Penal Code section 308 provides no private cause of action for violations of its prohibition against selling cigarettes to minors, UCL remedies for that conduct were unavailable. (Stop Youth Addiction, at p. 561.) The defendant claimed Rubin had endorsed the Safeco court's view that a UCL claim cannot be based on a statute that does not authorize an independent cause of action. (Safeco, supra, 216 Cal.App.3d at p. 1494; see Stop Youth Addiction, at pp. 561-562.) We disagreed, noting that Manufacturers Life had limited Rubin's holding to the absolute bar to relief created by the litigation privilege. (Stop Youth Addiction, at p. 564.)
We added: "Neither from our discussion nor from the authorities we cited in Manufacturers Life ... does it follow that a private plaintiff lacks UCL standing whenever the conduct alleged to constitute unfair competition violates a statute for the direct enforcement of which there is no private right of action. To the contrary, ... in Manufacturers Life we permitted a UCL claim based on the Cartwright Act to go forward, even while recognizing that the conduct alleged as unfair competition also violated the UIPA, for the direct enforcement of which, following Moradi-Shalal, there is no private right of action.... [¶] In Manufacturers Life, moreover, we explained that
We again reaffirmed Manufacturers Life in Quelimane, supra, 19 Cal.4th 26, where the plaintiffs claimed that title companies had conspired to withhold title insurance for property purchased at tax sales. We noted that Manufacturers Life had established the viability of Cartwright Act violations as the predicate for a UCL action. (Quelimane, at pp. 42-44.) We further held that the plaintiffs had stated a UCL claim based on the defendants' allegedly false advertising, which consisted of promising to issue title insurance for any property with good title. (Id. at pp. 51, 54-55.)
"A plaintiff may thus not `plead around' an `absolute bar to relief' simply `by recasting the cause of action as one for unfair competition.' (Manufacturers Life[, supra,] 10 Cal.4th 257, 283 ....) The rule does not, however, prohibit an action under the [UCL] merely because some other statute on the subject does not, itself, provide for the action or prohibit the challenged conduct. To forestall an action under the [UCL], another provision must actually `bar' the action or clearly permit the conduct." (Cel-Tech, supra, 20 Cal.4th at pp. 182-183.)
After Cel-Tech, a split in Court of Appeal opinion was created by Textron Financial Corp. v. National Union Fire Ins. Co. (2004) 118 Cal.App.4th 1061 [13 Cal.Rptr.3d 586] (Textron), which disagreed with State Farm, supra, 45 Cal.App.4th 1093. Textron held a security interest in a bus insured by the defendant. It submitted a claim after the bus was damaged in an accident. The
"While insurance companies are subject to California laws generally applicable to other businesses, including laws governing unfair business practices (... § 1861.03, subd. (a)), parties cannot plead around Moradi-Shalal's holding by merely relabeling their cause of action as one for unfair competition." (Textron, supra, 118 Cal.App.4th at p. 1070, citing Manufacturers Life, supra, 10 Cal.4th at pp. 283-284, Maler, supra, 220 Cal.App.3d at p. 1598, and Safeco, supra, 216 Cal.App.3d at p. 1494.) "The persuasiveness of [State Farm] has been undercut by the Supreme Court's subsequent disapproval of its definition of `unfair' business practices." (Textron, at p. 1071; see Cel-Tech, supra, 20 Cal.4th at pp. 184-185 [disapproving definition of "unfair" business acts or practices quoted in State Farm].) The Textron court concluded: "[G]iven the Supreme Court's disapproval of State Farm's `amorphous' definition of `unfair' practices and its focus on legislatively declared public policy, reliance on general common law principles to support a cause of action for unfair competition is unavailing." (Textron, at p. 1072.)
In the case at bench, the Court of Appeal disagreed with Textron, believing it "focused too narrowly on the `unfair' prong of potential liability under the UCL." The court endorsed the proposition, which it drew from State Farm, that an insurer is not protected from UCL liability simply because its claims handling practices may be prohibited by section 790.03. It decided that Zhang's false advertising claim supported her UCL cause of action, a result it deemed consistent with Moradi-Shalal and Manufacturers Life. For reasons set forth below, we conclude the Court of Appeal correctly followed State Farm instead of Textron.
As noted, Zhang's UCL claim is premised on allegations of false advertising. She contends California Capital misleadingly advertised that it would timely pay the true value of covered claims. She asserts that its treatment of her claim demonstrated it had no intention of honoring that promise. California Capital's demurrer was based on Textron's rule that a UCL claim
In this court, California Capital maintains its insistence that Zhang's UCL claim is actually directed at its claims handling, not its advertising. It argues that any bad faith claim might be turned into a false advertising suit, because all insurers at least impliedly promise to pay what they owe under their policies. California Capital urges us to follow Textron and the Safeco line of cases, and to disapprove State Farm.
Textron's criticisms of State Farm do not withstand examination. The Textron court reasoned that State Farm had been undermined by Cel-Tech's disapproval of the "unfairness" standard applied in State Farm. (Textron, supra, 118 Cal.App.4th at pp. 1071-1072.) However, our disapproval of that standard was expressly limited to actions between business competitors alleging anticompetitive practices. We declared: "Nothing we say relates to actions by consumers or by competitors alleging other kinds of violations of
The Textron court relied on Safeco, supra, 216 Cal.App.3d at page 1494, for the proposition that the UCL "`provides no toehold for scaling the barrier of Moradi-Shalal.'" (Textron, supra, 118 Cal.App.4th at p. 1070; see id. at p. 1072.) Safeco, however, was a third party action in which the plaintiff had no common law claim against the insurer. Moreover, in Stop Youth Addiction we noted that the Safeco line of cases "stand[s] at most for the proposition the UCL cannot be used to state a cause of action the gist of which is absolutely barred under some other principle of law." (Stop Youth Addiction, supra, 17 Cal.4th at p. 566.) Because Moradi-Shalal barred only claims brought under section 790.03, and expressly allowed first party bad faith actions, it preserved the gist of first party UCL claims based on allegations of bad faith. Moradi-Shalal imposed a formidable barrier, but not an insurmountable one.
Textron distinguished Manufacturers Life and Quelimane on the ground that those UCL claims rested on Cartwright Act violations. (Textron, supra, 118 Cal.App.4th at p. 1072.) However, nothing in Manufacturers Life or Quelimane suggests the Cartwright Act is the only avenue for asserting a UCL claim against an insurer. "In Manufacturers Life ... we explained that Moradi-Shalal was not meant to impose sweeping limitations on private ... unfair competition actions." (Stop Youth Addiction, supra, 17 Cal.4th at p. 565.) Manufacturers Life stands for the proposition that a cause of action neither barred by Moradi-Shalal nor absolutely precluded by other law may serve as the basis for a UCL claim. (Manufacturers Life, supra, 10 Cal.4th at p. 284; see Cel-Tech, supra, 20 Cal.4th at pp. 182-183.) Textron's holding that Moradi-Shalal precludes UCL causes of action based on allegations of bad faith claims handling practices is contrary to the reasoning of Manufacturers Life, Stop Youth Addiction, and Cel-Tech.
As the State Farm court observed, Moradi-Shalal was concerned with the adverse effects of recognizing an implied right of action for damages under section 790.03, whereas UCL remedies are limited in scope, generally extending only to injunctive relief and restitution.
Indeed, since State Farm was decided the scope of the UCL has been further restricted by the passage of Proposition 64 in 2004. Private plaintiffs must demonstrate economic injury caused by the alleged unfair competition, and may not represent the interests of others without meeting the requirements for a class action. (Kwikset Corp. v. Superior Court, supra, 51 Cal.4th at p. 326; Arias v. Superior Court, supra, 46 Cal.4th at p. 980.) Thus, there is additional support for State Farm's conclusion that allowing UCL claims in common law bad faith cases is unlikely to resurrect the problems caused by Royal Globe. (State Farm, supra, 45 Cal.App.4th at p. 1110.) We note as well that those problems stemmed from the recognition of third party claims under section 790.03, not from claims by insureds against their insurers.
For all the above reasons, we disapprove Textron Financial Corp. v. National Union Fire Ins. Co., supra, 118 Cal.App.4th 1061, to the extent it is inconsistent with this opinion. Our ruling does not affect the opinions in third party cases such as Industrial Indemnity, supra, 209 Cal.App.3d 1093, and Safeco, supra, 216 Cal.App.3d 1491. In Moradi-Shalal, we identified numerous adverse consequences of third party bad faith claims, including proliferating litigation, unwarranted settlement demands, escalating insurance costs, conflicts of interest, practical difficulties with the scope and nature of the third party cause of action, and potential constitutional issues. (Moradi-Shalal, supra, 46 Cal.3d at pp. 301-302.) Whether similar concerns weigh against recognizing a right of third parties to pursue UCL claims is a matter beyond the scope of this case.
Our resolution of the conflict between State Farm and Textron disposes of the bulk of California Capital's arguments. With regard to Zhang's particular claim, California Capital asserts that no statutory or decisional law other than the UIPA imposes liability on insurers for the conduct alleged in Zhang's UCL cause of action, which California Capital characterizes as "a general practice of underpaying fire claims." Reasonably interpreted in the context of
California Capital contends the litigation of Zhang's UCL cause of action will be unmanageable, requiring the examination of its claims handling practices in thousands of cases. However, a UCL claim may be based on a single instance of unfair business practice. (Stop Youth Addiction, supra, 17 Cal.4th at p. 570; United Farm Workers of America v. Dutra Farms (2000) 83 Cal.App.4th 1146, 1163 [100 Cal.Rptr.2d 251].) Were Zhang to attempt to recover on behalf of other insureds, she would be required to certify a class action. (Arias v. Superior Court, supra, 46 Cal.4th at p. 980.) Furthermore, we are not concerned at the pleading stage with how Zhang might go about proving her claim. As we have noted in other UCL cases, the possible difficulty of proving the plaintiff's allegations is not a relevant consideration on review of a demurrer ruling. (Quelimane, supra, 19 Cal.4th at p. 47; Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214 [197 Cal.Rptr. 783, 673 P.2d 660].)
We affirm the Court of Appeal's judgment.
Cantil-Sakauye, C. J., Kennard, J., Baxter, J., and Chin, J., concurred.
Yanting Zhang has pleaded conduct by California Capital Insurance Company that contravenes long-standing common law prohibitions against bad faith insurance practices and false advertising. Under settled precedent, such common law breaches may provide the predicate for claims under the unfair competition law (UCL). (Bus. & Prof. Code, § 17200 et seq.; Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 209-214 [197 Cal.Rptr. 783, 673 P.2d 660]; State Farm Fire & Casualty Co. v. Superior Court (1996) 45 Cal.App.4th 1093, 1105 [53 Cal.Rptr.2d 229].) That such conduct may also be statutorily proscribed by the Unfair Insurance Practices Act (Act; Ins. Code, § 790 et seq.)
I write separately, however, because the majority goes further and asserts no UCL claim can ever be based on violations of the Act. (Maj. opn., ante, at p. 379, fn. 8 & p. 384.) Given Zhang's conscious decision not to predicate a UCL claim directly on such transgressions, this assertion is unnecessary dictum. Moreover, it is wrong: it misreads our own precedent and imposes on the UCL limits never contemplated by the Legislature.
Our understanding of this point must begin with Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880 [153 Cal.Rptr. 842, 592 P.2d 329]
Nine years later, Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287 [250 Cal.Rptr. 116, 758 P.2d 58] (Moradi-Shalal) overruled Royal Globe. The Moradi-Shalal majority embraced as "irrefutable" the position of the Royal Globe dissent: "Neither section 790.03 nor section 790.09 was intended to create a private civil cause of action against an insurer that commits one of the various acts listed in section 790.03, subdivision (h)." (Moradi-Shalal, at p. 304.) But Moradi-Shalal did no more than that. To forestall any implication of "an invitation to the insurance industry to commit the unfair practices proscribed by the Insurance Code" (ibid.), the majority stressed the continuing availability of both Insurance Commissioner sanctions for violations of the Act and suits for fraud, bad faith, and the like as checks on insurers (46 Cal.3d at pp. 304-305).
In the wake of Moradi-Shalal, numerous plaintiffs sought to recoup the same compensatory and punitive damages previously afforded under a Royal Globe claim by suing under the UCL. The Courts of Appeal uniformly rejected these suits, typically without detailing their reasoning. (See, e.g., Maler v. Superior Court (1990) 220 Cal.App.3d 1592, 1597-1598 [270 Cal.Rptr. 222]; Safeco Ins. Co. v. Superior Court (1990) 216 Cal.App.3d 1491, 1494 [265 Cal.Rptr. 585]; Industrial Indemnity Co. v. Superior Court (1989)
Twice in the first half of the 1990s we had occasion to discuss these post-Moradi-Shalal Court of Appeal decisions. In Rubin v. Green (1993) 4 Cal.4th 1187, 1202 [17 Cal.Rptr.2d 828, 847 P.2d 1044], we considered whether a party could sue under the UCL for conduct immunized from suit by Civil Code section 47, subdivision (b), and concluded he could not. (Rubin, at pp. 1200-1203.) Rubin foreshadowed (and indeed was relied upon by) our later decision in Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 182-184 [83 Cal.Rptr.2d 548, 973 P.2d 527], which clarified that UCL suits are precluded when the Legislature immunizes particular conduct from suit. In Rubin, we cited by analogy the Court of Appeal decisions rejecting UCL actions in the wake of Moradi-Shalal. In doing so, we simply assumed, but had no occasion to decide, that the situation they dealt with was analogous — that Moradi-Shalal involved an "absolute barrier[] to relief" just as Rubin itself did. (Rubin, at p. 1201.)
Two years later, in Manufacturers Life Ins. Co. v. Superior Court (1995) 10 Cal.4th 257 [41 Cal.Rptr.2d 220, 895 P.2d 56], an antitrust case, we considered and rejected the argument that the Act "supersede[s] or displace[s] insurance-industry-related claims" under the Cartwright Act and the UCL. (Manufacturers Life, at p. 263.) Instead, "the Legislature intended that rights and remedies available under those statutes were to be cumulative to the powers the Legislature granted to the Insurance Commissioner" to enforce the Act. (Manufacturers Life, at p. 263.) Moradi-Shalal stood as no bar; because "[w]hether statutory causes of action under the Cartwright Act and the UC[L] may be stated against an insurance company was not an issue" there, Moradi-Shalal's repudiation of a right of action under the Act itself did not preclude a right of action under the UCL. (Manufacturers Life, at p. 280.)
The Court of Appeal in Manufacturers Life had distinguished the earlier Court of Appeal decisions rejecting damages suits under the UCL for violations of the Act by concluding that, even if one could not predicate a UCL claim on violation of the Act, one could still predicate a UCL claim on violations of the Cartwright Act (Bus. & Prof. Code, § 16720 et seq.), which was not superseded by the Act. We approved that distinction, agreeing that a UCL claim could be based on Cartwright Act violations. (Manufacturers Life,
To be sure, as early as 1983 it had been established that whether a private cause of action could be implied under a predicate statute was immaterial to the availability of a UCL claim because the UCL allowed redress of unlawful business practices whether or not the underlying statute was privately enforceable. (Committee on Children's Television, Inc. v. General Foods Corp., supra, 35 Cal.3d at pp. 210-211.) In Stop Youth Addiction, however, we directly confronted the contention that the omission of a private right of action to enforce particular statutory requirements sufficed to preclude suit under the UCL. We rejected the argument that Rubin v. Green, supra, 4 Cal.4th 1187, Manufacturers Life, supra, 10 Cal.4th 257, and the post-Moradi-Shalal Court of Appeal cases established that point. Instead, we confined them to supporting "the proposition the UCL cannot be used to state a cause of action the gist of which is absolutely barred under some other principle of law" (Stop Youth Addiction, supra, 17 Cal.4th at p. 566), without, of course, revisiting whether Moradi-Shalal, supra, 46 Cal.3d 287, actually contained such an absolute bar. And because nothing in the history surrounding the statute there sued upon, Penal Code section 308, indicated the Legislature had intended to foreclose suit under other statutes, we concluded a UCL claim could go forward. (Stop Youth Addiction, at pp. 573-574.)
To similar effect in Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., supra, 20 Cal.4th 163, we offered our clearest articulation of the governing principle: "A plaintiff may thus not `plead around' an `absolute bar to relief' simply `by recasting the cause of action as one for unfair
Even legislative repudiation of a private right of action under a statute need not foreclose a UCL claim based on violations of that statute. As we unanimously explain in another case today, a UCL claim may be based on a federal statute notwithstanding the congressional repeal of a previously existing private right of action under that statute. (Rose v. Bank of America, N.A. (2013) 57 Cal.4th 390, 393, 397-398].)
Collectively, these cases stand for the proposition that a UCL cause of action will not lie to enforce violation of a particular statute only if the Legislature affirmatively intended to preclude such indirect enforcement. It is not enough that the Legislature in drafting the predicate statute simply failed to "provide for the action." (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., supra, 20 Cal.4th at p. 183.)
From these precedents, it is apparent that UCL "unlawful" prong claims predicated on violations of the Act are, in fact, permissible. First, Moradi-Shalal, supra, 46 Cal.3d 287, held only that the Legislature did not create a right of action in the Act, not that it intended to foreclose any private right of action. Second, it follows from Stop Youth "Addiction, supra, 17 Cal.4th at pages 561-567, 573-574, and Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., supra, 20 Cal.4th at pages 182-184, that such an omission is insufficient to preclude suit. Third, any contrary language in our cases suggesting a broader reading of Moradi-Shalal was dicta that failed to account for the distinction later drawn in Stop Youth Addiction and other cases between failing to create a right of action and foreclosing one. (See Manufacturers Life Ins. Co. v. Superior Court, supra, 10 Cal.4th at pp. 266, 283-284; Rubin v. Green, supra, 4 Cal.4th at pp. 1201-1202.) And fourth, the concern expressed in Court of Appeal cases decided in the immediate aftermath of Moradi-Shalal that plaintiffs should not be able to resurrect a Royal Globe damages action is addressed by our subsequent conclusion that damages are unavailable under the UCL. (Bank of the West v. Superior Court, supra, 2 Cal.4th at p. 1266.) Thus, to allow a UCL "unlawful" claim predicated on a violation of the Act would not contravene
Liu, J., concurred.
The concurring opinion rejects this proposition, arguing that neither Manufacturers Life nor Moradi-Shalal preclude UCL claims based on UIPA violations. However, were that the case, in Manufacturers Life we would not have limited the grounds for the UCL cause of action to the plaintiff's Cartwright Act claims. Our exclusion of the UIPA claims from the analysis was no oversight. (Manufacturers Life, supra, 10 Cal.4th at pp. 283-284.) And in Moradi-Shalal, we identified administrative remedies and traditional common law actions as viable avenues for restraining unfair insurance practices, without mentioning the UCL. (Moradi-Shalal, supra, 46 Cal.3d at pp. 304-305.) We approved the reasoning of Justice Richardson's Royal Globe dissent, holding that the UIPA contemplates only administrative sanctions for practices amounting to a pattern of misconduct. (Moradi-Shalal, at pp. 295-296, 303-304.) It is clear from Moradi-Shalal that when the UIPA was enacted, "the Legislature ... considered a situation and concluded no action should lie ..." on behalf of private parties, and therefore "courts may not override that determination" by entertaining UCL actions predicated on UIPA violations. (Cel-Tech, supra, 20 Cal.4th at p. 182.)
