Consumer Law

restitution unavailable in fed ct when damages are adequate, no matter what Cal state cts say

By Rebecca Tushnet

Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020)

In this amended opinion (original summarized here), the court elaborates on its reasoning that Sonner couldn?t abandon her damages claim on the eve of trial in this false advertising case and seek only restitution, because equity requires that legal remedies be inadequate and she abandoned her legal damages claim:

At bottom, ?[t]hat a State may authorize its courts to give equitable relief unhampered by? the ?restriction[ ]? that an adequate remedy at law be unavailable ?cannot remove th[at] fetter[ ] from the federal courts.? Guided by that instruction, we hold that the traditional principles governing equitable remedies in federal courts, including the requisite inadequacy of legal remedies, apply when a party requests restitution under the UCL and CLRA in a diversity action.

Side note: I wonder how federal courts treat the ?traditional principles governing equitable remedies in federal courts? when it comes to disgorgement in trademark cases. Disgorgement supposedly just became much easier to get, and if courts continue to believe that trademark goodwill is a mysterious entity, distinct from all the other parts of a business, then perhaps they will routinely find damages inadequate. But that?s always been a slogan rather than a reasoned decision, and plaintiffs pressing disgorgement demands in marginal cases may lead courts to see that.

Anyway, ?Sonner must establish that she lacks an adequate remedy at law before securing equitable restitution for past harm under the UCL and CLRA.? But she conceded that she sought the same sum in equitable restitution as ?a full refund of the purchase price??$32,000,000?as she requested in damages to compensate her for the same past harm. There was no reason damages couldn?t be adequate, even if California state courts wouldn?t impose the same rule.

Full post as published by 43(B)log on September 24, 2020 (boomark / email).