Software Download Is Not “Goods or Services” under CLRA, but Third Party Payments Constitute “Restitution” under the UCL: Ferrington v. McAfee.

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Software now joins insurance and credit services on the list of intangible “goods or services” that fall outside the scope of California’s Consumer Legal Remedies Act (CLRA). The recent news from the Northern District,however, is not all good. Ferrington also involved a claim under the Unfair Competition Law (UCL)1 and held that “restitution” for purposes of a UCL claim encompasses monies paid to third parties so long as it is “reasonable to infer that the defendant indirectly received that money from the third party.” This decision marks a departure fromthe California Supreme Court’s decision in Korea Supply Co. v. Lockheed Martin, which essentially defined “restitution” under the UCL as the return of a direct, out-of-pocket loss. While a handful of courts have found room in Korea Supply for the recovery of indirect losses where the lost funds can be fairly traced back to the plaintiff, none have gone as far as Ferrington.

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