Class Action

The UCL and the "business judgment rule": Hill v. State Farm Mutual Auto Ins. Co.

By Kimberly A. Kralowec

A lengthy opinion on the "business judgment rule" concludes with this paragraph:

Plaintiffs asserted three theories of liability: breach of contract, breach of the covenant of good faith and fair dealing, and violation of the Unfair Competition Act. The claim for breach of contract (duty of care) is precluded by the business judgment rule. The covenant claim is not an independent cause of action under Illinois law. (See State Farm II, supra, 114 Cal.App.4th at pp. 451?453.) And liability imposed by the California Unfair Competition Act requires the commission of an ?unlawful, unfair or fraudulent business act or practice.? (Bus. & Prof. Code, § 17200; see Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 383.) State Farm did not engage in such conduct. Plaintiffs are therefore not entitled to an accounting. The trial court properly granted summary judgment.

Hill v. State Farm Mutual Auto Ins. Co., ___ Cal.App.4th ___ (Sept. 19, 2008) (Second Appellate District, Division Three) (slip op. at 59).

Full post as published by The UCL Practitioner on September 22, 2008 (boomark / email).