OBRIEN, v. CAMISASCA AUTOMOTIVE MANUFACTURING, INC.,

Filed 3/27/08

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

Story Continued From Part I ..

OBrien cites Anunziato v. eMachines, Inc. (C.D.Cal. 2005) 402 F.Supp.2d 1133, which held reading reliance into the UCL and the FAL would subvert the public protection aspects of those statutes. (Id. at p. 1137.) Anunziato reasoned, If actual reliance were required, a consumer who did not read the label and rely on the count and weight representations would be barred from proceeding under the UCL or the FAL because he or she could not claim reliance on the representation in making his or her purchase. Yet[,] the consumer would be harmed as a result of the falsity of the representation. (Ibid.) We are unpersuaded by Anunziato, which represents one side of a split opinion in the federal courts. (See Cattie v. Wal-Mart Stores, Inc. (2007) 504 F.Supp.2d 939, 947.) Also, decisions of the federal courts interpreting California law are . . . not binding. (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 299.) While we recognize the concerns expressed in Anunziato, we cannot ignore Proposition 64s stated requirement that a plaintiff must suffer injury in fact . . . as a result of the unfair business practice or false advertising. We are bound to take the statute as enacted and may not give it meaning to conform to a presumed intent that is not expressed. (Knight v. Superior Court (2005) 128 Cal.App.4th 14, 23; Code Civ. Proc., 1858.)

Instead, the interpretation of Proposition 64 in Laster v. T-Mobile USA, Inc., supra, 407 F.Supp.2d 1181 is more apt. There, the plaintiffs alleged that the defendants engaged in unfair and deceptive practices by charging consumers sales tax on the full retail value of cellular telephones, which telephones they had advertised as free or substantially discounted. (Id. at p. 1183.) The district court held [b]ecause Plaintiffs fail to allege they actually relied on false or misleading advertisements, they fail to adequately allege causation as required by Proposition 64. (Id. at p. 1194.) The court explained that plaintiffs did not include any allegations in their FAC that they relied on Defendants advertisements in entering into the transactions. While Plaintiffs meticulously describe the allegedly misleading advertisements (as later described in Plaintiffs pleadings, a bait-and-switch leading to a fleece), none of the named Plaintiffs allege that they saw, read, or in any way relied on the advertisements; nor do they allege that they entered into the transaction as a result of those advertisements. (Ibid.)

We agree with Laster. Proposition 64s requirement that a plaintiff suffer injury in fact . . . as a result of unfair business practices or false advertising ( 17204 & 17535, italics added) necessarily means that OBrien must have purchased the license plate frame in reliance on a false or misleading representation or advertisement that the frame was Made in USA and suffered injury as a consequence. To hold otherwise, we would have to ignore the as a result of language, reading it out of the initiative all together. That would render the phrase a nullity in contravention of well-established principles of statutory interpretation that   an interpretation that renders statutory language a nullity is obviously to be avoided. . . .  [Citations.] (Association for Los Angeles Deputy Sheriffs v. County of Los Angeles (2007) 154 Cal.App.4th 1536, 1544.)

b. On the undisputed facts, OBrien has no standing under either the UCL or the FAL.

Applying Proposition 64s standing requirements to this case, it is apparent that OBrien lacks standing as a private person to prosecute this case under both the UCL and the FAL. OBrien alleged in his complaint that defendants fraudulently induced him to purchase the License Plate Frames at premium prices,misrepresenting that the license plate frame was Made in USA and Fabriqu aux tats-Unis when it was not because the frame and its parts were entirely or substantially made or produced outside of the United States of foreign materials. However, OBrien incontrovertibly did not see any Made in USA representation about the license plate frame, either in the catalogue or on the website before he purchased it; the first time he saw any representation of origin was weeks later when the frame arrived in the mail. OBrien also testified he did no research beyond reviewing the catalogue and website. Indeed, as OBrien admits, the catalogue made no representation whatsoever about a country of origin anywhere on the page where the license plate frame was depicted. Therefore, the record shows indisputably that OBrien did not see and did not rely on any representation about the country of origin, and did not purchase the Audi license plate frame as a result of any Made in USA representation made by defendants. That is, even if OBrien has lost money or property, it was not as a result of any violation of the UCL or the FAL.

OBrien argues that the catalogue misrepresented the license plate frames origin. To the contrary, the undisputed evidence shows that nowhere on the entire page of the catalogue where the license plate frames are pictured do the words imported or Made in USA appear. Section 17533.7 makes it unlawful for anyone to offer for sale in California any merchandise on which merchandise or on its container there appears the words Made in U.S.A., Made in America, U.S.A., or similar words when the merchandise or any article, unit, or part thereof, has been entirely or substantially made, manufactured, or produced outside of the United States. (See Benson v. Kwikset Corp. (2007) 152 Cal.App.4th 1254, 1268, italics added [Section 17533.7 constitutes a legislative determination that representations suggesting merchandise was made in the United States are misleading unless the producers manufacturing processes satisfy the strictures of the statute. (Italics added.)].) The statute does not make it unlawful to omit a designation entirely, OBriens suggestion to the contrary notwithstanding.

OBriens contention appears to be that any country-of-origin misrepresentation occurred because he assumed one was made. He made this assumption because there were scattered references to imported elsewhere in the catalogue but none on the page depicting the frames. He contends that he has standing because he relied on the implicit representation in the catalogue that the license plate frame at issue was not imported and, thus [was] Made in USA. 

The standard applied in UCL and false advertising cases is that of the ordinary consumeracting reasonably under the circumstances. (Colgan v. Leatherman Tool Group, Inc. (2006) 135 Cal.App.4th 663, 682; Lavie v. Procter & Gamble Co. (2003) 105 Cal.App.4th 496, 504.) We conclude on the undisputed facts here that OBriens assumption is not reasonable.

It does not necessarily follow from the lack of an imported designation that a product was made in the United States. First, California law does not require an advertiser to identify the country of origin in a catalogue or website. The FAL makes it unlawful to use the words Made in USA or similar words when that is not the case under the statute. ( 17533.7.) Second, in California, a product is only deemed Made in USA if it contains no article, unit, or part that has been entirely or substantially made, manufactured, or produced outside of the United States. (Ibid.) Thus, as Volkswagen observes, imported may not be the same as not Made in USA. Merely because these frames were not imported, did not ipso facto mean they were Made in USA as defined by section 17533.7. Finally, the only references to imported items in the catalogue submitted in connection with the motions for summary judgment, are connected to clothing. No country of origin designation is made with respect to any non-clothing item in the entire catalogue.  Likely to deceive implies more than a mere possibility that the advertisement might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner. (Lavie v. Procter & Gamble Co., supra, 105 Cal.App.4th at p. 508.) For the foregoing reasons, OBriens assumption is simply unjustified that where the word imported was not associated with the license plate frames, or with the vast majority of items in the catalogue for that matter, the frames necessarily must have been Made in USA as defined by the statute. Under the circumstances here, as a matter of law, no reasonable consumer would interpret the absence of a country‑of‑origin label to mean that the license plate frames were necessarily made in the United States. (See Haskell v. Time, Inc. (E.D.Cal. 1994) 857 F.Supp. 1392, 1399 [dismissing UCL and FAL claims].)

As a fallback position, OBrien relies on the Made in USA designation stamped on the packaging containing the license plate frame when he received it in the mail. Section 17533.7 also makes it unlawful to place a country of origin misrepresentation on an items container. OBrien argues that [o]nce [he] received the item, the misrepresentation inducing the sale was confirmed by the clear and explicit packaging containing the express representation the license plate frame was Made in USA.  (Italics added.) In our view, this contention is tantamount to an admission that no Made in USA representation induced him to purchase the frame. Any misrepresentations about the origin of the license plate frame made after he purchased the item could not logically have induced him to purchase the frame in the first place.

We are also unpersuaded by OBriens contention that once he saw the Made in USA stamp on the packaging materials, he did not return the license plate frame and suffered damage thereby. He appears to argue that his purchase of the license plate frame was not complete until he decided not to return it, arguing that his purchase included his right to return the item and once he received it, his belief that it was made domestically was confirmed by the packaging. Such a contention does not square with the undisputed facts, as OBrien testified in his deposition, that he did not return the frame and seek a refund because at this point I had agreed to be a plaintiff in the case . . . . (Italics added.) He was induced not to return the frame by his agreement to be a plaintiff, not by the Made in USA stamp. In any event, we are mindful that the issues to be addressed in a summary judgment motion are framed by the pleadings. (Wattenbarger v. Cincinnati Reds, Inc. (1994) 28 Cal.App.4th 746, 750.) OBriens complaint alleges fraudulent inducement to purchase, not fraudulent inducement not to return the license plate frame. The undisputed facts here show that OBrien was not induced to purchase frames by any representation made at the time of purchase.

Stated otherwise, even assuming OBrien suffered injury in fact and lost money or property, there is no factual dispute that the injury was not as a result of any misrepresentation about where the license plate frame he purchased was manufactured. ( 17204, 17203, & 17535.)[1]As a matter of law, therefore, OBrien did not have standing to bring the first and third causes of action based on the UCL and the FAL. The trial court properly granted summary adjudication of those causes of action.

3. The CLRA

a. The trial court properly granted summary judgment of the CRLA cause of action because OBrien does not have standing.

The CLRA targets a class of unfair methods of competition and unfair or deceptive acts or practices enumerated in Civil Code section 1770. [Citation.] Any consumer who suffers any damage as a result of the use or employment by any person of this unlawful conduct may bring an action for damages, restitution of property, and injunctive relief. [Citation.] (Buckland v. Threshold Enterprises, Ltd., supra, 155 Cal.App.4th at p. 809.)

As noted, To have standing to assert a claim under the CLRA, a plaintiff must have suffer[ed] any damage as a result of the . . . practice declared to be unlawful.  (Aron v. U-Haul Co. of California, supra, 143 Cal.App.4th at p. 802, citing Civ. Code, 1780, subd. (a).)

For the same reasons OBrien cannot demonstrate standing under the FAL and the UCL, he cannot demonstrate he suffered damage as the result of any violations of the CLRA. Indeed, OBrien appears to concede this point. He states: Plaintiff must show that Defendants deceptive advertising caused him to purchase the license plate frame . . . . (Italics added.) As demonstrated above, he cannot make that showing. The trial court properly granted summary judgment of OBriens CLRA cause of action.

b. The trial court properly granted defendants motions to strike.

Before damages may be sought under the CLRA, the plaintiff must satisfy the CLRAS pre-filing notice requirement. The CLRA requires at least 30 days

before filing a complaint for its violation, that the consumer send written notice, by certified or registered mail, return receipt requested, to the person alleged to have violated the CLRA, indicating the particular violation alleged and demanding correction or rectification of the violations. (Civ. Code,  1782, subd. (a).)[2]

The notice requirement is strict and literal. The purpose of the notice requirement of [Civil Code] section 1782 is to give the manufacturer or vendor sufficient notice of alleged defects to permit appropriate corrections or replacements. The notice requirement commences the running of certain time constraints upon the manufacturer or vendor within which to comply with the corrective provisions. The clear intent of the act is to . . . establish a limited period during which such settlement may be accomplished. This clear purpose may only be accomplished by a literal application of the notice provisions. (Outboard Marine Corp. v. Superior Court (1975) 52 Cal.App.3d 30, 40-41, fn. omitted.)

Defendants moved to strike those portions of OBriens complaint that sought damages under the CLRA because OBrien failed to give the required 30-days notice before commencing his action. OBriens notice was sent on January 21, 2005. His complaint under the CLRA was filed on February 8, 2005, a mere 18 days later. The trial court did not abuse its discretion in granting defendants motions to strike OBriens damages request.

4. The trial court did not abuse its discretion in entering judgment in this case, even though it had the effect of precluding plaintiffs from amending the complaint to name a plaintiff with standing.

a. Factual background

Plaintiffs contend that they had a right to file a motion to amend the complaint to name a new plaintiff and so the trial court abused its discretion in denying the request to file a motion to amend to add a suitable representative plaintiff with standing.

Proposition 64 was enacted in November 2004, and became effective immediately. (Californians For Disability Rights v. Mervyns, LLC, supra, 39 Cal.4th at p. 227.) OBrien filed this action three months later in February 2005. His standing was at issue from nearly the beginning of the case. Defendants first challenged OBriens standing in its demurrer filed in March 2005. In April 2005, the trial court ruled that defendants could challenge standing either by demurrer or by summary judgment motion. Discovery was specifically focused on the standing issue only. Defendants motions for summary judgment challenging standing were brought in August 2005. The trial court heard argument on the motions in May 2006 and took the matter under submission.

The trial court granted the summary judgment motions ruling OBrien did not have standing on August 8, 2006. In mid-September 2006, five weeks later, defendants filed their proposed judgment. On September 19, 2006, more than a month after the court granted the summary judgment motions, and 19 months after OBrien filed his complaint, plaintiffs scheduled a status conference for the purpose of discuss[ing] a timetable for amendment of the complaint . . . . (Italics added.) Plaintiffs also filed a written objection to the proposed judgment on the grounds that Plaintiff has a right to amend the complaint and respectfully requests that the Court not sign the proposed judgment to allow for such an amendment.

At the status conference on October 13, 2006, the court stated, I dont have a motion for leave to amend here or a proposed amended pleading or a proposed plaintiff to be substituted in, and you dont just leave a case open ended forever. So if counsel finds a new plaintiff to pursue a claim of this sort, counsel can file a new action . . . . The court repeated that nothing was pending before it and so, where it had already ruled on the summary judgment motions, it would enter judgment. With that, the court signed the proposed judgment.

b. Law and application

[C]ourts have permitted plaintiffs who have been determined to lack standing, or who have lost standing after the complaint was filed, to substitute as plaintiffs the true real parties in interest. [Citations.] (Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 243.)[3]

  [T]he trial court has wide discretion in allowing the amendment of any pleading [citations], [and] as a matter of policy the ruling of the trial court in such matters will be upheld unless a manifest or gross abuse of discretion is shown. [Citations.]  [Citation.] Nevertheless, it is also true that courts generally should permit amendment to the complaint at any stage of the proceedings, up to and including trial. [Citations.] But this policy applies  only [w]here no prejudice is shown to the adverse party.   [Citation.] (Melican v. Regents of University of California (2007) 151 Cal.App.4th 168, 175.)

That stated,    even if a good amendment is proposed in proper form, unwarranted delay in presenting it may -- of itself -- be a valid reason for denial.   [Citations.] Thus, appellate courts are less likely to find an abuse of discretion in denying leave where, for example, the proposed amendment is  offered after long unexplained delay . . . or where there is a lack of diligence . . . .  [Citation.] (Melican v. Regents of University of California, supra, 151 Cal.App.4th at p. 175.)

Additionally, to establish that the trial court abused its discretion in denying leave to amend, the plaintiff must show that the complaint can be amended to cure the defects. (Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 711.) The  showing that the complaint can be amended to state a cause of action need not be made in the trial court so long as it is made to the reviewing court.   (Velez v. Smith (2006) 142 Cal.App.4th 1154, 1175.)

For example, in Levy v. Skywalker Sound (2003) 108 Cal.App.4th 753, the trial court did not abuse its discretion in denying leave to amend the complaint where the plaintiff had waited several months after the dispositive discovery to seek leave to amend, did not file a procedurally proper motion for leave to amend, and did not request a continuance of the hearing on the summary judgment motion in order to pursue the matter. Also, the amendment would not have changed the result. (Id. at pp. 770-771.)

In Huff v. Wilkins (2006) 138 Cal.App.4th 732, the trial court was held not to have abused its discretion in denying leave to amend the complaint where the plaintiff moved for leave to add a new claim three days before the scheduled hearing on the defendants summary judgment motion. The plaintiff had given no explanation for his delay in seeking to amend. Also, the court recognized that no liability would lie under the new claim. (Id. at p. 746.)

Here, plaintiffs have produced no explanation for their extensive delay before mentioning amendment. Despite the fact the question of OBriens standing to bring the action was at the forefront of this litigation for the first 15 months of this case, plaintiffs never filed a motion seeking leave to amend the complaint and never attempted to name a plaintiff who would comply with the standing requirements after the trial court issued its 15-page statement of decision explaining why OBrien did not have standing. Indeed, the first time plaintiffs asserted their right to amendment was five weeks after the trial court granted summary judgment when defendants filed the proposed judgment. For 40 days after the trial court granted summary judgment and issued its statement of decision, during which time plaintiffs were well aware of the courts view, plaintiffs made no attempt to file a motion seeking leave to amend the complaint. Only after defendants lodged a proposed judgment did plaintiffs even raise the subject of filing a motion for leave to amend. Then, rather than to file a proposed complaint, plaintiffs sought merely a status conference to discuss a timetable for an anticipated motion to amend the complaint. Plaintiffs cannot be allowed to sit back and seek leave to amend for this lengthy amount of time.

Moreover, at no time  even during this appeal  have plaintiffs offered a proposed amendment to cure the defect. Plaintiffs never filed a declaration indicating that they had a person with standing. (Velez v. Smith, supra, 142 Cal.App.4th at p. 1175; Smith v. State Farm Mutual Automobile Ins. Co., supra, 93 Cal.App.4th at p. 711.) Since the August 8, 2006, ruling, this case has had no named plaintiff.

 It is . . . well established that courts have fundamental inherent equity, supervisory, and administrative powers, as well as inherent power to control litigation before them. [Citation.] . . . . . . That inherent power entitles trial courts to exercise reasonable control over all proceedings connected with pending litigation . . . in order to insure the orderly administration of justice. [Citation.]   [Citation.] (Elkins v. Superior Court (2007) 41 Cal.4th 1337, 1351.) Where the trial court had no motion to amend before it, least of all a motion for leaveto amend, we cannot say it abused its discretion in entering judgment upon its ruling, which effectively precluded plaintiffs from amending their complaint.[4]

DISPOSITION

The judgment is affirmed. Each party to bear its own costs on appeal.

CERTIFIED FOR PUBLICATION

ALDRICH, J.

We concur:

KLEIN, P. J.

KITCHING, J.

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[1] OBrien contends that the UCL is a strict liability cause of action with the result he is not required to demonstrate reliance on any alleged misrepresentation. Apart from the fact this argument focuses on the elements of the cause of action and not on the standing prerequisite, the contention overlooks the impact of Proposition 64 which was designed to address this issue. Moreover, at least one court has concluded that actual reliance is an element of a CLRA claim sounding in fraud. (Buckland v. Threshold Enterprises, Ltd. (2007) 155 Cal.App.4th 798, 811.)

[2] Civil Code section 1782, subdivision (a) states:  Thirty days or more prior to the commencement of an action for damages pursuant to this title, the consumer shall do the following:  []  (1) Notify the person alleged to have employed or committed methods, acts, or practices declared unlawful by Section 1770 of the particular alleged violations of Section 1770.  []  (2) Demand that the person correct, repair, replace, or otherwise rectify the goods or services alleged to be in violation of Section 1770.  []  The notice shall be in writing and shall be sent by certified or registered mail, return receipt requested, to the place where the transaction occurred or to the persons principal place of business within California.

[3] In Branick v. Downey Savings & Loan Assn., supra, 39 Cal.4th 235, the plaintiff lost standing because the case was pending when Proposition 64 was approved by the voters. (Id. at p. 242.) Branick, of course, does not aid plaintiffs here because plaintiffs filed their complaint three months after Proposition 64 became effective and so plaintiffs were always aware that standing would be an issue.

[4]Stalnaker v. Boeing Co. (1986) 186 Cal.App.3d 1291, does not aid plaintiffs. Stalnaker stated that the plaintiffs there could clearly have moved the court for leave to amend and to defer ruling on the summary judgment motion until the amendment had been granted. [Citations.] (Id. at p. 1302.) Here, plaintiffs did not file a motion for leave to amend either before the trial court ruled on the summary judgment motions, or anytime thereafter; they sought only to discuss the matter.