Licea v. Brown Sugar CA2/1

Filed 1/27/23 Licea v. Brown Sugar CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
LUIS LICEA, B310487
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. 20STCV24404)
v.
BROWN SUGAR, LLC,
Defendant and Respondent.
Appeal from an order of the Superior Court of Los Angeles
County, Holly J. Fujie, Judge. Affirmed.
Pacific Trial Attorneys, Scott J. Ferrell, David W. Reid,
Victoria C. Knowles and Richard H. Hikida for Plaintiff and
Appellant.
Barnes & Thornburg, Eric S. Fisher, Seth Alan Gold and
Kian J. Hudson for Defendant and Respondent.
______________________________
Appellant Luis Licea (Licea) appeals from the trial court’s
April 8, 2021 judgment entered in favor of respondent Brown
Sugar, LLC (Brown Sugar), following the court’s issuance of a
November 25, 2020 order sustaining Brown Sugar’s demurrer
to the entirety of Licea’s first amended complaint (FAC). We
conclude that (1) Licea’s claims for violation of California’s
Automatic Renewal Law (ARL), Business and Professions Code
section 17600 et seq.,1 fail because the ARL does not provide a
private right of action, and (2) Licea’s claim under California’s
Unfair Competition Law (UCL), section 17200 et seq., fails
because the FAC does not allege the causation necessary to
establish Licea’s standing. We therefore affirm the trial court’s
April 8, 2021 judgment.
FACTUAL SUMMARY AND PROCEDURAL HISTORY
Brown Sugar “operates an over-the-internet streaming
service that provides subscribers access to a large library of films
and television shows.” Licea “is a blind California consumer,”
who contends that he “both genuinely wanted to avail himself
of [Brown Sugar]’s services and, as a consumer advocate for the
blind, also wanted to determine whether [Brown Sugar] would
abide by its obligations under California law.”
On June 29, 2020, Licea filed a complaint in the superior
court against Brown Sugar alleging three causes of action for
violation of the ARL. The complaint also asserted a cause of
action for violation of the UCL, premised on the alleged ARL
violations. Licea alleges that, in 2020, “he accepted a ‘free’ trial
subscription of an online movie/film/TV show streaming service
1All unspecified statutory references are to the Business
and Professions Code in effect on January 1, 2020.
2
and related product from Brown Sugar.” He contends that Brown
Sugar’s free trial offer violated the ARL by, inter alia, failing
to include the automatic renewal and free trial offer terms in a
“clear and conspicuous” manner, charging his debit card without
first obtaining his “affirmative consent” to the automatic renewal
offer terms, and failing to provide an acknowledgment that
includes the automatic renewal offer terms and cancellation
policy. (Boldface omitted.)
As relevant to this appeal, Licea alleged that he “has
standing to pursue th[e UCL] claim because he suffered injury
in fact and has lost money or property as a result of [Brown
Sugar]’s actions as set forth herein. [Licea] accepted [Brown
Sugar]’s free trial offer but was later charged monies in violation
of the law, thus causing an actual injury to [Licea].” Licea
alleged further, in the portion of the complaint concerning
the alleged ARL violations, that he “would like to use [Brown
Sugar]’s services again in the future and will likely do so, but
would like to ensure that [Brown Sugar] offers such services
fairly and in compliance with its obligations under California
law.”
On July 31, 2020, Brown Sugar removed the action
to federal district court2 and then, on August 14, 2020, filed a
motion to dismiss the complaint. Brown Sugar argued, inter alia,
that Licea lacked standing to pursue his UCL claim because
(1) he admitted in his complaint that, once Brown Sugar makes
the required ARL disclosures, he likely will use Brown Sugar’s
services in the future, and (2) this admission demonstrates
that Brown Sugar’s alleged failure to make the required ARL
2 Licea v. Brown Sugar LLC (C.D.Cal. Oct. 5, 2020,
No. 2:20-CV-06916).
3
disclosures did not cause any injury to Licea. Rather than oppose
the motion to dismiss, Licea filed an amended complaint in the
district court action on August 26, 2020. The amended complaint
revised the ARL causes of action and added more specificity
concerning how Brown Sugar allegedly violated the ARL;
however, notwithstanding Brown Sugar’s arguments challenging
Licea’s standing to pursue his UCL claim, the amended
complaint repeated nearly verbatim the allegations from the
original complaint that Licea “would like to use [Brown Sugar]’s
services again in the future after [Brown Sugar] complies with
California law, and will likely do so in light of the quality of
the content of [Brown Sugar]’s product or service, but would like
to ensure that [Brown Sugar] offers such services fairly and in
compliance with its obligations under California law.” Brown
Sugar therefore filed a motion to dismiss the amended complaint
on September 8, 2020, again arguing, inter alia, that these
allegations constituted an admission that Brown Sugar’s alleged
failure to provide the required ARL disclosures did not cause any
injury to Licea, and that Licea thus lacked standing to pursue a
claim under the UCL.
On October 5, 2020, without ruling on the pending motion
to dismiss, the district court remanded the case to the superior
court for lack of subject matter jurisdiction. That same day,
Licea filed a first amended complaint in the superior court
action—the operative complaint for purposes of this appeal.3
3 Because Licea filed an amended complaint in the
district court action, Brown Sugar contends that the FAC
should be captioned “second amended complaint,” and that
Licea improperly filed the amended pleading without leave
of court. For simplicity, however, we refer to Licea’s amended
complaint filed in the superior court as the “FAC.”
4
Like the original and amended complaints, the FAC asserts three
causes of action under the ARL against Brown Sugar: (1) “failure
to present automatic renewal offer terms or continuous service
offer terms clearly and conspicuously and in visual proximity
to the request for the consent to the offer,” in violation of
section 17602, subdivision (a)(1); (2) “failure to obtain consumer’s
affirmative consent before subscription charges are imposed,”
in violation of sections 17602, subdivision (a)(2) and 17603; and
(3) “failure to provide acknowledgment with automatic renewal
offer terms and cancellation policy,” in violation of section 17602,
subdivisions (a)(3) and (b). (Boldface and capitalization omitted.)
In addition, the FAC alleges a fourth cause of action against
Brown Sugar for violation of the UCL, premised on a subset of
the alleged ARL violations.
The FAC repeats the allegations in the first two complaints
that (1) “[Licea] would like to use [Brown Sugar]’s services again
in the future after [Brown Sugar] complies with California law,
and will likely do so in light of the quality of the content of
[Brown Sugar]’s product or service, but would like to ensure
that [Brown Sugar] offers such services fairly and in compliance
with its obligations under California law,” and (2) “[Licea]
accepted [Brown Sugar]’s free trial offer, but was later charged
monies in violation of the law, thus causing an actual, economic
injury to [Licea].” The FAC, however, includes the following new
allegation: “[Licea] would not have consented to the free trial
offer if [Brown Sugar] had made the appropriate disclosures
required by the ARL.”
On October 20, 2020, Brown Sugar filed a demurrer to
the entirety of Licea’s FAC, along with a supporting request for
judicial notice. Brown Sugar argued that Licea’s ARL claims
should be dismissed because (1) the ARL does not provide a
5
private right of action, and (2) alternatively, Brown Sugar is
exempt from the ARL, pursuant to section 17605, subdivision (b).
With respect to the UCL cause of action, Brown Sugar argued
that Licea failed to state a claim because (1) the UCL claim “is
based entirely upon the ARL claim, and the ARL claim fails,”
and (2) Licea “fails to allege an injury in fact and therefore lacks
standing.” In support of the latter argument, Brown Sugar filed
a motion to strike the new allegation in the FAC that “ ‘[Licea]
would not have consented to the free trial offer if [Brown Sugar]
had made the appropriate disclosures required by the ARL.’ ”
Brown Sugar argued that this allegation directly contradicts
Licea’s allegations that he “would like to use [Brown Sugar]’s
services again in the future after [Brown Sugar] complies with
California law, and will likely do so in light of the quality of the
content of [Brown Sugar]’s product or service.”
Licea filed an opposition to the demurrer on November 12,
2020, and in support of his opposition, requested that the court
take judicial notice of certain legislative history relating to
Senate Bill No. 340, the bill that became the ARL. Licea also
opposed Brown Sugar’s motion to strike. He argued, inter alia,
that the new allegation in the FAC was not inconsistent with
his earlier allegations: “There is nothing contradictory about
[the earlier allegations] . . . . [¶] . . . Fairly read, [they are]
intended to mean that although [Licea] is interested in using
[Brown Sugar]’s services again in the future, such usage is
contingent upon [Brown Sugar]’s compliance with the ARL.
In other words, if [Brown Sugar] fails to comply with the ARL,
then [Licea] shall definitely not use [Brown Sugar]’s services
again in the future.” (Boldface and italics omitted.)
At the November 25, 2020 hearing on Brown Sugar’s
demurrer and motion to strike, the trial court granted the
6
parties’ requests for judicial notice. The court then sustained
the demurrer with leave to amend. The court also granted
the motion to strike, “[d]ue to the demurrer to each cause
of action in the FAC being sustained.” Licea represented at
the November 25, 2020 hearing that he would not be filing an
amended complaint, and on April 8, 2021, the court dismissed
the action and entered judgment in favor of Brown Sugar.
On January 22, 2021, Licea filed a notice of appeal
from the court’s November 25, 2020 minute order sustaining
Brown Sugar’s demurrer and motion to strike. Although
the November 25 order is nonappealable, Licea subsequently
provided us with a copy of the April 8, 2021 final judgment.
We exercise our discretion to construe Licea’s notice of appeal
as taken from that appealable judgment. (See, e.g., Groves v.
Peterson (2002) 100 Cal.App.4th 659, 666, fn. 2 [“[w]e liberally
construe [the] notice of appeal from the order sustaining the
demurrer, a nonappealable order, to be from the subsequent
judgment of dismissal”].)
DISCUSSION
A. Standard of Review
We review a trial court’s decision sustaining a demurrer
de novo. (Walgreen Co. v. City and County of San Francisco
(2010) 185 Cal.App.4th 424, 433.) We assume the truth of the
factual allegations in the operative complaint and, based on those
allegations, determine whether a valid cause of action is stated
under any legal theory. (See Doan v. State Farm General Ins. Co.
(2011) 195 Cal.App.4th 1082, 1087−1091.)
7
B. Overview of ARL
“California’s automatic renewal law”—codified in
sections 17600 through 17606—“was enacted ‘to end the practice
of ongoing charging of consumer credit or debit cards . . . without
the consumers’ explicit consent for ongoing shipments of a
product or ongoing deliveries of service.’ ” (Mayron v. Google LLC
(2020) 54 Cal.App.5th 566, 570 (Mayron), review den. Dec. 9,
2020, S265116, citing § 17600.) “The law requires a consumer’s
affirmative consent to any subscription agreement automatically
renewed for a new term when the initial term ends. [Citation.]
It further requires ‘clear and conspicuous’ disclosure of the
offer terms, and an ‘easy-to-use mechanism for cancellation.’ ”
(Mayron, supra, at p. 570, quoting § 17602, subds. (a) & (b).)
In addition, the ARL provides that “[i]n any case in which
a business sends any goods, wares, merchandise, or products to
a consumer, under a continuous service agreement or automatic
renewal of a purchase, without first obtaining the consumer’s
affirmative consent as described in [s]ection 17602, the goods,
wares, merchandise, or products shall for all purposes be deemed
an unconditional gift to the consumer.” (§ 17603.)
C. The ARL Does Not Afford a Private Right of
Action
The trial court sustained Brown Sugar’s demurrer to the
ARL claims because it concluded that the statute does not confer
a private right of action. We agree.
A private right of action does not exist under a California
statute unless the state Legislature has manifested its intent
to create one. (See Lu v. Hawaiian Gardens Casino, Inc. (2010)
50 Cal.4th 592, 596 (Lu).) “Such legislative intent, if any, is
revealed through the language of the statute and its legislative
8
history. [Citation.] [¶] A statute may contain ‘ “clear,
understandable, unmistakable terms,” ’ which strongly and
directly indicate that the Legislature intended to create a
private cause of action. [Citation.] For instance, the statute
may expressly state that a person has or is liable for a cause of
action for a particular violation. [Citations.] Or, more commonly,
a statute may refer to a remedy or means of enforcing its
substantive provisions, i.e., by way of an action. [Citations.] If,
however, a statute does not contain such obvious language, resort
to its legislative history is next in order.” (Id. at pp. 596−597,
fn. omitted.)
We therefore first consider whether the ARL contains
“ ‘ “clear, understandable, unmistakable” ’ ” language that
“strongly . . . indicate[s]” a legislative intent to provide a private
right of action. (Lu, supra, 50 Cal.4th at p. 597.) Section 17600
of the ARL, titled “legislative intent,” is silent on the issue,
stating only: “It is the intent of the Legislature to end the
practice of ongoing charging of consumer credit or debit cards
or third party payment accounts without the consumers’ explicit
consent for ongoing shipments of a product or ongoing deliveries
of service.” (§ 17600.) Section 17604 of the ARL, titled “violation;
civil remedies,” similarly is devoid of any express reference
to a private right of action. It provides, in relevant part,
“[n]otwithstanding [s]ection 17534, a violation of this article
shall not be a crime. However, all available civil remedies that
apply to a violation of this article may be employed.” (§ 17604,
subd. (a).) We agree with the Sixth District’s conclusion in
Mayron that, although section 17604, subdivision (a)’s reference
to “all available civil remedies” might mean “that a private
party can sue for any remedies available under the civil law”
(Mayron, supra, 54 Cal.App.5th at p. 571), the language also
9
can support the opposite inference—namely, “an intent not
to create a new cause of action[,] but to require enforcement
through existing means (such as through [section] 17200 et seq.,
which allow individuals harmed by unlawful business practices
to seek restitution and injunctive relief).” (Mayron, supra,
54 Cal.App.5th at p. 572.) We thus conclude that the ARL
does not contain “clear, understandable, unmistakable” language
suggesting that the Legislature intended the ARL to confer a
private right of action. (Lu, supra, 50 Cal.4th at p. 598.)
Having so concluded, we next consider whether legislative
history reveals an intent that the ARL afford a private right of
action. (Lu, supra, 50 Cal.4th at p. 597.) Here again, we find
Mayron’s analysis persuasive: “The legislative history of the
automatic renewal law contains no clear statement about an
individual’s right to sue under the statute. There is no mention
of a private right [of] action at all. . . . [To the contrary, in the
April 14, 2009 Senate Judiciary Committee bill analysis for
Senate Bill No. 340,] [u]nder a heading that reads, ‘[r]emedies
available under the bill’—where one would expect reference to
a private right of action if one were contemplated—[the analysis]
instead notes violations can be enforced through section 17200
[the UCL], which allows a private party to ‘bring a civil action
for injunctive relief and/or for restitution of profits that the
defendant unfairly obtained from that party.’ [Citation.] The
legislative history’s reference to enforcement by way of a different
statute is a strong indication that no independent private right
of action was intended by the new law.” (Mayron, supra, 54
Cal.App.5th at pp. 573−574.)
Thus, like the Mayron court, we “see[ ] no clear indication
of intent to create a private right of action in either the statutory
text or its legislative history,” and we therefore “conclude there is
10
no such right under the [ARL].” (Mayron, supra, 54 Cal.App.5th
at p. 573.)
Licea’s arguments in opposition do not convince
us otherwise. First, Licea contends that section 17603’s
“unconditional gift” provision demonstrates that “the Legislature
intended to create a private right of action by enacting the
ARL.” We agree with the conclusion in Mayron, however, that
section 17603 “provides only a passive right to retain any
products received from a violator, rather than a right to pursue
a refund of fees a claimant could show had been paid.” (Mayron,
supra, 54 Cal.App.5th at p. 572.) Licea insists that Mayron’s
analysis is flawed because it “offers no explanation [of] how ‘the
goods, wares, merchandise, or products’ received by a California
consumer can constitute an ‘unconditional gift’ . . . if [a] merchant
is permitted to retain the harmed consumers’ money.” But it
does not follow from the absence of a private right of action
under the ARL that a merchant who violates the statute will
be permitted to retain consumers’ payments. Consumers’ funds
can be recouped in an action brought by the Attorney General
or brought by the aggrieved consumers themselves via a claim
under another statute, such as the UCL, provided the consumers
meet the requisite standing requirements (discussed, post).
We thus find unpersuasive Licea’s argument that
“ ‘reason, practicality, and common sense’ ” dictate that we
interpret section 17603 as evidencing the Legislature’s intent
to create a private right of action under the ARL. And we
therefore necessarily reject Licea’s related arguments that
we should disregard Mayron and other decisions4 holding that
4 These decisions include Johnson v. Pluralsight, LLC (9th
Cir. 2018) 728 Fed.Appx. 674 (Johnson) and Roz v. Nestle Waters
11
the ARL confers no private right of action because (1) they
do not interpret section 17603’s “unconditional gift” provision
as supporting the existence of such a right, and (2) they focus
their analysis on legislative history predating the addition of
the ”unconditional gift” provision to Senate Bill No. 340 on
June 10, 2009.
Moreover, Licea’s latter argument fails for the additional
reason that even the legislative history post-dating the June 10,
2009 addition of the “unconditional gift” provision to Senate Bill
No. 340 does not suggest any legislative intent to create a private
right of action under the ARL. We find persuasive the summary
and analysis of this legislative history set forth in Lopez v. Stages
of Beauty, LLC (S.D.Cal. 2018) 307 F.Supp.3d 1058 (Lopez)—a
case in which plaintiff ’s counsel advanced the same arguments it
makes here. After quoting the language from the April 14, 2009
Senate Judiciary Committee bill analysis indicating that the ARL
can be enforced through the UCL (discussed in Mayron, ante),
the Lopez court explained: “Plaintiff asserts that this quotation
cannot be used to interpret the California Legislature’s intent
because it ‘was issued prior to the key amendment (including
for the first time an “unconditional gift” provision) to [Senate Bill
No.] 340.’ . . . However, the [June 24, 2009] Assembly Committee
on Judiciary bill analysis . . . recognizes that the ARL would
include a provision deeming goods, wares, merchandise, or
products sent to a consumer under a continuous service or
automatic renewal in violation of the ARL as an unconditional
gift. . . . The analysis also provides that ‘all civil remedies that
apply to a violation may be employed,’ and lists ‘existing law,’
North America, Inc. (C.D.Cal. Jan. 11, 2017, No. 2:16-CV-00418-
SVW-JEM) [2017 WL 132853].
12
including the following . . . Business [and] Professions Code
sections: [section] 17200 et seq. (the UCL), [section] 17500,
[section] 17534, [section] 17536, [section] 17204, [section] 17203,
and [section] 17206. [Citation.] Thus, the committees’ bill
analyses specifically contemplate that consumers who suffer[ ]
an injury by violations of the ARL can seek relief under other
statutory provisions, including the UCL.” (Lopez, supra, 307
F.Supp.3d at p. 1068.) We find unconvincing Licea’s assertion
that the bill analyses’ “reference[ ] to ‘existing law’ . . . was
merely explaining how and why [Senate Bill No.] 340 would
change existing law” (capitalization omitted), and we therefore
agree with the Lopez court, that along with the text of the ARL
itself, “[t]hese analyses . . . ‘strongly support[ ] a Legislative
intent to pursue causes of action for violations of [the ARL] under
existing laws.’ [Citation.]” (Lopez, supra, at p. 1068.)5
Second, Licea urges that a private right of action
exists under the ARL pursuant to sections 17535 and 17604,
subdivision (a). Section 17535 provides, in relevant part: “Any
person, corporation, firm, partnership, joint stock company, or
5 Also unavailing is Licea’s contention that, by considering
the June 24, 2009 Assembly Committee on Judiciary bill
analysis, the district court in Lopez necessarily “abandoned any
reliance upon the [April 14, 2009] Senate Judiciary Committee’s
bill analysis.” Licea urges that this “aspect of Lopez is highly
significant because such document was expressly cited and
relied upon as the sole relevant legislative history” in other
federal decisions finding no private right of action under the
ARL. (Boldface and capitalization omitted.) As the portion of
the Lopez decision quoted above makes clear, however, the Lopez
court relied on both the April 14 and the June 24, 2009 analyses
in reaching its conclusion that the ARL confers no private right
of action.
13
any other association or organization which violates . . . this
chapter may be enjoined by any court of competent jurisdiction.
The court may make such orders or judgments . . . as may be
necessary to prevent the use or employment . . . of any practices
which violate this chapter, or which may be necessary to restore
to any person in interest any money or property, real or personal,
which may have been acquired by means of any practice in this
chapter declared to be unlawful. [¶] Actions for injunction under
this section may be prosecuted by the Attorney General . . . or
by any person who has suffered injury in fact and has lost money
or property as a result of a violation of this chapter.” (§ 17535.)
Licea argues that because “[section] 17535 provides relief against
any person or entity which violations ‘this chapter,’ ” and “the
California Legislature intentionally placed the ARL within
the same chapter as [section] 17535,” “the ARL . . . [therefore]
provides consumers with remedies of injunctive relief and
restitution via [section] 17535.” Licea’s argument with respect
to section 17604, subdivision (a) is similar. As noted, ante,
that section provides: “Notwithstanding [s]ection 17534, [which
establishes criminal liability for certain violations,] a violation
of this article shall not be a crime. However, all available
civil remedies that apply to a violation of this article may be
employed.” (§ 17604, subd. (a).) Licea urges that “[t]he reference
to ‘this article’ is a reference to Article 9, which only contains
the ARL statutes. In other words, the California Legislature
carefully exempted any criminal liability for ARL violations
via [section] 17604[, subdivision] (a), but allowed all other
provisions including civil remedies (including the remedies
in [section] 17535) for violations of the ARL to apply.”
Like the district court in Lopez, however, we conclude
that Licea “ ‘misse[s] a crucial distinction between the existence
14
of a private right to enforce [the ARL] (such as under the UCL
[False Advertising Law (FAL)], and/or [section] 17535), and
the existence of an independent cause of action under [the ARL]
itself.’ [Citation.] Section 17535 ‘explicitly authorizes a private
right of action by “any person” for violations of [chapter 1 of . . .
Business and Professions Code, which includes the ARL].’
[Citation.] However, by stating actions ‘under this section may be
prosecuted by . . . any person who has suffered injury in fact,’ the
California Legislature clarified its intent ‘that such a cause of
action be pursued under [section] 17535 itself ’ and not the ARL.
[Citations.]” (Lopez, supra, 307 F.Supp.3d at p. 1067.) And as
discussed, ante, section 17604, subdivision (a)’s reference to “ ‘all
available civil remedies’ ” is consistent with a legislative intent
“to require enforcement through existing means,” such as the
UCL. (Mayron, supra, 54 Cal.App.5th at p. 572.)
Third, Licea argues that the ARL confers a private right
of action because the statute’s legislative history “indicates
that the UCL and FAL were perceived to be inadequate” for
protecting consumers and because the ARL is a “remedial
statute” that must be “broadly construed” to effectuate its
purpose. (Boldface and capitalization omitted.) But Licea fails
to explain why the enforcement gap the Legislature intended
the ARL to address cannot be closed through an action brought
by the Attorney General or via private suits brought under
other statutes, such as the UCL, that make ARL violations
independently actionable. (See Mayron, supra, 54 Cal.App.5th
at p. 574 [“[p]laintiff urges that outcome [i.e., finding no private
right of action] is contrary to the remedial purpose of the statute
and will undermine its consumer protection function. But the
automatic renewal law can be enforced with an action brought
by the Attorney General. A private individual can also pursue
15
enforcement through an unfair competition lawsuit, if economic
loss resulted from the violation”].)
Fourth, and finally, Licea contends that “multiple federal
courts” have recognized a private right of action under the ARL,
pointing to the decisions in Kissel v. Code 42 Software, Inc.
(C.D.Cal. Apr. 14, 2016, No. SACV 15-1936-JLS (KESx)) [2016
WL 7647691 at pp. *6−*7], In re Trilegiant Corp., Inc. (D.Conn.
2014) 11 F.Supp.3d 82, 126, Noll v. eBay, Inc. (N.D.Cal. May 30,
2013, No. 5:11-CV-04585-EJD) [2013 WL 2384250 at p. *6],
and Noll v. eBay, Inc. (N.D.Cal. 2015) 309 F.R.D. 593, 600.
We note, as an initial matter, that we are not bound by any of
these decisions. Moreover, we find persuasive Lopez’s analysis
distinguishing the cases: “[T]he [c]ourt disagrees with each of
these cases. For example, Kissel failed to distinguish between
the existence of a private right to enforce the ARL through
existing law, like the UCL, and the existence of an independent
cause of action under the ARL itself. [Citation.] Additionally, In
re Trilegiant Corp. considered whether the provisions of the ARL
could be enforced by out-of-state consumers against California
businesses and did not directly analyze whether the ARL creates
a private right of action. [Citation.] Similarly, the Noll cases
also found that the ARL limited recovery to California consumers
without directly analyzing whether the ARL creates a private
right of action for California consumers.” (Lopez, supra, 307
F.Supp.3d at p. 1068, fn. 2.)6
6 In light of our conclusion that Kissel’s reasoning is
flawed, we reject Licea’s argument that Mayron is “unpersuasive”
because it fails to address Kissel.
16
Accordingly, we conclude that the ARL does not confer
a private right of action, and Licea’s claims under the ARL
therefore fail.7
D. The UCL Claim Does Not Adequately Allege
Causation
The UCL “ ‘ “borrows” violations from other laws by making
them independently actionable as unfair competitive practices.’ ”
(Mayron, supra, 54 Cal.App.5th at p. 574, quoting Korea Supply
Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1143.)
“The unfair competition statutes come with an express standing
requirement, however. An action can be brought only ‘by a
person who has suffered injury in fact and has lost money or
property as a result of the unfair competition.’ [Citation.] It is
not enough that a plaintiff lost money; to have standing, there
must be a causal link between the unlawful practice and the
loss.” (Ibid., quoting § 17204).
Here, Licea alleges that Brown Sugar did not provide
certain disclosures required under the ARL. But “[t]o establish
standing, [Licea] would also need to allege that he ordered
[Brown Sugar’s services] but would not have done so had the
disclosures been provided.” (See Mayron, supra, 54 Cal.App.5th
at pp. 574−575.) Instead, in each of his complaints, including the
operative FAC, Licea alleges precisely the opposite—namely, that
7 Our conclusion renders unnecessary consideration of
Brown Sugar’s argument that section 17603 “does not apply
to intangible services” such as those it offers. We also need not
address Brown Sugar’s contention that it is exempt from the ARL
because it and its parent company are regulated by the Federal
Communications Commission, or Licea’s related contention that
the trial court erred in taking judicial notice of certain materials
Brown Sugar cites in support of its exemption argument.
17
he “would like to use [Brown Sugar]’s services again in the future
after [Brown Sugar] complies with California law [i.e., makes
the requisite disclosures under the ARL], and will likely do so in
light of the quality of the content of [Brown Sugar]’s product or
service.” As Brown Sugar persuasively argues, these allegations
suggest that Licea “would have purchased and maintained
[Brown Sugar’s services] even if [Brown Sugar] had complied
with the [ARL]” (see Mayron, supra, 54 Cal.App.5th at
pp. 574−575)—a concession by Licea that the alleged absence
of required ARL disclosures did not cause any injury. This
admission is fatal to Licea’s standing to pursue a UCL claim,
and distinguishes the facts here from the cases on which Licea
relies. (See Kwikset Corp. v. Superior Court (2011) 51 Cal.4th
310, 317 (Kwikset) [“plaintiffs who can truthfully allege they
were deceived . . . into spending money to purchase the product,
and would not have purchased it otherwise, have ‘lost money or
property’ . . . and have standing to sue” under the UCL]; Johnson,
supra, 728 Fed.Appx. at p. 677 [containing no indication that
plaintiff admitted he would have purchased a subscription from
defendant had defendant complied with the ARL]; Davidson v.
Kimberly-Clark Corp. (9th Cir. 2018) 889 F.3d 956, 966 [involving
alleged violation of FAL and containing no indication that
plaintiff admitted she would have purchased the product
irrespective of the allegedly false advertising].)
Moreover, Licea cannot rely on his new allegation in the
FAC—added only after Brown Sugar challenged his standing
under the UCL— that he “would not have consented to the
free trial offer if [Brown Sugar] had made the appropriate
disclosures required by the ARL” because it contradicts his
earlier allegations conceding that he likely would have purchased
Brown Sugar’s services even had Brown Sugar made the required
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ARL disclosures. (See Banis Restaurant Design, Inc. v. Serrano
(2005) 134 Cal.App.4th 1035, 1044 [“[W]hen a complaint contains
allegations that are fatal to a cause of action, a plaintiff cannot
avoid those defects simply by filing an amended complaint
that omits the problematic facts or pleads facts inconsistent
with those alleged earlier. [Citations.] Absent an explanation
for the inconsistency, a court will read the original defect into
the amended complaint, rendering it vulnerable to demurrer
again.”].)8 Finally, Licea’s argument that he need not allege
actual reliance is a red herring. Brown Sugar does not contend
that Licea failed to allege actual reliance, but that he failed to
allege any form of causation whatsoever. Licea agrees that he
must allege facts demonstrating causation to establish standing
under the UCL but, as set forth, ante, he has failed to do so.
Accordingly, because we conclude that the ARL confers
no private right of action and Licea failed adequately to allege
a violation of the UCL, the trial court correctly sustained Brown
Sugar’s demurrer to the FAC. We therefore affirm the trial
court’s judgment in favor of Brown Sugar.
8 Because we disregard this new allegation for purposes of
our analysis, we need not address Licea’s contention that the trial
court erred by striking the allegation from the FAC on another
ground, or Brown Sugar’s related contention that Licea waived
his right to challenge the court’s ruling on the motion to strike.
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DISPOSITION
We affirm the trial court’s April 8, 2021 judgment.
Respondent Brown Sugar, LLC is awarded its costs on appeal.
NOT TO BE PUBLISHED.
ROTHSCHILD, P. J.
We concur:
CHANEY, J.
WEINGART, J.
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