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BUSINESS & PROFESSIONS CODE

Division 7 General Business Regulations

§ 17535. Obtaining injunctive relief

Any person, corporation, firm, partnership, joint stock company, or any other association or organization which violates or proposes to violate this chapter may be enjoined by any court of competent jurisdiction. The court may make such orders or judgments, including the appointment of a receiver, as may be necessary to prevent the use or employment by any person, corporation, firm, partnership, joint stock company, or any other association or organization of any practices which violate this chapter, or which may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of any practice in this chapter declared to be unlawful.

Actions for injunction under this section may be prosecuted by the Attorney General or any district attorney, county counsel, city attorney, or city prosecutor in this state in the name of the people of the State of California upon their own complaint or upon the complaint of any board, officer, person, corporation or association or by any person who has suffered injury in fact and has lost money or property as a result of a violation of this chapter. Any person may pursue representative claims or relief on behalf of others only if the claimant meets the standing requirements of this section and complies with Section 382 of the Code of Civil Procedure, but these limitations do not apply to claims brought under this chapter by the Attorney General, or any district attorney, county counsel, city attorney, or city prosecutor in this state.


Added Stats 1941 ch 63 § 1. Amended Stats 1972 ch 244 § 1, ch 711 § 3.
Amendment approved by voters, Prop. 64 § 5, effective November 3, 2004.

ANNOTATIONS

Amendments:

1972 Amendment:
Added (1) the second sentence of the first paragraph; and (2) ", county counsel, city attorney, or city prosecutor" after "district attorney" in the second paragraph.

2004 Amendment:
Amended the second paragraph by (1) Substituting "who has suffered injury in fact and has lost money or property as a result of a violation of this chapter" for "acting for the interests of itself, its members or the general public"; and (2) adding the second sentence.

Historical Derivations:
Former CC § 3369, as amended Stats 1933 ch 953 § 1.

Note:
Proposition 64, effective November 3, 2004, provides:
SEC. 7. In the event that between July 1, 2003, and the effective date of this measure, legislation is enacted that is inconsistent with this measure, said legislation is void and repealed irrespective of the code in which it appears.
SEC. 8. In the event that this measure and another measure or measures relating to unfair competition law shall appear on the same statewide election ballot, the provisions of the other measures shall be deemed to be in conflict with this measure. In the event that this measure shall receive a greater number of affirmative votes, the provisions of this measure shall prevail in their entirety, and the provisions of the other measures relating to unfair competition law shall be null and void.
SEC. 9. If any provision of this act, or part thereof, is for any reason held to be invalid or unconstitutional, the remaining provisions shall not be affected, but shall remain in full force and effect, and to this end the provisions of this act are severable.
Cross References:
Injunctive relief against violations of provisions governing unfair competition: B & P C §§ 17202 et seq
Applicability of this section to violations of provisions pertaining to purported fact-based or brand-comparison advertisements: B & P C § 17508
Applicability of this section to misrepresentation of blind labor: B & P C § 17522
Undertaking required for issuance of injunction: CCP § 529
Collateral References:
Witkin Summary (9th ed) Equity §§ 96, 99, Sales §§ 315, 320
Cal Jur 3d (Rev) Consumer and Borrower Protection Laws §§ 2, 79, 142
Law Review Articles:
Controlling false and misleading advertising. 29 LA Bar B 365
Private and public remedies for fraudulent business practices in California. 6 Loyola U of LA LR 312
Fraudulent advertising: Right of public attorney to seek restitution for consumers. 4 Pacific LJ 168
Law enforcement's role in consumer protection: 14 Santa Clara LR 555
Attorney General's Opinions:
Right of Poultry Improvement Commission to initiate injunction proceedings to curb false and misleading statements by entrants as to contest results. 28 Ops. Cal. Atty. Gen. 71
Annotations
Right to enjoin business competitor from unlicensed or otherwise illegal acts or practices. 90 ALR2d 7
Right of state, public official, or governmental entity to seek, or power of court to allow, restitution of fruits of consumer fraud, without specific statutory authorization. 55 ALR3d 198
Validity of express statutory grant of power to state to seek, or to court to grant, restitution of fruits of consumer fraud. 59 ALR3d 1222

NOTES OF DECISIONS

1. In General

2. Actions; Parties

3. Available Remedies

4. Proceedings

5. Jurisdiction

1. In General
A bank's financing of allegedly fraudulent installment contracts between a seller and buyers of certain merchandise did not constitute the type of deceptive business practice enjoinable under CC § 3369 and B & P C § 17535 where the contracts were valid on their face, even though the bank allegedly had knowledge of the fraudulent nature of the contracts; hence, plaintiffs could not maintain an action against the bank as private attorneys general for the benefit of the public pursuant to those statutes. Payne v United California Bank (1972, 1st Dist) 23 Cal App 3d 850, 100 Cal Rptr 672
The trial court properly granted a preliminary injunction prohibiting an unlicensed person from using the term "accounting" in connection with his accounting business in violation of the Accountancy Act (Bus. & Prof. Code, § 5000 et seq.). Such use constitutes practices which are deceptive and unfair on their face, and Bus. & Prof. Code, § 17535, authorizes the remedy of injunction if a person uses specific types of business practices that are deceptive and unfair on their face. Furthermore, the granting of the preliminary injunction was proper as tending to preserve the status quo, interpreted as that which existed before defendant started using the prohibited terms. People v Hill (1977, 1st Dist) 66 Cal App 3d 320, 136 Cal Rptr 30
The 1972 amendment to the unfair trade practice statute, Bus. & Prof. Code, § 17535, declaring that the court may make such orders or judgments which may be necessary to restore to any person any money or property which may have been acquired by means of an unfair trade practice, was intended not to create a new power in the trial court but to simply clarify existing law on the point of remedies available. Thus, a plaintiff may seek relief under the statute, even though he has commenced his suit prior to the effective date of the amendment. Fletcher v Security Pacific Nat'l Bank (1979) 23 Cal 3d 442, 153 Cal Rptr 28, 591 P2d 51
Under Bus. & Prof. Code, § 17535, which authorizes injunctions against violations of statutes governing false advertising (Bus. & Prof. Code, § 17500 et seq.), though the trial court is given broad authority to fashion a remedy that will prevent violations and deter future violations, it cannot enjoin an event that has already transpired; a showing of threatened future harm or continuing violation is required. Thus, in an action against a seller of discount casino and shopping coupons, a permanent injunction containing prohibitions and requirements similar to those in an earlier preliminary injunction was properly issued, where the seller had failed to comply with the terms of the preliminary injunction, giving the trial court good reason to feel that his misleading and unfair trade practices would continue. Since all provisions of the permanent injunction were necessary to the objective of preventing future violations, the injunction was not too broad in scope. People v Toomey (1984, 1st Dist) 157 Cal App 3d 1, 203 Cal Rptr 642
The false advertising laws of B & P C §§ 17500 et seq., prohibiting untrue or misleading statements, undoubtedly apply to representations made by fundraisers with the intent of obtaining charitable solicitations. B & P C § 17535 allows the Attorney General to seek injunctive relief against certain practices violating § 17500. The test of a cause of action is whether the advertising is such that members of the public are likely to be deceived. Allegations of actual deception, reasonable reliance, and damage are unnecessary. People v Orange County Charitable Services (1999, 4th Dist) 73 Cal App 4th 1054, 1075, 87 Cal Rptr 2d 253
Trial court properly granted judgment against claims brought under Cal. Bus. & Prof. Code §§ 17500 and 17200 for false advertising and unfair competition against a seller of homeopathic medicines where the party bringing the action claimed that the seller was making false claims in connection with the marketing of the products but offered no evidence in support of its allegations; the legislature had provided that the burden of proof in such actions should lie with the party claiming that the advertising claims were false, and the appellate court would not change the law to require the seller to prove that the claims were true. National Council Against Health Fraud, Inc. v King Bio Pharmaceuticals, Inc. (2003, 2nd Dist) 107 Cal App 4th 1336, 133 Cal Rptr 2d 207

2. Actions; Parties
In a civil action by the Attorney General charging false advertising and seeking several forms of relief, mandamus was appropriate to review rulings declaring that the complaint did not allege certain matters with sufficient specificity, and also striking all forms of relief sought by plaintiff other than an injunction in futuro. People v Superior Court (1973, 1st Dist) 35 Cal App 3d 710, 111 Cal Rptr 14
Class allegations were properly stricken from plaintiff's complaint, alleging that land scheme was deceptive and misleading and was falsely registered under California Subdivided Lands Act, where settlement in separate action had been negotiated between defendant and Attorney General and Real Estate Commissioner. Kamm v California City Development Co. (1975, CA9 Cal) 509 F.2d 205
In an action by the People against individuals and corporations seeking injunctive relief, civil penalties, and restitution to investors in connection with an alleged oil drilling contract fraud, the trial court did not err or abuse its discretion in permitting a purported class of defrauded investors to intervene, where both complaints sought restitution to the investors based on the same underlying facts and the intervenors stood to gain directly from the judgment should the People obtain all relief sought, where there was a risk that the interveners' contributions to the venture would be used primarily to pay statutory penalties, with the result that the People's action, ostensibly brought to "protect consumers," would deprive them of the fruit of their venture, and where there were no circumstances that would justify excluding persons protected by consumer legislation from an action brought to vindicate their interests. People v Superior Court of Ventura County (1976) 17 Cal 3d 732, 131 Cal Rptr 800, 552 P2d 760
The rule that a defendant in a class action has a due process right to secure a determination of the composition of the class prior to determination of the merits of the action, is not applicable to an action by the People under Bus. & Prof. Code, § 17535, providing the Attorney General or any district attorney, with the authority to bring an action for injunctive relief or restitution against a business organization, and under § 17536, providing for the imposition of civil penalties in such an action. Thus, in an action by the Attorney General and a county district attorney against the owners of land for making sales to the public in violation of the Subdivided Lands Act (Bus. & Prof. Code, § 11000 et seq.), and for making misrepresentations in the sale of such land, the trial court was not required to treat the matter as a class action requiring notice to all vendees for whom restitution was sought prior to a determination of the merits. People v Pacific Land Research Co. (1977) 20 Cal 3d 10, 141 Cal Rptr 20, 569 P2d 125
Consumer protection actions brought by the People, seeking injunctive relief, civil penalties and restitution pursuant to Bus. & Prof. Code §§ 17535, 17536, prohibiting false advertising, are not the equivalent of class actions brought by private parties so as to require class-action procedural safeguards to protect a defendant from multiple suits and other harmful consequences, but are fundamentally law enforcement actions designed to protect the public. A request for restitution on behalf of vendees in such an action is not the primary objective but is only ancillary to the remedies of injunction and imposition of civil penalties sought for the benefit of the public. Moreover, the role of the Attorney General or other governmental official who files the action as a protector of the public may be inconsistent with the welfare of the class so that he could not adequately protect their interests, the claims and defenses are not typical of the class, and, since a trial court has the inherent power to order restitution as a form of ancillary relief, it cannot be said that intervention by private individuals would enlarge the issues or change the nature of the action. People v Pacific Land Research Co. (1977) 20 Cal 3d 10, 141 Cal Rptr 20, 569 P2d 125
The constitutional safeguards applicable in the criminal area do not apply in a case presenting the possible exposure to civil penalties. Thus, in an action alleging violation of a preliminary injunction (entered under Bus. & Prof. Code, § 17535) against violation of statutes governing false advertising (Bus. & Prof. Code, § 17500 et seq.), since the penalty provision (Bus. & Prof. Code, § 17535.5) imposed civil penalties, the action was not criminal in nature, and the defendant was not entitled to bifurcation of the proceedings or a jury trial. People v Toomey (1984, 1st Dist) 157 Cal App 3d 1, 203 Cal Rptr 642
Plaintiff's cause of action against an insurer for which plaintiff performed plumbing and insurance claim work, for unfair competition, was dismissed with leave to amend. Private individuals cannot seek damages for unfair business practices under B & P C § 17200. Private remedies are limited to equitable relief; and civil penalties are recoverable only by specified public officers (B & P C §§ 17200, 17203-17206). Also, a cause of action for unfair competition under B & P C § 17500 was dismissed with leave to amend. B & P C § 17500 provides only for criminal penalties. Individuals may seek remedy for violations of B & P C § 17500 through B & P C § 17200. However, private remedies are limited to equitable relief; civil penalties are recoverable only by specified public officers (B & P C §§ 17500, 17535). Brown v Allstate Ins. Co. (1998, SD Cal) 17 F Supp 2d 1134

3. Available Remedies
In a civil action by the Attorney General under B & P C § 17535, the trial court has the inherent power to order, as a form of ancillary relief, that defendants make, or offer to make, restitution to customers found to have been defrauded; the 1972 amendment (Stats 1972, ch 244) explicitly recognizing such inherent power was not intended to create a new power in the trial court, but simply to clarify existing law on the point. People v Superior Court of Los Angeles County (1973) 9 Cal 3d 283, 107 Cal Rptr 192, 507 P2d 1400
Under proper allegations, civil damages may be awarded pursuant to CC § 3369, authorizing the enjoining of unfair competition, and B & P C §§ 17500, 17535, proscribing the making of false representations to the public and authorizing the enjoining of proscribed advertising practices. United Farm Workers v Superior Court (1975, 5th Dist) 47 Cal App 3d 334, 120 Cal Rptr 904
In an action against a bank by a borrower, the trial court properly granted defendant's motion for summary judgment as to a count seeking damages on the basis of allegations that defendant's method of computing interest rates was misleading within the meaning of B & P C, § 17500. Under B & P C, § 17535, private relief is limited to the filing of an action for an injunction, and civil penalties are recoverable under B & P C, §§ 17535.5, 17536, only by specified public officers. Chern v Bank of America (1976) 15 Cal 3d 866, 127 Cal Rptr 110, 544 P2d 1310
Bus. & Prof. Code, § 17535, making it unlawful to induce the public to enter into an obligation through misleading or untruthful statements, and providing that a court may make such orders to restore to any person any money which may have been acquired by an illegal practice, clearly authorizes a trial court to order restitution in the absence of proof of the individual borrower's lack of knowledge of the alleged fraud if the court determines that such a remedy is necessary to deter future violations of the unfair trade practice statute or to foreclose the defendant's retention of any ill-gotten gains. Under the statute, once an unfair trade practice has been established, a trial court has discretion to order restitution without requiring proof, in a class action, of each class member's lack of knowledge as to that unfair trade practice. Thus, in a class action by bank customers against the bank challenging the bank's practice of computing per annum interest rates on the basis of a 360-day year and seeking restitution of sums obtained through the use of this unfair business practice, the trial court committed reversible error in granting defendant's motion to dismiss the class action on the ground that proof of each individual borrower's lack of knowledge as to the bank's practice was required to sustain recovery of restitution under the statute. Fletcher v Security Pacific Nat'l Bank (1979) 23 Cal 3d 442, 153 Cal Rptr 28, 591 P2d 51
In enacting Bus. & Prof. Code, § 17535, making it unlawful to use untruthful or misleading statements to induce any member of the public to enter into an obligation, and providing that a court may make such order necessary to restore to any person any money or property which may have been acquired illegally, the Legislature intended to vest the trial court with broad authority to fashion a remedy that would effectively prevent the use of any practices which violate the chapter proscribing unfair trade practices and deter the defendant from engaging in such practices in the future. The requirement that a wrongdoing entity disgorge improperly obtained money surely serves as the proscribed strong deterrent. An injunction against future violations, while of some deterrent force, is only a partial remedy, since it does not correct the consequences of past conduct. Fletcher v Security Pacific Nat'l Bank (1979) 23 Cal 3d 442, 153 Cal Rptr 28, 591 P2d 51
The basic equitable principles underlying Bus. & Prof. Code, § 17535, making it illegal to use false or misleading statements to induce a member of the public to enter into an obligation, and providing that a court may make such orders necessary to restore to any person any money or property which may have been acquired illegally, arm the trial court with broad discretionary powers to order restitutionary relief, even in the absence of individualized proof of lack of knowledge by the person harmed of the unfair trade practice. A court of equity may exercise its full range of powers in order to accomplish complete justice between the parties restoring if necessary the status quo ante as nearly as may be achieved. Even in the absence of the specific authorization contained in the statute, a trial court has the inherent power to order restitution as a form of ancillary relief. Fletcher v Security Pacific Nat'l Bank (1979) 23 Cal 3d 442, 153 Cal Rptr 28, 591 P2d 51
In an action against a seller of discount casino and shopping coupons charged with misleading solicitations, assessment of $150,000 in civil penalties for violation of Bus. & Prof. Code, §§ 17200 (unfair competition), and 17500 (false advertising), in addition to a $150,000 penalty for violation of a preliminary injunction (Bus. & Prof. Code, § 17535.5) and restitution (Bus. & Prof. Code, § 17535) was not excessive as a matter of law. Determination of the number of violations of §§ 17200 and 17500 depends on the circumstances of the case, and the trial court properly used the number of sales, which it estimated to be at least $150,000. Since Bus. & Prof. Code, §§ 17205 and 17534.5, specifically allow for cumulative remedies, the trial court properly assessed penalties under both Bus. & Prof. Code, §§ 17206 and 17536, for each violation; and since §§ 17206 and 17536 each allows a maximum penalty of $2,500 per violation, the court's assessment was clearly reasonable. With respect to violation of the preliminary injunction, since § 17535.5 permitted an award of up to $6,000, and since the seller had repeatedly violated the injunction, the award was reasonable. Finally, since the statutes authorizing restitution (Bus. & Prof. Code, §§ 17203 and 17535) did not make reliance or actual damages a condition to an award, it was proper for the trial court not to limit restitution to purchasers who appeared at trial and requested refunds. People v Toomey (1984, 1st Dist) 157 Cal App 3d 1, 203 Cal Rptr 642
In a civil action challenging a dairy company's advertising practices, the trial court had authority under the unfair competition law (Bus. & Prof. Code, $ 17200 et seq.) and the false advertising act (Bus. & Prof. Code, $ 17500 et seq.) to order that a warning label be affixed to the company's consumer products. Bus. & Prof. Code, $ 17203, and Bus. & Prof. Code, $ 17535, expressly recognize the authority of the courts to make orders as may be necessary to prevent the use of deceptive advertising or unfair competition. This authority is not limited to granting preliminary injunctions, but includes the authority to correct false impressions built up by prior advertising and to deter future violations. Consumers Union of U.S., Inc. v Alta-Dena Certified Dairy (1992, 1st Dist) 4 Cal App 4th 963, 6 Cal Rptr 2d 193
Cal. Bus. & Prof. Code § 17200 et seq., the "unfair competition law." provides for injunctive relief independent of the mandatory imposition of penalties. §§ 17203, 17206, 17535, 17536. There is no requirement that the fact of an injunction be considered in imposing civil penalties. People ex rel. Bill Lockyer v Fremont Life Ins. Co. (2002, 2nd Dist) 104 Cal App 4th 508, 128 Cal Rptr 2d 463
Court may order restitution of money acquired by means that are violative of the Cal. Bus. & Prof. Code § 17200 et seq. §§ 17203, 17535. People ex rel. Bill Lockyer v Fremont Life Ins. Co. (2002, 2nd Dist) 104 Cal App 4th 508, 128 Cal Rptr 2d 463
General equitable principles underlying Cal. Bus. & Prof. Code § 17535 arm the trial court with the cleansing power to order restitution to effect complete justice. Accordingly the statute authorizes a trial court to order restitution in the absence of proof of lack of knowledge in order to deter future violations of the unfair trade practice statute and to foreclose retention by the violator of ill-gotten gains. People ex rel. Bill Lockyer v Fremont Life Ins. Co. (2002, 2nd Dist) 104 Cal App 4th 508, 128 Cal Rptr 2d 463
Life insurance company that engaged in deceptive practices in connection with the sale of certain annuity policies was subject to $ 2.5 million in civil penalties and ordered to pay restitution for violating California's unfair competition law. Imposition of cumulative remedies was not an abuse of discretion. People ex rel. Bill Lockyer v Fremont Life Ins. Co. (2002, 2nd Dist) 104 Cal App 4th 508, 128 Cal Rptr 2d 463
Restitution can be ordered in a suit for damages under Cal. Bus. & Prof. Code § 17200 et seq. without individualized proof of harm. People ex rel. Bill Lockyer v Fremont Life Ins. Co. (2002, 2nd Dist) 104 Cal App 4th 508, 128 Cal Rptr 2d 463
B & P C § 17535 permits an order of restitution of any money which may have been acquired by means of any illegal practice. In re Paxil Litig. (2003, CD Cal) 218 FRD 242, 2003 US Dist LEXIS 21195

4. Proceedings
In an action to restrain defendants from engaging in untrue and misleading advertising practices, a motion for summary judgment was properly granted in that there was no triable issue remaining, where it was shown that applicable statutes prohibited untrue and misleading advertising, where defendant admitted that he disseminated the advertising material in question, and where the statements to which the injunction was directed, with one exception, were primarily statements concerning legal consequences arising from the creation of a pure trust, and the court could properly take judicial notice of applicable law in determining whether the stated legal consequences were untrue or misleading. People ex rel. Mosk v Lynam (1967, 2nd Dist) 253 Cal App 2d 959, 61 Cal Rptr 800
In an action by a borrower against a bank, the trial court erred in granting defendant's motion for summary judgment as to a count seeking injunctive relief under B & P C, § 17535, on the basis of allegations that the bank followed the practice of quoting a "per annum" interest rate on the basis of a 360-day year in its initial contacts with prospective borrowers and later advised the customer through a "truth in lending" statement that a higher annual percentage rate would actually be charged. B & P C, § 17500, prohibiting the making of untrue or misleading statements as to the price of personal property or services is sufficiently broad to include false or misleading statements made to the public by banking institutions in connection with their loans, and, in the absence of evidence to the contrary, it must be assumed that the public is likely to understand that a "per annum" rate is an annual rate based on a 365-day calendar year, and the challenged practice might unfairly entice persons to commence loan negotiations in the expectation of obtaining the lower rate initially quoted. Moreover, federal regulations require that a creditor's total finance charges be quoted only in terms of the annual percentage rate. Chern v Bank of America (1976) 15 Cal 3d 866, 127 Cal Rptr 110, 544 P2d 1310
Defendant publishers' motions for summary judgment were granted as to all claims except for the claim that one publisher's prompt-pay sweepstakes was an illegal lottery, in an action on behalf of plaintiff and the general public of California, seeking to enjoin various statements by defendants in their magazine sweepstakes solicitations. Plaintiff claimed sweepstakes solicitations violated state laws prohibiting false and misleading advertising, that the operation of the sweepstakes constituted an unfair business practice, and that they were illegal lotteries. The sweepstakes did not fit within the scope of the lottery statute merely because some customers came to believe they could enhance their chances of receiving further solicitations if they purchased a product. Because eligibility for customer-only sweepstakes did not hinge on the payment of consideration, they were not illegal. However, it could not be determined whether the prompt-pay sweepstakes imposed a new obligation on potential entrants and required contestants to pay something to enter. Haskell v Time, Inc. (1997, ED Cal) 965 F Supp 1398
Cal. Bus. & Prof. Code. § 17526 imposed a civil penalty for a corporation's bad faith registration of an individual's name as a domain name when the registration expired through no fault of the individual's own; however, Cal. Bus. & Prof. Code § 17535 did not authorize a private right of action for the individual since only the attorney general was authorized to apply to the district court for injunctive and other relief. Wright v Domain Source, Inc. (2002, ND Ill) 2002 US Dist LEXIS 16024

5. Jurisdiction
Reading § 17204 of the Unfair Business Practices Act, Cal. Bus. & Prof. Code § 17200 et seq., and § 17535 of the False Advertising Act, Cal. Bus. & Prof. Code § 17500 et seq., in the context of the statutory scheme of which they are a part, it is clear that the legislature envisioned enforcement of Unfair Competition Law (UCL), claims solely in the courts, the text of Cal. Bus. & Prof. Code § 17204 closes off the possibility of concurrent jurisdiction in the courts and the public utility commission (PUC), nothing in the False Advertising Act, Cal. Bus. & Prof. Code § 17500 et seq., supports reaching a different result. Greenlining Institute v Public Utilities Com. (2002, 1st Dist) 103 Cal App 4th 1324, 127 Cal Rptr 2d 736

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