"unlawful" conduct causes actionable harm even without deception in Cal.

Medrazo v. Honda of North Hollywood, 140 Cal. Rptr. 3d 20 (Ct. App. 2012)

Medrazo sued HNH on behalf of a putative class under the UCL and CLRA for failure to comply with California law that required new motorcycles to be sold only with a label disclosing the recommended retail price and the dealer’s added charges.  After the court of appeals directed the class be certified, the trial court granted HNH’s motion for judgment, finding that Medrazo failed to establish that she, or any other class member, was injured by HNH's conduct.  The court of appeals reversed as to the UCL, but affirmed as to the CLRA because Medrazo failed to adequately address that law in her appeal briefs.

Medrazo presented evidence that: when she bought a motorcycle from HNH, there was no label attached; more than $2000 in dealer charges were added to the cost of the motorcycle she bought; HNH as a matter of consistent practice failed to attach labels to Suzuki and Yamaha motorcycles, failed to attach labels to some Honda motorcycles, and didn’t include the dealer charges on all the labels that were attached; and that HNH sold more than 3000 motorcycles in the relevant period.  The court of appeals ordered certification despite the individual issues (each Honda purchaser would have to establish that there was no tag attached to the motorcycle she bought and/or the dealer added costs weren’t disclosed on the tag, and restitution amounts might differ) because those were manageable issues overwhelmed by the commonality of issues.

The evidence suggested that customers would at first only hear the manufacturer’s suggested retail price, but if a customer wanted to buy, a salesperson would negotiate the terms of sale. At that point, the salesperson would complete a worksheet disclosing any dealer-added charges. 

As for Medrazo’s specific purchase, HNH produced the hanger tag for the motorcycle she bought; given that HNH still had it, HNH’s witness conceded that it probably hadn’t been attached to the motorcycle when she bought it, and also it showed the MSRP but not the dealer-added charges.  After the lawsuit was filed, HNH started creating its own hanger tags, laminated them to keep them from being destroyed or blown off, and had a salesperson look for and replace missing tags every day.

The trial court accepted HNH’s argument that Medrazo wasn’t injured because she was adequately informed of the dealer-added charges before she entered into the purchase contract, failed to show that she was misled or injured by HNH’s failure to comply with the law, and failed to establish the amount of restitution allegedly owed to herself or any other class member.

The court of appeals ruled that the trial court had incorrectly applied the law to the facts.  Medrazo wasn’t required to show actual reliance to be entitled to restitution based on the “unlawful” prong of the UCL, and she showed economic injury.  To violate the UCL, it’s enough that a practice is unlawful, even if not deceptive.  An actual reliance requirement doesn’t apply to UCL actions not based on a a fraud theory; the only requirement is that a plaintiff must show lost money or property caused by the violation.

Medrazo’s evidence that there was no hanger tag and that she wasn’t informed of the dealer-added charges or the total price of the motorcycle until she was presented with the sales contract sufficed to establish that she suffered a concrete, particularized, and actual invasion of an interest legally protected by California law, which requires disclosure before a consumer makes the decision to purchase a specific motorcycle.  Her economic injury was that she bought a motorcycle that HNH allegedly “was not legally allowed to sell (or at least was not allowed to sell at the price for which it was sold) because it failed to disclose the dealer-added charges on a hanger tag attached to the motorcycle.”  This was enough to constitute lost money or property as a result of the UCL violation, assuming there was in fact a violation of the disclosure law.

Likewise, Medrazo presented sufficient evidence of restitution amounts; HNH refused to disclose certain information about class members, citing privacy concerns.  Thus, when the trial court ruled that Medrazo was unable to show each class member’s dealer-added charges at the time HNH moved for judgment, it erred. Medrazo could show the amounts HNH charged for each type of motorcycle, and thus could easily establish the amounts owed as restitution if there was a violation of the law once HNH disclosed the necessary information.