California's Fourth Appellate District Holds That Named Plaintiffs In Putative Class Actions Alleging Misrepresentation And Deception Under The UCL'S "Unlawful" Prong Must Plead Actual Reliance


On April 19, 2010, California?s Fourth Appellate District decided two companion cases – Durell v. Sharp Healthcare, --- Cal.Rptr.3d ----, 2010 WL 1529322, Cal.App. 4 Dist., April 19, 2010 (NO. D054261) and Hale v. Sharp Healthcare, --- Cal.Rptr.3d ----, 2010 WL 1529329, Cal.App. 4 Dist., April 19, 2010 (NO. D054637) – that mark a potentially significant development in pleading standards under California's Unfair Competition Law, California Business & Professions Code sections 17200, et seq. (“UCL”). Broadly speaking, both Durell and Hale stand for the proposition that named class plaintiffs alleging a UCL violation under the “unlawful” prong of the statute must now also plead “actual reliance” when the conduct challenged involves “misrepresentation and deception.” Stated another way, plaintiffs alleging unlawful conduct stemming from misrepresentation and deception under the UCL now must actually have relied on the defendant's alleged misrepresentation; proximate cause or a mere “factual nexus” is insufficient. Both decisions extend the reasoning of the California Supreme Court's recent decision in In re Tobacco II Cases (2009) 46 Cal.4th 298 (Tobacco II), which addressed the requirements for pleading standing under the UCL's “fraud” prong, to UCL class actions brought under the “unlawful” prong, at least where the conduct challenged involves misrepresentation and deception.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sheppard Mullin Richter & Hampton LLP | Attorney Advertising

Written by:


Sheppard Mullin Richter & Hampton LLP on:

Popular Topics
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.