Saturday, September 29, 2007

Restitution Under UCL Is Not Limited to Direct Purchases

A Plaintiff Can Seek Restitution of Money That He Spent Because of Alleged Unlawful Practice

Shersher v. Superior Court (Sept. 10, 2007, B195317, Second District)
11 p. opinion

Plaintiff Shersher brought a consumer action against Microsoft. He sought restitution. Shersher alleged that he, and many others, had paid money to purchase Microsoft wireless products because false or misleading statements on the product packages described the products as 11 Mbps or 54 Mbps. But, the plaintiff alleged, the products were not able to transmit consumer data at these speeds.

The plaintiff had purchased Microsoft's product from a retailer. Microsoft brought a motion to strike the plaintiff's claim for restitution on the grounds that, under the UCL, restitution was limited to purchasers who had bought the product directly from Microsoft. Microsoft argued that this requirement could be found in Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134. The trial court agreed with Microsoft's interpretation and granted the motion. That ruling came before the Court of Appeal on plaintiff's petition for a writ of mandate.

Microsoft's authority for the limitation to direct purchasers was a single sentence in Korea Supply (29 Cal.4th at 1149). However, in Korea Supply one competitor had sued another alleging that the defendant company had used illegal bribes to obtain a contract for which the plaintiff company had submitted the lowest bid.

The Court of Appeal rejected the alleged "direct purchase" requirement. Plaintiffs in UCL actions are not permitted to obtain "restitution" of money in which they never had an ownership interest (such as the money paid to a competitor by a third party). But Shersher could seek restitution of money that he had owned and had paid to the retailer in order to purchase the Microsoft product. The crucial requirement for restitution was that the plaintiff had at one time owned the money.
Justice Kriegler wrote the opinion. Presiding Justice Turner and Justice Armstrong concurred.

Comment: This opinion is the source of the quote of the week for the week of September 10th on the Civil Litigation Quote of the Week blog.

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