California Supreme Court Confirms Equitable Remedies Under UCL and FAL Causes of Action Are Tried by the Court, Not the Jury

Yesterday, the California Supreme Court issued an opinion in Nationwide Biweekly Administration, Inc. v. Superior Court of Alameda County (S250047, April 30, 2020) (“Nationwide”) resolving the conflict in the Court of Appeal decisions regarding whether, when the government seeks civil penalties as well as an injunction or other equitable remedies under the unfair competition law (UCL) and the false advertising law (FAL), the causes of action are to be tried by the court or a jury. The Supreme Court held that the causes of action established by the UCL and FAL at issue in this case are equitable in nature and are properly tried by the court rather than a jury.

In Nationwide, the district attorneys of four counties, acting on behalf of the People, filed a civil complaint alleging that Defendants, operating a debt payment service, had violated the UCL and FAL for misleading consumers regarding its debt repayment program. The People requested that the court (1) issue an injunction prohibiting the business practices found to violate the provisions of the UCL or FAL, (2) order restitution of all money wrongfully acquired by Defendants from California consumers in violation of the UCL and FAL, and (3) impose civil penalties up to $2,500 for each violation of the UCL or FAL found by the court. In their answer, Defendants requested a jury trial. After briefing, the trial court granted the People’s motion to strike the jury demand. The Court of Appeal initially summarily denied Defendants’ petition for writ of mandate. The Supreme Court granted Defendants’ petition for review and retransferred the matter to the Court of Appeal with directions to issue an order requiring the People to show cause why Defendants do not have a right to a jury trial. After briefing and argument, the Court of Appeal held that under article I, section 16 of the California Constitution—the jury trial provision—Defendants had a right to a jury trial.

On review, the Supreme Court concluded that the legislative history and underlying purpose of the statutory provisions in question demonstrate that the consumer protection statutes require the courts to utilize their traditional flexible equitable authority and judicial expertise of a court of equity, and not by a jury, including when civil penalties as well as injunctive relief and restitution are sought. According to the court, “the gist of a civil action under the UCL and FAL is equitable rather than legal in nature. Such causes of action are equitable in nature either when brought by a private party seeking only an injunction, restitution, or other equitable relief or when brought by the Attorney General, a district attorney or other governmental official seeking not only injunctive relief and restitution but also civil penalties.” Further, the constitutional right to jury trial in state court civil proceedings is governed only by the civil jury trial provisions of each individual state’s own constitution. Accordingly, the United States Supreme Court decision in Tull v. United States (1987) 481 U.S. 412—interpreting application of the civil jury trial provision of the Seventh Amendment to the federal Constitution—only applies to federal court proceedings, not state court proceedings.

Finally, the Supreme Court made clear that it limits the holding in this case to the UCL and FAL setting and expresses no opinion “regarding how the state constitutional jury trial right applies to other statutory causes of action that authorize both injunctive relief and civil penalties.”

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May 1, 2020