Rose v. Bank of America
57 Cal. 4th 390
Cal.2013Background
- Plaintiffs (class) sued Bank of America under California's Unfair Competition Law (UCL, Bus. & Prof. Code § 17200) alleging the bank violated federal Truth in Savings Act (TISA) disclosure requirements and sought injunctive relief and restitution.
- TISA originally (1991–1996) provided a private damages remedy (former 12 U.S.C. § 4310), but Congress repealed that private right of action in 1996, effective 2001.
- TISA retained a savings clause (12 U.S.C. § 4312) preserving state laws "relating to the disclosure of yields payable or terms for accounts" so long as they are consistent with TISA.
- The trial court sustained the bank's demurrer; the Court of Appeal affirmed, reasoning Congress intended to bar private enforcement of TISA.
- The California Supreme Court granted review to decide whether a UCL "unlawful" claim may be predicated on violations of a federal statute after Congress has removed the federal private damages remedy, given the TISA savings clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a UCL "unlawful" claim may be based on violations of TISA after repeal of TISA's private damages remedy | Rose: Yes — TISA's savings clause preserves state law enforcement of equivalent disclosure requirements, so UCL may borrow TISA's standards | Bank: No — repeal of TISA's private remedy shows congressional intent to bar private enforcement based on TISA | Court: Yes — repeal of federal remedy does not bar state enforcement under UCL where Congress left an express savings clause allowing consistent state laws |
| Whether a UCL action "enforces" the federal statute (i.e., is precluded because Congress removed private federal remedy) | Rose: UCL enforces state law (not federal) by borrowing the definition of "unlawful," so it does not constitute enforcement of TISA | Bank: A UCL suit based on TISA violations is effectively enforcing TISA and subverts Congress's intent to eliminate private federal enforcement | Court: UCL actions are independent equitable suits that borrow predicate laws to define "unlawful"; they do not "enforce" the federal statute and are consistent with TISA's savings clause |
| Whether allowing UCL claims here would impermissibly "plead around" Congress's decision to bar private federal remedies | Rose: Not here — Congress expressly allowed state laws consistent with TISA to operate; UCL remedies are different and limited (injunctive, restitution) | Bank: Permitting UCL claims undermines Congress's decision to remove federal private remedies | Court: Rejects Bank; because §4312 remains, UCL claims are not foreclosed and do not duplicate the repealed TISA remedy |
| Whether preemption or comprehensive federal scheme principles bar the UCL claim | Rose: §4312 shows non-preemption and permits state laws consistent with TISA | Bank: Reliance on federal cases suggesting Congress can preclude private enforcement where Congressional scheme is comprehensive | Court: §4312 demonstrates Congress did not intend exclusivity; UCL is cumulative absent express preemption |
Key Cases Cited
- Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 (1999) (UCL "unlawful" prong borrows violations of other laws; UCL provides independent cause of action)
- Stop Youth Addiction, Inc. v. Lucky Stores, Inc., 17 Cal.4th 553 (1998) (UCL enforces its own remedies; plaintiff not "enforcing" underlying criminal statute)
- Bates v. Dow Agrosciences LLC, 544 U.S. 431 (2005) (state law requirements consistent with a federal statute are enforceable even if federal statute lacks a private remedy)
- Farm Raised Salmon Cases, 42 Cal.4th 1077 (2008) (UCL claims based on state statutes that adopt federal requirements can be viable)
- Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134 (2003) (UCL provides equitable remedies and operates as a distinct enforcement mechanism)
- Middlesex County Sewerage Auth. v. National Sea Clammers Assn., 453 U.S. 1 (1981) (analysis on when a federal remedial scheme suggests exclusivity)
- Almond Hill School v. U.S. Dept. of Agriculture, 768 F.2d 1030 (9th Cir. 1985) (discusses inference of congressional intent to bar private remedies where statutory scheme is comprehensive)