COMMITTEE ON CHILDREN‘S TELEVISION, INC., et al., Plaintiffs and Appellants, v. GENERAL FOODS CORPORATION et al., Defendants and Respondents.
L.A. No. 31603
Supreme Court of California
Dec. 22, 1983.
35 Cal. 3d 197
Sidney M. Wolinsky, Lois Salisbury and Robert L. Gnaizda for Plaintiffs and Appellants.
Honora Kaplan, Norah M. Wylie and Gitlin, Emmer, Kaplan & Bohn as Amici Curiae on behalf of Plaintiffs and Appellants.
Gibson, Dunn & Crutcher, John J. Hanson, J. Edd Stepp, Jr., Steven C. McCracken and Gail E. Lees for Defendants and Respondents.
BROUSSARD, J.—Plaintiffs appeal from a judgment of dismissal following a trial court order sustaining demurrers without leave to amend to their fourth amended complaint. The complaint essentially charges defendants—General Foods Corporation, Safeway Stores, and two advertising agencies—with fraudulent, misleading and deceptive advertising in the marketing of sugared breakfast cereals. The trial court found its allegations insufficient because they fail to state with specificity the advertisements containing the alleged misrepresentations. We review the allegations of the complaint and conclude that the trial court erred in sustaining demurrers without leave to amend to plaintiffs’ causes of action charging fraud and violation of laws against unfair competition and deceptive advertising.
I. SUMMARY OF THE PLEADINGS AND PROCEDURE.
Plaintiffs filed their original complaint on June 30, 1977, as a class action on behalf of “California residents who have been misled or deceived, or are threatened with the likelihood of being deceived or misled,” by defendants in connection with the marketing of sugared cereals.1 The named plaintiffs included five organizations (The Committee on Children‘s Television, Inc.; the California Society of Dentistry for Children; the American G.I. Forum of California; the Mexican-American Political Association; the League of United Latin American Citizens), individual adults, and individual children.
The principal defendant is General Foods Corporation, the manufacturer of five “sugared cereals“—Alpha Bits, Honeycomb, Fruity Pebbles, Sugar Crisp, and Cocoa Pebbles—which contain from 38 to 50 percent sugar by weight. The other corporate defendants are two advertising agencies—Benton and Bowles, Inc., and Ogilvy & Mather International, Inc.—which handled advertising of these cereals, and Safeway Stores, which sold the products to plaintiffs. Finally, the complaint includes as defendants numerous officers and employees of the corporate defendants.
When the court sustained a demurrer to the third amended complaint, it ruled that no cause of action could be stated on behalf of the organizational plaintiffs. The individual plaintiffs remaining then filed their fourth amended complaint; the validity of this complaint is the principal issue on appeal.
Paragraph 35 lists some 19 representations allegedly made in television commercials aimed at children. Most of these representations are not explicit but, according to plaintiffs, implicit in the advertising. They include, for example, the implied representation that “children . . . who regularly eat candy breakfasts are bigger, stronger, more energetic, happier, more invulnerable, and braver . . . ,” that eating such products is a “‘fun’ thing to do,” that the products possess or impart “magical powers,” etc. Some representations, however, are more specific: that the sugared cereals are “grain products,” are “healthful and nutritious,” contain adequate amounts of elements essential to diet, and “are the most important part of a well balanced breakfast.”3
Paragraph 42 asserts that defendants concealed material facts, such as the sugar content of their products, that “[t]here is no honey in Honeycomb, no fruit in Fruity Pebbles,” that sugared cereals contribute to tooth decay and can have more serious medical consequences, and that they cost more per serving than breakfast foods of greater nutritional value.4 Such con-
The complaint asserts at length the special susceptibility of children to defendants’ “advertising scheme,” and explains how defendants take advantage of this vulnerability. It further asserts that, as defendants know, the desires and beliefs of children influence and often determine the decision of adults to buy certain breakfast foods. Finally, claiming that defendants will continue deceptive practices unless enjoined, the first cause of action seeks injunctive relief, plus restitution of monies paid by plaintiff class for “candy breakfasts.”
Plaintiffs’ second cause of action is based on
The third through sixth causes of action set out various aspects of the tort of fraud. The third cause of action charges deliberate fraud in violation of
Defendants demurred to the fourth amended complaint for failure to state a cause of action and for uncertainty.7 The trial court sustained the demurrers without leave to amend. The trial judge explained the basis for his ruling: “[I]n order to state a cause of action for fraud or for breach of warranty, there must be alleged with specificity the basis for the cause and that is, if there are advertisements which contain fraudulent matters, those advertisements must be set out. [¶] In paragraph 35, which is the heart of the allegations concerning the conveying of the representations, we have just a series of very general allegations to which there is no reference of an advertisement actually made. . . . [¶] Paragraph 38 which makes the allegations concerning media dissemination set out no television stations, no other media, except for the fact that these ads were run on television stations every day in Southern California for a four-year period. [¶] This gives the defendant practically no kind of information concerning that which the defendant must answer, and it doesn’t give the court a sufficient factual basis for its administration of the case.”
Appealing from the judgment of dismissal, plaintiffs contend that their fourth amended complaint states, or can be amended to state, a valid cause of action. They also ask us to review certain rulings by the trial court respecting earlier versions of their complaint. They point out that in sustaining a demurrer to their second amended complaint, the court denied leave to amend as to causes of action asserting breach of fiduciary duty and violation of the
In reviewing the issues raised by the fourth amended complaint and the earlier rulings of the trial court, we first consider the causes of action based upon various consumer protection statutes. We then review the various causes of action for statutory and common law fraud. Lastly, we take up plaintiffs’ asserted cause of action for breach of fiduciary duty. Issues concerning the standing of plaintiffs and the available remedies will be discussed in connection with each cause of action.
II. CAUSES OF ACTION BASED ON CONSUMER PROTECTION STATUTES.
Plaintiffs’ first cause of action in the fourth amended complaint seeks injunctive relief and restitution under
The term “unfair competition” receives a broad definition. A recent Court of Appeal decision summarized its breadth. “Historically, the tort of unfair business competition required a competitive injury. However, the language of
Plaintiffs’ second cause of action is based on
In addition to the causes of action asserted in the fourth amended complaint, plaintiffs’ second amended complaint also asserted a cause of action based on the
In sum, plaintiffs rely on three statutes—the unfair competition law, the false advertising law, and the Sherman Food, Drug and Cosmetic Law—all of which in similar language prohibit false, unfair, misleading, or deceptive advertising. In the present context we discern no difference in the scope of these enactments (apart from the fact that the Sherman law is limited to food, drugs, and cosmetics) or the meaning of their provisions. We proceed, therefore, on the basis that any advertising scheme involving false, unfair, misleading or deceptive advertising of food products equally violates all three statutes.
To state a cause of action under these statutes for injunctive relief, it is necessary only to show that “members of the public are likely to be deceived.” (Chern v. Bank of America (1976) 15 Cal.3d 866, 876; see Payne v. United California Bank (1972) 23 Cal.App.3d 850, 856 and cases there cited.) Allegations of actual deception, reasonable reliance, and damage are unnecessary. The court may also order restitution without individualized proof of deception, reliance, and injury if it “determines that such a remedy is necessary ‘to prevent the use or employment’ of the unfair practice . . . .” (Fletcher v. Security Pacific National Bank, supra, 23 Cal.3d 442, 453.)
Insofar as plaintiffs seek injunctive relief and restitution under the cited consumer protection statutes, defendants’ principal basis for demurrer is the charge that the complaint fails to describe the alleged deceptive practices with sufficient particularity. Defendants assert that plaintiffs should not merely describe the substance of the misrepresentations, but should state the specific deceptive language employed, identify the persons making the misrepresentations and those to whom they were made, and indicate the date, time and place of the deception.
The complaint in a civil action serves a variety of purposes (see 3 Witkin, Cal. Procedure (2d ed. 1971) p. 1690), of which two are relevant
We applied these principles in our decision in the Jayhill case (People v. Superior Court (Jayhill Corp.) (1973) 9 Cal.3d 283), a suit charging encyclopedia salesmen with false and misleading advertising in violation of
Defendants suggest that Jayhill held only that the failure to plead the exact language of the misrepresentation in text is cured by including that language in an exhibit to the complaint. The Jayhill exhibits, however, included only “the sales dialogues allegedly employed by some of the defendants” (p. 288, italics added), yet our decision upheld the cause of action against all defendants. We therefore interpret Jayhill as holding that a plaintiff need not plead the exact language of every deceptive statement; it is
The fourth amended complaint in the present case describes the alleged deceptive scheme in considerable detail. Paragraph 35 alleges some 19 misrepresentations—some general, others relatively specific. Paragraph 42 lists material facts which are not disclosed. Finally, plaintiffs allege that each misrepresentation appears (and every listed material fact is concealed) in every advertisement for the specified product during the period in question.13 There is thus no doubt as to what advertisements are at issue, nor as to what deceptive practices are called into question.14 We believe these allegations are sufficient to notify the defendants of the claim made against them, and to frame the issues for litigation.15
Defendants’ objection, as we see it, is not really one of lack of specificity or notice. Basically defendants believe that the allegations of paragraph 35 are not a fair paraphrase of the actual language of the advertisements, and that if plaintiffs could be compelled to state the exact language, it would be clear, for example, that defendants are not really representing that Cocoa Puffs will make children braver or that Alpha Bits impart magical powers.
It is not the ordinary function of a demurrer to test the truth of the plaintiff‘s allegations or the accuracy with which he describes the defendant‘s conduct. A demurrer tests only the legal sufficiency of the pleading. (Whitcombe v. County of Yolo (1977) 73 Cal.App.3d 698, 702.) It “admits the truth of all material factual allegations in
The unsuitability of a demurrer to test the accuracy of a complaint is particularly marked in the present case. Plaintiffs do not, for the most part, claim that defendants made explicit oral or written representations. Instead, they claim that defendants used language, and presented images, in a form such that a particularly susceptible and naive audience—one composed largely of preschool children—would believe defendants were making those representations. Even if plaintiffs pled the exact language and sequence of visual images making up a television advertisement, it would be difficult for judges unaided by expert testimony to determine how a three-year-old would interpret that advertisement.
Important policy considerations also argue against requiring plaintiffs to set out the specific language of each advertisement. Plaintiffs allege that defendants carried out a large scale program of deceptive advertising in which the specific advertisements change constantly, but all follow a pattern of making, in one form or another, certain misleading and deceptive representations. If such is the case, to require plaintiffs to plead the specifics of each advertisement would render a suit challenging the overall program impractical. The complaint would have to include thousands of pages setting out specifics which are largely within defendants’ knowledge. The cost and difficulty of compiling, organizing, and setting down the information would seriously deter the filing of any such complaint. The effect of such a pleading requirement, moreover, would not be limited to discouraging private suits; it would also seriously hamper suits by public officials seeking to enjoin schemes of unfair competition and deceptive advertising.
We conclude that the allegations of plaintiffs’ fourth amended complaint are sufficient to overcome a general demurrer and to state causes of action for injunctive relief and restitution under both the unfair competition law and the false advertising law. (As we noted earlier, it is immaterial whether they state an independent cause of action under the Sherman Food,
We also hold that the organizational plaintiffs have standing to sue under both the unfair competition law and the false advertising law. With respect to the former,
We do not, however, decide whether a plaintiff other than a business competitor can recover damages on a cause of action based on the unfair competition or false advertising law.16 Resolution of this issue is not essential to provide plaintiffs with an adequate remedy in the present case. As explained in part III of this opinion, the nonorganizational plaintiffs can recover damages under their causes of action for fraud, while the organizational plaintiffs have suffered no legally cognizable damages under any cause of action.
III. CAUSES OF ACTION BASED ON FRAUD.
Plaintiffs base their third, fourth, fifth and sixth causes of action on the tort of fraud.
“Fraud actions . . . are subject to strict requirements of particularity in pleading. The idea seems to be that allegations of fraud involve a serious attack on character, and fairness to the defendant demands that he should receive the fullest possible details of the charge in order to prepare his defense. Accordingly the rule is everywhere followed that fraud must be specifically pleaded. The effect of this rule is twofold: (a) General pleading of the legal conclusion of ‘fraud’ is insufficient; the facts constituting the fraud must be alleged. (b) Every element of the cause of action for fraud must be alleged in the proper manner (i.e., factually and specifically), and the policy of liberal construction of the pleadings will not ordinarily be invoked to sustain a pleading defective in any material respect.” (3 Witkin, Cal. Procedure (2d ed. 1971) Pleading, § 574; see Hall v. Department of Adoptions (1975) 47 Cal.App.3d 898, 904; Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 109; Lavine v. Jessup (1958) 161 Cal.App.2d 59, 69.)17
The specificity requirement serves two purposes. The first is notice to the defendant, to “furnish the defendant with certain definite charges which can be intelligently met.” (Lavine v. Jessup, supra, 161 Cal.App.2d 59, 69; see Roberts v. Ball, Hunt, Hart, Brown & Baerwitz, supra, 57 Cal.App.3d 104, 109; Scafidi v. Western Loan & Bldg. Co. (1946) 72 Cal.App.2d 550, 553.) The pleading of fraud, however, is also the last remaining habitat of the common law notion that a complaint should be sufficiently specific that the court can weed out nonmeritorious
We observe, however, certain exceptions which mitigate the rigor of the rule requiring specific pleading of fraud. Less specificity is required when “it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy,” (Bradley v. Hartford Acc. & Indem. Co. (1973) 30 Cal. App.3d 818, 825 [106 Cal.Rptr. 718]); “[e]ven under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party. . . .” (Turner v. Milstein (1951) 103 Cal.App.2d 651, 658 [230 P.2d 25].)
Additionally, in a case such as the present one, considerations of practicality enter in. A complaint should be kept to reasonable length, and plaintiffs’ fourth amended complaint, 64 pages long, strains at that limit. Yet plaintiffs allege thousands of misrepresentations in various media over a span of four years—representations which, while similar in substance, differ in time, place, and detail of language and presentation. A complaint which set out each advertisement verbatim, and specified the time, place, and medium, might seem to represent perfect compliance with the specificity requirement, but as a practical matter, it would provide less effective notice and be less useful in framing the issues than would a shorter, more generalized version.
Defendants object to the allegations of misrepresentation on the ground that the complaint fails to state the time and place of each misrepresentation, to identify the speaker and listener, and to set out the representation verbatim or in close paraphrase. The place and time of the television advertisements, however, is fully known to defendant General Foods, but became available to plaintiffs only through discovery.18 That defendant equally knows the distribution of cereal box advertisements. A lengthy list of the dates and times of cereal ads on California television stations would add nothing of value to the complaint; the same is true for a list of California grocers marketing General Foods cereals. The language of the complaint—
General Foods also knows the content of each questioned advertisement. Plaintiffs initially lacked such detailed knowledge, and although they have now obtained copies of the television storyboards through discovery, quotation or attachment of such copies to the complaint would consume thousands of pages. Attachment of the storyboards, moreover, would not redress defendants’ grievance, which is, as we understand it, not that they lacked knowledge of the content of the commercials but that they do not understand what it is in the images and words that gives rise to the alleged misrepresentations.
For plaintiffs to provide an explanation for every advertisement would be obviously impractical. We believe, however, that the trial court could reasonably require plaintiffs to set out or attach a representative selection of advertisements, to state the misrepresentations made by those advertisements, and to indicate the language or images upon which any implied misrepresentations are based. This is a method of pleading which has been endorsed in other cases involving numerous misrepresentations (see People v. Superior Court (Jayhill Corp.), supra, 9 Cal.3d 283, 288; Vogelsang v. Wolpert (1964) 227 Cal.App.2d 102, 116 [38 Cal.Rptr. 440].) It represents a reasonable accommodation between defendants’ right to a pleading sufficiently specific “that the court can ascertain for itself if the representations . . . were in fact material, and of an actionable nature” (8 Grossman & Van Alstyne, op. cit. supra, § 984 (fns. omitted)), and the importance of avoiding pleading requirements so burdensome as to preclude relief in cases involving multiple misrepresentations.19
Defendants also object that the complaint does not indicate that any particular child relied upon or even saw any particular television advertisement. They point out that although the complaint does assert that each of the adult plaintiffs purchased General Foods’ products at a Safeway Store, it does not state which advertisements they, or their children, saw and relied upon.
A specific statement of the advertisements seen and relied upon by the individual plaintiffs would serve to demonstrate both that they possess a
Defendants further claim that the complaint is deficient because it describes one group, children, who receive the misrepresentations and a different group, parents, who purchase the product. (This objection applies only to the television commercials, since the parents saw the advertisements on the cereal boxes and in printed media.) Defendants’ argument is inconsistent with the strategy of their own advertising. They are aware that the parents purchase the cereals, but they are also aware that parents do not exercise a totally independent judgment, but are influenced by the desires of their children. If such were not the case, defendants would not spend millions to advertise cereals on children‘s programs watched by very few adult purchasers.
Restatement Second of Torts section 533, states that “[t]he maker of a fraudulent misrepresentation is subject to liability . . . to another who acts in justifiable reliance upon it if the misrepresentation, although not made directly to the other, is made to a third person and the maker intends or has reason to expect that its terms will be repeated or its substance communicated to the other, and that it will influence his conduct.” This proposition was indorsed as California law in Varwig v. Anderson-Behel Porsche/Audi, Inc. (1977) 74 Cal.App.3d 578, 581 [141 Cal.Rptr. 539]. We recognize that it does not quite cover the present case—plaintiffs do not allege the children repeated the representations to their parents, and we would imagine that in most cases they did not, but simply expressed their desire for the product. Repetition, however, should not be a prerequisite to liability; it should be sufficient that defendant makes a misrepresentation to one group intending to influence the behavior of the ultimate purchaser, and that he succeeds in this plan.
We turn finally to the question of damages. In an action for fraud, damage is an essential element of the cause of action (Harazim v. Lynam (1968) 267 Cal.App.2d 127, 130 [72 Cal.Rptr. 670]); the successful plaintiff recovers damages as a matter of right.
The present complaint describes three distinct groups of plaintiffs: the organizational plaintiffs, the parents who purchased the cereals, and the children who consumed them. With respect to the organizational plaintiffs, however, the allegations are inadequate to state a cause of action. Plaintiffs assert that some organizations such as the California Society of Dentistry for Children have spent funds to counter the influence of defendants’ advertising; other organizations such as the American G.I. Forum of California have many members who have sustained injury. Neither theory justifies a damage claim by the organization itself. Any organizational expenditures were voluntary in character and not the result of any legally cognizable injury to the organization. If some of the members have suffered injury, they can seek redress in an individual or class action. Thus the trial court did not err in sustaining a demurrer without leave to amend as to the fraud causes of action on behalf of the organizations.
When we consider the damages claimed by the parents and children, we encounter a different problem. The allegations of the complaint are clearly sufficient to state a cause of action for restitution of the money spent to purchase the sugared cereals. The complaint also seeks additional damages, claiming that plaintiffs and members of their class encountered medical or dental injury from consuming sugared cereals and incurred expenses to treat those injuries. It does not, however, assert that any of the named children sustained any specific injury or that any of the named parents spent money to treat such injury. As a result, the allegations appear sufficient to assert injury to a subclass of parents and children (the class being all parents who purchased and children who consumed, even if no injury was incurred), but does not clearly place any of the individually named plaintiffs within their subclass. In view of the requirement for specific pleading in fraud actions, we believe the trial court could view the complaint as uncertain in its failure to make clear whether the individual child plaintiffs have incurred any specific health injury from the consumption of the sugared cereals, and whether their parents have spent any specific sums to treat those injuries.20
In summary, the complaint fails to state a cause of action in fraud on behalf of the organizational plaintiffs. Its allegations on behalf of the indi-
IV. CAUSE OF ACTION FOR BREACH OF FIDUCIARY DUTY.
The seventh cause of action of the second amended complaint asserted that General Foods owed, and breached, a fiduciary obligation to the child plaintiffs. The trial court sustained a demurrer without leave to amend, with the result that this cause of action did not appear in subsequent versions of the complaint.
Plaintiffs’ assertion of fiduciary duty in a consumer context is unique. Plaintiffs argue that imposition of fiduciary obligations is appropriate whenever one party with a stronger bargaining position or greater knowledge has the ability to reach out and exploit the weaker party.21 Such duties are particularly appropriate here, say plaintiffs, because General Foods purports to give expert advice on diet and nutrition, and directs that advice to children, exploiting their trusting and uncritical acceptance.
But the efforts of commercial sellers—even those with superior bargaining power—to profit from the trust of consumers is not enough to create a fiduciary duty. If it were, the law of fiduciary relations would largely displace both the tort of fraud and much of the Commercial Code. Something more is needed. It is difficult to define that additional element precisely, and courts have traditionally refrained from definitions that would place strict limits on this equitable concept. It would appear, however, that before a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law. (See Scott, The Fiduciary Principle (1949) 37 Cal.L.Rev. 539, 540; Rest.2d Trusts (1959) § 2.)
We believe the various statutory and common law doctrines fashioned to protect the consumer from overreaching and deception are strong and flexible enough to accomplish that purpose, and that it is unnecessary to call upon the law of fiduciary relationships to perform a function for which it was not designed and is largely unsuited. We affirm the trial court‘s ruling sustaining a demurrer without leave to amend to this cause of action.
V. CONCLUSION.
Although the parties argue primarily the sufficiency and specificity of the pleadings, the underlying controversy is of much greater dimension. Defendants engaged in a nationwide, long-term advertising campaign designed to persuade children to influence their parents to buy sugared cereals. Adapted to its audience, the campaign sought to persuade less by direct representation than by imagery and example. While maintaining a constant theme, the particular advertisements changed frequently. Plaintiffs now contend that these advertisements were deceptive and misleading, and while we do not know the actual truth of those charges, we must assume them true for the purpose of this appeal. Yet, if we apply strict requirements of specificity in pleading as defendants argue, the result would be to eliminate the private lawsuit as a practical remedy to redress such past deception or prevent further deception. By directing their advertisements to children, and changing them frequently, defendants would have obtained practical im-
It can be argued that administrative investigation and rule making would be a better method of regulating advertising of this scope and character. The California Legislature, however, has not established the necessary administrative structure. It has enacted consumer protection statutes and codified common law remedies which in principle apply to all deceptive advertising, regardless of complexity and scale, and, we believe, regardless of whether the advertisement seeks to influence the consumer directly or through his children. Established rules of pleading should not be applied so inflexibly that they bar use of such remedies.
We therefore conclude that plaintiffs’ complaint states a cause of action for injunctive relief and restitution under the unfair competition law (
The judgment is reversed, and the cause remanded for further proceedings consistent with this opinion.
Mosk, J., Richardson, J., Kaus, J., Reynoso, J., and Grodin, J., concurred.
BIRD, C. J., Concurring and Dissenting.—I concur in Justice Broussard‘s opinion but I would answer the question as to whether plaintiffs who are not business competitors can recover damages for harm suffered as a result of unfair competition (
I.
The majority suggest that this court need not decide whether damages are available under the unfair competition and false advertising laws because all of the injured plaintiffs may recover damages under their causes of action
Under the traditional view of fraud, a plaintiff must show that the defendant made an untrue assertion of fact, which the defendant either knew to be untrue or had no reasonable ground for believing to be true. (
By contrast, any statement that is “untrue or misleading,” and which the defendant knew or reasonably should have known to be “untrue or misleading,” falls within the definition of “false or misleading statements” proscribed by the false advertising law. (
It appears, then, that under the traditional view of fraud, plaintiffs must sustain a greater burden to prove fraud than to prove unfair competition or false advertising. Recent developments do suggest, however, that the lines between fact and opinion, and between “untrue” and “misleading” statements, may be more apparent than real, at least in the consumer protection area. In Hauter v. Zogarts (1975) 14 Cal.3d 104 [120 Cal. Rptr. 681, 534 P.2d 377, 74 A.L.R.3d 1282], for example, a manufacturer claimed that its “Golfing Gizmo” was “completely safe,” and that the ball attached to the device “will not hit [the] player.” (Id., at pp. 108, 109.) This claim was
Apparently, the majority assume that similarly expansive definitions of “untrue” and “fact” should be applied here. I have no disagreement with that approach. However, in the absence of a clear statement equating the fraud standard (as applied in the consumer protection area) with that of the unfair competition and false advertising laws, this court should decide whether the injured plaintiffs may recover damages under the latter provisions.
II.
I would hold that injured consumers may state a cause of action for damages under the unfair competition and false advertising laws. The legislative history, purpose, and judicial treatment of the unfair competition law establish that courts may remedy a violation by awarding compensatory damages to all injured parties. Since a violation of the false advertising law is also, by definition, a violation of the unfair competition law (§ 172003), the remedies of the latter section are available in actions brought under the false advertising law.
The unfair competition law codified a longstanding tort doctrine which provided businesses with a remedy for unfair practices committed by their competitors. (See Note, Prevention of Unfair Business Practices in California: A Proposal for Effective Regulation (1980) 32 Hastings L.J. 229, 236-237.) As originally enacted, the law expressly provided for injunctive relief, but was silent on damages. (Stats. 1933, ch. 953, § 1, p. 2482.4) Neverthe-
In 1976, the Legislature amended the unfair competition law to provide for restitution as well as injunctive relief. (Stats. 1976, ch. 1005, § 1, pp. 2378-2379.) The law, now codified as section 17200 et seq., remains silent as to compensatory damages. The question then becomes whether compensatory damages, long awarded to business competitors, may be awarded to consumers as well.
The unfair competition law provides absolutely no basis for preferring business competitors over consumers in determining which remedies are available. In Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 111 [101 Cal.Rptr. 745, 496 P.2d 817], an action by consumers for injunctive relief, this court held that the unfair competition law protects consumers as well as business competitors. Indeed, “in a society which enlists a variety of psychological and advertising stimulants to induce the consumption of goods, consumers, rather than competitors, need the greatest protection from sharp business practices.” (Ibid.)
Defendants argue that because the statute is silent on compensatory damages, the sole basis for holding that compensatory damages are available to anyone lies in the old equitable doctrine, which was available only to competitors. This proposition has already been rejected by this court.
In People v. Superior Court (Jayhill Corp.) (1973) 9 Cal.3d 283 [107 Cal.Rptr. 192, 507 P.2d 1400, 55 A.L.R.3d 191], the Attorney General sought restitution on behalf of consumers who had been solicited by means of fraudulent sales presentations. At the time the Jayhill action was filed, the Legislature had not yet amended the statute to provide for restitution. Nevertheless, this court held that courts could use their “general equity jurisdiction” to grant restitution to injured customers. (Id., at p. 286.) “Unless the Legislature—“in so many words, or by a necessary and inescapable inference“‘—imposes a restriction on a court‘s equity powers, a court
The precise issue presented here was addressed by the Court of Appeal in United Farm Workers of America v. Superior Court (1975) 47 Cal.App.3d 334 [120 Cal.Rptr. 904]. Reasoning that Jayhill had implied that damages could be awarded in an appropriate case, the court concluded that a noncompetitor could recover damages under the unfair competition and false advertising laws. (Id., at pp. 344-345.5)
Defendants urge this court to overrule United Farm Workers and to repudiate the principles announced in Jayhill. To support their position, they point to Chern v. Bank of America (1976) 15 Cal.3d 866 [127 Cal.Rptr. 110, 544 P.2d 1310].
In Chern, this court stated without explanation that damages are not recoverable under the false advertising law. (15 Cal.3d at p. 875.) Since the issue of damages for unfair competition was not raised by the parties, this court did not address United Farm Workers, Jayhill, or the numerous cases holding that damages are available to competitors for unfair competition. (See ante, p. 225.)
In my view, Chern should be overruled. Otherwise, this court would be forced to adopt one of two alternatives, neither of which is supported by law or logic. As one alternative, the court could conclude that competitors but not consumers may recover general damages. This approach would require the overruling of United Farm Workers and the repudiation of the sound principles announced in Jayhill. Moreover, to accord competitors but not consumers a damage remedy would directly conflict with this court‘s recognition that “consumers, rather than competitors, need the greatest protection from sharp business practices.” (Barquis v. Merchants Collection Assn., supra, 7 Cal.3d 94, 111.)
As a second alternative, it could be held that no plaintiff may recover general damages for unfair competition or false advertising. This approach
In short, to retain Chern, which is unsupported by precedent or reasoning, this court would have to overturn numerous other decisions which are grounded in traditional principles of equity and which are consistent with the purposes of the unfair competition and false advertising laws. (See generally, Note, supra, 32 Hastings L.J. at pp. 241-242.) Accordingly, I would overrule Chern and hold that noncompetitor plaintiffs may state a cause of action for damages under both the unfair competition and false advertising laws.
Notes
“35. The advertising scheme routinely and repeatedly employs and utilizes, in commercials aimed at children, each of the following representations which are conveyed both visually and verbally:
“(a) Children and young children who regularly eat candy breakfasts are bigger, stronger, more energetic, happier, more invulnerable, and braver than they would have been if they did not eat candy breakfasts.
“(b) Eating candy breakfasts is a ‘fun’ thing for children to do, and is invariably equated with entertainment and adventure.
“(c) The sweet taste of a product ensures or correlates with nutritional merit.
“(d) Eating candy breakfasts will make children happy.
“(e) Bright colors in foods ensure or correlate with nutritional merit.
“(f) Candy breakfasts are grain products.
“(g) Candy breakfasts are more healthful and nutritious for a child than most other kinds and types of cereals.
“(h) Adding small amounts of vitamins and minerals to a product automatically makes it ‘nutritious.’
“(i) Candy breakfasts inherently possess and/or impart to those ingesting them magical powers, such as the capacity to cause apes and fantastic creatures to appear or disappear.
“(j) Candy breakfasts contain adequate amounts of the essential elements of a growing child‘s diet, including protein.
“(k) The ‘premiums’ (small toys packaged in with the candy breakfast as an inducement
to the child) are very valuable and are offered free as a prize in each box of candy breakfast.“(l) Candy breakfasts are the most important part of a ‘well-balanced breakfast’ and are at least as nutritious as milk, toast and juice.
“(m) Candy breakfasts calm a child‘s fears and dispel a child‘s anxiety. . . .
“(n) Candy breakfasts have visual characteristics which they do not in fact possess, such as vivid colors and the capacity to glitter or to enlarge from their actual size to a larger size.
“In addition to the foregoing representations specified in Paragraph 35 (a) through (n), in each of the commercials for each of the products specified below the advertising scheme repeatedly, uniformly and consistently utilizes and relies upon the following representations with respect to particular products:
“(o) Cocoa Pebbles are good for a child to eat whenever he or she is hungry, and it is a sound nutritional practice to eat chocolatey tasting foods, such as Cocoa Pebbles, for breakfast.
“(p) Honeycomb (i) contains honey and (ii) consists of pieces which are each at least two (2) inches in diameter and (iii) will make a child big and strong.
“(q) Alpha-Bits (i) will enable a child to conquer his or her enemies, (ii) can be used by a child easily to spell words in his or her spoon, (iii) are an effective cure for the child‘s anxieties, and (iv) have magical powers and can impart magical powers to a child . . .
“(r) Fruity Pebbles (i) contain fruit and (ii) emit auras, rainbows or mesmerizing colors.
“(s) Super Sugar Crisp (i) should be eaten as a snack food without danger to dental health, (ii) should be eaten as a nutritious snack whenever a child is hungry, (iii) makes a child smart and (iv) is coated with golden sugar and such sugar is very valuable.”
Section 17200 provides: “As used in this chapter, unfair competition shall mean and include unlawful, unfair or fraudulent business practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.” (Italics added.)“42. In the advertising scheme planned and participated in by each and every Defendant, none of the following facts are ever disclosed:
“(a) The percentage of sugar and chemicals together in the products advertised ranges from 38% to 50% of the total weight of the product;
“(b) There is no honey in Honeycomb, no fruit in Fruity Pebbles, and the premiums packed into the boxes of Alpha Bits and Super Sugar Crisp cost no more than a few pennies at most;
“(c) Eating candy breakfasts may contribute to tooth decay in children and adults;
“(d) Eating candy breakfasts as a snack will cause tooth decay;
“(e) Children should brush their teeth soon after eating sugary foods;
“(f) For many children, excessive sugar consumption will have serious and detrimental health consequences, including obesity, heart disease, and other adverse health consequences;
“(g) For children with already existing health problems, especially diabetes, consuming candy breakfasts may have serious and detrimental health consequences;
“(h) There is a serious controversy over the adverse effects of sugar on the health of
children;“(i) Candy breakfasts are not the most important part of a balanced breakfast;
“(j) If eaten at all, candy breakfasts should not be consumed in large quantities and whenever a child is hungry;
“(k) Candy breakfasts cost more per serving than non-pre-sweetened breakfast cereals or hot cereals and more than other foods of better nutritional value than candy breakfasts;
“(l) A child‘s welfare is best served by accepting nutritional advice from his or her parents when such advice conflicts with advice given in television commercials;
“(m) The happy, adventure-filled fantasy portrayal of eating candy breakfasts is unrealistic and cannot be duplicated by any child.”
Until 1976, the law was codified as Civil Code section 3369, subdivisions 2-5.We do not believe plaintiffs’ claim under