Justia California Court of Appeals Opinion Summaries

Amazon fulfills orders for products sold by third-party merchants through a program it calls “Fulfillment by Amazon” (FBA). According to the First Amended Complaint (FAC), the state agency responsible for collecting sales and use tax is the California Department of Tax and Fee Administration (DTFA) has historically not collected from Amazon sales and use taxes for products sold through the FBA program.   Plaintiff filed a taxpayer action under section 526a seeking a declaration that the DTFA “has a mandatory duty to assess and collect” sales and use tax specifically from Amazon for products sold through the FBA program. The DTFA and its Director and the Amazon entities that Plaintiff named in his FAC as Real Parties in Interest all demurred to the FAC. The trial court sustained Respondents’ demurrers without leave to amend.   The Second Appellate District affirmed the trial court’s order sustaining Respondents’ demurrers. The court explained that no statute or regulation conclusively establishes that the DTFA must pursue Amazon for sales and use taxes related to FBA transactions. The language of Revenue and Taxation Code section 6015, subdivision (a) makes it clear that there may be multiple “persons” who the DTFA may regard as “retailers” for the purposes of a single transaction. The statutory framework of the Sales and Use Tax Law and the statutes vesting the DTFA with authority to administer that statutory framework led the court to conclude that whether a taxpayer is a retailer for purposes of the Sales and Use Tax Law is a discretionary determination and not a ministerial task. View "Grosz v. Cal. Dept. of Tax & Fee Administration" on Justia Law

Doe alleges that she was sexually assaulted by a massage therapist during a massage at a San Rafael Massage Envy retail location. She filed suit against the Arizona-based franchisor that licenses the “Massage Envy” brand name (MEF), and the independently owned San Rafael franchise where the assault allegedly occurred. MEF moved to compel arbitration on the basis of a “Terms of Use Agreement” presented to Doe when she checked in for a massage she had booked at the franchise location. The trial court concluded that there was no agreement to arbitrate between Doe and MEF.The court of appeal affirmed, rejecting MEF’s argument that the “Terms of Use Agreement,” which was available to Doe via a hyperlink on the electronic tablet she was given at the franchise, was a valid and enforceable “clickwrap” agreement of the sort that courts routinely enforce. Doe did not have reasonable notice that she was entering into any agreement with MEF, much less notice of the terms of the agreement. The transaction was nothing like the typical transactions in which clickwrap agreements are used; Doe went to a physical location, where she was already a member, and was handed a tablet to check in for a massage. View "Doe v. Massage Envy Franchising, LLC" on Justia Law

Beasley alleged that, during the proposed class period— January 1, 2010, through December 31, 2016—Tootsie Roll manufactured, distributed, and sold products that contained artificial trans fats in the form of partially hydrogenated oils (PHOs) and that trans fats are harmful and cause cardiovascular disease, type 2 diabetes, cancer, Alzheimer’s disease, and organ damage. Beasley alleged she purchased Tootsie Roll products containing PHOs during the class period. She sought to represent a class defined as: “All citizens of California who purchased Tootsie Products containing partially hydrogenated oil in California” during the class period. Beasley asserted the use of PHOs was unlawful and unfair under the Unfair Competition Law (UCL) (Bus. & Prof. Code, 17200 ) and breached the implied warranty of merchantability.The court of appeal affirmed the dismissal of the complaint. Beasley failed to allege cognizable injury and some of her claims were preempted by federal law (specifically a congressional enactment providing the use of PHOs is not to be deemed violative of food additive standards until June 18, 2018). The claim for breach of warranty is also preempted. Permitting the use of broad state statutory provisions governing “adulterated” foods to impose liability for PHO use before the federally established compliance date would create an obstacle to the achievement of Congress’s evident purpose of confirming the 2018 compliance date. View "Beasley v. Tootsie Roll Industries, Inc." on Justia Law

Dr. Frank Coufal and his solely owned professional corporation, La Jolla Neurological Associates (LJNA), hired an unaffiliated, third-party billing service to collect payments from patients and their insurers. Raquel Olson, the widow of a former patient, sued the doctor and his corporation (but not the third-party billing service) for unlawful debt collection under the Rosenthal Fair Debt Collection Practices Act. According to the complaint, Dr. Coufal and LJNA violated the Rosenthal Act by sending multiple bills and making incessant phone calls seeking payment for neurological services Dr. Coufal had provided to Olson’s husband before he died, even though Olson directed them to stop contacting her and to seek payment through Medicare and the VA Medical Center. Olson’s complaint did not mention any third-party debt billing service or debt collector and did not allege that Dr. Coufal or LJNA were vicariously liable for the actions of any such third party. The trial court granted a defense motion for summary judgment on the ground that the doctor and his medical corporation were not “debt collectors” within the meaning of the Rosenthal Act. Finding no reversible error in the trial court's judgment, the Court of Appeal affirmed. View "Olson v. La Jolla Neurological Associates" on Justia Law

Dog buyers claimed a puppy mill victimized them. They said the mill advertised online, negotiated by text, arranged parking lot meetups, insisted on cash, and sold underage puppies that sickened within one day and soon died. The buyers alleged the mill were Defendants. Nine buyers, joined by Caru Society for the Prevention of Cruelty to Animals, sued Defendants and moved for a preliminary injunction. The trial court found Plaintiffs were likely to succeed in proving the Defendants had violated several statutes, including the Consumers Legal Remedies Act. Defendants appealed the preliminary injunction. As a group, they filed a single opening brief and a single reply: they appeal as one group with a unified legal position.   The Second Appellate District affirmed and found that the trial court right to find likely harm to the public justified the preliminary injunction. The court explained that the trial court had a basis for finding that Defendants posed a continuing menace to the public at large. The preliminary proof was that Defendants persisted in their routine. View "Loy v. Kenney" on Justia Law

In 2008, California enacted a Property Assessed Clean Energy program (PACE) as a method for homeowners to finance energy and water conservation improvements. A PACE debt was created by contract and secured by the improved property. But like a tax, the installment payments were billed and paid as a special assessment on the improved property, resulting in a first-priority tax lien in the event of default. The named plaintiffs in these putative class actions were over 65 years old and entered into PACE contracts. The defendants were private companies who either made PACE loans to plaintiffs, were assigned rights to payment, and/or administered PACE programs for municipalities. The gravamen of the complaint in each case was that PACE financing was actually, and should have been treated as, a secured home improvement loan. Plaintiffs alleged that defendants engaged in unfair and deceptive business practices by violating consumer protection laws, including Civil Code section 1804.1(j), which prohibited taking a security interest in a senior citizen’s residence to secure a home improvement loan. Generally, a taxpayer could not pursue a court action for a refund of property taxes without first applying to the local board of equalization for a reduction and then filing an administrative claim for a refund. Here, defendants demurred to the complaints on the sole ground that plaintiffs failed to allege they first exhausted administrative remedies. The trial court agreed, sustained the demurrers without leave to amend, and entered a judgment of dismissal in each case. On appeal, plaintiffs primarily contend they were not required to pursue administrative remedies because they have sued only private companies and do not challenge “any aspect of the municipal tax process involved.” The Court of Appeal found that despite their assertions to the contrary, plaintiffs did challenge their property tax assessments. And although they did not sue any government entity, the “consumer protection statutes under which plaintiffs brought their action cannot be employed to avoid the limitations and procedures set out by the Revenue and Taxation Code.” Thus, the Court concluded plaintiffs were required to submit their claims through the administrative appeals process in the first instance. "Their failure to do so requires the judgments to be affirmed." View "Morgan v. Ygrene Energy Fund, Inc." on Justia Law

The Council for Education and Research on Toxics (CERT) brought these actions under Proposition 65 (Prop. 65) against Respondents, dozens of companies that roast, distribute, or sell coffee. CERT claimed that Respondents had failed to provide required Prop. 65 warnings for their coffee products based on the presence of acrylamide. While the litigation was pending, the Office of Environmental Health Hazard Assessment (the Agency) adopted a new regulation providing that “exposures to chemicals in coffee, listed on or before March 15, 2019, as known to the state to cause cancer, that are created by and inherent in the processes of roasting coffee beans or brewing coffee do not pose a significant risk of cancer.”   CERT moved for summary adjudication, challenging the regulation’s validity on various grounds. In opposing summary judgment, CERT also contended that regardless of the regulation, triable issues remained regarding the presence of acrylamide resulting from additives. CERT challenged the trial court’s grant of summary judgment for Respondents, its denial of its motion for fees, and its award of section 998.   The Second Appellate Court affirmed the trial court’s orders granting summary judgment and denying attorney fees. The court reversed the order denying CERT’s motion to tax costs. The court explained that Respondents’ assertion ignores claims beyond the scope of CERT’s actions that were to be released under the offers. Given that the proposed releases in section 998 offers covered this and other potential claims, the trial court could not have determined that the offers were more favorable than the judgment. Thus, the offers were invalid for purposes of section 998. View "Council for Education and Research etc. v. Starbucks Corp." on Justia Law

Plaintiffs sued Nissan, alleging the transmission in a 2013 Nissan Sentra they purchased was defective, bringing statutory claims under the Song-Beverly Consumer Warranty Act (Civ. Code 1790) and a common law fraud claim alleging that Nissan, by fraudulently concealing the defects, induced them to purchase the car. The trial court dismissed the fraudulent inducement claim as barred by the “economic loss rule.” The court also struck the plaintiffs’ request for punitive damages.The court of appeal reversed. Under California law, the economic loss rule does not bar the fraudulent inducement claim. The fraudulent inducement exception to the economic loss rule applies; fraudulent inducement is a viable tort claim under California law. The plaintiffs adequately pleaded that the transmissions installed in numerous Nissan vehicles (including the one they purchased) were defective; Nissan knew of the defects and the hazards they posed; Nissan had exclusive knowledge of the defects but intentionally concealed and failed to disclose that information; Nissan intended to deceive plaintiffs by concealing known transmission problems; plaintiffs would not have purchased the car if they had known of the defects; and plaintiffs suffered damages in the form of money paid to purchase the car. View "Dhital v. Nissan North America, Inc." on Justia Law

Plaintiff purchased a new pickup truck. FCA US LLC (FCA) is the manufacturer of the truck. Within 900 miles the truck engine overheated and the truck had to be towed to the dealership for repair. The dealership replaced a defective radiator hose clamp, and visually inspected the cylinder heads for cracks that are often caused by overheating. The dealership did not undertake a standard dye test for leaks. The engine continued to overheat and after a few thousand miles the water pump failed. The dealership replaced the water pump under warranty. Plaintiff filed a complaint against FCA alleging causes of action for breach of express warranty and breach of implied warranty. FCA made an offer of settlement of $30,000. Plaintiff refused the offer, and the matter went to jury trial. The jury found FCA breached its express warranty and awarded $20,154 in compensatory damages plus a $10,000 civil penalty, for a total of $30,154. The jury also found FCA breached its implied warranty and awarded $30,154 in compensatory damages.   The Second Appellate District affirmed. The court reasoned that FCA failed to show that any of the damages the jury awarded included registration renewal fees or insurance premiums. The jury simply awarded a lump sum of damages. With such an undifferentiated award, there is no way to determine what portion, if any, of the verdict was rewarded on an improper basis. Further, FCA refused to repurchase the truck or even investigate whether it was a lemon. That is more than sufficient to show a willful violation. View "Figueroa v. FCA US" on Justia Law

Plaintiff’s complaint alleged Circle K violated the Fair Credit Reporting Act (FCRA) by failing to provide him with proper FCRA disclosures when it sought and received his authorization to obtain a consumer report about him in connection with his application for employment, and by actually obtaining the consumer report in reliance on that authorization. Plaintiff appealed from a judgment of dismissal entered in favor of respondent Circle K Stores Inc. (Circle K) and against Plaintiff after the trial court sustained Circle K’s demurrer to Plaintiff’s CLASS ACTION COMPLAINT (complaint) without leave to amend.     The Fifth Appellate affirmed the judgment of dismissal. The court explained that Plaintiff did not allege he did not receive a copy of the consumer report that Circle K obtained. Plaintiff does not allege the consumer report obtained by Circle K contains any defamatory content or other per se injurious content. He does not allege the consumer report contained false or inaccurate information. Similarly, there are no allegations of any exposure to a material risk of future harm, imminent or substantial. Thus, there was no injury to Plaintiff’s protected interest in ensuring fair and accurate credit (or background) reporting. The court also rejected Plaintiff’s claims he suffered “informational injury” sufficient to confer upon him standing to maintain his action. “Informational injury that causes no adverse effects”—e.g., where required information is provided but is provided in the wrong format as in the present case—has been held insufficient to satisfy Article III standing. View "Limon v. Circle K Stores" on Justia Law