California: No Jury Trials in Unfair Competition Law and False Advertising Law Cases (and Proposition 65 Cases?)

In Nationwide Biweekly Administration Inc. v. Superior Court of Alameda County, the high court reversed the California Court of Appeal, which held there is a constitutional right to a jury trial as to “liability in a government enforcement action seeking statutory penalties,” but not as to the amount of those penalties. The Court of Appeal relied on Tull v. United States (1987) 481 U.S. 412, a United States Supreme Court decision that applied the federal Seventh Amendment civil jury trial provision. By reversing the appellate court, the California Supreme Court affirmed 45 years of California Court of Appeal precedent holding UCL and FAL actions are to be tried by the court rather than by a jury. The Court aptly reasoned that the jury trial provision of the California Constitution, not the federal Constitution, should be interpreted to determine whether a jury trial exists in state court proceedings brought under the UCL or FAL.

Quoting its decision in Shaw v. Superior Court (2017) 2 Cal.5th 983, the California Supreme Court set forth the following standard: “Under California law, the right to a jury trial in a civil action may be afforded either by statute or by the California Constitution….” Here, analyzing the statutory prong of the standard, the Court looked to the “legislative history and underlying purpose” of the UCL and FAL, and determined “these very broadly worded consumer protection statutes were fashioned to permit courts to utilize their traditional flexible equitable authority ….” Then, under the constitutional prong¹, the Court concluded “the gist of both the UCL and FAL causes of action at issue here is equitable.”

Extension to Proposition 65?

In its prior decision, the Court of Appeal questioned the legal reasoning and conclusion of DiPirro v. Bondo Corp. (2007) 153 Cal.App.4th 150 (DiPirro), holding there is no right to a jury trial in Proposition 65 actions seeking injunctive relief, restitution and civil penalties. In deciding whether there was a right to a jury trial, the DiPirro court examined the statutory framework to determine whether the gist of the action was legal or equitable. The DiPirro court reasoned jury trials are not available because the essential character and purpose of Proposition 65 is to provide equitable relief, not to impose civil penalties.

Now that the California Court of Appeal has been reversed, the DiPirro reasoning and conclusion has been revived. Proposition 65 is similar to the UCL and FAL in that once a statutory violation is found, the court may issue an injunction and shall impose a civil penalty not to exceed $2,500 per day for each violation. Proposition 65 is also similar to the UCL and FAL in that the statute sets forth a list of multiple factors for the court to consider in determining the amount of civil penalties, giving it latitude beyond the statute’s proposed formula. Because the availability of injunctive relief and civil penalties is contingent on whether a statutory violation exists, “the equitable and legal aspects of the action are not severable.” Although the California Supreme Court limited its holding to the UCL and FAL, its opinion provides strong support for DiPirro and does not disturb the status quo—no jury trials in Proposition 65 actions.

^{1 California “preserves the right to jury trial in civil actions comparable to those legal causes of action in which the right to jury trial existed at the time of the first Constitution’s adoption in 1850 and does not apply to causes of action that are equitable in nature.”}