Lemon Law

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Procedural Posture

In an action by plaintiffs Salmon Norway, Inc., on behalf of themselves and other former tenants, brought under the unfair competition law, Cal. Bus. & Prof. Code §17200 et seq., in which plaintiffs alleged unlawful assessments of nonrefundable tenant charges, defendants petitioned for review of judgment of Court of Appeal of California, First Appellate District, which approved disgorgement into fluid recovery fund without class action certification.

Overview

Plaintiffs were former tenants of properties owned and managed by defendants; each plaintiff had been required to pay $ 100 as a nonrefundable security and administrative fee at the time they entered into the lease. Plaintiffs alleged that defendants’ practice of assessing tenant initiation expense reimbursement fees and their practice of assessing both liquidated damages and the remainder of the rent when tenants terminated their leases before the end of the term were unlawful and unfair business practices that violated the unfair competition law (UCL), Cal. Bus. & Prof. Code §17200 et seq. The action was not certified as a class action. Appellate court approved trial court’s order directing disgorgement into a fluid recovery fund. The court reversed, concluding that disgorgement into a fluid recovery fund was not a remedy available in representative UCL actions. The court declined to read Cal. Bus. & Prof. Code §17203 as encompassing the authority to fashion a fluid recovery remedy when such action had not been certified as a class action. The court also held that Cal. Civ. Code §1950.5 did not apply to defendants’ nonrefundable security and administrative fees.

Outcome

Judgment reversed and case remanded; disgorgement into a fluid recovery fund was not available because this action, which had been brought under the unfair competition law, had not been certified as a class action.

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