Appellate Law -- Aug 06, 2013

by Manatt, Phelps & Phillips, LLP

In an opinion issued late last week, the California Supreme Court interpreted the Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq. (the “UCL”), to allow a UCL unlawfulness claim based on a “borrowed” federal law, even though Congress had repealed that law’s private enforcement provision. Rose v. Bank of America. N.A.,__ Cal. 4th __, 2103 WL 3942612. The Court based its holding at least in part on the fact that the federal statute contained an express “savings clause,” stating that state laws consistent with the federal law were not superseded.

Rose concerned a complaint brought under the UCL for a bank’s alleged violations of disclosure requirements of the federal Truth in Savings Act, 12 U.S.C. § 4301 et seq. (“TISA”). Originally, TISA included a provision authorizing private civil actions for damages, but that provision was repealed as of 2001. The defendant bank in Rose argued that the repeal of the private enforcement provision meant that Congress intended to foreclose private suits. In accordance with prior California Supreme Court jurisprudence, the bank argued, a plaintiff could not “borrow” TISA as a basis for a UCL unlawfulness claim, because that would “plead around” Congress’s decision to preclude a private action.

However, as the Supreme Court explained, TISA contains a separate provision stating that TISA does “not supersede any provisions of the law of any State relating to [disclosure requirements such as those in TISA], except to the extent that those laws are inconsistent with the provisions of this subtitle, and then only to the extent of the inconsistency.” 12 U.S.C. § 4312. Because this provision survived the repeal of the private enforcement provision, the Court held that it was evident that Congress in fact did not intend to foreclose private suits under state law that challenged the same practices made unlawful by TISA. A UCL claim based on requirements borrowed from TISA was not “inconsistent” with TISA for the purposes of the savings clause. (The Court declined to opine on whether the issue concerned preemption, deeming it irrelevant to its analysis.)

The Court rejected the argument that the UCL could not borrow directly from a federal law that Congress had decided could not be enforced by private parties. The Court concluded that the argument elevated form over substance, because the UCL suit was not to “enforce” TISA but rather to remedy unfair competition. Similar to the UCL claim based on a borrowed Penal Code statute that the Court allowed in Stop Youth Addiction, Inc. v. Lucky Stores, Inc., 17 Cal. 4th 553 (1998), a UCL claim based on TISA does not enforce violations of the borrowed law, but rather only uses the borrowed law to define conduct that constitutes “unlawful” competition under the UCL. Thus, the Court said, “we have made it clear that by borrowing requirements from other statutes, the UCL does not serve as a mere enforcement mechanism” for the borrowed laws. Rose, 2013 WL 3942612, at *3.

Because the plaintiffs were not seeking to enforce or recover damages under TISA, but only to obtain equitable remedies under the UCL for conduct made unlawful by TISA, their suit was fully consistent with TISA – especially since “Congress expressly left the door open for the operation of state laws that hold banks to standards equivalent to those of TISA.” Rose, 2013 WL 3942612, at *3.

The Court also rejected a comparison to actions under the federal civil rights statute, 42 U.S.C. § 1983, which likewise are grounded in violations of other laws and which are precluded where Congress’s actions indicate an intent to prohibit private suits. Here, because of TISA’s express “preservation of state law alternatives,” there was no suggestion that TISA’s enforcement provisions are exclusive. Rose, 2013 WL 3942612, at *4. In addition, the UCL provides remedies that are cumulative to those provided by other law, and the plaintiffs sought only equitable remedies allowed by the UCL. It was unnecessary for the Court to consider whether a state-law suit for damages would be consistent with TISA and Congress’s repeal of the damages provision, because the plaintiffs did not seek – and the UCL does not provide – damages.

While the Rose opinion repeatedly references TISA’s savings clause as evidence that Congress did not intend to preclude state-law suits based on violations of TISA, the opinion is silent as to whether and how its analysis might have differed had TISA not contained that express preservation of state-law suits. Thus, while Rose appears to sweep broadly by opening up new avenues for creative uses of the UCL, its reach in fact may be narrow. By its terms, Rose should be limited to allowing UCL claims based only on borrowed federal laws where there is indication that Congress precluded, at least to some extent, private enforcement and also included a clause in the statute that expressly protects consistent state laws.

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.

© Manatt, Phelps & Phillips, LLP | Attorney Advertising

Written by:

Manatt, Phelps & Phillips, LLP

Manatt, Phelps & Phillips, LLP on:

Readers' Choice 2017
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 using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*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.