Department of Consumer Affairs v. Superior Court of Alameda County ( 2016 )

Filed 2/26/16
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE
CALIFORNIA DEPARTMENT OF
CONSUMER AFFAIRS,
Petitioner,
v. A144283
THE SUPERIOR COURT OF
ALAMEDA COUNTY, (Alameda County
Super. Ct. No. RG14731660)
Respondent;
NEDRA LEWIS et al.,
Real Parties in Interest.
Real parties in interest, Nedra Lewis and Julie Barbella, filed an action seeking to
declare an expression of policy of the Arbitration Certification Program of petitioner, the
California Department of Consumer Affairs, to be an underground regulation adopted
without following the processes required by the Administrative Procedures Act (Gov.
Code, §§ 11340 et seq.),1 and thus invalid. Petitioner demurred on the ground that real
parties in interest lack standing to challenge the policy. When the superior court
overruled the demurrer, petitioner filed its petition for writ of mandate in this court. We
stayed the proceedings in the superior court and ordered briefing.
We hold that real parties may not invoke the doctrine of public interest standing,
and their individual interests in the controversy are too conjectural to confer standing to
bring an action for declaratory relief. Accordingly, a writ of mandate shall issue directing
1
Unless otherwise noted, further statutory citations are to the Government Code.
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the superior court to vacate its order overruling the demurrer and instead issue a new
order that grants the demurrer with prejudice.
I.
The Arbitration Certification Program (ACP) is a bureau within the Department of
Consumer Affairs charged with certification and review of the qualified dispute
resolution process identified in the Song-Beverly Consumer Warranty Act, Civil Code
section 1790 et seq., commonly referred to as California’s “lemon law.” (Krotin v.
Porsche Cars North America, Inc. (1995) 38 Cal. App. 4th 294, 297.) “The ACP’s
mission is to protect California’s new car owners by ensuring that state certified
arbitration programs provide fair and expeditious resolution of lemon law disputes.” Not
all automobile manufacturers must have an ACP certified program. But those
manufacturers who choose to operate a certified arbitration process have limited lemon
law liability.
Real parties Lewis and Barbella bought new cars that were under the original
manufacturers’ warranties at the time they filed their complaint for declaratory relief in
the superior court. Lewis does not own a car made by a manufacturer that has an
arbitration program certified by the ACP. Barbella does.
Real parties filed their action for declaratory relief claiming that public statements
in ACP publications were illegal underground regulations not adopted in conformity with
California’s Administrative Procedures Act (§ 11340 et seq.). Specifically, they allege
that contrary to existing statutes and regulations, the ACP states that car manufacturers
may adjust the price of a defective vehicle to be repurchased from its owner as a lemon
for excessive wear and tear, and that it is not within an arbitrator’s purview to make such
an adjustment. Instead, such an adjustment is to be left to the vehicle owner and the
manufacturer as a matter of negotiation.
Petitioner demurred to the amended complaint on the grounds that there was no
justiciable case or controversy, the real parties lacked standing and they failed to exhaust
an available administrative remedy. Real parties opposed the demurrer by arguing that
standing to sue was conferred on them by section 11350, subdivision (a), which states in
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part: “Any interested person may obtain a judicial declaration as to the validity of any
regulation or order or repeal by bringing an action for declaratory relief in the superior
court in accordance with the Code of Civil Procedure.” Relying on case law
interpretation of the phrase “interested person” in section 11350, subdivision (a) as
someone who “ ‘is or may well be impacted by a challenged regulation,’ ” real parties
argued they have standing to contest the public position taken by the ACP.
The superior court concluded real parties were interested persons as described in
section 11350 and the cases interpreting it and overruled the demurrer. The court
concluded that the statements attributed to ACP about excessive wear and tear were
alleged in the complaint to affect the behavior of all car makers, not just those who
participated in the ACP. Thus, in the event either of the real parties were to experience
car problems of a magnitude within the scope of the lemon law, the maker of that car
would rely on the ACP publication to deduct excessive wear and tear from the repurchase
price, even if it did not participate in the arbitration program.
II.
Real parties argue that they are interested persons with standing to bring this
action for declaratory relief under the rule of Environmental Protection Information
Center v. Department of Forestry & Fire Protection (1996) 43 Cal. App. 4th 1011, 1017–
1018 (Environmental Protection). In that case, the court held an organization has
standing to sue for declaratory relief where either the organization or its members are or
may well be impacted by a challenged regulation. (Id. at p. 1018.) Environmental
Protection involved a challenge to Department of Forestry and Fire Protection regulation
exempting any property smaller than three acres from the preparation of a timber harvest
plan. The plaintiff organization had some 450 members, and the majority resided or
owned property in Sonoma, Mendocino and Humboldt, “three of this state’s major
timber-producing counties.” (Id. at p. 1019.) In considering the effect of the
department’s regulation to deprive these landowners of the ability to inspect or comment
on plans for harvesting trees on smaller properties before the actual harvesting took place,
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the court determined the plaintiffs could be subject to the challenged regulation and had
standing to sue for declaratory relief. (Ibid.)
Real parties argue Environmental Protection controls because it broadly
interpreted and applied section 11350, subdivision (a)’s delineation of parties who may
seek declaratory relief as to the validity of a regulation, order or repeal. According to real
parties, they are interested persons entitled to bring this suit because the court in
Environmental Protection rejected the standing requirements of injury in fact and harm
that is actual, imminent or likely as opposed to speculative. We disagree. While it is true
that a plaintiff need not show actual injury to have standing, California law generally
requires more of an individual plaintiff than a speculative chance of harm.
“As a general principle, standing to invoke the judicial process requires an actual
justiciable controversy as to which the complainant has a real interest in the ultimate
adjudication because he or she has either suffered or is about to suffer an injury of
sufficient magnitude reasonably to assure that all of the relevant facts and issues will be
adequately presented to the adjudicator. [Citations.] To have standing, a party must be
beneficially interested in the controversy; that is, he or she must have ‘some special
interest to be served or some particular right to be preserved or protected over and above
the interest held in common with the public at large.’ [Citation.] The party must be able
to demonstrate that he or she has some such beneficial interest that is concrete and actual,
and not conjectural or hypothetical.” (Holmes v. California Nat. Guard (2001) 90
Cal. App. 4th 297, 314–315, italics added.)
Moreover, as section 11350 makes clear, an action for declaratory relief is to be
brought “in accordance with the Code of Civil Procedure.” (§ 11350, subd. (a).) Thus,
we must also consider Code of Civil Procedure section 1060’s requirement for
declaratory relief, of an “actual controversy relating to the legal rights and duties of the
respective parties.” (Code Civ. Proc., § 1060.) This “actual controversy” language is
broad enough to encompass a probable future controversy, if the controversy is ripe, but
whether a claim presents such an actual controversy is a question of law that we review
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de novo. (Environmental Defense Project of Sierra County v. County of Sierra (2008)
158 Cal. App. 4th 877, 885.)
The standing principle announced in Environmental Protection, upon which the
real parties rely here, is known as “public interest standing.” (Save the Plastic Bag
Coalition v. City of Manhattan Beach (2011) 52 Cal. 4th 155, 166 (Save the Plastic Bag).)
Where the question is one of public right and the object of the litigation is to procure the
enforcement of a public duty, a plaintiff need not show any legal or special interest to
have standing. Instead, it is sufficient that as a citizen the plaintiff has an interest in
having the laws executed and duty enforced. (Id. at p. 166.) But public interest standing
is not freely available to any party. Rather, it is an exception to, not a repudiation of, the
usual requirement of a beneficial interest in the litigation (id. at p. 170, fn.5), and will not
be applied if its underlying policy is outweighed by competing interests of a more urgent
nature. (Ibid.)
This is such a case. As real parties point out, regulations governing the Office of
Administrative Law (OAL) confer administrative standing on “any person who submits a
petition to OAL alleging that a state agency has issued, used, enforced, or attempted to
enforce an underground regulation.” (Cal. Code Regs., tit. 1, § 250, subd. (a).) To
recognize real parties’ public interest standing in this case, in the absence of any
beneficial interest in an actual controversy, would undermine the efficacy of the
administrative remedy provided to citizen taxpayers by the Office of Administrative Law.
Carsten v. Psychology Examining Com. (1980) 27 Cal. 3d 793 (Carsten) is
illustrative. There, our Supreme Court considered a claim to public interest standing by a
member of the Psychology Examining Committee seeking to sue her own agency over
the standards that governed psychologist licensure examinations. Although the court held
that a board member is not a citizen-taxpayer with standing to sue the very board on
which she sits, its opinion is instructive on the interplay between the public interest
exception and challenges to administrative proceedings. “Unquestionably, the ready
availability of court litigation will be disruptive to the administrative process and
antithetical to its underlying purpose of providing expeditious disposition of problems in
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a specialized field without recourse to the judiciary.” (Id. at p. 799.) This consideration
in Carsten leads us to conclude that we should not extend public interest standing to
plaintiffs who have an administrative remedy that may enforce a public duty when they
otherwise lack a beneficial interest that is different from the public at large.
Here, although one of the real parties owns a car manufactured by a company
participating in the ACP, neither of them has a current dispute with an automobile
manufacturer arising under California’s lemon law.2 Nor does either allege any ongoing
unresolved car repair issues. Their concern seems to be that if they had purchased a
lemon and had a dispute with one of the manufacturers of their automobiles, the
manufacturer would rely on the ACP’s allegedly underground regulation to deduct for
excessive wear and tear to incorrectly determine the amount it would be willing to pay to
repurchase the car. This scenario is too conjectural for us to conclude real parties have a
beneficial interest that is concrete and actual so as to provide them individual standing to
bring an action for declaratory relief. (Holmes v. California Nat. Guard (2001) 90
Cal. App. 4th 297, 314–315.)
Moreover, in addition to a declaration that ACP’s policy statement is an
underground regulation, real parties seek to invalidate the ACP’s interpretation of the
lemon law in a way that would permit a vehicle manufacturer who repurchases a vehicle
to deduct for excessive wear and tear. But as real parties’ return in this case makes clear,
the legality of a manufacturer’s deduction has been and continues to be litigated in other
cases brought by consumers claiming benefits under the lemon law. This, then, is not a
situation in which an alleged right will go unaddressed and unvindicated if public interest
standing is denied. In contrast, one of the reasons supporting the recognition of public
interest standing for the group of landowners suing in Environmental Protection was the
fact that the regulation challenged in that case operated in a way that denied the suing
landowners any opportunity to review and comment on timber harvest plans before
2
Although both cars were under warranty when the complaint was filed, one was
serviced twice for warranty related repairs and the other does not appear to have received
warranty related service at all.
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logging took place. (Environmental Protection, supra, 43 Cal.App.4th at p. 1019.) In
this way, if the regulation remained unchallenged before its application it would leave the
landowners without a meaningful legal remedy. The contested regulation here does not
operate in a similar way.
Considerations of ripeness, a branch of the doctrine of justiciability, help inform
our conclusion. Injunctive and declaratory remedies are discretionary, and traditionally
courts have been reluctant to apply them to administrative determinations unless they
arise in the context of an actual controversy that is ripe for adjudication. At bottom,
considerations of ripeness are rooted in the recognition that judicial decision making is
best conducted in the context of an actual set of facts. (Pacific Legal Foundation v.
California Coastal Com. (1982) 33 Cal. 3d 158, 170–171.) These considerations apply
here to counsel our deference to those cases where claims challenging a manufacturer’s
deduction for excessive wear and tear arise in a factual, as opposed to conceptual,
context.
Buyers like real party in interest Lewis, whose vehicles are not covered by a
certified arbitration process, may sue to enforce their rights under the lemon law. (Civ.
Code § 1793.22, subd. (c).) A buyer, like Barbella, who purchases a vehicle from a
manufacturer with a certified arbitration process also retains the right to sue if the buyer
is dissatisfied with the decision or a manufacturer does not promptly comply with it.
(Civ. Code § 1793.22, subd. (c).) The lemon law thus provides an express legal remedy
for a buyer who disagrees with a vehicle manufacturer’s attempt to deduct for excessive
wear and tear when repurchasing a vehicle. This statutory availability of a legal remedy
for aggrieved consumers who disagree with the interpretation or application of the lemon
law also supports our conclusion that public interest standing is not available in this case.
In these circumstances, the administrative proceeding made available to real
parties by the Office of Administrative Law can afford them adequate relief. To
recognize public interest standing here would undermine the efficacy of the expansive
standing recognized in the regulations governing the Office of Administrative Law and
the possible expeditious disposition afforded by administrative proceedings. The courts
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afford consumers the opportunity to substantively challenge erroneous interpretations of
the lemon law, as well as the ACP, as they arise in the context of actual claims under the
lemon law. This is not a case for public interest standing.
DISPOSITION
Let a writ of mandate issue directing the superior court to vacate its order of
January 22, 2015, overruling the demurrer of petitioner California Department of
Consumer Affairs to real parties first amended complaint and to instead issue a new order
that grants the demurrer with prejudice. The stay previously issued by this court is
dissolved. Each party is to bear its own costs in this proceeding.
_________________________
Siggins, J.
We concur:
_________________________
McGuiness, P.J.
_________________________
Pollak, J.
California Department of Consumer Affairs et al. v. Superior Court, A144283
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Trial Court: Alameda County Superior Court
Trial Judge: Honorable Gail Brewster Bereola
Kamalah D. Harris, Attorney General, Alicia Fowler, Senior Assistant Attorney General,
Miguel A. Neri, Supervising Deputy Attorney General, John T. McGlothlin, Deputy
Attorney General for Petitioner California Department of Consumer Affairs et al.
Jeffrey A. Kaiser, Lawrence J. Gornick, Dennis J. Canty, Kaiser Gornick LLP for Real
Parties in Interest Nedra Lewis and Julie Barbella.
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