Class Action

Can a UCL "unlawful" prong claim be predicated on out-of-state law?

By Kimberly A. Kralowec

I have been asked before whether a UCL "unlawful" prong claim may be predicated on the defendant's violation of the law of another state. California case law is very clear that the UCL prohibits "any practices forbidden by law, be it civil or criminal, federal, state, or municipal, statutory, regulatory, or court-made." See, e.g., South Bay Chevrolet v. General Motors Acceptance Corp., 72 Cal.App.4th 861, 880 (1999). However, I could not think of any case that addressed whether another state's laws could form the basis of a UCL claim.

Then, a couple of weeks ago, I was doing research on another subject and I found a case from 2001 holding that the defendant's violation of Delaware law could also constitute a UCL violation:

As a preliminary issue, [defendant] Sematech argues that PSI's claim fails because it cannot rely on an out-of-state law as a predicate for a UCL claim. However, Sematech has not cited any authority, nor is the court aware of any, prohibiting PSI from doing so. Instead, California law on the UCL emphasizes the broad nature of a UCL claim. See Cel-Tech [Communications, Inc. v. Los Angeles Cellular Tel. Co.], 20 Cal.4th [163,] 181 [(1999)]; Hewlett v. Squaw Valley Ski Corp., 54 Cal.App. 4th 499, 531-32 (1997) (the "unlawful" practices prohibited by the UCL are "any practices forbidden by law, be it civil or criminal, federal, state or municipal, statutory, regulatory, or court-made") (quoting Saunders v. Sup.Ct., 27 Cal.App. 4th 832, 838-39 (1994)). Accordingly, the court finds that PSI may bring its UCL claim based on a violation of Delaware law. [FN18]

FN18. Norwest Mortgage, Inc. v. Sup.Ct., 72 Cal.App. 4th 214 (1999), relied on by Sematech, does not require a contrary holding. There, the question presented was whether a UCL action could be granted nationwide class certification when some of the actions complained of were performed out of state and effected out of state plaintiffs with no nexus to California. The court held that with respect to these claims only, the lack of any nexus to California made it inappropriate to apply the UCL. The court did not decide whether an out-of-state law could serve as a predicate for a UCL claim because no out-of-state laws were involved.

Process Specialties, Inc. v. Sematech, Inc., 2001 WL 36105562, *15 (E.D. Cal. Nov. 8, 2001). Does anyone have any other case law on this question?

Full post as published by The UCL Practitioner on February 21, 2008 (boomark / email).