Unfair Competition By statute, California prohibits the following types of unfair competition as (1) any unlawful, unfair or fraudulent

business act or practices; (2) any act prohibited by Business and Profession Code section 17500; or, (3) any unfair, deceptive, untrue or misleading advertising. This law is broad in scope. It is not confined to anticompetitive business practices, but is also directed toward the publics right to protection from fraud, deceit and unlawful conduct. It is not a substitute for contract or tort actions, but provides an equitable means through which both public prosecutors and private individuals can bring suit to prevent unfair business practices and restore money or property to victims. Courts have repeatedly recognized the importance of private enforcement efforts. As noted below, it can be an effective tool with respect to claims arising from mortgage originations, predatory lending practice or foreclosure related actions. A plaintiff must have standing to assert a cause of action for unfair competition; the same requirements apply to causes of action under section 17200 and 17500. Plaintiff must show (a) injury in fact, (b) lost money or property and (c) causation. Where the alleged harm is economic injury, injury in fact and lost money or property are one and the same. There are innumerable ways in which economic injury may occur; a plaintiff may (1) surrender more or acquire less than he or she otherwise would have; (2) have a property interest diminished; (3) be deprived of money or property; or, (4) enter into an unnecessary transaction that costs money or property. First, an unfair business act or practice is broadly defined. The broad language enables courts to deal with the innumerable new schemes which the fertility of mans invention would contrive. An unfair business act or practice need only meet one of the three statutory criteria: it can either be unlawful, unfair or fraudulent. Since 1992 even a

single act may create liability. Past and completed acts are included and it need only impact a single victim. A breach of contract may form the basis of an unfair practice only if it constitutes conduct that is also unlawful, unfair or fraudulent. Persons or entities that deal with the public, even if they are nonprofit entities, may engage in unfair competition. Governmental entities, however, are not included. Liability requires personal participation in the act, but an employer is bound by the doctrine of respondeat superior. Where a federally regulated institution or a federal law is involved, there is a potential for federal preemption. Lenders, real estate agents, title companies, and others involved in the origination, lending and foreclosure process would be covered. An act or practice is unlawful if it violates any federal, state or local law, including criminal, civil, regulatory or common-law and court-made rules. Assertion of a contract right one does not have or inclusion of an unlawful provision in a contract, even it one never intends to enforce it satisfy the unlawful prong. Violations of laws for which there is no direct private right of action be redressed as an unlawful business act or practice. All elements of the borrowed law must be established. Specific defenses available against a violation of the borrowed are applicable to the unlawful practice claim. Equitable defenses, however, cannot defeat such a claim. Possible federal violations arising in the origination, lending and foreclosure process include: the Truth in Lending Act [mandates disclosures and requires a properly completed and delivered right to rescind notice], Home Ownership and Equity Protection Act [regulates specific high cost loans], Fair Housing Act [prohibits lending and other housing discrimination], and the Real Estate Settlement Procedures Act [regulates loan documentations and closing process and limits markups and kickbacks]. In evaluating

potential claims, however, federal preemption issues may arise. State laws that may apply include Home Equity Sales Contract Act [regulating transfers of homes in foreclosure], Foreclosure Consultant Act [regulating persons who assist persons in foreclosure], Fair Debt Collection Practices Act [regulates manner in which debts are collected], and Fair Employment and Housing Act [prohibits lending and other housing discrimination]. The unfairness prong is intentionally broad so as to allow courts maximum discretion to prohibit new scheme to defraud. This prong sweeps within its scope acts and practices not specifically proscribed by any other law. Conduct that is lawful, however, cannot be unfair. This safe harbor rule does not prohibit an action because some other statute on the subject does not, itself, provide for the action or prohibit the challenged conduct; a law must actually bar the action or clearly permit the conduct. No prior determination of unfairness is required and industry custom is no defense. There is, however, some uncertainty about the appropriate definition in the consumer context. Some courts require that unfairness must be tethered to some legislatively declared policy or proof of some actual or threatened impact on competition. Other courts adhere to a balancing test that weighs the unfair practices impact on its alleged victim against the reasons, justifications and motives of the alleged wrongdoers. Some courts have adopted the test used by the Federal Trade Commission that requires (a) the injury to be substantial; (b) the injury to outweigh countervailing benefits to consumers or competition; and, (c) the injury could not have readily been avoided. Given this uncertainty, courts may apply all three standards before dismissing a claim. Falsifying loan application to qualify a borrower and

deceptively inducing a borrower into a loan with unfavorable terms has been found to be unfair and fraudulent. Allegations that a lender placed borrowers into unsuitable mortgage product resulting in loss of equity may be an unfair practice. Unconscionable terms in a contract may constitute an unfair practice. Charging periodic inspection fees to delinquent residential borrowers is not an unfair practice. An act is fraudulent if members of the public are likely to be deceived. The fraud prong has little resemblance to common law fraud. For purposes of standing, however, for purposes of standing the plaintiff, whether in an individual case or class action, must demonstrate injury, causation and actual reliance. It does not require advertising or even a representation. Unless the representations target a particularly vulnerable group, misleading is based on a reasonable consumer standard. Thus, the manner in which a third party guarantee in connection with a nursing home was found deceptive. Second, Business and Profession Code section 17500 prohibits the making of false or misleading statements intended to induce any person to dispose or real or personal property, perform services, or enter into any other related obligation. A statement is false or misleading if members of the public are likely to be deceived, actual deception or confusion is not required. It encompasses not just false statement, but those statements that may be accurate on some level, but will nonetheless tend to mislead or deceive. Use of words that have double meaning cannot escape liability. In the absence of evidence that the advertising targeted particularly vulnerable consumers, the standard is that of the ordinary consumer acting reasonably under the circumstances, rather than the least sophisticated consumer. No specific intent to deceive is required. Statements made to individuals about a loan come within the meaning of section 17500. A borrower has an

actionable claim against a lender for as hidden fees. A systematic scheme by lenders to steer borrowers into loans that were the most lucrative to the lender on the secondary market by representing to borrowers that it was the best loan for the borrower, without having performed any appropriate analysis is also actionable. False advertising to quote a certain interest rate and then compute it on 360-day year rather than a 365 day year even though TILA disclosure accurately reflected actual rate. A false or misleading statement that is actionable under the Landham Act is also actionable under section 17500. Finally, a false advertising under section 17500 is also an unfair practice under section 17200. The statute of limitations is four years under section 17200. Since there is no specific statute of limitations that governs claims under section 17500, it is assumed that it is governed by the shorter, general three-year statute of limitations provided in Code of Civil Procedure section 338(h). These statutes of limitations should run from the date of discovery. These statutes of limitations generally govern over any shorter statute of limitations. This result may be different if the borrowed statute is a federal statute which has a shorter limitations period then based on principles of preemption the shorter federal statute controls. Standing to assert such a cause of action requires that the plaintiff have a transactional nexus with the underlying act or practice such that he or she has suffered injury in fact and has lost money or property as a result of the unfair competition. Such actions can be maintained as a representative or class action if the requirements of a class action are met and the representative plaintiff has standing. Unless the action is brought by a public prosecutor, remedies are limited to equitable relief in the form of

injunction, disgorgement of moneys received and/or restitution; damages are not recoverable. Injunctive relief is not available to wrongs that have been completed, absent a showing that past violations will probably reoccur. While the distinction between damages and restitution can be elusive, the goal of restitution is to restore plaintiff to the status quo ante. Since these private remedies are not punitive, statutory penalties and punitive damages are not recoverable by a private party. The remedies are cumulative to those impose under other laws. Attorney fees are not recoverable unless they are otherwise authorized by contract or a statute. As these actions are equitable in nature, one is not entitled to a jury trial.
Ca. Bus. & Prof. Code 17200. Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949, 119 Cal.Rptr.3d 296. Hewlett v. Squaw Valley Ski Corp. (1007) 54 Cal.App.4th 499, 520, 63 Cal.Rptr.3d 118. Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1150, 131 Cal.Rptr.2d 29. Kraus v. Trinity Management Services (2000) 23 Cal.4th 116, 125, 96 Cal.Rptr.2d 485. Buckland v. Threshold Enterprises Ltd. (2007) 155 Cal.App.4th 798, 819, 66 Cal.Rptr.3d 543. Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 1345, 90 Cal.Rptr.3d 589. Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 325, 120 Cal.Rptr.3d 74. Id. Cel-Tech Communications v. L.A. Cellular (1999) 20 Cal.4th 163, 180, 83 Cal.Rptr.2d 548. Barquis v. Merchants Collection Assn (1972) 7 Cal.3d 94, 112, 101 Cal.Rptr. 745. Morgan v. AT&T Wireless, Inc. (2009) 177 Cal.App.4th 1235, 1254, 99 Cal.Rptr.3d 768. UFW v. Dutra Farms (2000) 83 Cal.App.4th 1146, 1163-1164, 100 Cal.Rptr.2d 251.. Ca. Bus. & Prof. Code 17203. Allied Grape Growers v. Bronco Wine Co. (1988) 203 Cal.App.3d 432, 453, 249 Cal.Rptr. 872.

Puentes v. Wells Fargo Home Mortg., Inc. (2008)160 Cal.App.4th 638, 645, 72 Cal.Rptr.3d 903. Pines v. Tomson (1984) 160 Cal.App.3d 370, 386, 206 Cal.Rptr. 866 [Christian Yellow Pages]. People for Ethical Treatment of Animals, Inc. v. Cal. Milk Producers Advisory Bd. (2005) 125 Cal.App.4th 871, 878-879, 22 Cal.Rtpr.3d 900. People v. Toomey (1984) 157 Cal.App.3d 1, 15, 203 Cal.Rptr. 642. Grimes v. New Century Mortgage (9th Cir. 2003) 340 F.3d 1007, 1010. Smith v. Wells Fargo Bank, N.A. (2006) 135 Cal.App.4th 1453, 1480, 36 Cal.Rptr.3d 653; Martinez v. Wells Fargo Home Mortg., Inc. (9th Cir. 2010) 598 F.3d 549, 554-556 [national bank]; Conder v. Home Savings of Amer. (C.D. Ca. 2010) 680 F.Supp.2d 1168, 1175 [national savings and loan]. South Bay Chevrolet v. General Motors Acceptance Corp. (1999) 72 Cal.App.4th 861, 870, 85 Cal.Rtpr.2d 301. People v. National Assn of Realtors (1981) 120 Cal.App.3d 459, 473474, 186 Cal.Rptr. 728. Quelimane Co. v Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 43, 77 Cal.Rptr.2d 709. Inline Inc. v. A.V. L. Holding Co. (2005) 125 Cal.App.4th 895, 902, 23 Cal.Rptr.3d 216 Saunders v. Superior Court (1994) 27 Cal.App.4th 832, 838-839, 33 Cal.Rptr.2d 438. People v. McKale (1975) 23 Cal.3d 626, 635, 159 Cal.Rptr. 811. Summit Tech. v. High-Line Medical Instruments, Co. (C.D. Ca. 1996) 933 F.Supp. 918, 943. Crawford v. Farmers Group, Inc. (1984) 160 Cal.App.3d 1164, 11711172, 207 Cal.Rptr. 155. People v. Duz-Mor Diagnostic Laboratory (1998) 68 Cal.App.4th 654, 673, 80 Cal.Rptr.2d 419. Ticconi v. Blue Shield of Cal. Ins. Co. (2008) 160 Cal.App.4th 528, 543, 72 Cal.Rptr.3d 888. 15 U.S.C. 1601, et seq.; Velazquez v. GMAC Mortg. Corp. (C.D. Ca. 2008) 605 F.Supp.2d 1044, 1068; 15 U.S.C. 1639. 42 U.S.C. 3601, et seq. 12 U.S.C. 2601, et seq.; Morales v. Countrywide Home Loans, Inc. (C.D. Ca. 2008) 531 F.Supp.2d 1225, 1226. Amparan v. Plaza Home Mortg., Inc. (N.D. Ca. 2008) 678 F.Supp.2d 961, 976 [TILA violations not preempted but conduct lawful under TILA is preempted]. Ca. Civ. Code 1695, et seq. Ca. Civ. Code 2945, et seq. Ca. Civ. Code 1788.4, et seq. Ca. Gov. Code 12955. Podolsky v. First Healthcare Corp. (1966) 50 Cal.App.4th 632, 647, 58

Cal.Rptr.2d 89. Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949, 119 Cal.Rptr.3d 296 Cal-Tech Communications, Inc. v. Los Angeles Cellular Tel. Co. (1999) 20 Cal.4th 163, 182, 83 Cal.Rptr.2d 548. Hauk v. JP Morgan Chase Bank, (9th Cir. 2009) 552 F.3d 1114, 1122. People v. James (1981) 122 Cal.App.3d 25, 53-36, 177 Cal.Rptr. 110. Chern v. Bank of America (976) 15 Cal.3d 866, 876, 127 Cal.Rptr. 110. Camacho v. Automobile Club of S. Cal. (2006) 142 Cal.App.4th 1394, 1400, 48 Cal.Rptr.3d 770. Gregory v. Albertsons Inc. (2002) 104 Cal.App.4th 845, 854, 128 Cal.Rptr.2d 389. Walker v. Countrywide Home Loans,Inc. (2002) 98 Cal.App.4th 1158 1170, 121 Cal.Rptr.2d 79. Camacho v. Automobile Club of S. Cal. (2006) 142 Cal.App.4th 1394, 1403, 48 Cal.Rptr.3d 770. Drum v. San Fernando Valley Bar Assn (2010) 182 Cal.App.4th 247, 256-257, 106 Cal.Rptr.3d 46. Hardy v. Indymac Federal Bank (E.D. Ca. 2009) 263 F.R.D. 586, 591. Sanchez v. Bear Stearns Residential Mortg. Corp. (S.D. Ca. 2010) 2010 U.S. Dist. LEXIS 46043 *16-17 [unfair if can be tether to any underlying law]; Similia v. American Sterling Bank (S.D. Ca. 2010) 2010 U.S. Dist. LEXIS 108440 *14-16 [dismissed because not sufficient allegations that misconduct tethered to underlying law]. Perdue v. Crocker Natl Bank (1985) 38 Cal.3d 913, 927-928, 216 Cal.Rptr. 345. Walker v. Countrywide Home Loans,Inc. (2002) 98 Cal.App.4th 1158 1175-1178, 121 Cal.Rptr.2d 79. Committee on Childrens Television v. General Foods Corp. (1983) 35 Cal.3d 197, 211, 197 Cal.Rptr. 781. People v. Fremont Life Ins. Co. (2002) 104 Cal.App.4th 508, 519, 128 Cal.Rptr.2d 463. In re Tobacco II Cases (2009) 46 Cal.4th 298, 312-314, 93 Cal.Rptr.3d 559. See American Philatelic Soc. v. Claibourne (1935) 3 Cal.2d 689, 696699, 46 P.2d 135. Quelimane Co. v. Stewart Title Guar. Co. (2003) (1998) 19 Cal.4th 26, 55, 77 Cal.Rptr. 709. Podolsky v. First Healthcare Corp. (1996) 50 Cal.App.4th 632, 649, 58 Cal.Rptr.2d 89. People v. Toomey (1984) 157 Cal.App.3d 1, 16, 203 Cal.Rptr. 642. Colgan v. Leathern Tool Group, Inc. (2006) 135 Cal.App.4th 663, 679, 38 Cal.Rptr.3d 36. Garvai v. Bd. of Chiropractic Examiners (1963) 216 Cal.App.2d 374, 379, 31 Cal.Rtpr. 187. Lavie v. Procter & Gamble Co. (2003) 105 Cal.App.4th 496, 504, 129

Cal.Rptr.2d 486. People v. Wahl (1940) 39 Cal.App.2d Supp. 771, 773. Jefferson v. Chase Home Financial (N.D. Ca. 2007) 2007 US Dist. LEXIS 94652 *50. Brewer v. Indymac Bank (E.D. Ca. 2009) 609 F.Supp.2d 1104, 1122. Leyvas v. Bank of America Corp. (S.D. Ca. 2009) 601 F.Supp.2d 1201, 1220. Chern v. Bank of America (1976) 15 Cal.3d 866, 876, 127 Cal.Rptr. 110. Summit Technology, Inc. v. High-Line Medical Instruments, Co. (C.D. Ca. 1996) 933 F.Supp. 918, 943. Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 950, 119 Cal.Rptr.2d 296. Bus. & Prof. Code 17208. Cazares v. Household Fin. Corp. (C.D. Ca. 2005) 2005 US Dist LEXIS 39222 *40 n 17 [conceding 3 year statute applies]. Broberg v. Guardian Life Ins. Co. of America (2009) 171 Cal.App.4th 912, 920-921, 90 Cal.Rptr.3d 925, but see Salenga v. Mitsubishi Motors Credit of America, Inc. (2010) 183 Cal.App.4th 986, 996, 107 Cal.Rptr.3d 386 [no discovery rule]. Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 178-179, 96 Cal.Rptr.2d 518 [wage claim not subject to shorter Labor Code statute of limitations]. Silvas v. E*Trade Mortgage Corp. (S.D. Ca. 2006) 421 F.Supp.2d 1315, 121, affd (9th Cir. 2008) 514 F.3d 1001, 1007 n. 3. Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 13451350, 90 Cal.Rptr.3d 589. Harper v. 24 Hour Fitness, Inc. (2008) 167 Cal.App.4th 966,975-976, 84 Cal.Rptr.3d 532. Korea Supply Co. v. Lockhead Martin Corp. (2003) 29 Cal.4th 1134, 1146-1147, 131 Cal.Rptr2d 29. Bank of the West v. Superior Court (1992) 2 Cal.App.4th 1254, 1266, 10 Cal.Rptr.2d 538. Madrid v. Perot Systems Corp. (2005) 130 Cal.App.4th 440, 465, 30 Cal.Rptr.3d 210. Inline, Inc. v. A.V.L. Holding Co. (2005) 125 Cal.App.4th 895, 903, 23 Cal.Rptr.3d 216. Pineda v. Bank of America, N.A. (2010) 50 Cal.4th 1389, 1401-1402 n.14, 117 Cal.Rptr.3d 377. Clark v. Superior Court (2010) 50 Cal.4th 605, 614-615, 112 Cal.Rptr.3d 876; compare People v. Orange County Charitable Services (1999) 73 Cal.App.4th 1054, 1076, 87 Cal.Rptr.2d 253 [public prosecutor can recover statutory penalties]. Bus. & Prof. Code 17205; People v. Fremont Life Ins. Co., supra, 104 Cal.App.4th at 532. Cel-Tech Communications v. L.A. Cellular (1999) 20 Cal.4th 163, 173, 83 Cal.Rptr.2d 548.

Hodge v. Superior Court (2006) 145 Cal.App.4th 278, 284-285, 51 Cal.Rptr.3d 519.