*1 No. 31679. Mar. [L.A. 1984.] KAGAN,
ELEANOR M. Plaintiff and v. Appellant, et al., GIBRALTAR SAVINGS AND LOAN ASSOCIATION Defendants and Respondents.
583 *5 Counsel
Levin, Ballin, Plotkin & Plotkin and Justin Graf Plaintiff Zimring, Jay and Appellant.
Richard A. Elbrecht and Paul on Griebel Amici Curiae behalf of Plaintiff and Appellant.
Gibson, Crutcher, & Endicott, Dunn John L. Martin C. Washton and Richard C. Cornish for Defendants and Respondents.
Opinion May a REYNOSO, a consumer who notifies defendant of prospective J. class grievances under the Consumer Act and informally Remedies Legal on relief, for damages a class action bring obtains individual subsequently the herself of the class against behalf of and as a representative defendant? and as a individually rep-
Plaintiff Eleanor M. this Kagan brought Loan Association of a the Gibraltar against Savings resentative class that en- (Gibraltar) and “Doe” She Gibraltar alleges various defendants. in Remedies by Legal Consumer gaged deceptive practices proscribed charged management Act in that customers would not be falsely advertising a motion by in connection with Individual Retirement Accounts. Upon fees merit, since Gibraltar that the action the trial court lacked determined she the threatened fee had not been deducted from account “ha[d] under the Con- any damage not suffered or sustained injury any cognizable entered Legal judgment sumer Remedies Act.” trial court Accordingly, in favor Gibraltar. Code, (Civ.
Plaintiff Act contends that the Consumer Remedies Legal 1750 et not off” seq.) pro- does a permit “pick § them individual relief not made by spective representatives offering below, to the available entire class. As will we agree. appear Gibraltar, (IRA) Plaintiff an Individual Retirement Account opened office, its chose Gibraltar be- through Panorama 1979. She City April cause she had financial fees for charge institution would sought (since the account be rather small administering initially) her account would seen was and had advertisements that this Gibraltar’s newspaper indicating account, Before brochure she also read policy. opening promotional circulated in its described its IRA plan district offices which *6 the No and made “No establishment following commissions. representation: No management fees. fees.” account,
In course the a reference in the the noticed plaintiff opening but $7.50 to a trustee fee of annually, combined and agreement sponsorship that not to customers the fee was assured it was Gibraltar’s charge practice 1979, how- no fee be In November charged. and that would management ever, fee be $7.50 Gibraltar letter that a trustee would informed plaintiff by to Union Bank for deducted from all Seven dollars would be IRA’s. paid Savings 50 be to the California administering the and cents would plan paid fee that the “supports and Loan for it. The letter stated League sponsoring necessary which are and functions legal, fiduciary the required sponsorship had the that Gibraltar absorbed to maintain a current It also noted plan.” costs” fee but year,” “increasing trustee the administrative during “past it to had caused its change policy.
588
Incensed, She plaintiff telephoned Gibraltar. advised consumer affairs officer that she considered the action inconsistent with Gibraltar’s proposed that no be she representations fees would on the account and that charged ” felt matter, “defrauded. After into the the officer to looking reported plain- tiff that Gibraltar had decided to fee begin customers trustee charging after other surveying that all but three of institutions them discovering When charged fees. plaintiff attorney, an the consumer spoke consulting affairs officer her offered the unsolicited advice that assertedly “it would not be worth while.” [her]
In a letter dated husband December warned Gibral- plaintiff’s tar’s announced intention president “recently to retro- company’s actively trustee fees with charge on IRA accounts conflicts both written and oral made to wife other IRA representations my myself, depositors.” italics.) The letter that if (Original stated went with company through this “Gibraltar could of a plan, be consumer fraud. The major ...” guilty letter also stated that Gibraltar had to presumably consumers represented $7.50 other than that the fee set forth in the would not plaintiff agreement be operative.
A 27, 1979, in a letter December vice-president dated replied that “there is a The contending payment fees.” misunderstanding letter stated that as to decision whether or not Gibraltar would pay “[t]he the Trustee Fee has always been made no year year, guarantee that this benefit would be for one longer year offered than at a time.” it advised all Consequently, accounts are to be treated in like “[s]ince manner, fee this will be IRA and will de- every assessed participant ducted from their retirement account.” Gibraltar subsequently charged and, later, husband a fee for 1980. 2, 1980, husband, counsel,
On June her de- through sent a mand letter Gibraltar that its conduct came within the notifying assertedly (Act) of section 17701 proscription Consumer Remedies Act Legal defining business Gibraltar’s conduct was deceptive practices. Specifically, said to (i), be unlawful under which prohibits advertised,” goods or with intent not to them as “[advertising services sell and subdivision that the consumer will (q), proscribes “[Representing *7 rebate, benefit, discount, receive if the a or economic the earning other benefit is on to the contingent an event to occur consummation subsequent transaction,” of the the in case this Gibraltar’s alleged contingency being undisclosed decision annual administrative whether to impose management fees. The letter demanded that Gibraltar these violations. Addi- “rectify” indicated, statutory
1 Unless otherwise references are to the Civil Code.
589 and from plaintiff’s the amounts deducted the letter demanded that tionally, interest, Gibraltar and that restored, be together her husband’s IRA’s Pursuant to and false advertising practices.” “cease its misleading was not relief if the 1782, requested under Act threatened suit the was 30 within days. granted 24, 1980, 30-day period, dated within the prescribed
In letter June dis- offices the from its branch and discard promised remove brochures, had deducted that trustee fees been advised no promotional puted the account, husband and check reimbursed plaintiff’s plaintiff’s the account for years $15 in trustee fees had been his charged and 1980. action, 31, on behalf of 1980,
On class filed instant July plaintiff to establish IRA herself and those been induced other who had persons accounts through advertising misrepresenta- Gibraltar’s false alleged fees, declara- tions. The for the deducted damages actual complaint sought deductions, $5 million in tory puni- future injunctive relief preventing tive and costs. damages attorneys’ reasonable fees still brochures were revealed that
Subsequent discovery promotional 1980, 9, January in at least as two displayed recently one district office as months be Also after received notice that a would plaintiff charge imposed. 15, 1980, in which revealed was an December internal memorandum dated vice- branch confirmed to the manager Gibraltar’s Panorama City had never been withdrawn from Gibraltar that the trustee’s fee president account be in the future. and would not withdrawn 1781, Gibraltar then moved for a under section subdivision determination (c)(3), that had suf- argued plaintiff that action lacked merit.2 Gibraltar no no deducted fered the Act as fees were ever damages under cognizable account; from her not a member the class she was therefore plaintiff and, $7.50 was not a manage- that the fee represent; finally, purported commission, but a fee to be special ment establishment fee or a required remitted an IRA On June to other entities to maintain plan.
trial court motion on the ground Gibraltar’s granted “ha[d] the Con- under any cognizable suffered or sustained any injury damage sumers Remedies Act.” Legal Proc., (Code summary judgment Civ. originally 2 The was denominated one for motion 437c), the action is without a motion to determine that but was allowed to treated as § (c)(3) of sum light explicit of the Act’s exclusion
merit under section mary judgment actions. motions in actions commenced *8 I Plaintiff contends that the trial court’s al judgment erroneously lowed Gibraltar to oust her as a of the class of IRA representative depositors by simple expedient her offering husband individual plaintiff relief. Plaintiff argues that this was to the response contrary requirement of 1782, section (c) subdivision that relief be to the entire class in order given to forestall or terminate a class suit. Gibraltar that was responds plaintiff precluded either an bringing individual or class action since her ac count was never debited for the trustee’s fee and hence did she not “suffer any damage” as required section 1780. Gibraltar also renews the other it arguments court, to the presented trial that is not a member of the class she seeks to $7.50 and that the represent fee is not a management or establishment fee or a commission.
An individual action bemay brought under the Act to section pursuant 1780, (a), subdivision which that provides “[a]ny consumer who suffers any as damage a result of the use or method, employment by any person act, or practice declared to be unlawful by Section 1770 an may bring against such . . . .” person This provision further states that the consumer seek may to recover actual and relief, punitive damages, injunctive “any other relief which the court deems A class action proper.” brought 1781, to section pursuant (a), subdivision provides “[a]ny consumer entitled to an bring action under Section 1780 if the may, method, act, unlawful or practice has caused to other consumers damage situated, similarly an action bring on behalf of himself and such other con- sumers to recover or obtain other damages relief as for in Section provided 1780.” or
Thirty days more an prior action for commencing damages pursuant to either section 1780 or the consumer must notify prospective defendant of the “[djemand violations of section alleged 1770 and that such correct, person or repair, replace otherwise or rectify goods services to be in alleged (§ 1782, violation” (a)(2).) If, thereof. subd. within this 30-day period, corrects the alleged wrongs, indicates that it will make such time, corrections within a reasonable no cause action for damages will lie. This notice need not be requirement complied with in order (§ 1782, an action for bring relief. injunctive (d).) subd.
Once a defendant has received notice of alleged violations of extent its ameliorative differs consid- responsibilities erably on whether the notification depending sets forth an individual or grievance. (b) Section provides “[ejxcept provided
591 action for maintain an cannot (c),” an individual consumer in subdivision notice, of such if, 30 after receipt 1780 within days under section damages a reasonable within to be given is or remedy given, agreed an appropriate 1782 contrast, (c) of section time, In subdivision to the individual consumer. under section be maintained may that a class action for damages provides of the all it has satisfied defendant shows that 1781 unless the prospective identify effort to made a reasonable (1) identified or following requirements: their consumers; (2) consumers upon notified such all situated similarly (3) remedy; provided, it will them with an appropriate provide request relief; (4) demonstrated within a reasonable time will such provide, cease, in the ceased, from engaging or within a reasonable time will it has conduct. challenged un-
Thus, of individual grievances unlike the resolution relatively simple affirma- (b), (c) extensive der section subdivision places and make whole identify tive on defendants to obligations prospective between This clear distinction entire class situated consumers. similarly to notifications of a in defendant responsibilities prospective responding for effect- of individual and class preference grievances, legislative (c), our following informal class relief to subdivision ing guide pursuant analysis. not deducted from contends that since the contested fee was account, for she no “suffers as longer any damage” required Therefore, an Gibraltar ar- individual action under section 1780.
bringing is action under section gues, plaintiff also a class precluded bringing 1781, which entitled to an bring is limited to consumer expressly “[a]ny under Section 1780.” defendant
We has notified a agree that a consumer who her relief can requested of an individual and has obtained his or grievance under the Act. or class action either an individual subsequently bring However, “suffers any this is not no longer because consumer simply remedied the contested but defendant has damage” because the prospective notice of a grievance receiving defendant practices. Similarly, prospective action only which affects a class of consumers can avert a subsequent consumers. The crit affected contested all remedying practices be subject ical whether a inquiry determining defend the prospective to an individual or class action is therefore whether which it has received. ant has made all to the notice remedies appropriate husband requested and her The demand letter sent Gibraltar by plaintiff fees be their accounts for management that the “amounts deducted from demanded accounts, It also to their with interest thereon.” restored together that Gibraltar “cease its and false misleading advertising practices” . . . “rectiffy] services, misconduct falsely advertising [its] its as well as *10 conditioning conferral of an on economic benefit a contingency will occur to consummation subsequent of a transaction.” These demands Gibraltar on put notice that its violations of section 1770 alleged affected individuals in husband, addition to and her a possibly broad class of 19, consumers. This notice was formalized December 1979, letter from plaintiff’s husband to the of Gibraltar in which president he stated: “I believe Gibraltar could be of a consumer fraud if guilty major it to attempts retroactively trustee fees.” This letter also impose stated that the intended charge “conflicts with both written oral representations which were made to wife myself, my and other IRA and that depositors” Gibraltar’s oral representation that the fee in the would provision agreement not be operative was to presumably “conveyed anyone else who have may noticed the provision.” letters,
As these taken together, Gibraltar on notice that put its alleged violations of section consumers, 1770 affected a of class under was affirmative, an obligation 1782, to meet the conditions set forth in section (c) subdivision in order to avert a class action. There is no evidence to indicate that Gibraltar made an effort to meet any these conditions. Gi- braltar did not seek to identify consumers situated to similarly plaintiff, such notify consumers that it would them relief their provide upon request. Nor did Gibraltar demonstrate that it had relief to provided requested any similarly situated consumers or that it would cease from in the engaging challenged conduct within a reasonable time. Gibraltar made no mention stopping of its any false allegedly other than its advertising withdrawing promotional brochures. Nor did Gibraltar indicate that it would its require to employees stop making allegedly oral misleading representations. Additionally, assuming husband is a member of the purported class IRA Gibraltar, depositors induced to fraudulently IRAs with open Gibraltar’s $15 reimbursement to him of the which it de- acknowledged from his ducting 1979 and 1980 accounts did not include any compensation for the requested interest thereon.
As 1782, Gibraltar did not (c) meet the conditions of section subdivision to response 1770, notification of its class violations of section alleged class action for 1781, to damages (a) section subdivision lie. pursuant may Moreover, below, as discussed the action on plaintiff may properly bring behalf of hersélf and as a of the representative class.
Section (b), subdivision states that in subdi “[e]xcept provided (c),” vision individual for will not lie under section 1780 damages an if an appropriate individual has been made. This remedy exception alleged who notified a consumer has permits relief, nonetheless individual section 1770 and obtained violations of if the de- under section 1781 a class action bring damages (c) by pro- has met the subdivision fendant not conditions of ante the consumer entire As noted informal relief to the class. viding (d), which, does also seek relief under section injunctive notice 30-day require compliance requirement. loss with the We reject equate pecuniary thus Gibraltar’s effort itAs is un damage.” consumer standing any that a requirement “suffer[] *11 in enumerated to in the business any practices lawful of engage deceptive 1770, not to sub right have a corresponding legal section consumers of section requirement thereto. we the jected broadly Accordingly, interpret of that a to include the any infringement 1780 consumer damage” “suffer[] as defined section 1770.3 any legal right by action
Gibraltar further to a class is bring asserts that permitting plaintiff to be a member contrary the well rule that a class representative recognized (La Sav. & of the class which she to Sala v. American purports represent 864, 849, (1971) 1113]), Loan Assn. 5 P.2d 875 489 Cal.3d Cal.Rptr. [97 IRA accounts in this case the of induced to establish class putative persons, through Gibraltar’s the of concerning imposition alleged misrepresentations fees, whose accounts the fee. This actually argument were debited trustee the under the Act clear intent defendants ignores legislative that prospective a not avert action plaintiffs class off” by “picking exempting one-by-one the through of individual remedies. provision
Those to the such responsible drafting sought preclude Act specifically “The off” of most “picking important class action plaintiffs: in is settlement connection of actions with the settlement point the with named them from further plaintiffs prosecuting will preclude action on class. Note that section behalf the members of the remaining 1782(c) action if all de- precludes only further maintenance scribed conditions are to Those settlement shown exist. conditions require all The term ‘maintained’ with identifiable members of class. reasonably the term (c) just in section 1782 chosen carefully was deliberately The was to make certain that ‘commenced’ was avoided. intent deliberately has a 30 he made demand days can commence a class action person after particular has to settle his on the class even the merchant behalf if offered 1782(b). in An so commenced claim accordance section action with See, e.g., Code Annotated 15 United States 3 Federal consumer statutes are in accord. “any who fails to against creditor permits an individual or class part. comply any requirement imposed under this . . .” maintained, however, not be if for settlement with the class the conditions 1782(c) been It of section so as have met. is evident that construction action if his claim had maintaining any particular preclude person That most cer- been settled would class actions under the statute. destroy (Italics added.) (Reed, Legis- was not the intent of the tainly legislature.” Legal For The Consumer: An Insider’s The Consumers lating Analysis Of (1971) 19.) Remedies Act 2 Pacific L.J. in Sala American
This result is consistent with this court’s La v. holding Assn., the effective date Sav. & Loan 5 Cal.3d decided before supra, individual relief of the Act. In that case we held that a defendant’s grant not, itself, named does in render those to the a class action plaintiffs in La Sala had unfit se to the class. The defendant plaintiffs per represent the acceleration clauses in deeds avert a class action sought by waiving reasoned that of trust executed the named and defendant. We plaintiffs action, waive as other borrowers a class bring may again “[i]f [defendant] borrowers, to those move to dismiss the action. again representative Such a could be followed ad infinitum for each successive procedure group *12 such If is to succeed with defendant representative plaintiffs. permitted tactics, door can afford to initiate members of the class who revolving only redress; will obtain relief for even a of the class join litigation portion would Yet the innumerable individual compel by plaintiffs. appearances of such burdens upon function the class action is to avoid the imposition tactic the class and the court. If we sanction upon [Citation.] [defendant’s] can kind of treatment special defendants defeat a class action the always of the class of the accorded here and thus other members plaintiffs deprive ” (Id., into benefits of the notice of to enter it. litigation any opportunity 873.) at p. not be entitled
Gibraltar contends that should alternatively plaintiff demand letter to file a class action for under the Act because the damages only and obtained restoration of the amounts deducted sought plain accounts, relief on tiff’s and her and did not seek such husband’s explicitly to commence behalf of class. Gibraltar that argues permitting the and her husband requested such an action after the relief which she receiving informal reso in their letter contravenes of the Act encouraging the policy lution of to suit. commencing disputes prior forth, set as ex under the Act should
While a class demand letter and the the the relief objected-to requested, plicitly possible, practices, met, not be failure to file a the letter’s demands intent class action should be entitled should all of the relief to which a class to specifically request of section notice function a later action so as the essential long preclude case, the demand 1782, (a) In the present subdivision is achieved. husband, served letter, by plaintiff’s with the sent together letter previously objected-to practices notice forth by setting this essential function file an to a lawsuit the for relief intent stating indicated class necessity cannot said be met. The demand letter should the letter’s demands not course alleged been but notice of an complaint, to have an individual merely situated consumers. similarly to damage many of conduct that was causing request We have indicated that the demand letter’s already deducted from his in trustee fees reimburse husband the amounts least one mem- for behalf of at IRA constituted relief on accounts request obligation of the met its affirmative ber class. Had Gibraltar purported 1782, (c), the policy the set in section subdivision satisfy conditions forth informal of consumer of the Act the correction voluntary encouraging would have been met. complaints a class may bring we hold that an individual consumer
Accordingly, 1782, if, 1781, (a) action under to section pursuant section subdivision (a), defendant on notice that subdivision he or she has put consumers, and the violations of 1770 affect a class alleged section has to correct such violations failed to correct or seek all set forth in as to situated conditions similarly pursuant consumers (c). bringing subdivision These prerequisites action class were met the instant case. determined instant action
Having may bring that plaintiff (a), under section we nevertheless recognize whether the conditions for a class have question remaining bringing *13 (b), in sound been met to subdivision lies the dis pursuant (1982) of 131 (Rosack Corp. cretion the trial court. v. America Volvo of 741, 1781, 800].) (b) 750 Section Cal.App.3d Cal.Rptr. [182 on behalf that the trial “shall the suit to maintained provides permit court of the conditions following of all members of the class if all represented (1) of exist: to the class before the bring It is all members impracticable [¶] court, or to the class are substan (2) The of law fact common questions [¶] similar over the the individual tially affecting and predominate questions members, are (3) The or defenses of the representative plaintiffs claims [¶] class, (4) of of the The the claims or defenses typical representative [¶] the class.” We will and the interests of fairly protect plaintiffs adequately to shall therefore remand to afford the trial court an opportunity this case exercise its discretion under this statute. properly
We of from the now hold that Gibraltar’s only exemption plaintiff unfit to represent of the trustee does not render her se per fee imposition are typical the class. In whether claims determining plaintiff’s class, protect of the fairly adequately those and whether can plaintiff 596
the class she seeks to the represent, trial court on remand take into “may account the that named plaintiff[] already obtained individual [has] [her] action; benefits from the who plaintiffs have stake will at often nothing devote action; sufficient to further, the the energy the prosecution receipt by of benefits the named plaintiffs may sometimes create a conflict inter- est the between hand, class its would-be On the other representatives. . . . the court find that the named will continue to plaintiffQ fairly and, class, therefore, represent the class permit continue the liti- [her] (La Assn., Sala gation.” v. American Sav. & 5 supra, Loan Cal.3d 871-872.)
We do note that claims to be of those of the appear typical class, and putative that the tenacity which has thus plaintiff pursued far this matter is indicative that she has those qualities necessary fairly and Moreover, adequately protect interests of class. plaintiff’s demon- strated in energy pursuing this matter would appear to advance the primary “ action, purposes maintaining ‘eliminating] the by possibility of repetitious litigation small claimants with providing] a method of redress for obtaining claims would too which otherwise be small to warrant ’ ” (Richmond Industries, litigation. individual (1981) v. Dart Inc. 29 Cal.3d 469 23], 629 P.2d Eisen Carlisle Cal.Rptr. quoting [174 v. & (2d 1968) However, Jacquelin 555, 560.) Cir. 391 F.2d should trial court conclude that class, cannot it suitably represent should afford her “the class, to amend opportunity complaint, to redefine the [her] toor add new in both, individual order plaintiffs, to establish a suitable Assn., (La representative.” & Sala v. American Sav. Loan supra, Cal.3d 864, 872.) these if the court concludes Following procedures, should be dismissed for lack representative, suitable it should first 874.) notify (Id., members of the class. at p.
II Finally, that the judgment Gibraltar contends its favor can be on the court, alternative not reached the trial upheld ground, that the record establishes fee that the trustee beyond Gibraltar elected dispute *14 to fee.” charge did constitute a Gibraltar’s “management as position, declaration, that, set forth in is though an officer’s it had previously elected fee, to absorb election was for the trustee each such the calendar year only, this the of and “had do” with no promise “management to fees.” nothing Gibraltar,” “management by It insists that no fee for charged is contrast administrators, the fund to of retirement investment practice such competing funds, as mutual investment brokers insurance and companies, mortgage hand, the other broker investment On Gibraltar concedes that companies. that it would to continue absorb the misunderstood fees plaintiff apparently have “may brochure account, that its promotional of the and for the lifetime un- not seem does Such “confusion” confusion.” contributed to fee is paid that the trustee acknowledgment of Gibraltar’s in light reasonable Plan, including the of administration Bank for its and “operation to Union Plan, com- the in the of contributions provided and control management of such filing and and the distributions preparation of installment putation In law.” under applicable as are required accounts and statements reports, consumers, it can hardly to mislead the brochure’s evident potential light of false was guilty Gibraltar exists whether be said that no triable issue the Act. advertising prohibited by to the trial court remanded and the cause is
The is reversed judgment in this opinion. consistent with the views expressed proceedings Grodin, J., Broussard, J., concurred. Bird, J., Mosk, J., C. of the stark that in J., light with the
KAUS, majority Dissenting. I agree (c) (b) of section between the of subdivisions distinction requirements a 1782,1 did not intend to permit it is clear that the Legislature named plain- off” class action by “picking defendant derail a threatened to such plain- remedies the of individual tiffs one-by-one through provision Thus, widespread practice when a consumer about a complains tiffs. demanded, the Act is remedy a that a “class” notifies avoid a subsequent a defendant to must be construed to reasonably permit (c). of subdivision class action if it satisfies the only requirements outset of her inten- at the if had notified Gibraltar Accordingly, plaintiff court’s relief, that the trial I would with the majority tion seek class agree recited As the facts dismissal this class action would inappropriate. however, Gibraltar of her indicate, notified when by majority plaintiff re- demands, monetary classwide she did not that she was seeking suggest own and her Instead, to her she such relief sought only respect lief. relief very by granting husband’s accounts. responded circumstances, is I believe plaintiff had Under these requested. under Act. a class action for damages now barred pursuing clear, course, It is this result. notions fairness Elementary compel intends to seek whether he or she consumer knows aggrieved that only on behalf additionally on or her own behalf or only his monetary recovery response defendant’s It is also clear that prospective of the entire class. of the scope be influenced invariably for relief will to a demand *15 Legal to the Consumer Code. The Act refers are to the Civil 1 All section references Act, 1784. 1750 to codified at sections Remedies A small, demand. be much more to settle or willing remedy claim, individual even if it has doubts as to its than it would strong validity, be to provide class relief. If consumers are autho- expensive, wide-ranging case, rized to pursue followed in this can approach they routinely defendants first “sandbag” prospective by seeking obtaining an individual thereafter their recovery only complaints transforming into mind, (a), (b), class actions. To my (c) subdivisions must be construed reasonably a consumer who has demanded preclude and has received individual relief from then a class action for instituting damages. case,
Accordingly, of the facts of this I would affirm the light judgment of dismissal.
Richardson, J.,* concurred. sitting assignment under Supreme Court * Retired Justice of Chair Associate person Council. of the Judicial