With his background as a brewery owner, business litigator Greg Nylen defends attorneys from “the triumvirate” of unfair-competition claims: the Unfair Competition Law, the False Advertising Law, and the Consumer Legal Remedies Act. Greg shares some trends, tips, and traps emerging in this space, including:
Courts are getting a bit more stringent on the “reasonable consumer test”—the determination whether a large portion of the target market is likely to be misled. Does “krab meat” come from crab? Are rumors that outlet stores carry nowhere-to-be-found merchandise actionable? Increasingly, the courts’ answer to these questions is: Come on.
But the “reasonable consumer” depends on what the product is. King’s Hawaiian bread is actually made in Torrance, CA. Does that matter? Probably not, because bread is bread. But what if the product was beer—where consumers may have more discriminating tastes, and the quality of the water matters to the product? The answer might change.
The “reasonable consumer” is often determined as a matter of law. So plaintiffs’ strategy is to rely on consumer surveys, to make the determination factual in nature. Does it work? As Greg explains, you may be able to attack the survey as a matter of law.
Litigation consumer claims in federal court? Beware of Article III standing. And bookmark the Sonner v. Premier Nutrition case—plaintiffs might not be able to get both legal and equitable relief in federal court.
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Welcome to the California appellate podcast, a discussion of timely trial tips and the latest cases and news coming from the California Court of Appeal, and the California Supreme Court. And now your hosts, Tim Kowal and Jeff Lewis.
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Tim Kowal 0:58
And today we welcome Greg Nylund. To the show, Greg Nylund, has more than 29 years experience in litigating complex commercial cases involving intellectual property entertainment, litigation, and anti counterfeiting enforcement for luxury brands, food and beverage law, class action, defense and general business litigation. Greg is the co host of the California unfair competition defense podcast, which provides in depth analysis of new developments in case law and defense strategies relating to California's unfair Competition and Consumer Protection statutes, including business and professions code 17 217 500 at SEC and the Consumer Legal Remedies Act. Greg, welcome to the podcast. Thanks for being here.
Gregory Nylen 1:38
Thank you appreciate it.
Tim Kowal 1:39
Was there anything in that short bio, that I read a view that that I left out for the good of the record for the good of our audience?
Gregory Nylen 1:45
I think I do a lot of intellectual property litigation. And I think you've covered that. But there's some overlap in the sense that trademark for litigation, for example, turns on the question likely to confusion, which in turn looks at what reasonable consumers believe. So there's a lot of overlap between the fraudulent prong of the UCL and trademark litigation in that sense. Yeah, so that's, that's a lot of my wheelhouse, too. And also, I've been practicing now I realized I have to update my bio, because I've been practicing for 32 years now going on 33. So that needs a little adjustment on my end.
Tim Kowal 2:16
Well, and at the end of your list of any practice areas, you include the umbrella term that business litigation, like, you know, like the 2 million or so others of us who do business litigation in the Los Angeles metro area, tell us how you develop your niche in unfair competition law, which is the subject that we'd like to talk about today, given that you recently published an article about recent trends and updates in that space, unfair competition law.
Gregory Nylen 2:38
Well, I've had two phases here at Greenberg, short one phase was I was a shareholder up in LA for 12 years and associate for a couple years before then, it was there when they opened the LA office from day one January 1 2000. And I lived in LA for 36 years where I went to film school before law school. And while I was in LA, I started defending a number of consumer class actions involving 70 275 Hunt. You know, the triumvirate, if you will, is what I call them in CLRS. They seem to go to gather like peas and carrots. Although and we'll get to this. I think Sonnar may be helping with that to some degree, but in terms of them all being lumped together.
Tim Kowal 3:15
So you're talking about sonar versus premier nutrition core the night Yes. Yeah, we'll talk. We'll talk about that a little bit later on.
Gregory Nylen 3:21
Yeah. So I did quite a bit of litigation in that regard. When I was in LA during my first stint at the firm, and then decided of all things to follow a passion and open a brewery in Orange County, which I co founded and along with my wife and ran for about five and a half years, we were the first in Costa Mesa of our type. We did that and we got out of the business just before COVID hit. I kept practicing law during that time. You know, I had trials during that time arbitrations, you name it, but it was at a small firm that a friend of mine I knew from law school had and after that, I came back to GT but in Orange County, so now my commute seven minutes instead of an hour and a half each way.
Tim Kowal 3:58
Yeah. So it's amazing. So you had a film school background before law school and then as a practicing attorney, you started a brewery so you you're all over the place as an entrepreneur a fan of the arts do you are you able to you find you're able to bring it all together in your legal practice? You kind of touch on all of your your passions there?
Gregory Nylen 4:15
Yeah. I mean, first 10 years of my career, I did entertainment litigation, primarily up in Santa Monica before coming to GT and so that that involved a lot of, you know, really interesting cases and clients and issues, right of publicity, defamation, false light invasion of privacy, public disclosure of private facts, a lot of Civil Code section 3344 stuff as well as you know, IP litigation, trademark and copyright and that kind of thing. The 1700s 200 stuff came in more when I when I joined GT, and then during my first stint, I would write on the subject. I did a yearly update on the law for the litigation review that litigation section of the State Bar produces. It used to be called the litigation section. They've changed how that's organized, but I was the chair of that section for a year and I'm Officer before then and a member of the executive committee before that. So I got very involved in, you know, writing about the statute and did some kind of the old school panels, you know, before the age of zoom and wrote some articles about it.
Tim Kowal 5:12
Yeah, well, and at some point, you decided to start co hosting the California unfair competition defense podcast, what spurred you to to start that podcast and what kind of lawyer should be tuning in to the California unfair competition defense podcast,
Gregory Nylen 5:26
what my co host, Lisa Sonett. And I, who is also GTA, she's a shareholder in LA, we both recognize that there's a need for some sort of information source for people defending against these claims. And there really wasn't any consistent blog that we could find in that regard. There are plenty of side blogs. But we saw a need for for this kind of information on the defense side. And you know, in this day and age, we thought a podcast would be something that would be probably consumed more frequently by people than in the blog. It's just printed, you know, people can listen to I mean, I do a lot of cycling now. And I listened to stuff when I'm cycling, I don't listen to music, I listen to people talking for the most part. And if my own experience is any guide, and I was certainly told by our marketing people, that that's the way it is now, the podcast is a better way to go.
Tim Kowal 6:09
Yeah, that's interesting. I hadn't thought about what you just mentioned that there are more resources for the plaintiff side in these cases than for the defense side. So you said that you found that there were several unfair competition blogs that were geared toward prosecuting those kinds of claims, but not so much for the defense side. But what explains that other than, you know, I guess, kind of the jackpot mentality if you're gonna go and work on these cases, you want to be on the side that stands to win the big money, big money?
Gregory Nylen 6:31
I don't know. I mean, I think there are certainly plenty of articles about particular issues, like when a case like Sonnar that we talked about comes down, you'll see a bunch of law firms will write about it in from the defense perspective. And then that's pretty much it, as opposed to just talking about these issues on a consistent basis.
Tim Kowal 6:48
Are there any types if there's one thing that you wanted attorneys to remember from your podcast to take away from listening to the California unfair competition defense podcast? What is it what types of doctrines or cases that defense attorneys really need to be aware of that? Maybe they're not if they're just kind of coming out of the box? And they don't I think sources before listening to your podcast?
Gregory Nylen 7:07
Yeah, I mean, I think, you know, the, to be aware of the most recent developments in terms of how courts are viewing both sides of the battle, really, but it's just really important to stay on top of things because it changes so rapidly in this area. And when you have a case come down on one particular issue, you know, like I just look today, sonar has 309 federal court decisions following and already are applying it, you know, in various contexts. And that case is what two years old. So it's really important to fight to hear what the splits are, where the undecided issues are, but to get some hear about, you know, some ideas and consensus and how to address new angles and new attacks that the plaintiffs bar is trying, you know, in these what I call no injury cases, this in particular, you know, the the alleged false advertising and that kind of thing.
Tim Kowal 7:58
Yeah, yeah. You describe it as a no injury cases. These are like these statutes are they're developed for the purpose of public policy to foster truth and fairness and advertising, not necessarily to prevent injury. So that's it makes it a little bit of a novel area of law, I guess. Sure. And as you said, it's important to know about where the trends are, where the splits and an unanswered questions are. And that's that's a good segue into talking about your recent article published in the ocba, Lawyer magazine, entitled recent developments in California unfair competition law. And in that article, you note that the courts are always busy interpreting the statutes under the unfair competition law located under the Business and Professions Code. And among those many decisions, you spotted three trends in unfair competition law, can you tell us what those trends are?
Gregory Nylen 8:43
Sure. I mean, I think one of them is kind of sub parts, which is sub parts under the main topic that courts are willing to find statements that form the basis of these kinds of putative class actions to be not deceptive as a matter of law. And, you know, they're willing to do that for a number of reasons, but one of them is that there's no actual representation. That's kind of one sub subcategory. There's no statement on the packaging issue in an alert and relating to alleged false advertising on which a claim could be based on the other package simply doesn't say what they say it said, that's one type. The other type is just what I call the smell test. It doesn't pass the smell test for a reasonable consumer and courts have been increasingly willing to make that determination at the pleading stage as a matter of law without even getting into, you know, the stage where you're filing a motion for summary judgment or something like that. We
Tim Kowal 9:34
back up just for a second when you mentioned these cases involving no representation that the advertiser or manufacturer is not making the representation or statement that the plaintiff says they are. Can you give us an example of a case like this? Is it simply a an instance where the plaintiff is misrepresenting what the advertising is? Or are we talking about advertising by way of images that don't make an actual literal representation?
Gregory Nylen 9:57
Yeah, I mean, one of the context for this came up In the factory outlet context, and the case that I cited in the article is the Rubinstein versus the gap, which is a case where the plaintiff alleged that she was misled by gap selling clothing in the factory stores that had not been sold in traditional retail stores that you'd see in a mall, for example, and by factory store, I mean, a factory outlet, right? So when you go buy an outlet mall, you know, her contention was she thought that those clothes would be the same thing that you would get in a brick and mortar retail store in a traditional setting, you know, when
Tim Kowal 10:28
that's an assumption she picked up how just just kind of custom or something floating in the air that's not written on the outside of the building, I take it
Gregory Nylen 10:34
right. And it's, you know, I think a lot of people make that kind of assumption about certain things. But that doesn't mean you have a claim against somebody. And you know, you go to a factory outlet, they're not saying that this is precisely the same goods in every circumstance that you would get if you were to go to a place in, you know, the Santa Monica, or Thursday promenade or something.
Tim Kowal 10:53
So it's the essence of the claim is that there's this rumor that I'm supposed to be able to get these novel and nowhere else to be found merchandise and GAAP had a duty to dispel that rumor if it was in fact, but knew it was not true. And that that rumor was out there is that kind of the essence of the plaintiffs claim and that kind of a case. Yeah, the
Gregory Nylen 11:10
plaintiff allege that reasonable This is a quote, reasonable consumers believe outlet stores sell products that were previously available for purchase at retail stores. So they plaintiff actually allege that but the Court explained and this again, this is at the pleading stage, there were no facts showing that to be true. And that a consumer for whom that you know, retail history of factory store items is material can ask gap employees about this. And a reasonable consumer would inspect the quality of factory store clothing items before buying them and can return them if they were unsatisfactory. That's what the court determined. So if you for some reason, thought this notion you had in your mind that you develop through popular belief, or whatever it is, what was actually the fact and you go to the store, you could number one, ask somebody at the store if this was true. And presumably they tell you, you know, we have, you know, we have goods here that are made in a different or same factory, but they're different, because that certainly happens a lot. You know, Factory Stores can very often carry goods that are not the same line that you'd find in those much more expensive locations. Yeah. And they're not always, you know, stuff that couldn't sell or out of season items, or last year's items. You know, sometimes they are sometimes they're not, but you know, people have the ability to ask questions, and make informed choices based on that. And if you don't have an It'd be one thing if a retailer were saying, you know, saying this is the same thing you'll find in our store in you know, X fancy mall, we're just selling it as last year's model, or last year as colors or whatever at a discounted price. It'd be another if they said, it's just simply the same, you're just, you know, you kind of you came here to this outlet mall, and so you can get it and get a deal. But that's not the case. Neither neither was the case in this instance. And but also, the Court made the point that you can look at something and determine if you liked the quality, you have it in your hands, just take the item and look at it, make it put it on what you like you would in any store, go to the changing room and try it on checkout the quality. Is it the same sort of quality that you came to expect? Is it you know, if not, don't buy it?
Tim Kowal 13:01
Yeah, yeah. Well, that that leads to one of the one of the my takeaways from after reading your article, and maybe you can tell me if my takeaway is too broad, but I was left with this general impression that courts are going to be they're becoming less likely to find that consumers are likely to be deceived, the courts seem to assume a little bit more sophistication on the part of the consumers. Is that Is that too broad to take away? Or is that you think that's kind of trend that you're seeing?
Gregory Nylen 13:27
I don't know that it's necessarily assuming more sophistication, I think they're just imposing or not even really imposing. They're applying a reasonable standard, reasonable consumer standard, which has been around for a while, but they're making it rational, in my opinion, obviously, I come at this from the defense standpoint, but I believe in what I do very strongly, and I know why these laws were enacted, and they, you know, certainly have their place for the correct circumstance. But in a situation where something is not something a reasonable consumer is going to think is deceptive. Courts are just willing to look at that and go, I'm not going to force this defendant to spend months or years litigating this to the Class Search stage or beyond, you know, the cost of potentially hundreds of many hundreds of 1000s of dollars when look, I mean, come on, it's obviously not deceptive to just a rational, reasonable person. Just look at the statement. I mean, who's going to think that the term crab mix with the K is made with real crab? What kind of nuts and that you can't spell it all? And that's the king versus PF Changs case in the article, you know, and I think that that's that is something that judges should be entitled to do. That's why they are appointed in the case of federal court or elected in the case of state court to do it they do we trust them to be rational and make these kinds of initial determinations and frankly, prevent the courts from getting clogged by what I you know, these no harm cases that are based on allegations that don't pass the smell test. Yeah, that makes sense.
Tim Kowal 14:51
Yeah, that was the holding of the King versus PF Chang's China bistro case that crab meat KR A B crab meat would not lead a reason Well consumer to believe that it was real crab see our A B crab meat. So let's go back to you mentioned, we're talking about the reasonable consumer test here, right. And as I understand that test, it means that it has to be more than just likely or possible that someone out there would be misled as to be a finding that a substantial portion of the target market would be misled. Is that did I have that? Right? Yeah.
Gregory Nylen 15:26
I mean, it depends on the nature of the case, in a lot of cases, the target market is, you know, any reason or it could be huge. You know, it depends on what the product is, yeah, whoever is gonna buy that particular type of product are likely to. And that's the same thing for trademark infringement cases when you're talking about likelihood of confusion under this case called Sleep craft, which is the ninth circuit test for likely to confusion and one of the things that you need to show is, particularly with the survey in those kinds of cases is that your sample for the survey, it draws upon likely consumers of that product. So it's a similar concept. But I'll give you another example, which is the Disha Hodges case versus King's Hawaiian bakery West also discussed in the article. Some of the other things that come into play here is the actual packaging as well. So not just whether a particular phrase is so obviously not deceptive as a matter of law, that it's not going to pass that test. But also you know, it look in that case, you had kings when it was called kings, Hawaiian, original Hawaiian sweet rolls. And I think a lot of people are aware of this bread, which states in the package is established. 1950 Hilo, Hawaii, Hawaii, I'm sorry, inside a three point crown, which you know, is evocative of the pineapples crown. And but on the back, it says it's now made in Torrance, California says it right on the package. And that's an interesting case to me, because it's the court said, unlike the brewing process, and I found this interesting, having been a brewery owner, the place of origin is not as important to consumers in the courts mind, it's not relevant, whereas in brewing, it can be relevant because of the quality or type of water and which makes up over 90% of the end product. I found that interesting, because I remember I you know, as a home brewer before I owned a brewery. And you know, there are situations where if you're a beer aficionado, and you go you want to get a Kolsch in Germany and cone you know, it's got a very specific water profile, you want to get an alt in Dortmunder. It's got a very specific water profile that really affects the taste of the beer. So surprised to see the court pick up on that particular notion.
Tim Kowal 17:22
But it's interesting. So does that mean that so King's Hawaiian bread package it says on the back somewhere made in Torrance, California, that's not unfair advertising. But what if you know kings away and made a line of beer King's Hawaiian Pilsner? And on the back of the Macan, it said Baden Torrance, would that be a different result? Because it's a different product, different target market?
Gregory Nylen 17:43
I don't know. That's an interesting issue. But I think you know, what, it's gonna depend in part on the product and upon whether, you know, geographic origin is relevant to the quality of the product or some unique aspect of it, if there isn't, you know, a description of where it actually comes from, in that instance, on the packaging.
Jeff Lewis 17:58
It was. It was, yeah, I was just gonna ask the distinction between Torrance and Hawaii, a bread and beer is that often made at the pleading stage or summary judgment as expert witness required expert testimony required on some of these issues? Well,
Gregory Nylen 18:12
in that case, it was done pleading stage. And, you know, I think if the product doesn't make a representation, that's the geographic origin. You know, it seems to me to be fair, and the nature of the claim is I read, I looked at this packaging, and I thought it did, then I think it should be ripe for consideration by the court as a matter of law doesn't, you know, or if it's got a disclaimer as to geographic origin, I thought this is from Hawaii. I didn't bother to look at the part of the package that says it's from Torrance. And the Court said in those in that instance, your being selectively blind was the phrase the court used, and I think that's spot on. So you know, I mean, it's certainly important to have packaging, that's not deceptive, that doesn't matter. You know, mentioned things that aren't true doesn't make representations that aren't true. But if you don't, then I think it's great that courts are willing to take this up as a matter of law and make this kind of decision up front.
Tim Kowal 19:00
Yeah. Where is that line between where big words a factual issue and where it's an issue of law? If if the plaintiff is arguing in opposition to your demurrer on behalf of the business owner, right, you're arguing that no, this this should be an issue of law, the court can find as a matter of law, that there's no, there's no deception here. And the plaintiff is arguing, Your Honor, this would be stealing away from the province of the jury, this should go this should go to a trial, you'd be denying my client his or her day in court. What's the argument there? How do you push the the judge over into your camp to decide that? Yeah, this is an issue that we can decide as a matter of law,
Gregory Nylen 19:33
it's in the judges discretion and in their minds, really, they're substituting their judgment for reasonable consumers in a way that I think makes sense because they have a duty not to allow their docket to be clogged with nonsense. I mean, you know, I make no bones about where I come out on this stuff, but I think I do for a reason. And I think that's what this is all about. I mean, ever you're gonna get that argument on the other side in every instance that this is why you're doing this now. You know, we should be able to take this to a jury, we should be able to do a survey. And we'll talk about that in a minute. Or sometimes they'll include ally increasingly include allegations in their complaint about a survey, which ties in again to trademark litigation. That's, you know, a lot of the survey experts who get involved in these kinds of cases are the same ones you would use in a trademark infringement case.
Tim Kowal 20:20
Yeah, yeah. Well, let's talk about surveys. I assume that this is a strategy that got cooked up by plaintiffs attorneys after you and your colleagues were successful in getting a lot of these issues adjudicated on demurrer stage as issues as a matter of law. And so plaintiffs probably decided we got to make this clear that this is a question of fact. And so let's get a survey put together. And so do the plaintiffs allege that there exists a survey and put the survey results in the pleadings themselves in order to buttress themselves at the demurrer stage?
Gregory Nylen 20:46
Yeah, absolutely. And, you know, again, increasingly, in my experience, courts are willing to overlook those allegations in the face of statements that the courts determine are not deceptive to reasonable consumers as a matter of law. So that, you know, in some instances, they they point to obvious flaws with the survey with survey methodology. But in other cases, they just basically reached the conclusion that, you know, a self serving survey is not going to change the fact that I just simply don't find I, the court do not find this to be deceptive as a matter of law. But I'll give you an example as the Clark versus Westbury natural case cite in my article, you know, they're they plaintiff alleged that a survey showed that reasonable consumers would conclude that vanilla soy milk that had the vanilla flavor came from the vanilla beans specifically, although that wasn't represented on the on the packaging, and they claimed to have a 49.66% response rate, you know, can basically confusion rate showing that but, you know, the Court pointed out sort of flaws with the survey among the fact that they didn't have a when they were asked about whether the label conveyed anything about the origin of the flavor, nothing was not even an option. So there's Sherry diamonds survey evidence chapter from the Federal manual on on scientific evidence is kind of the gold standard on this issue. And it's really it boils down to a number of of issues that you can point to, but this was one of them. If you don't have nothing as an option in your survey instrument. It's a fatal flaw right there. And, you know, a lot of times the questions
Tim Kowal 22:14
emerge stage, but that was that decided at the diverse stage or judgment
Gregory Nylen 22:18
tumor stage. That's interest? I believe. So I believe that's a good question. I believe that was also at the dimmer stage. But I've seen this happen at the dimmer stage. And a lot of times in at least in the surveys that I've seen, I have yet to see a survey that's described and in some cases attached, you know, that follows the basic requirements that you would follow in conducting a likelihood of confusion study in a trademark infringement case.
Tim Kowal 22:40
I did just check your article, it does say that it was that the defendants motion for motion to dismiss was was granted on survey methodological errors. So that that is that is interesting. That's something very important, I would think for defense attorneys to keep in their back pocket to know that they don't have to wait for summary judgment or trial to adjudicate methodological problems with plaintiffs surveys,
Gregory Nylen 23:02
right. And then I've cites a couple other cases in the article two on this issue, the elbows versus vitals International Group case there, it was kind of a vague reference to having surveys in hand, but they didn't allege any details that was at the dismissal stage as well, this govia versus grim a corporation case, which is a tortilla case, where the court felt that it was simply not plausible that reasonable consumers would be misled into believing that tortillas were made in Mexico when they had a statement on the packaging, saying that they had contained a piece of Mexico and the court found to be a meaningless phrase, they did get the plaintiff however, in that case, an opportunity to try to allege survey results. So sometimes they are willing to be more, you know, amenable to that. So I think it depends on what you know, you're going to have I like I said, I've yet to see a survey in this kind of case on the plaintiff side that supports the allegations that are made in a way that I think would pass muster under Sherry diamonds principles, which are the ones that every survey expert follows. And I've done, you know, panels and written about the survey issue. It's something that is of unique interest to me defended and taken a number of expert depositions on survey issues in particular, it's kind of an interesting area and so near and dear to my heart. And I'm glad to see that there are judges who take a look at some of these instruments and say, No, this isn't going to work. I mean, leading questions, for example, not having an open, you know, a question that no, or I'm not the seat is an option, not having a proper survey universe. Um, there's a whole host of things. There's just kind of a checklist that you go through, it's in if your expert is someone who's good, they're going to follow those rules whenever they conduct a survey. So
Jeff Lewis 24:34
imagine when there's a case ending order at the demurrer stage, plaintiffs often appeal those rulings. And when there's a lack of a case ending order at the diverse stage and the demurrer is overruled, sometimes defense attorneys attorneys will take this up on our writ. So whether it's on a writ or on an appeal, are there any common issues you see up when the cases are up on a review? Are there traps that attorneys need to be aware of in terms of pleadings, battles over these types of claims
Gregory Nylen 24:58
at the appellate stage? Ah, well, I think it's kind of like, you know, I wait, if you manage if saying if you're on the defense side and you manage to have your demersal stained with all leave to matter, yeah. Or motion dismiss granted with prejudice, what do you what do you look for on appeal?
Jeff Lewis 25:12
Yeah, yeah. Like, for example, on the question of surveys, I wonder if it's if trial judges can sometimes overstep the line between fact questions and legal questions in terms of these statements, and whether or not it's an affirmative representation, or an omission and that kind of thing, right? Have you seen any issues that come up commonly in dealing with either appeals or risks on these issues?
Gregory Nylen 25:31
Not really, because I think, excuse me, in most instances, the battles are about the same issues as a matter of law. So I think just dotting your I's and crossing your T's in terms of your arguments below, and making sure that you're on top of the law, because it changes so often, and try to make sure that you gather as many of the decisions on these points in your favor as you can because, you know, there are splits on a lot of these sub issues. And so, you know, I wouldn't say that there have been final pronouncements on you know, a lot of them. So,
Tim Kowal 25:59
you ever have situations where you you're partially successful on a dimmer and you're able to kind of kill the core claim and the plaintiffs complaint, but the case is not completely finished. You know, sometimes in those kinds of instances where the case still hobbles along, the plaintiff might be motivated to just dismiss the rest of the claims in order to accelerate the appellate review. Do you ever see those kinds of issues? Do you ever have plaintiffs asking you to stipulate to a dismissal and reservation of appellate jurisdiction? Those kinds of things?
Gregory Nylen 26:25
No, I haven't. Personally, I think it'd be interesting to see how though it depending on what they do, and what they dismiss, that could trigger some issues on dishonor, as well. And I'd be interested to see how that might play out
Jeff Lewis 26:35
as a defense lawyer on these unfair competition claims. Where would you rather be state court or federal court in terms of which form is more hospitable to UCL claims?
Gregory Nylen 26:45
You know, I know there are people who will say that they always want to, they'd rather be in federal court. And there is some truth to that, from the defense side for a variety of reasons. But I found that a lot, I really like a lot of complex judges. And if you get a very fair read for many of them in state court, and I really liked a lot of them. But I would say overall, I would rather be in federal court, not because of you know, the judges, but because I think there there are good ones in both state and federal court, of course, but rather, because you can take advantage of the federal courts view on Article Three standing, for example, and issues like Sonnar, which is a, you know, Ninth Circuit decision that can be really helpful in federal court as opposed to state I also just think, because of the institutional way that federal courts work, you and how dockets have become so backlogged after COVID, a lot of times you can get a quicker read, or a quicker decision, um, depending on which judge are in front of you know, that it can go both ways, I've had judges in federal court take over a year to rule on a motion to dismiss or I'm sorry, a motion to compel arbitration to the point where a client just decided to resolve the case, because we couldn't wait any longer. But I've also found in some state courts, it's taking six to eight months to get a hearing on, you know, a dispositive motion. So I just think overall, it's it's and because I do a lot of intellectual property litigation. I'm very comfortable in federal court. I'm comfortable in both. But yeah, you know, I think a lot of times, counsel, plaintiff's counsel, in these kinds of cases is not comfortable in federal court. So I'd like to be where there's an imbalance of comfort, if you will, that certainly helps. But you know, for those reasons, it's substantively, I think it's a better place to be for defense counsel, hey, you know,
Jeff Lewis 28:22
I've never really litigated either side of these claims. And so far, Pardon my ignorance, Does insurance typically cover these claims? When a business is sued for a US UCL claim?
Gregory Nylen 28:33
It depends, you know, false advertising, it depends on what kind of what kind of insurance you have really, yeah, it can run the gamut.
Jeff Lewis 28:40
Let me ask you this, you know, many lawyers practice toaster law, they practice whatever pops up, right. They're generalists. When does somebody need to call Greg in to handle a UCLA UCL
Gregory Nylen 28:51
plan? I mean, I think at the pleading stage, if you've gotten hit with one of these, there are so many traps for the unwary in the sense that you can leave a lot of arguments on the table without realizing that you just gave up gave something up. And, you know, just just the the nuances that are coming out, for example, under Sonnar, it's interesting to see how the district courts are applying that decision. And there's all of these micro splits, if you will. So it's really important to be able to marshal as many of the favorable district court orders as you can. And I've also noticed something interesting, which is, you know, used to be that you couldn't cite district court decisions from Westlaw, like anywhere, and now it's just all bets are off, it seems to me, I mean, I've had no problem whatsoever doing that in either state or federal court, frankly. And that's really helpful because a lot of times that's the only place where you're going to find a particular nuance or particular discussion of a case like Sondra, that's coming down and how are we going to actually apply this now on the ground? Now that this case has come down? How are we going to look at it in light of this particular nuance of, you know, this set of allegations on this in this country? right on this motion to dismiss.
Tim Kowal 30:01
So you've mentioned sonor, several times now. So let's finally get to the Ninth Circuit decision in Sonnar versus premier nutrition Corp. So this is this is a doctrine now that comes up in federal court that can limit plaintiffs availability for or entitlement to equitable relief if there is an adequate remedy at law. So that's that's the holding under sonor versus premier nutrition. So Greg, how does this come about under sonor? If a plaintiff is seeking both equitable and legal relief, dishonor just mean that sorry, you can't get the equitable relief, you're only you can only look at the legal relief,
Gregory Nylen 30:34
if you allege an adequate remedy, you know, if you allege a claim for which there's an adequate remedy at law, yes. And in some of the cases, like the GeoBlue case discussed in my article there, the plaintiff sought both restitution and injunctive relief, and the court found that was a distinction without a difference. You have to I have to plead the inadequacy of legal remedies. So that's an important unavailable. I'm sorry, go ahead.
Tim Kowal 30:58
Yeah, that's an important pleading note on the checklist. And to make sure that if you're asking for both, you have to make sure to establish that legal relief by itself would not be adequate, you need the equitable relief as well.
Gregory Nylen 31:10
Right. And so one area where this can come up as if you allege a claim under the CLA for which damages are available at the same time, you allege a claim under the UCL or FL or both, and see restitutionary discouragement or injunctive relief, and restitutionary discouragement is under Business and Professions Code section 17. Two of three is not what you might think it is, if you don't practice in this area, it's you know, the California Supreme Court has held in a number of cases that that doesn't include lost profits, for example, that the other side may have realized or earned as a result of alleged unfair business practices. It has to be money or property that you either had in your possession and turned over or paid to the defendant or that you have a statutory right to obtain like overtime wages, for example, once you earn overtime wages, they that's a right, that attaches to you individually as a person under California law under the labor code that's a present right to receive those wages. Right. But, you know, in a case called Korea supply, for example, you had a defense contractor who lost out on a bid to another one and tried to seek the profits that the company that won the bid as by virtue of what they claimed were unfair business practices tried to recover those as restitutionary. discouragement, California Supreme Court said no, that's not what that's all about. That's in essence damages in disguise, and you cannot get damages under the UCL. So because of that you would very often see up until Sonnar. Anyway, the triumvirate you'd see UCL FL and CRA because the CLI just straight up lets you get damages. And so now one of the issues that's come out of saunter, and you'll see a lot of back and forth in the district courts on this issue is sonor was further along than the pleading stage. Does that mean that you have to be further along for this doctrine to apply? In other words, can you allege in the alternative, can you allege these claims in the alternative and get by a motion to dismiss? I think the correctly decided district court cases say that doesn't make a difference, because it's obvious from this claim that they're seeking damages. So there are plenty of district court decisions where they will still dismiss the claims at that stage, but there are others. So that's one issue. The other issue is if you're seeking future injunctive relief, as opposed to relief for past conduct. And that's what came up in this. One of the issues that came up in the GeoBlue. Case cited my article, the Court rejected that argument that the plans for seeking relief for future violations based on automatic renewals relating to these television subscription services. And interestingly, the court in that case rejected plaintiffs argument also that they were only seeking relief under the ECL because the court found that the nature of their relief was legal. So that's a really this is a really hot area. I mean, as I said, 300 and something district court decisions, applying sonor. And this is why it's important when you get this kind of case to make sure you find somebody who understands this area of the law and is going to marshal as much as possible, you know, in in your favorite your defendant who's who's been hit with one of these claims.
Tim Kowal 34:04
Okay. And then the solder case is fairly recent. That was 2020. Right. Was that the first case in this space in the Ninth Circuit? Well,
Gregory Nylen 34:12
they were resolving, you know, as I recall from that decision, and I know this issue came up before in the district court level, so they were resolving an issue that had not yet been resolved at the appellate level.
Tim Kowal 34:23
Yeah, well, like you said, this is a space to watch the interplay or to what extent a plaintiff can plead and recover both legal and injunctive relief, that may be a landmine and you know, I know that the you represent the defendants side, but I would say that if you're a plaintiff's attorney listening to this, it seems like it would. It could be malpractice to bring a claim in federal court if your client really wants both legal and equitable relief.
Gregory Nylen 34:45
Yeah. One other interesting nuance I should point out on that is and this is not there are different district decisions on this as well, just a court decisions, but what happens if you allege this claim for under the CRA you'd like these types of claims, and one of them's under the CLR and you seek damages, and then just before trial, you dump the CRA claim because you, you know, you want to avoid this issue and just get a bench trial because it's all equitable at that point. And there are cases that say no, sorry, you know, nice try. Yeah, you make the district decision to do that you do so at your peril, because you could have the whole case thrown out, you know, except for potentially injunctive relief, but it depends on on the case.
Tim Kowal 35:23
Okay. So those are the trends we've covered that looks like the judges tend to be imposing a little bit more of a rigorous standard on the reasonable consumer consumer tests, watch out for Article Three standing issues in federal court. And then also make sure that you're you're looking at the Sonnar versus premier nutrition Corp. If you see a case in federal court that alleges both legal and equitable remedies. Anything else audience should be aware of as kind of a parting shot here. Greg,
Gregory Nylen 35:47
I think one of the things that if you're at the summary judgment phase of a case, I think one thing that's really important to remember is to really dot your i's and cross your t's and trial court on evidence to support your motion, because I have seen this time and time again, come up where you need to have, you know, authenticating declarations for exhibits, for example, this is not a jurisdiction where documents are self authenticating. So you need to make sure that you have proper, you know, declaration supporting your evidence, follow all the rules, make sure your separate statement, and I mean, it's in the rules of court, but I'm just shocked how many times to separate statement doesn't look like what the rules of court says just you know, do this here are the columns follow this format, and then you just get some wacky thing. So the picture right in the rules of court, yeah, exactly. So you know, you want everything has to be done. Right. If you want to survive the appeal. Yeah. No matter what side you're on. So that was kind of my parting shot on that issue.
Tim Kowal 36:42
All right. All right. Well, Greg Nylund, thank you very much. If any of our listeners are representing a defendant facing unfair competition case, you should give Greg Nylund a call to make sure you're not missing any splits or unresolved issues or any defenses that you need to raise, or else they ever be deemed forever waived and forfeited if you ever have to get all right. Well, once again, Greg Island, thank you very much for being on the podcast and Jeff, that's gonna wrap up this episode. We'd like to thank our sponsor once again, case text for sponsoring the podcast each week when we include links to the cases we discussed, we use case text and listeners to the podcast can find a 25% discount available to them if they sign up to casetext at casetext.com/calp. That's casetext.com/C A L P.
Jeff Lewis 37:27
And if you have suggestions for future episodes, or if you have a strong opinion about whether Hawaii or Torrance makes better water for bread, please email us at info at Cal podcast.com. And in our upcoming episodes, look for tips on how to lay the groundwork for an appeal when preparing for trial. All
Tim Kowal 37:41
right, thanks. See you next time.
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