Case: Hall v. Time Inc., Case No. G038040 (Cal. Ct. App. 1/7/08)

The One Sentence Summary: Plaintiff could not establish injury in fact or causation required by California’s Unfair Competition Law where merchant’s alleged scheme to disregard 21-day free preview period did not induce him to pay for book immediately upon receipt or keep a book that he otherwise would have returned.

What They Were Fighting About:

Plaintiff Jeffrey Hall alleged that Time engaged in an unlawful, unfair, or fraudulent scheme in violation of California Business and Professions Code Section 17200 in offering consumers a free preview period for 21 days in which to review a book and return it to Time with no obligation to purchase. The complaint alleged that during the 21-day period, Time sent consumers invoices demanding payment and not referring to a free preview period, so as to deceive consumers into believing that they had an immediate obligation to pay. Hall ordered a book from Time but did not pay during the 21-day free preview period after receiving an invoice. He paid for the book 10 months later after a collection agency sent a demand for payment. The complaint alleged a single cause of action for class action relief under Section 17200. The trial court dismissed the complaint without leave to amend on the grounds that plaintiff received the book that he ordered, at the price and payment schedule that he requested.

Court Holdings: The court of appeal affirmed the dismissal of plaintiff’s complaint because he could not meet the standing requirements under California’s Unfair Competition Law (“UCL”).

• As a result of Proposition 64 enacted in November 2004, a plaintiff suing for violation of Section 17200 must have “suffered an injury in fact” and “lost money or property as a result of such unfair competition” in order to have standing.
• Plaintiff could not allege an injury in fact because he did not expend money due to Time’s alleged acts of unfair competition. Hall paid Time $29.51, but he received the book that he ordered in exchange. “He did not allege he did not want the book, the book was unsatisfactory, or the book was worth less than what he paid for it.”
• Plaintiff also could not satisfy the second prong of the standing test – that he “lost money or property as a result of” Time’s alleged unfair competition. The court held that this language imposes a causation requirement for UCL standing. In the context of a fraud claim, causation means justifiable reliance on the alleged misrepresentation.
• Hall could not allege causation because Time’s conduct did not cause him to believe that he did not have a 21-day free preview period and was obligated to keep and pay for the book upon receipt. Moreover, “Hall did not allege he did not want the book or Time’s alleged acts of unfair competition induced him to keep a book he otherwise would have returned during the free trial period.”