Supreme Court of California Justia
Citation 50 Cal. 4th 605, 235 P.3d 171, 112 Cal. Rptr. 3d 876
Clark v. Super. Ct.


Filed 8/9/10

IN THE SUPREME COURT OF CALIFORNIA

JAMES A. CLARK et al.,
Petitioners,
S174229
v.
Ct.App. 2/7 B212512
THE SUPERIOR COURT OF
LOS ANGELES COUNTY,
Los Angeles County
Respondent;
Super. Ct. No. BC3211681
NATIONAL WESTERN LIFE )
INSURANCE COMPANY, )
Real Party in Interest. )

Under California‟s unfair competition law (Bus. & Prof. Code, § 17200 et
seq.), plaintiffs, who are senior citizens, sued an insurance company, alleging
deceptive business practices relating to the purchase and sale of annuity contracts.
Plaintiffs sought a monetary award, and they asserted that statutory law entitled
them to a trebling of the award.
Plaintiffs rely on Civil Code section 3345, which provides that in an action
brought by senior citizens to redress unfair competition, a trier of fact may award
up to three times the amount imposed as “a fine, or a civil penalty or other penalty,
or any other remedy the purpose or effect of which is to punish or deter.” (Id.,
1



§ 3345, subd. (b).) At issue here is the applicability of that provision to the unfair
competition law, which generally limits a private party‟s available remedies to
injunctions and restitution. (Bus. & Prof. Code, § 17203.)
We conclude that because Civil Code section 3345 authorizes the trebling
of a remedy only when it is in the nature of a penalty, and because restitution
under the unfair competition law is not a penalty, an award of restitution under the
unfair competition law — which plaintiffs seek here — is not subject to section
3345‟s trebling provision.
I
Plaintiffs James A. Clark, Orville R. Camien, Mary F. Simms-Schmidt, and
Carmen R. Armstrong filed this lawsuit against, among others, defendant National
Western Life Insurance Company. Plaintiffs‟ complaint alleged that defendant
violated California‟s unfair competition law (Bus. & Prof. Code, § 17200 et seq.)
by using deceptive business practices to induce senior citizens to buy high-
commission annuity contracts with large penalties for “early surrender.” Plaintiffs
sought an injunction, restitution, and under Civil Code section 3345 treble the
amount of any monetary award.
The trial court granted plaintiffs‟ motion for class action certification of
their unfair competition law claim. The class was certified as “All California
residents who purchased National Western Life Insurance Company deferred
annuities when they were age 65 or older” under specified certificate forms issued
by defendant. The trial court then granted defendant insurer‟s motion for
judgment on the pleadings (Code Civ. Proc., § 438) and ruled that Civil Code
section 3345‟s trebled recovery provision did not apply to private actions brought
under the unfair competition law.
Plaintiffs petitioned the Court of Appeal for a writ of mandate. That court
granted the petition and directed the trial court to enter a new order denying
2

defendant‟s motion for judgment on the pleadings. We granted defendant‟s
petition for review.
II
Before we consider defendant insurer‟s challenge to the Court of Appeal‟s
holding, we briefly summarize the relevant statutes and the Court of Appeal‟s
conclusions.
Civil Code section 3345 applies “in actions brought by, on behalf of, or for
the benefit of senior citizens or disabled persons, as those terms are defined in
subdivisions (f) and (g) of Section 1761, to redress unfair or deceptive acts or
practices or unfair methods of competition.” (Civ. Code, § 3345, subd. (a).)1
Subdivision (b) of Civil Code section 3345 allows for a recovery of up to three
times the amount of a monetary award whenever “a trier of fact is authorized by a
statute to impose either a fine, or a civil penalty or other penalty, or any other
remedy the purpose or effect of which is to punish or deter,” if the trier of fact
finds any of the factors identified in the statute to exist.2

1
Subdivision (f) of Civil Code section 1761 defines “senior citizen” as a
person 65 years of age or older, and subdivision (g) defines “disabled person” as a
person “who has a physical or mental impairment that substantially limits one or
more major life activities.”
2
Subdivision (b) of Civil Code section 3345 requires the trier of fact to
consider these factors: “(1) Whether the defendant knew or should have known
that his or her conduct was directed to one or more senior citizens or disabled
persons. [¶] (2) Whether the defendant‟s conduct caused one or more senior
citizens or disabled persons to suffer: loss or encumbrance of a primary residence,
principal employment, or source of income; substantial loss of property set aside
for retirement, or for personal or family care and maintenance; or substantial loss
of payments received under a pension or retirement plan or a government benefits
program, or assets essential to the health or welfare of the senior citizen or
disabled person. [¶] (3) Whether one or more senior citizens or disabled persons
are substantially more vulnerable than other members of the public to the
defendant‟s conduct because of age, poor health or infirmity, impaired

(footnote continued on next page)
3



The unfair competition law prohibits “any unlawful, unfair or fraudulent
business act or practice” (Bus. & Prof. Code, § 17200); actions under this law may
be brought by either private plaintiffs or public prosecutors (id., § 17204). In a
private unfair competition law action, the remedies are “ „generally limited to
injunctive relief and restitution.‟ ” (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939,
950; see Bus. & Prof. Code, § 17203.) When the action is brought by public
prosecutors, the recovery may also include a civil penalty up to $2,500 for each
violation. (Bus. & Prof. Code, § 17206.) Not recoverable are damages, including
punitive damages and increased or enhanced damages. (Korea Supply Co. v.
Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1148; Cel-Tech Communications,
Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 179.)
Here, the Court of Appeal held that under the plain meaning of Civil Code
section 3345 its trebled recovery provision applied to plaintiffs‟ demand for a
monetary award under the unfair competition law, because the action here was
brought by senior citizens “to redress unfair or deceptive acts or practices or unfair
methods of competition.” (Civ. Code, § 3345, subd. (a), italics added; see id.,
subd. (b).) The Court of Appeal further concluded that an award of restitution —
the only monetary remedy available in a private action brought under the unfair
competition law — has a deterrent purpose and effect and therefore falls within
the statutory language as a “remedy the purpose or effect of which is to . . . deter”
within the meaning of section 3345. Defendant insurer challenges both
conclusions.

(footnote continued from previous page)

understanding, restricted mobility, or disability, and actually suffered substantial
physical, emotional, or economic damage resulting from the defendant‟s conduct.”
4



III
Defendant insurer contends that Civil Code section 3345‟s trebling
provision applies only to actions brought under the Consumers Legal Remedies
Act.3 It argues that the Legislature must have intended this result because in
subdivision (a) of section 3345 the Legislature used phrases that are identical to
those used in Civil Code section 1770‟s subdivision (a), a provision of the
Consumers Legal Remedies Act. The identical phrases are “unfair or deceptive
acts” and “unfair methods of competition.” (Id., §§ 1770, subd. (a), 3345, subd.
(a).) Defendant correctly notes that these phrases do not appear in the unfair
competition law, which prohibits “unlawful, unfair or fraudulent” business acts or
practices. (Bus. & Prof. Code, § 17200.)
We disagree, however, with defendant insurer‟s contention. It is apparent
from the language of Civil Code section 3345 that its applicability is not limited to
actions brought under the Consumers Legal Remedies Act. Subdivision (a) of
section 3345 specifically states its applicability to actions “brought . . . to redress
unfair or deceptive acts or practices or unfair methods of competition,” not just to
actions brought under the Consumers Legal Remedies Act. In addition,
subdivision (b) of section 3345 allows for trebled recovery “[w]henever a trier of
fact is authorized by a statute” (italics added) to impose specified remedies. That

3
The Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.) allows
consumers to recover damages, restitution, and other remedies against a person
who in the sale or lease of any goods or services uses any method, act, or practice
declared in section 1770 to be unlawful. (Id., § 1780, subd. (a).) The 24
enumerated subparagraphs of section 1770‟s subdivision (a) identify a number of
prohibited practices, such as passing off goods or services as those of another
(§ 1770, subd. (a)(1)), misrepresenting the source of goods or services (id., subd.
(a)(2)), and using deceptive representations of the geographic origin of goods or
services (id., subd. (a)(4)).
5



provision refers to any statute that authorizes the specified remedies, not just the
Consumers Legal Remedies Act. Additional support for our conclusion can be
found in the circumstances surrounding the enactment of section 3345.
Civil Code section 3345 was one of three statutes that the Legislature added
or amended in 1988 (Stats. 1988, ch. 823, §§ 1-4, pp. 2665-2669) as part of Senate
Bill No. 1157 (1987-1988 Reg. Sess.). That bill created a new Civil Code section
3345 and a new Business and Professions Code section 17206.1. The latter statute
authorizes public prosecutors in unfair competition law actions to recover
additional civil penalties when the acts of unfair competition were perpetrated
against senior citizens or against disabled persons. Senate Bill No. 1157 also
amended the Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.) to
authorize senior citizens as well as disabled persons to recover up to $5,000 in
addition to any other remedies available under that act, including compensatory
and punitive damages. (Civ. Code, § 1780, subds. (a), (b).) Had the Legislature
intended section 3345 to be limited to actions under the Consumers Legal
Remedies Act, it could simply have amended only that act. Instead, the
Legislature simultaneously enacted Civil Code section 3345 as a separate statute
that applies to “actions brought” (id., subd. (a)), “[w]henever a trier of fact is
authorized by a statute” (id., subd. (b), italics added) to impose “a fine, or a civil
penalty or other penalty, or any other remedy the purpose or effect of which is to
punish or deter . . . . (ibid.).”
Nor do we find persuasive defendant insurer‟s argument that because Civil
Code section 3345, subdivision (a) incorporates by reference the definitions of
“senior citizens” and “disabled persons” found in the Consumers Legal Remedies
Act (Civ. Code, § 1761, subds. (f), (g)), section 3345 refers only to the Consumers
Legal Remedies Act. Section 3345 incorporates only these two definitions from
the Consumers Legal Remedies Act, not the entire act. This incorporation shows
6

no legislative intent to restrict section 3345‟s applicability to the Consumers Legal
Remedies Act.
Accordingly, we hold that that Civil Code section 3345 is not limited to
actions under the Consumers Legal Remedies Act.
IV
Defendant insurer contends that the Court of Appeal erred in holding that
an action brought by senior citizens under the unfair competition law is one in
which the trier of fact “is authorized by statute to impose a fine, or a civil penalty
or other penalty, or any other remedy the purpose or effect of which is to punish or
deter . . . .” (See Civ. Code, § 3345, subd. (b).)
This language from section 3345, subdivision (b) focuses attention on the
remedy available. The only monetary remedy available in a private action under
the unfair competition law is restitution. (Korea Supply Co. v. Lockheed Martin
Corp., supra, 29 Cal.4th at pp. 1146, 1148; Cel-Tech Communications, Inc. v. Los
Angeles Cellular Telephone Co., supra, 20 Cal.4th at p. 179.) The Court of
Appeal concluded, however, that restitution is a “remedy the purpose or effect of
which is to punish or deter” within the meaning of subdivision (b) of Civil Code
section 3345. The Court of Appeal relied on decisions by this court recognizing
that the unfair competition law remedy of restitution has a deterrent effect (Korea
Supply Co. v. Lockheed Martin Corp., supra, at p. 1148 [deterrence of unfair
practices is an important goal of unfair competition law, but not its sole objective];
Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1267 [purpose of
injunction and restitution under unfair competition law includes deterrence of
future violations]), reasoning that the unfair competition law is therefore a statute
that authorizes the trier of fact to impose a remedy that “has a deterrent purpose
and effect.” Defendant insurer challenges the Court of Appeal‟s holding.
7

Defendant insurer‟s analysis is this: Subdivision (b) of Civil Code section
3345 allows up to three times the amount of a fine, civil penalty, or “any other
remedy the purpose or effect of which is to punish or deter.” According to
defendant, the Court of Appeal read in isolation, rather than in context, the
statutory phrase “the purpose or effect of which is to . . . deter,” which appears in
subdivision (b) of section 3345. This led the court to conclude that any remedy
with a deterrent effect falls within subdivision (b)‟s trebled recovery provision.
Defendant points out that immediately preceding the just-quoted statutory
language is phrasing restricting trebled recovery to a statutorily authorized “fine,
or a civil penalty or other penalty.” Thus, defendant argues, subdivision (b)‟s
“deter” language must be read as pertaining to a remedy that is designed to punish.
We agree.
Pertinent here is this canon of statutory construction: “[W]hen a particular
class of things modifies general words, those general words are construed as
applying only to things of the same nature or class as those enumerated.” (People
v. Arias (2008) 45 Cal.4th 169, 180.) The canon “presumes that if the Legislature
intends a general word to be used in its unrestricted sense, it does not also offer as
examples peculiar things or classes of things since those descriptions then would
be surplusage.” (Kraus v. Trinity Management Services, Inc. (2000) 23 Cal.4th
116, 141.) This simply means that if a statute contains a list of specified items
followed by more general words, the general words are limited to those items that
are similar to those specifically listed.
Application of that canon of statutory construction here supports defendant
insurers‟ argument that the statutory phrase “or any other remedy the purpose or
effect of which is to punish or deter,” which appears in the trebled recovery
provision in question (Civ. Code, § 3345, subd. (b)), means a remedy that is in the
nature of a penalty. To conclude otherwise, as the Court of Appeal did here,
8

would turn into meaningless surplusage the phrase immediately preceding the
statute‟s “deter” language, which expressly refers to a “fine, or a civil penalty or
other penalty.” All remedies have some incidental deterrent effect. Here, the
trebled recovery provision comes into play when the governing statutory remedy
has “the purpose or effect” of punishing or deterring. (Civ. Code, § 3345, subd.
(b), italics added.) Had the Legislature intended any statutory remedy to be
subject to section 3345‟s trebling provision, it would have used simply the word
“remedy” without any qualifying language.
For the reasons given above, we conclude that trebled recovery may be
awarded under Civil Code section 3345, subdivision (b) only if the statute under
which recovery is sought permits a remedy that is in the nature of a penalty. We
now consider whether the unfair competition law, the basis of plaintiffs‟ private
party action, falls within that category.
As we have seen (ante, p. 7), restitution is the only monetary remedy
authorized in a private action brought under the unfair competition law. (Korea
Supply Co. v. Lockheed Martin Corp., supra, 29 Cal.4th at pp. 1146, 1148.)
Restitution is not a punitive remedy. The word “restitution” means the return of
money or other property obtained through an improper means to the person from
whom the property was taken. (Kasky v. Nike, Inc., supra, 27 Cal.4th at p. 950;
Kraus v. Trinity Management Services, Inc., supra, 23 Cal.4th at pp. 126-127.)
“The object of restitution is to restore the status quo by returning to the plaintiff
funds in which he or she has an ownership interest.” (Korea Supply Co. v.
Lockheed Martin Corp., supra, 29 Cal.4th at p. 1149, italics added.) In contrast, a
penalty is a recovery “ „without reference to the actual damage sustained . . . .‟ ”
(Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1104.)
“Penalties provide for „ “recovery of damages additional to actual losses incurred,
such as double or treble damages . . . .‟‟ ‟ ” (Ibid.) Because restitution in a private
9

action brought under the unfair competition law is measured by what was taken
from the plaintiff, that remedy is not a penalty and hence does not fall within the
trebled recovery provision of Civil Code section 3345, subdivision (b).
The judgment of the Court of Appeal is reversed.
KENNARD, J.
WE CONCUR:

GEORGE, C. J.
BAXTER, J.
WERDEGAR, J.
CHIN, J.
MORENO, J.
CORRIGAN, J.

10



See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Clark v. Superior Court
__________________________________________________________________________________

Unpublished Opinion


Original Appeal
Original Proceeding
Review Granted
XXX 174 Cal.App.4th 82
Rehearing Granted

__________________________________________________________________________________

Opinion No.

S174229
Date Filed: August 9, 2010
__________________________________________________________________________________

Court:

Superior
County: Los Angeles
Judge: Victoria G. Chaney

__________________________________________________________________________________

Attorneys for Appellant:

Robert S. Gerstein; Gianelli & Morris, Robert S. Gianelli, Jully C. Pae, Richard R. Fruto; Ernst & Mattison,
Raymond E. Mattison, Don A. Ernst, Christopher D. Edgington; Law Offices of Ronald A. Marron and
Ronald A. Marron for Petitioners.

Barbara A. Jones, Michael Schuster and Jay Sushelsky for AARP as Amicus Curiae on behalf of
Petitioners.

__________________________________________________________________________________

Attorneys for Respondent:

No appearance for Respondent.

Barger & Wolen, Kent R. Keller and Larry M. Golub for Real Party in Interest.

Reed Smith, Margaret M. Grignon, Robert D. Phillips, Jr., James C. Martin and Wendy S. Albers for
Association of California Life and Health Insurance Companies, North American Company for Life and
Health Insurance and Midland National Life Insurance Company as Amici Curiae on behalf of Real Party
in Interest.

Fred J. Hiestand for The Civil Justice Association as Amicus Curiae on behalf of Real Party in Interest.

Jorden Burt, James R. Jorden, Denise A. Fee, Ann B. Furman and Brian P. Perryman for American Council
of Life Insurers as Amicus Curiae on behalf of Real Party in Interest.



Counsel who argued in Supreme Court (not intended for publication with opinion):

Robert S. Gerstein
12400 Wilshire Boulevard, Suite 1300
Los Angeles, CA 90025
(310) 820-1939

Kent R. Keller
Barger & Wolen
633 West Fifth Street, 47th Floor
Los Angeles, CA 90071
(213) 680-2800

Margaret M. Grignon
Reed Smith
355 South Grand Avenue, Suite 2900
Los Angeles, CA 90071-1514
(213) 457-8000


Petition for review after the Court of Appeal granted a petition for peremptory writ of mandate. This case presents the following issue: Is Civil Code section 3345, which permits an enhanced award of up to three times the amount of a fine, civil penalty, or "any other remedy the purpose or effect of which is to punish or deter" in actions brought by or on behalf of senior citizens or disabled persons seeking to "redress unfair or deceptive acts or practices or unfair methods of competition," applicable in an action brought by senior citizens seeking restitution under the Unfair Competition Law (Bus. & Prof. Code, section 17200 et seq.)?

Opinion Information
Date:Citation:Docket Number:Category:Status:
Mon, 08/09/201050 Cal. 4th 605, 235 P.3d 171, 112 Cal. Rptr. 3d 876S174229Review - Civil Original Proceedingsubmitted/opinion due

Parties
1Clark, James A. (Petitioner)
Represented by Robert S. Gianelli
Gianelli & Morris
626 Wilshire Boulevard, Suite 800
Los Angeles, CA

2Clark, James A. (Petitioner)
Represented by Raymond E. Mattison
Ernst & Mattison
P.O. Box 1327
1020 Palm Street
San Luis Obispo, CA

3Clark, James A. (Petitioner)
Represented by Robert S. Gerstein
Law Offices of Robert S. Gerstein
12400 Wilshire Boulevard, Suite 1300
Los Angeles, CA

4Armstrong, Carmen R. (Petitioner)
Represented by Robert S. Gerstein
Law Offices of Robert S. Gerstein
12400 Wilshire Boulevard, Suite 1300
Los Angeles, CA

5Camien, Orville R. (Petitioner)
Represented by Robert S. Gerstein
Law Offices of Robert S. Gerstein
12400 Wilshire Boulevard, Suite 1300
Los Angeles, CA

6Simms-Schmidt, Mary F. (Petitioner)
Represented by Robert S. Gerstein
Law Offices of Robert S. Gerstein
12400 Wilshire Boulevard, Suite 1300
Los Angeles, CA

7Superior Court of Los Angeles County (Respondent)
Represented by Victoria Chaney
Superior Court of Los Angeles County
600 S. Commonwealth, Suite 1415
Department 311
Los Angeles, CA

8National Western Life Insurance Company (Real Party in Interest)
Represented by Larry Mark Golub
Barger & Wolen LLP
633 W 5th St 47FL
Los Angeles, CA

9National Western Life Insurance Company (Real Party in Interest)
Represented by Larry M. Golub
Barger & Wolen, LLP
515 S. Flower Street, 34th Floor
Los Angeles, CA

10National Western Life Insurance Company (Real Party in Interest)
Represented by Kent R. Keller
Barger & Wolen, LLP
633 West Fifth Street, 47th Floor
Los Angeles, CA

11American Association of Retired Persons (Amicus curiae)
Represented by Barbara A. Jones
AARP Foundation Litigation
200 S. Los Robles, Suite 400
Pasadena, CA

12American Council of Life Insurers (Amicus curiae)
Represented by Denise A. Fee
Jorden Burt, LLP
1025 Thomas Jefferson Street, #400 East
Washington, DC

13American Council of Life Insurers (Amicus curiae)
Represented by James F. Jorden
Jorden Burt, LLP
1025 Thomas Jefferson Street, #400 East
Washington, DC

14American Council of Life Insurers (Amicus curiae)
Represented by Brian P. Perryman
Jorden Burt, LLP
1025 Thomas Jefferson Street, #400 East
Washington, DC

15American Council of Life Insurers (Amicus curiae)
Represented by Ann Began Furman
Jorden Burt, LLP
1025 Thomas Jefferson Street, #400 East
Washington, DC

16Association of California Life & Health Insurance Companies (Amicus curiae)
Represented by Margaret Anne Grignon
Reed Smith, LLP
355 S. Grand Avenue, Suite 2900
Los Angeles, CA

17Civil Justice Association of California (Amicus curiae)
Represented by Fred J. Hiestand
Attorney at Law
1121 "L" Street, Suite 404
Sacramento, CA

18Midland National Life Insurance Company (Amicus curiae)
Represented by Margaret Anne Grignon
Reed Smith, LLP
355 S. Grand Avenue, Suite 2900
Los Angeles, CA

19North Amerian Company for Life & Health Insurance (Amicus curiae)
Represented by Margaret Anne Grignon
Reed Smith, LLP
355 S. Grand Avenue, Suite 2900
Los Angeles, CA


Dockets
Jun 29 2009Petition for review filed
Real Party in Interest: National Western Life Insurance CompanyAttorney: Kent R. Keller   National Western Life Insurance Company, Real Party in Interest Kent Keller, Retained counsel
Jun 29 2009Record requested
 
Jun 29 2009Received Court of Appeal record
 
Jul 20 2009Answer to petition for review filed
Petitioner: Clark, James A.Attorney: Robert S. Gerstein   James A. Cark, Petitioner Robert S. Gersten, counsel
Jul 29 2009Reply to answer to petition filed
Real Party in Interest: National Western Life Insurance CompanyAttorney: Larry M. Golub   National Western Life Insurance Company, Real Party in Interest Larry Golub, Retained counsel
Aug 21 2009Time extended to grant or deny review
  The time for granting or denying review in the above-entitled matter is hereby extended to and including September 25, 2009, or the date upon which review is either granted or denied.
Sep 9 2009Petition for review granted
  Votes: George, C.J., Kennard, Baxter, Werdegar, Chin, Moreno and Corrigan, JJ.
Sep 17 2009Certification of interested entities or persons filed
  National Western Life Ins. Co., Real Party in Interest Kent Keller, Retained counsel
Oct 6 2009Opening brief on the merits filed
Real Party in Interest: National Western Life Insurance CompanyAttorney: Kent R. Keller  
Oct 22 2009Request for extension of time filed
  to file answer brief/merits to 12-7-09
Oct 27 2009Extension of time granted
  On application of petitioners and good cause appearing, it is ordered that the time to serve and file the answer brief on the merits is extended to and including December 7, 2009.
Dec 7 2009Answer brief on the merits filed
Petitioner: Clark, James A. Petitioner: Camien, Orville R. Petitioner: Simms-Schmidt, Mary F. Petitioner: Armstrong, Carmen R.  
Dec 23 2009Reply brief filed (case fully briefed)
Real Party in Interest: National Western Life Insurance CompanyAttorney: Kent R. Keller  
Jan 19 2010Application to file amicus curiae brief filed
  American Council of Life Insurers in support of Real Party in Interest. by counsel, Ann B. Furman.
Jan 19 2010Application to appear as counsel pro hac vice (granted case)
  Denise A. Fee of the District of Columbia.
Jan 19 2010Application to appear as counsel pro hac vice (granted case)
  James F. Jorden of the District of Columbia.
Jan 19 2010Application to appear as counsel pro hac vice (granted case)
  Brian P. Perryman of the District of Columbia.
Jan 22 2010Application to file amicus curiae brief filed
  Association of California Life and Health Insurance Companies, North American Company For Life and Health Insurance, and Midland National Life Insurance Company in support of Real Party in Interest. by counsel Margaret M. Grignon
Jan 22 2010Application to file amicus curiae brief filed
  AARP in support of petitioners, James A. Clark, et al. by counsel, Barbara A. Jones
Jan 25 2010Application to appear as counsel pro hac vice granted
  The application of James F. Jorden of the District of Columbia for admission pro hac vice to appear on behalf of amicus curiae American Council of Life Insurers is hereby granted. (See Cal. Rules of Court, rule 9.40.)
Jan 25 2010Application to appear as counsel pro hac vice granted
  The application of Denise A. Fee of the District of Columbia for admission pro hac vice to appear on behalf of amicus curiae American Council of Life Insurers is hereby granted. (See Cal. Rules of Court, rule 9.40.)
Jan 25 2010Application to appear as counsel pro hac vice granted
  The application of Brian P. Perryman of the District of Columbia for admission pro hac vice to appear on behalf of amicus curiae American Council of Life Insurers is hereby granted. (See Cal. Rules of Court, rule 9.40.)
Jan 25 2010Application to file amicus curiae brief filed
  The Civil Justice Association of California in support of Real Party in Interest by counsel, Fred J. Hiestand
Jan 26 2010Permission to file amicus curiae brief granted
  AARP in support of petitioners. The application of AARP for permission to file an amicus curiae brief in support of petitioners is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Jan 26 2010Amicus curiae brief filed
Amicus curiae: American Association of Retired PersonsAttorney: Barbara A. Jones  
Jan 26 2010Permission to file amicus curiae brief granted
  The Civil Justice Association of California in support of Real Party in Interest. The application of The Civil Justice Association of California for permission to file an amicus curiae brief in support of petitioners is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Jan 26 2010Amicus curiae brief filed
Amicus curiae: Civil Justice Association of CaliforniaAttorney: Fred J. Hiestand  
Jan 26 2010Permission to file amicus curiae brief granted
  Association of California Life and Health Insurance Companies, North American Company for Life and Health Insurance, and Midland National Life Insurance Company in support of Real Party in Interest The application of Association of California Life and Health Insurance Companies, North American Company for Life and Health Insurance, and Midland National Life Insurance Company for permission to file an amicus curiae brief in support of petitioners is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Jan 26 2010Amicus curiae brief filed
Amicus curiae: Association of California Life & Health Insurance CompaniesAttorney: Margaret Anne Grignon  
Jan 26 2010Permission to file amicus curiae brief granted
  American Council of Life Insurers in support of Real Party in Interest. The application of American Council of Life Insurers for permission to file an amicus curiae brief in support of Real Party in Interest is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief.
Jan 26 2010Amicus curiae brief filed
Amicus curiae: American Council of Life InsurersAttorney: Ann Began Furman  
Feb 18 2010Received:
  timely reply to multiple amicus curiae briefs by Petitioner, James Clark - by counsel, Robert Gerstein. Attorney will send application to file a consolidated answer
Feb 19 2010Filed:
  Petitioner's ( Clark, et al) application to file a consolidated answer to amicus curiae briefs of The Civil Justice Association of California,American Council of Life Insurers, and Association of California Life and Health Insurance Companies. By counsel, Robert S. Gerstein.
Feb 23 2010Order filed
  The application of Petitioners, James A. Clark, et al., for permission to file a consolidated answer to the amicus curiae briefs filed by The Civil Justice Association of California; American Council of Life Insurers; and Association of California Life and Health Insurance Companies, et al., is hereby granted.
Feb 23 2010Response to amicus curiae brief filed
Petitioner: Clark, James A.Attorney: Robert S. Gianelli   Petitioner's reply brief to amicus briefs of: The Civil Justice Association of California; American Council of Life Insurers; and Association of California Life and Health Insurance Companies, et al.
Mar 8 2010Received:
  joint letter from Petitioners, Clark et al., and Real Party in Interest, National Western re: preliminary approval of settlement. by counsel : Kent R. Keller and Robet S. Gianelli
May 5 2010Case ordered on calendar
  to be argued Wednesday, June 2, 2010, at 9:00 a.m., in Los Angeles
May 12 2010Filed:
  Request to divide oral argument filed by Kent R. Keller, counsel for real party in interest, requesting to share 10 minutes of time with amici curiae Association of California Life & Health Insurance Companies et al.
May 13 2010Order filed
  The request of real party in interest to allocate to amici curiae Association of California Life & Health Insurance Companies et al. 10 minutes of real party's 30-minute allotted time for oral argument is granted.
May 17 2010Stipulation filed
  Stipulation by counsel Kent Keller, that real party in interest has no objection to Justice Kennard's participation in the deliberations and decision in this matter notwithstanding her absence from oral argument.
May 17 2010Stipulation filed
  Stipulation by counsel Robert S. Gerstein, that petitioners have no objection to Justice Kennard's participation in the deliberations and decision in this matter notwithstanding her absence from oral argument.
Jun 2 2010Cause argued and submitted
 
Aug 6 2010Notice of forthcoming opinion posted
  To be filed on Monday, August 9, 2010 @ 10 a.m.

Briefs
Oct 6 2009Opening brief on the merits filed
Real Party in Interest: National Western Life Insurance CompanyAttorney: Kent R. Keller  
Dec 7 2009Answer brief on the merits filed
Petitioner: Clark, James A. Petitioner: Camien, Orville R. Petitioner: Simms-Schmidt, Mary F. Petitioner: Armstrong, Carmen R.  
Dec 23 2009Reply brief filed (case fully briefed)
Real Party in Interest: National Western Life Insurance CompanyAttorney: Kent R. Keller  
Jan 26 2010Amicus curiae brief filed
Amicus curiae: American Association of Retired PersonsAttorney: Barbara A. Jones  
Jan 26 2010Amicus curiae brief filed
Amicus curiae: Civil Justice Association of CaliforniaAttorney: Fred J. Hiestand  
Jan 26 2010Amicus curiae brief filed
Amicus curiae: Association of California Life & Health Insurance CompaniesAttorney: Margaret Anne Grignon  
Jan 26 2010Amicus curiae brief filed
Amicus curiae: American Council of Life InsurersAttorney: Ann Began Furman  
Feb 23 2010Response to amicus curiae brief filed
Petitioner: Clark, James A.Attorney: Robert S. Gianelli  
Brief Downloads
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Clark v. Superior Court-real-partys-in-interest-reply-to-answer-to-petition-for-review.pdf (1223175 bytes)
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Clark v. Superior Court-petitioners-answer-to-petition-for-review.pdf (832243 bytes)
If you'd like to submit a brief document to be included for this opinion, please submit an e-mail to the SCOCAL website
Dec 1, 2010
Annotated by sbarnard

50 Cal.4th 605; 235 P.3d 171; 112 Cal.Rptr.3d 876; 10 Cal. Daily Op. Serv. 10,112; 2010 Daily Journal D.A.R. 12,287.

FACTS

Plaintiffs James A. Clark, Orville R. Camien, Mary F. Simms-Schmidt, and Carmen R. Armstrong filed a class action lawsuit against defendant National Western Life Insurance Company for allegedly violating California’s unfair competition law, Bus. & Prof. Code § 17200 et seq. Plaintiffs are senior citizens who purchased annuities from defendant insurance company when they were 65 years or older. Plaintiffs’ complaint alleges that defendant used “deceptive business practices to induce senior citizens [defined as individuals over the age of 65 years] to buy high-commission annuity contracts with large penalties for ‘early surrender.’” Plaintiffs sought injunctive relief, restitution, and treble the amount of any monetary award under California Civil Code § 3345.

PROCEDURAL HISTORY

The trial court granted plaintiffs' motion for class certification, and certified the class under the title “All California residents who purchased National Western Life Insurance Company deferred annuities when they were age 65 or older.” The trial court granted defendant’s motion for judgment on the pleadings (Code Civ. Proc., § 438), and ruled that the trebled recovery provision in Civil Code § 3345 did not apply to actions brought under the unfair competition law if such actions are private in nature.

Plaintiffs then petitioned the Court of Appeal for a writ of mandate, which the court granted. The Court of Appeal directed the trial court to enter a new order denying defendant’s motion for judgment on the pleadings, reasoning that because the action was brought by senior citizens “to redress unfair or deceptive acts or practices or unfair methods of competition,” that under the plain meaning of the statute, the trebled recovery provision of Civil Code § 3345 did apply to plaintiff’s demand for a monetary award under Bus. & Prof. Code § 17200 et seq.

The Court of Appeal also concluded that an award of restitution has a deterrent purpose and effect and thus falls within the statutory language as a “remedy the purpose or effect of which is to . . . deter.” (Civ. Code § 3345). Defendant challenged both conclusions of the Court of Appeal and petitioned the Supreme Court of California for review.

In a unanimous decision, the Supreme Court reversed the Court of Appeal by holding that Civil Code § 3345 only authorized the trebling of a remedy when it is in the nature of a penalty, and because restitution under the unfair competition law is not a penalty, an award of restitution under the unfair competition law is not subject to the trebling provision in Civil Code § 3345.

KEY STATUTORY PROVISIONS

California Civil Code § 3345: Applies “in actions brought by, on behalf of, or for the benefit of senior citizens or disabled persons . . . to redress unfair or deceptive acts or practices or unfair methods of competition.” (Civil Code § 3345(a)).

California Civil Code § 3345(b) (trebling provision): This provision allows a plaintiff to recover up to three times the monetary award when “a trier of fact is authorized by a statute to impose either a fine, or a civil penalty or other penalty, or any other remedy the purpose or effect of which is to deter.” (Civ. Code § 3345(b)). This trebling provision only applies when the finder of fact finds one of the three factors identified in subdivision (b) of the statute.

Bus. & Prof. Code § 17200 et seq (California’s unfair competition law): Prohibits “any unlawful, unfair, or fraudulent business act or practice.” The remedies in private unfair competition actions are “’generally limited to injunctive relief and restitution.’” (Kasky v. Nike, Inc., 27 Cal.4th 939 (2002)).

California Civil Code § 1750 et seq (Consumers Legal Remedies Act): Allows for a consumer to recover in the form of damages, restitution, and other remedies against one who, during the sale or lease of any goods or services, uses a method, act, or practice declared to be unlawful under California Civil Code § 1770.

KEY PLAYERS

(1) National Western Life Insurance Company (Real Party in Interest)
(2) The Superior Court of Los Angeles (Respondent)
(3) James A. Clark et al. (Class of plaintiffs certified under "All California Residents who purchased National Western Life Insurance Company deferred annuities when they were age 65 or older.")

ISSUES

(1) Does Civil Code § 3345'ss trebling provision apply only to actions brought under the Consumer Legal Remedies Act?

(2) Is the restitution awarded to plaintiffs a penalty and thus does it fall within the trebled recovery provision of Civil Code § 3345?

HOLDINGS

(1) California Civil Code § 3345's trebling provision does not apply only to actions brought under the Consumer Legal Remedies Act.

(2) The restitution awarded to plaintiffs is not a penalty and thus does not fall within the trebled recovery provision of Civil Code § 3345.

ANALYSIS (Kennard, J.)

ISSUE 1

The Court explained that the language of Civil Code § 3345 makes it clear that the statute’s applicability is not limited solely to actions brought under the Consumer Legal Remedies Act (CLRA). Civil Code § 3345(a) says that the statute is applicable to actions “brought . . . to redress unfair or deceptive acts or practices or unfair methods of competition.” The Court determined that this language is broad enough to encompass more than solely actions brought under the CLRA.

The Court examined the legislative history of Civil Code § 3345 to show that the Legislature did not intend for § 3345 to be limited solely to actions under the CLRA. It discussed how Civil Code § 3345 was one of three statutes that was added or amended by the Legislature in 1988 as part of Senate Bill No. 1157, which added Civil Code § 3345 and Bus. & Prof. Code § 17206.1, and amended the CLRA. The Court reasoned that if the Legislature had intended for § 3345 to be limited to only actions under the CLRA, it could have amended only the CLRA instead of adding § 3345 as a separate statute. Thus, the Court determined that by adding § 3345 at the same time as amending the CLRA, the Legislature did not intend to limit the § 3345 to only actions under the CLRA.

The Court rejected defendant's argument that because Civil Code § 3345 incorporates by reference the definitions of "senior citizens" and "disabled persons" (which are also found in the CLRA), this means that § 3345 only refers to the CLRA. The Court pointed out that § 3345 only incorporates these two definitions from the CLRA--not the entire act. This limited incorporation, in the Court's view, did not show legislative intent to confine § 3345 to actions under the CLRA.

Based on the inquiry into the Legislative history and intent behind the statute, the Court concluded that Civil Code § 3345 is applicable to actions other than solely those brought under the Consumer Legal Remedies Act.

ISSUE 2:

The Supreme Court agreed with defendant’s contention that the Court of Appeal erred when it read in isolation the phrase “the purpose or effect of which is to . . . deter” in Civil Code § 3345(b). The Supreme Court determined that this isolated reading had caused the lower court to erroneously conclude that any remedy with a deterrent effect falls within § 3345(b). The Court agreed with defendant that the “deter” language in § 3345(b) “must be read as pertaining to a remedy that is designed with a purpose to punish,” because immediately proceeding the “deter” language is phrasing that restricts trebled recovery to a “fine, or a civil penalty or other penalty” authorized by the statute. To determine otherwise, the Supreme Court reasoned, would make superfluous the statutory language referring to a “fine, or a civil penalty or other penalty.” Accordingly, if a remedy was not designed to punish, the “deter” language of Civil Code § 3345(b)) does not apply. To come to this conclusion, the Court applied the popular canon of statutory construction used in People v. Arias, which reads: “if a statute contains a list of specified items followed by more general words, the general words are limited to those items that are similar to those specifically listed.” (People v. Arias, 45 Cal.4th 169, 180 (2008)). Applying this canon to § 3345, the Court concluded that the phrase from § 3345(b), “or any other remedy the purpose of effect of which is to punish or deter,” refers to a remedy that is in the nature of a penalty. Thus, the trebled recovery provision applies only when the governing statutory remedy has “the purpose or effect” of punishing or deterring.

The Court then considered whether the unfair competition law, Bus. & Prof. Code § 17200 et seq, fell within the category of a statute that permits a remedy that is in the nature of a penalty and determined that it did not, reasoning that because the only monetary remedy available in a private action under the unfair competition law is restitution (a measure of what was taken from the plaintiff), and because restitution is not a punitive remedy, it does not fall within the trebled recovery provision of Civil Code § 3345(b).

DISPOSITION: The Supreme Court reversed the Court of Appeal, and superseded that court's opinion in 94 Cal.Rptr.3d 135.

WE CONCUR
George, C.J.
Baxter, J.
Werdegar, J.
Chin, J.
Moreno, J.
Corrigan, J.

TAGS: senior citizen, unfair competition, annuities, deceptive business practices, restitution, trebling, Consumer Legal Remedies Act, insurer, penalty, remedy, deter, Civil Code 3345.

KEY RELATED/CITED CASES

Pineda v. Bank of America, N.A., (Cal. Nov 18, 2010) (NO. S170758). (Click here for SCOCAL entry for this case).
Horowitz v. American Intern. Group, Inc., (S.D.N.Y. Sep 30, 2010) (NO. 09 CIV. 7312 PAC).
Kasky v. Nike, Inc., 27 Cal.4th 939 (2002)
Korea Supply Co. v. Lockheed Martin Corp. 29 Cal.4th 1134 (2003).
Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 (1999).
Bank of the West v. Superior Court, 2 Cal.4th 1254 (1992).
People v. Arias, 45 Cal.4th 169 (2008).
Kraus v. Trinity Management Services, Inc., 23 Cal.4th 116 (2000).
Murphy v. Kenneth Cole Productions, Inc., 40 Cal.4th 1094 (2007).

Annotated by: Shannon Barnard