Ninth Circuit holds that California consumers who abandon damages claims can’t get restitution

It’s pretty common in consumer class actions in California for the plaintiffs to assert causes of action seeking damages as well other causes of action for various equitable remedies (such as restitution).  Sometimes, plaintiffs abandon the damages claims in order to get a bench trial on the equitable claims or in an effort to improve their chances of certifying a class.  In Sonner v. Premier Nutrition, the Ninth Circuit affirmed the dismissal of consumer-protection claims seeking solely equitable relief because legal damages were available in the same amount for the same alleged harm.

Background

In Sonner, the plaintiff brought false advertising claims against Premier Nutrition over its marketing of a dietary supplement.  The complaint sought injunctive relief and restitution under California’s Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA), as well as damages under the CLRA.

After the class had been certified and shortly before trial, the plaintiff voluntarily dismissed the damages claim under the CLRA in order to avoid a jury trial; the restitution and injunction claims under the UCL and CLRA would be resolved by a bench trial.  But the district court dismissed the restitution claims because the plaintiff had an adequate remedy at law—the abandoned damages claim under the CLRA.  And although the plaintiff argued that the UCL and CLRA don’t condition equitable restitution on the lack of an equitable remedy at law, the district court disagreed.

The Ninth Circuit’s Decision

On appeal, the Ninth Circuit affirmed the dismissal of the equitable restitution claims—but on a different rationale.  The Ninth Circuit assumed without deciding that the UCL and CLRA abrogate the state’s inadequate-remedy-at-law requirement for claims seeking equitable restitution.  Instead, the Ninth Circuit concluded that, under the Erie doctrine, answers the question of whether the adequate-remedy-at-law doctrine applies.

Citing Guaranty Trust Co. v. York, the Ninth Circuit held that “a federal court must apply traditional equitable principles before awarding restitution under the UCL and CLRA” because “state law cannot expand or limit a federal court’s equitable authority.”  The Ninth Circuit explained that rules such as the inadequate-remedy-at-law rule are important for protecting the Seventh Amendment right to trial by jury, and that the “strong federal policy protecting the constitutional right to trial by jury outweighs” a state’s “procedural interest” in dispensing with the inadequate-remedy-at-law requirement.

The Ninth Circuit went on to hold that the plaintiff’s abandoned CLRA damages claim was an adequate remedy at law because the damages award would encompass the full amount of equitable restitution sought on behalf of the certified class.

Analysis

The Ninth Circuit’s decision in Sonner resolves a split among federal district courts in California over whether plaintiffs could get equitable relief under the UCL and CLRA without showing why any available damages claim was inadequate.  Compare, e.g., Munning v. Gap, Inc. (N.D. Cal. 2017) (dismissing equitable restitution claim for lack of proof that legal remedies inadequate) with, e.g., Luong v. Subaru of Am., Inc. (N.D. Cal. 2018) (dispensing with requirement because the UCL and CLRA provide that their remedies are “cumulative” to remedies available under other laws).

Sonner’s holding that the traditional limitations on equitable relief apply is of significant importance to class-action litigation under California’s consumer-protection laws.

To begin with, as noted in Sonner itself, the presence or absence of the damages claim determines whether the case will be tried to the judge or a jury.  The constitutional right to trial by jury applies only to legal claims—not purely equitable ones.

Moreover, by preventing plaintiffs seeking monetary relief under the UCL from jettisoning CLRA damages claims, Sonner bars plaintiffs from evading the CLRA’s requirements—which can make it harder to get a class certified.

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