©2024 Seyfarth Shaw LLP www.seyfarth.com 2024 Cal-Peculiarities | 115 5.13 Unfair Competition Claims 5.13.1 The Unfair Competition Law (UCL) California’s vaguely worded UCL permits lawsuits for any “unlawful, unfair or fraudulent business practice.”349 Wage and hour plaintiffs often add a UCL claim to obtain a four-year statute of limitations instead of the threeyear statute that applies to Labor Code claims generally. The UCL authorizes only limited remedies: it does not permit damage awards or a remedy of nonrestitutionary disgorgement (e.g., return of profits that an employer has realized through Labor Code violations).350 Nor does the UCL authorize recovery of penalties due for untimely payment of termination wages.351 The UCL does authorize injunctive relief and any order “necessary to restore to any person in interest any money or property which may have been acquired by means of such unfair competition.”352 The California Supreme Court thus held that an action seeking restitution for unpaid overtime wages could proceed as a representative action under the UCL, and that UCL’s four-year limitations period applied even though the underlying wage claim was governed by a three-year statute.353 Plaintiffs have used the UCL to circumvent a defendant employer’s right to jury trial. The Court of Appeal has upheld a trial court’s decision to have a wage and hour claim tried to the court, without a jury, over the defendant’s objection, on the basis that the UCL claim encompassed the traditional wage and hour claims and that the UCL claim is one for equitable relief, for which no jury trial is available. The Supreme Court decided to review this decision (on other grounds), making it unfit to cite as precedential authority.354 Historically, a UCL action also permitted the plaintiff to seek restitution on a class-wide basis without satisfying the usual requirements of class certification.355 This rule was amended by Proposition 64, however, discussed below. 5.13.2 Proposition 64 and recent expansion of organizational standing Proposition 64, enacted by a vote of the People of California in November 2004, reformed the UCL by requiring that a private UCL plaintiff must have suffered an “injury in fact” and have lost “money or property” as a result of the challenged business practice, and by requiring that UCL plaintiffs suing on behalf of others must satisfy the requirements for a class action.356 Despite Proposition 64 and long-standing precedent denying associational standing,357 the California Supreme Court in California Medical Association v. Aetna Health of California Inc. ruled that organizations such as trade organizations have standing to pursue UCL claims if they incur costs while responding to perceived fraudulent, unlawful, or unfair trade practices that threatens their bona fide, pre-existing mission.358 While such an expansion is likely to have costly implications for employers facing a new brand of UCL plaintiffs, the Supreme Court limiting the opinion to organizational standing and expressly stating it did not expand associational or individual standing.359 In addition, the opinion made clear that an organization may not establish standing by diverting costs, and establishing standing, by preparing for UCL litigation.360 5.14 The Wage and Hour Class Action Explosion 5.14.1 California peculiarities favoring wage and hour class actions The number of class action lawsuits alleging California Labor Code violations has risen continuously over the last twenty years, with thousands pending every year. PAGA actions have also become prolific, and PAGA claims are regularly included in class action lawsuits, or filed alone. The following factors make class actions particularly attractive to California wage and hour plaintiffs: California wage and hour law differs from federal law in important ways, such that an employee who is exempt from federal overtime pay requirements often is not exempt under California law.
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