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BUSINESS & PROFESSIONS CODE

Division 7 General Business Regulations

§ 17536. Penalty for violations of chapter; Proceedings; Disposition of proceeds

(a) Any person who violates any provision of this chapter shall be liable for a civil penalty not to exceed two thousand five hundred dollars ($2,500) for each violation, which shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the Attorney General or by any district attorney, county counsel, or city attorney in any court of competent jurisdiction.

(b) The court shall impose a civil penalty for each violation of this chapter. In assessing the amount of the civil penalty, the court shall consider any one or more of the relevant circumstances presented by any of the parties to the case, including, but not limited to, the following: the nature and seriousness of the misconduct, the number of violations, the persistence of the misconduct, the length of time over which the misconduct occurred, the willfulness of the defendant's misconduct, and the defendant's assets, liabilities, and net worth.

(c) If the action is brought by the Attorney General, one-half of the penalty collected shall be paid to the treasurer of the county in which the judgment was entered, and one-half to the State Treasurer.

If brought by a district attorney or county counsel, the entire amount of penalty collected shall be paid to the treasurer of the county in which the judgment was entered. If brought by a city attorney or city prosecutor, one-half of the penalty shall be paid to the treasurer of the county and one-half to the city. The aforementioned funds shall be for the exclusive use by the Attorney General, district attorney, county counsel, and city attorney for the enforcement of consumer protection laws.

(d) If the action is brought at the request of a board within the Department of Consumer Affairs or a local consumer affairs agency, the court shall determine the reasonable expenses incurred by the board or local agency in the investigation and prosecution of the action.

Before any penalty collected is paid out pursuant to subdivision (c), the amount of such reasonable expenses incurred by the board shall be paid to the State Treasurer for deposit in the special fund of the board described in Section 205. If the board has no such special fund the moneys shall be paid to the State Treasurer. The amount of such reasonable expenses incurred by a local consumer affairs agency shall be paid to the general fund of the municipality which funds the local agency.

(e) As applied to the penalties for acts in violation of Section 17530, the remedies provided by this section and Section 17534 are mutually exclusive.


Added Stats 1965 ch 827 § 1. Amended Stats 1972 ch 711 § 2, ch 1105 § 2; Stats 1973 ch 752 § 1; Stats 1974 ch 875 § 1; Stats 1979 ch 897 § 6; Stats 1992 ch 430 § 5 (SB 1586).
Amendment approved by voters, Prop. 64 § 6, effective November 3, 2004.

ANNOTATIONS

Amendments:

1972 Amendment:
(1) Amended the first sentence by (a) deleting ", except Section 17530," after "chapter"; and (b) adding ", county counsel, or city attorney"; (2) added "or county counsel" in the third sentence; and (3) added the fourth sentence.

1973 Amendment:
(1) Designated the former first sentence to be subd (a); (2) added ", except Section 17530," after "chapter" in subd (a); (3) designated the former second through fourth sentences to be subd (b) by substituting "(b) If the action is" for "If"; and (4) added subd (c).

1974 Amendment:
(1) Deleted ", except Section 17530," in subd (a); and (2) added subd (d).

1979 Amendment:
Amended subd (c) by (1) adding "or a local consumer affairs agency"; (2) adding "or local agency" in the first paragraph; (3) adding the third sentence in the second paragraph; and (4) deleting the former third paragraph which read: "As used in this subdivision, 'board' includes commission, bureau, division, and other similarly constituted agency."

1992 Amendment:
(1) Added subd (b); (2) redesignated former subds (b)-(d) to be subds (c)-(e); and (3) substituted "subdivision (c)" for "subdivision (b)" in the second paragraph in subd (d).

2004 Amendment:
Added the last sentence in the second paragraph of subd (c).

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.

Editor's Notes--
For legislative intent, see the 1992 Note following B & P C § 17200.
Cross References:
Penalty for violation of enforcement provisions governing unfair competition: B & P C § 17206
Collateral References:
Witkin Evidence (3d ed) § 158
Witkin Summary (9th ed) Equity § 96, Torts § 1332
Cal Jur 3d (Rev) Consumer and Borrower Protection Laws §§ 2, 81, 118, 142
Miller & Starr, Cal Real Estate 3d §§ 4:22, 34:88
Law Review Articles:
Enforcing California's false advertising law: A guide to adjudication. 25 Hast LJ 1105
Private and public remedies for fraudulent business practices in California; injunctions and civil and criminal penalties. 6 Loyola U of LA LR 333
Law relating to consumer frauds. 8 San Diego LR 50
Law enforcement's role in consumer protection: 14 Santa Clara Law 555
Role of California's Attorney General and district attorneys in protecting the consumer; substantive areas of action. 4 UCD LR 45
Actions for false advertising, and application of civil rules of proof. 5 USF LR 440

NOTES OF DECISIONS

1. In General

2. Pleadings

3. Proceedings

4. Evidence

5. Penalties

1. In General
The word "person" as used in B & P C § 17536 included corporations as well as natural persons, even prior to the 1970 addition of § 17506, defining the term "person" as used in the code. People v Hacker Emporium, Inc. (1971, 2nd Dist) 15 Cal App 3d 474, 93 Cal Rptr 132
There is no unconstitutional uncertainty in the provision of B & P C § 17536 for a monetary civil penalty for each violation of the prohibition of B & P C § 17500 against misleading advertising. People v Witzerman (1972, 2nd Dist) 29 Cal App 3d 169, 105 Cal Rptr 284
Under B & P C § 17536, the number of violations is to be determined by the number of persons to whom the misrepresentations were made, and not by the number of separately identifiable misrepresentations involved. People v Superior Court of Los Angeles County (1973) 9 Cal 3d 283, 107 Cal Rptr 192, 507 P2d 1400

2. Pleadings
In a civil action by the Attorney General seeking penalties authorized by B & P C § 17536, the complaint was not subject to attack on the ground of its failure to give the names of the customers allegedly solicited, the names of the salesmen who made the alleged misrepresentations, and the time and place of the alleged misrepresentations, where the acts relied on as constituting the violations were alleged in sufficient detail to apprise defendants of the basis of the cause of action. People v Superior Court of Los Angeles County (1973) 9 Cal 3d 283, 107 Cal Rptr 192, 507 P2d 1400
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

3. Proceedings
While the provisions of B & P C § 17536 and CC §§ 3369, 3370.1, providing penalties for false and misleading advertising and other unlawful and unfair business practices, are sufficiently similar to exemplary damages to permit discovery in appropriate cases of a defendant's financial condition in order to assess the penalty, the state was not entitled to a writ of mandate requiring the trial court to order discovery in such a case where liability had not yet been determined; where the case had been pending for approximately four years and had been considered in all of the pretrial activities by the same judge, who would be in the best position to use judicial discretion relative to discovery; and where, since the motion for discovery was denied on the erroneous ground that the defendant's financial condition was not relevant, the judge should have the opportunity to reconsider the motion and decide what further discovery, if any, is proper. People v Superior Court of Los Angeles County (1973) 9 Cal 3d 283, 107 Cal Rptr 192, 507 P2d 1400
B & P C § 17536 and CC § 3370.1, authorizing the imposition of substantial monetary civil penalties for deceptive advertising and unfair competition cannot be said to provide for penalties that are actually criminal in nature so as to preclude compelling a defendant in such a proceeding to testify under a grant of immunity from criminal prosecution. The statutes in question do not otherwise provide for criminal sanctions, and, while the penalties are unquestionably intended as deterrents against future misconduct and constitute severe punitive exactions by the state, they do not involve the stigma of a criminal conviction or permit such alternative punishment as the loss of personal freedom with which a defendant in a criminal action is threatened, and the procedures applicable in civil actions are traditionally utilized in the enforcement of the statutory provisions. People v Superior Court of Los Angeles County (1974) 12 Cal 3d 421, 115 Cal Rptr 812, 525 P2d 716
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
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
The penalty provisions for violations of Bus. & Prof. Code, §§ 17200 (unfair competition), and 17500 (false advertising), are sufficiently similar to exemplary damages to permit discovery of the defendant's financial condition in appropriate cases; and §§ 17207 and 17535.5 expressly direct the court to consider the liabilities and net worth of the person in determining the amount of the civil penalty. However, in an action against a seller of discount casino and shopping coupons, the trial court did not err in assessing penalties under Bus. & Prof. Code, §§ 17206 and 17536, for violations of §§ 17200 and 17500, respectively, though it did not receive evidence of the seller's personal net worth other than his monthly salary, where evidence of the net sales and profits of the company the seller controlled as its sole operator was introduced. The burden is on the defendant to establish financial inability to pay an exemplary damage award, and the seller failed to assist the trial court by providing requested financial information. People v Toomey (1984, 1st Dist) 157 Cal App 3d 1, 203 Cal Rptr 642

4. Evidence
In an action by the state to impose civil sanctions for false advertising in connection with the sale of cattle care contracts, the trial court properly found that defendants in the exercise of reasonable care should have known of the untruth of a statement at the time of making it, that the corporate defendant that was to perform the contracts was qualified to do business in California, where it could reasonably be inferred, despite testimony to the contrary, that the individual defendant in charge of the operation informed the other defendants of the loss of such qualification, and where, in any event, defendants could have discovered that fact by asking the individual defendant or by contacting the office of the Secretary of State. People v Witzerman (1972, 2nd Dist) 29 Cal App 3d 169, 105 Cal Rptr 284
In an action by the state to impose civil sanctions for false advertising in connection with the sale of cattle care contracts, the trial court properly found that defendants in the exercise of reasonable care should have known of the untruth of a statement, at the time of making it, that the contracts had been approved by the Commissioner of Corporations and had been exempted by him from the Corporate Securities Law, where the letter of exemption concerned contracts to care for cattle owned by others on a fixed cash fee one-year-basis only, and the contracts actually sold provided for the purchase of a cow and a calf and payment for their care, with the proceeds from the annual sale of the calf crop to be divided between the purchaser of the contract and the ranch operator over a six-year period. Moreover, defendants were put on inquiry as to the continued existence of any assumed exemption over five months before the action was brought when the Corporations Commissioner issued the first of three cease and desist orders. People v Witzerman (1972, 2nd Dist) 29 Cal App 3d 169, 105 Cal Rptr 284
In an action by the state to impose civil sanctions for false advertising in connection with the sale of cattle care contracts, the trial court properly found that defendants, in the exercise of reasonable care, should have known of the untruth of a statement, at the time of making it, that yearling calves to be raised would weigh 625 pounds, where defendants had admitted prior to trial that they did not know whether any of the calves raised under the contracts sold by them had actually attained such a weight, as a yearling, where they failed to verify whether the yearlings they saw prior to commencing sales of the contracts actually weighed as much as the ranch operator claimed, and where the financial circumstances of the operator and other facts brought to the attention of defendants, who had no expertise in cattle raising, indicated that, in the exercise of reasonable care, they should have taken steps to ascertain the facts. People v Witzerman (1972, 2nd Dist) 29 Cal App 3d 169, 105 Cal Rptr 284
Where the trial court found 300 separate violations of Cal. Bus. & Prof. Code § 17200 et seq., as well as 400 violations of Cal. Bus. & Prof. Code § 17500 et seq., the imposition of civil penalties and issuance of a permanent injunction were affirmed because Cal. Bus. & Prof. Code §§ 17206, 17536 did not require the State to present evidence of an appellant's financial condition in that the court was required to impose a penalty even in the absence of any evidence as to an appellant's financial status, statutory penalties did not equate with punitive damages, the trial court did not abuse its discretion in assessing the penalty amount or in holding the appellants jointly and severally liable, and the trial court did not abuse its discretion in issuing the permanent injunction because the individuals were principals of the corporation who acted unscrupulously. People v First Federal Credit Corp. (2002, 2nd Dist) 104 Cal App 4th 721, 128 Cal Rptr 2d 542

5. Penalties
In an action by the state to impose civil sanctions for false advertising, the trial court properly applied the provision of B & P C § 17536, for a penalty of not to exceed $2,500 for each violation by imposing a $50,000 overall penalty, jointly and severally, against all defendants, where such penalty was actually imposed on the basis of roughly $500 per victim, rather than on a per culpable statement basis, and where the court found on substantial evidence that defendants cooperated with each other in the advertising and sale of cattle care contracts, and in connection therewith did disseminate and cause to be disseminated, to more than one hundred members of the public, three specified untrue and misleading statements, and that each of said defendants aided and abetted the specified statutory violations. People v Witzerman (1972, 2nd Dist) 29 Cal App 3d 169, 105 Cal Rptr 284
In the absence of statutory authorization, the Attorney General could not properly seek exemplary damages on behalf of the people of the state in his civil action for unfair competition. People v Superior Court of Los Angeles County (1973) 9 Cal 3d 283, 107 Cal Rptr 192, 507 P2d 1400
The Attorney General has only one cause of action against a particular defendant for violating B & P C § 17500, prohibiting dissemination of untrue or misleading statements with certain intents, but the amount of civil penalties which may be imposed under B & P C § 17536 is dependent on the number of violations committed by a defendant. People v Superior Court of Los Angeles County (1973) 9 Cal 3d 283, 107 Cal Rptr 192, 507 P2d 1400
Under Bus. & Prof. Code, § 17536, providing for a civil penalty of $2,500 or less for each violation of the false or misleading advertising statute, Bus. & Prof. Code, § 17500, a single false or misleading publication in a newspaper advertisement constitutes a minimum of one violation with as many additional violations as there are persons who read the advertisement or who responded to the advertisement by purchasing the advertised product or service or by making inquiries concerning such product or service. Thus, in an action by a district attorney against a real estate firm seeking civil penalties and injunctive relief for the alleged dissemination of false and deceptive newspaper advertisements in violation of Bus. & Prof. Code, §§ 17200 and 17500 (the unfair competition statute), the trial court erred in ruling that each appearance of a false advertisement in a single edition of a newspaper constituted only a single violation of § 17500 and of § 17200 for which a maximum penalty of $5,000 could be imposed. In determining the reasonableness of a penalty under § 17536, the court must consider all pertinent factors including the kind of misrepresentations or deceptions, whether they were intentionally made or the result of negligence, the circulation of the newspaper, the nature and extent of the public injury, and the size and wealth of the advertising enterprise. People v Superior Court (Olson) (1979, 4th Dist) 96 Cal App 3d 181, 157 Cal Rptr 628
Unfair competition laws prohibit any unfair, deceptive, or unlawful business or other practice violating false advertising laws. The Attorney General may obtain injunctive relief and civil penalties, and the remedies are cumulative to those available under other provisions of the law. The court may impose civil penalties of $2,500 for each violation of Business and Professions Code sections 17200 and 17500. People v Orange County Charitable Services (1999, 4th Dist) 73 Cal App 4th 1054, 1076, 87 Cal Rptr 2d 253
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
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. Trial court's 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
In an action against landlords who violated a rent control ordinance by requiring prospective tenants to sign long-term leases as a condition of tenancy, the trial court did not abuse its discretion in determining the number of violations and in ordering restitution. People v Beaumont Investment, Ltd. (2003, Cal App 6th Dist) 2003 Cal App LEXIS 1215

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