Case: Shersher v. Superior Court (Microsoft Corp.), Case No. B195317 (Cal. Ct. App. 9/10/07)

The One Sentence Summary: To recover restitution under California’s Unfair Competition Law, a consumer is not required to have made direct payments to the defendant who is alleged to have engaged in unfair competition or some other act prohibited by the statute or the false advertising law.

What They Were Fighting About: Plaintiff and members of the class he purported to represent purchased from retailers wireless routers, adapters, and other similar products manufactured by Microsoft. Plaintiff alleged that in marketing and promoting these wireless products, Microsoft made false representations on the packaging about the products’ capabilities to deliver data transmission rates of up to a certain level of megabits per second. The complaint sought various relief including restitution. Microsoft filed a motion to strike the claim for restitution and any reference to “restitution” on the grounds that such recovery was precluded by the California Supreme Court’s decision in Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134 (2003). Microsoft argued, and the trial court agreed, that indirect purchasers – those who purchased from someone other than the defendant – could not obtain restitution under Korea Supply because they paid no money directly to the defendant.

Court Holdings: The Court of Appeal reversed and held that Microsoft’s motion to strike should have been denied because:

  • The only requirements for recovery of restitution imposed by Korea Supply are that (1) the plaintiff must have had an ownership interest in the money or property sought to be recovered; and (2) the defendant must have acquired the plaintiff’s money or property by means of unfair competition or some other act prohibited by the Unfair Competition Law (California Business & Professions Code section 17200) or the false advertising law (section 17500).
  • Nothing in Korea Supply requires that the plaintiff seeking restitution have made direct payments to the defendant who allegedly engaged in the acts of unfair competition or false advertising.
  • In this case, the plaintiff and putative class members had an ownership interest in the restitutionary relief sought because they purchased Microsoft’s products.