Unfair Competition By statute, California prohibits the following types of unfair competition as (1) any unlawful, unfair or fraudulent business

act or practices; (2) any act prohibited by Business and Profession Code section 17500; or, (3) any unfair, deceptive, untrue or misleading advertising. This law is broad in scope. It is not confined to anticompetitive business practices, but is also directed toward the public’s right to protection from fraud, deceit and unlawful conduct. It is not a substitute for contract or tort actions, but provides an equitable means through which both public prosecutors and private individuals can bring suit to prevent unfair business practices and restore money or property to victims. Courts have repeatedly recognized the importance of private enforcement efforts. As noted below, it can be an effective tool with respect to claims arising from mortgage originations, predatory lending practice or foreclosure related actions. A plaintiff must have standing to assert a cause of action for unfair competition; the same requirements apply to causes of action under section 17200 and 17500. Plaintiff must show (a) injury in fact, (b) lost money or property and (c) causation. Where the alleged harm is economic injury, injury in fact and lost money or property are one and the same. There are innumerable ways in which economic injury may occur; a plaintiff may (1) surrender more or acquire less than he or she otherwise would have; (2) have a property interest diminished; (3) be deprived of money or property; or, (4) enter into an unnecessary transaction that costs money or property. First, an unfair business act or practice is broadly defined. The broad language enables courts to deal with the innumerable new schemes which the fertility of man’s invention would contrive. An unfair business act or practice need only meet one of the three statutory criteria: it can either be unlawful, unfair or fraudulent. Since 1992 even a

unfair or fraudulent. are not included. Liability requires personal participation in the act. civil. however. and others involved in the origination. In evaluating . real estate agents. Past and completed acts are included and it need only impact a single victim. A breach of contract may form the basis of an unfair practice only if it constitutes conduct that is also unlawful. cannot defeat such a claim. Where a federally regulated institution or a federal law is involved. Fair Housing Act [prohibits lending and other housing discrimination]. even it one never intends to enforce it satisfy the unlawful prong. lending and foreclosure process would be covered. All elements of the borrowed law must be established. Home Ownership and Equity Protection Act [regulates specific high cost loans]. but an employer is bound by the doctrine of respondeat superior. Specific defenses available against a violation of the borrowed are applicable to the unlawful practice claim. even if they are nonprofit entities. regulatory or common-law and court-made rules. Lenders. An act or practice is unlawful if it violates any federal. and the Real Estate Settlement Procedures Act [regulates loan documentations and closing process and limits markups and kickbacks]. Assertion of a contract right one does not have or inclusion of an unlawful provision in a contract. title companies.single act may create liability. Governmental entities. however. state or local law. Equitable defenses. including criminal. lending and foreclosure process include: the Truth in Lending Act [mandates disclosures and requires a properly completed and delivered right to rescind notice]. Possible federal violations arising in the origination. Violations of laws for which there is no direct private right of action be redressed as an unlawful business act or practice. there is a potential for federal preemption. may engage in unfair competition. Persons or entities that deal with the public.

a law must actually bar the action or clearly permit the conduct. Fair Debt Collection Practices Act [regulates manner in which debts are collected]. No prior determination of unfairness is required and industry custom is no defense. however. federal preemption issues may arise. however. There is. (b) the injury to outweigh countervailing benefits to consumers or competition. (c) the injury could not have readily been avoided. Given this uncertainty. provide for the action or prohibit the challenged conduct. State laws that may apply include Home Equity Sales Contract Act [regulating transfers of homes in foreclosure]. Conduct that is lawful. Some courts have adopted the test used by the Federal Trade Commission that requires (a) the injury to be substantial. cannot be unfair. Some courts require that unfairness must be tethered to some legislatively declared policy or proof of some actual or threatened impact on competition.potential claims. Foreclosure Consultant Act [regulating persons who assist persons in foreclosure]. however. This safe harbor rule does not prohibit an action because some other statute on the subject does not. itself. and Fair Employment and Housing Act [prohibits lending and other housing discrimination]. and. This prong sweeps within its scope acts and practices not specifically proscribed by any other law. Falsifying loan application to qualify a borrower and . some uncertainty about the appropriate definition in the consumer context. courts may apply all three standards before dismissing a claim. The unfairness prong is intentionally broad so as to allow courts maximum discretion to prohibit new scheme to defraud. justifications and motives of the alleged wrongdoers. Other courts adhere to a balancing test that weighs the unfair practice’s impact on its alleged victim against the reasons.

An act is fraudulent if members of the public are likely to be deceived. but will nonetheless tend to mislead or deceive. Charging periodic inspection fees to delinquent residential borrowers is not an unfair practice. rather than the least sophisticated consumer. causation and actual reliance. perform services. the standard is that of the ordinary consumer acting reasonably under the circumstances. Statements made to individuals about a loan come within the meaning of section 17500. Business and Profession Code section 17500 prohibits the making of false or misleading statements intended to induce any person to dispose or real or personal property. for purposes of standing the plaintiff. the manner in which a third party guarantee in connection with a nursing home was found deceptive. whether in an individual case or class action. Allegations that a lender placed borrowers into unsuitable mortgage product resulting in loss of equity may be an unfair practice. A borrower has an . The fraud prong has little resemblance to common law fraud. For purposes of standing. It does not require advertising or even a representation. misleading is based on a reasonable consumer standard. Second. actual deception or confusion is not required. however.deceptively inducing a borrower into a loan with unfavorable terms has been found to be unfair and fraudulent. No specific intent to deceive is required. but those statements that may be accurate on some level. Unless the representations target a particularly vulnerable group. Unconscionable terms in a contract may constitute an unfair practice. In the absence of evidence that the advertising targeted particularly vulnerable consumers. or enter into any other related obligation. Thus. It encompasses not just false statement. Use of words that have double meaning cannot escape liability. must demonstrate injury. A statement is false or misleading if members of the public are likely to be deceived.

Since there is no specific statute of limitations that governs claims under section 17500. it is assumed that it is governed by the shorter. Unless the action is brought by a public prosecutor. The statute of limitations is four years under section 17200.actionable claim against a lender for as hidden fees. This result may be different if the borrowed statute is a federal statute which has a shorter limitations period then based on principles of preemption the shorter federal statute controls. False advertising to quote a certain interest rate and then compute it on 360-day year rather than a 365 day year even though TILA disclosure accurately reflected actual rate. A false or misleading statement that is actionable under the Landham Act is also actionable under section 17500. These statutes of limitations generally govern over any shorter statute of limitations. without having performed any appropriate analysis is also actionable. Finally. A systematic scheme by lenders to steer borrowers into loans that were the most lucrative to the lender on the secondary market by representing to borrowers that it was the best loan for the borrower. a false advertising under section 17500 is also an unfair practice under section 17200. Standing to assert such a cause of action requires that the plaintiff have a transactional nexus with the underlying act or practice such that he or she has suffered injury in fact and has lost money or property as a result of the unfair competition. These statutes of limitations should run from the date of discovery. Such actions can be maintained as a representative or class action if the requirements of a class action are met and the representative plaintiff has standing. general three-year statute of limitations provided in Code of Civil Procedure section 338(h). remedies are limited to equitable relief in the form of .

Attorney fees are not recoverable unless they are otherwise authorized by contract or a statute. Trinity Management Services (2000) 23 Cal. 745. Code §17200. Cellular (1999) 20 Cal. statutory penalties and punitive damages are not recoverable by a private party. While the distinction between damages and restitution can be elusive. 520. Threshold Enterprises Ltd.4th 499. Squaw Valley Ski Corp. 112.4th 310. & Prof.Rptr. Morgan v. Kwikset Corp. 249 Cal.Rptr. Id. damages are not recoverable.Rptr. Barquis v. 453. absent a showing that past violations will probably reoccur. 66 Cal. 96 Cal. L. 872. Injunctive relief is not available to wrongs that have been completed. Nike.4th 798.3d 94.3d 118. Merchants Collection Assn (1972) 7 Cal.4th 116. v.4th 1305.2d 29. Code §17203.Rptr.3d 296. Bus. 119 Cal.App. (2003) 29 Cal.Rptr.4th 1146. 120 Cal. (1988) 203 Cal.Rptr. Inc. Superior Court (2011) 51 Cal. one is not entitled to a jury trial.2d 548. The remedies are cumulative to those impose under other laws. Ca. 63 Cal.4th 939. 819.Rptr. Inc. Since these private remedies are not punitive.4th 1134. Bus. .4th 163. 325. UFW v. Cel-Tech Communications v.Rptr. 90 Cal. Kraus v. v.Rptr. (1007) 54 Cal.Rptr.injunction. 99 Cal.3d 74.App. As these actions are equitable in nature. Korea Supply Co. (2007) 155 Cal. 125. & Prof. Kasky v. Farmers Group.3d 543. 180.Rptr. 1345.3d 432. 131 Cal. 1254.. 1150. AT&T Wireless. Allied Grape Growers v. Bronco Wine Co. Buckland v.4th 1235.A.App.App. 100 Cal. Lockheed Martin Corp. disgorgement of moneys received and/or restitution.3d 589.2d 251.3d 768. (2002) 27 Cal. 83 Cal.App.2d 485. Dutra Farms (2000) 83 Cal. Troyk v.Rptr. Hewlett v. 949. (2009) 171 Cal. Ca.App. (2009) 177 Cal. Inc. 1163-1164. the goal of restitution is to restore plaintiff to the status quo ante. 101 Cal.

Ca. 902. 22 Cal.Supp. 80 Cal.4th 528. Ca. Duz-Mor Diagnostic Laboratory (1998) 68 Cal. 85 Cal.2d 1168. §1639.3d 1. New Century Mortgage (9th Cir. Wells Fargo Home Mortg.4th 832. 976 [TILA violations not preempted but conduct lawful under TILA is preempted].Supp. Blue Shield of Cal. Inc. 12 U. Inc. Home Savings of Amer. Podolsky v.D.S. 33 Cal.4th 1453. Grimes v. § 2601. 42 U. 645. 811.D.4th 26. et seq. People v. Quelimane Co.App. et seq. (1966) 50 Cal.3d 1164. 186 Cal.3d 370.4th 632. 77 Cal.Rptr.Rptr. Ticconi v. Gov.V. Co. Holding Co. 2008) 605 F. v. South Bay Chevrolet v. (C. N. 2008) 531 F.3d 549. (C. et seq. Inc. 838-839.3d 1007. Code §1788. 11711172. Crawford v. Amparan v. 2003) 340 F. Velazquez v.App.. National Ass’n of Realtors (1981) 120 Cal.Supp. (1984) 160 Cal. (2005) 125 Cal. Inline Inc.App.D. 642. Corp.App. §1601. §3601. First Healthcare Corp. 878-879.Rptr. Ins.Rptr.4.Rptr. Wells Fargo Bank.Rptr.4th 638.. (C.2d 419. 15 U. Ca. 36 Cal.C..3d 626.3d 903. 473474.D. General Motors Acceptance Corp. 43. v. v Stewart Title Guaranty Co. 918. Farmers Group. 72 Cal.Rptr. Ca.C. 386. A. 554-556 [national bank]. et seq.3d 459. Ca. Ca. GMAC Mortg. 673.S. (9th Cir.Supp. 58 . Ca. People v. 15 U. Plaza Home Mortg.Puentes v.4th 654. Co. People for Ethical Treatment of Animals. et seq. (2008)160 Cal.C. 728.3d 900. Smith v. Ca. Code §1695.App. 1226. 15. People v..Rptr. McKale (1975) 23 Cal. Martinez v. 647.App. Milk Producers Advisory Bd. Civ.D. 203 Cal. 1010.Rtpr.3d 216 Saunders v. 866 [Christian Yellow Pages]. Code §2945. (1998) 19 Cal. (2008) 160 Cal. Morales v. High-Line Medical Instruments. People v. Wells Fargo Home Mortg. 1480.Rptr. 207 Cal.App. Toomey (1984) 157 Cal.C. 155. Code §12955. Civ. v. (C. Inc. 72 Cal.Supp.3d 653.2d 961..4th 895.S.2d 709. Countrywide Home Loans. Inc.Rptr.4th 861.App.Rtpr. Inc.2d 1225.A.4th 871. 2008) 678 F.App. 635.3d 888. Summit Tech.App. L.Rptr. 2010) 598 F. 23 Cal. Tomson (1984) 160 Cal. 1996) 933 F. Conder v. 206 Cal. Pines v. (N. 870. (2005) 125 Cal.App. (1999) 72 Cal.App. Superior Court (1994) 27 Cal.2d 438. Ca. Cal. et seq. 943.App. 1068. 159 Cal. 1175 [national savings and loan]. 2010) 680 F. Civ.Rptr. 543.S.2d 1044.2d 301. (2006) 135 Cal.

First Healthcare Corp. 642. In re Tobacco II Cases (2009) 46 Cal. 48 Cal. (2002) 27 Cal.2d 389. Countrywide Home Loans. JP Morgan Chase Bank. 121 Cal.Rptr.Rptr.Inc.Rptr.Rptr.3d 25.App.4th 508. 58 Cal.4th 1394. (2006) 135 Cal.D. LEXIS 46043 *16-17 [unfair if can be tether to any underlying law].2d 463.4th 939.2d 374. 110.Rptr. 1400. (2003) 105 Cal. (2002) 98 Cal. Bd. Albertson’s Inc. Corp. (1999) 20 Cal.4th 298. 182. 504. Camacho v. Ca.3d 36. Automobile Club of S. Hauk v. 128 Cal.Inc. Bank of America (976) 15 Cal. 2009) 263 F. Ca.Rptr. American Sterling Bank (S. 197 Cal. Colgan v. Procter & Gamble Co.2d 89. Gregory v. Lavie v.Rptr.App.App. Bear Stearns Residential Mortg. Kasky v.App. (2006) 142 Cal.4th 1158 1170.S. Inc. 649.Rptr. Walker v. (2002) 104 Cal.Cal. 379. Cal.3d 770. 177 Cal. People v. 106 Cal.Rptr. Co. Quelimane Co.2d 548. (1996) 50 Cal. Dist. Inc. James (1981) 122 Cal. 591.Rptr. 203 Cal. Camacho v. Drum v.3d 1. Chern v.App.Rptr. 16. 876.D. Co. 256-257. Countrywide Home Loans. Fremont Life Ins. Hardy v. 345.Rptr. 187. 519.4th 496.4th 632. 48 Cal. (2006) 142 Cal. 696699. Los Angeles Cellular Tel. (1983) 35 Cal. 83 Cal.App.3d 296 Cal-Tech Communications. Podolsky v. 2009) 552 F.App.2d 89. 854. 1122.App. Indymac Federal Bank (E. Toomey (1984) 157 Cal.Rptr.4th 247. 949.4th 163.Rptr. 121 Cal. Similia v.App. 128 Cal. v.S.D.3d 1114. 55.3d 770. Crocker Nat’l Bank (1985) 38 Cal. 2010) 2010 U. Sanchez v.R.4th 845. 38 Cal.Rptr. (S.2d 79. Nike.4th 663. Ca. Claibourne (1935) 3 Cal. 110. Cal. 781. 1403.2d 135.3d 197. 927-928. People v. Walker v. Leathern Tool Group. San Fernando Valley Bar Ass’n (2010) 182 Cal. Co.Rptr.Rptr. (9th Cir.4th 1394. 127 Cal.D.Rptr. Committee on Children’s Television v.App. 119 Cal.3d 46. See American Philatelic Soc. 53-36. (2002) 104 Cal.App. Perdue v. of Chiropractic Examiners (1963) 216 Cal. Dist. 129 .App. 709. Automobile Club of S.3d 913. Stewart Title Guar. 93 Cal.4th 1158 1175-1178.4th 26.3d 559. People v. 216 Cal. 211.3d 866.Rptr. 31 Cal. 77 Cal. General Foods Corp. 679. v. LEXIS 108440 *14-16 [dismissed because not sufficient allegations that misconduct tethered to underlying law]. 586. 2010) 2010 U. (2003) (1998) 19 Cal. v. 46 P. Garvai v.2d 689.Rtpr. Inc.2d 79.App. (2002) 98 Cal. 312-314.

127 Cal. 2008) 514 F.D.Rptr. 30 Cal.Rptr.4th 1389.4th 986. Perot Systems Corp.4th 163.2d 253 [public prosecutor can recover statutory penalties].App. 1076.4th 912. Clark v. 2005) 2005 US Dist LEXIS 39222 *40 n 17 [conceding 3 year statute applies].Rptr.Supp. supra. High-Line Medical Instruments. Bus. Summit Technology.2d 296. 771. Holding Co. Fremont Life Ins.D.2d 548. Guardian Life Ins. 96 Cal.4th 1305. Orange County Charitable Services (1999) 73 Cal. (2010) 50 Cal. 13451350. 920-921. (2008) 167 Cal. N. People v. Co.3d 216. Harper v.Rptr. Purolator Air Filtration Products Co. but see Salenga v. Cortez v.Rptr.3d 386 [no discovery rule].4th 895.App.D. 943. Inc. 173. Madrid v. Bank of America Corp.2d 518 [wage claim not subject to shorter Labor Code statute of limitations].4th at 532. (2000) 23 Cal. 107 Cal.Rptr. 1007 n. aff’d (9th Cir. 465. 23 Cal.3d 589. Inline. 2009) 609 F. 90 Cal. 104 Cal. (2005) 125 Cal. Chase Home Financial (N.Supp. Superior Court (1992) 2 Cal.App. Inc. L.App. 178-179.D. 1220. Mitsubishi Motors Credit of America.Rptr2d 29. Jefferson v. 119 Cal. Korea Supply Co. Household Fin. Pineda v. v. v. Co. 1266. Troyk v.2d 1201. 903. 614-615. Brewer v. 996. (2003) 29 Cal. Ca.4th 1054. Inc.App.4th 1134. Lockhead Martin Corp. Broberg v.4th 1254.D. 1122. 110. 2009) 601 F.3d 876.App.A. 918. Leyvas v. Ca.3d 866. Bank of America (1976) 15 Cal.Rptr. (S.2d 1315. 84 Cal.Cal.V.App.App.4th 440. Ca. .3d 532. 2007) 2007 US Dist. Ca.Rptr.A. Superior Court (2010) 50 Cal.Rptr. Indymac Bank (E. Ca. compare People v. (S. (2009) 171 Cal. Corp. Wahl (1940) 39 Cal. LEXIS 94652 *50.App.Rptr.Rptr. People v.Rptr. (2005) 130 Cal.App.Rptr. 950. Co. 1401-1402 n.4th 605.975-976. Cazares v. 121.3d 210. 24 Hour Fitness.L. 90 Cal.4th 966. 87 Cal. 876. (C. of America (2009) 171 Cal. 773.3d 1001.Supp. A. Inc. & Prof.4th 939. Code §17208. Ca.Supp. 1996) 933 F.14. Silvas v.2d 538. Inc. Bus. Cellular (1999) 20 Cal. v. 131 Cal. 83 Cal.3d 925.2d Supp. Farmers Group. 112 Cal. Bank of the West v. 10 Cal. Nike.2d 1104.D. 1146-1147.Rptr. (2002) 27 Cal. Code §17205. Bank of America. 3. Cel-Tech Communications v. (2010) 183 Cal.4th 163. (C. Kasky v. 117 Cal.. & Prof. 2006) 421 F. Inc.2d 486.3d 377.Rptr. E*Trade Mortgage Corp. Chern v.

284-285. 51 Cal.4th 278.App. Superior Court (2006) 145 Cal.3d 519.Hodge v.Rptr. .

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