Under California Business and Professions Code section 17200, unfair competition is broadly defined as “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” This section of the law applies to all business types: corporations, partnerships, firms, associations, organizations, sole proprietors, and natural persons. Sounds great, but what does it mean?
Unlawful, Unfair, Fraudulent, Deceptive
A business commits unfair competition when its practices are prohibited by law, or are counter to public policy. Where a business acts unlawfully, or contrary to public policy, it opens itself to the possibility of legal action if the actions harm its consumers or give a business an unfair advantage over competitors.
Examples of unlawful and unfair competition including attempting to fix the market price for a good, price discrimination, attempting to divide up the market, monopolizing, bait-and-switch with the intent to deceive, violating FCC do-not-call lists, and/or false advertisements.
Can I sue?
The Unfair Competition Law (“UCL”), contained under California Business and Professions Code section 17200, et seq., aims to protect both consumers and competitors, in order to maintain a free market. In order to bring an Unfair Competition claim in California, a member of the public must have lost money or property due to the false advertising or unlawful conduct of the business. [Cal. Bus. & Prof. Code § 17203.] For this reason, consumer watchdog groups and governmental organizations cannot sue under California law.
The District Attorney, or a government official, acting on behalf of the public may bring an action for unfair competition leading to a civil penalty of up to $2,500 per violation and criminal prosecution for false advertisement. [Cal. Bus. & Prof. Code § 17204.]
In 2004, California voters passed Proposition 64, the Injury Required for Unfair Competition Lawsuits Initiative. This proposition required a person bringing a claim for unfair competition to have suffered an actual injury or loss of money. The proposition further required any unfair competition action to be brought by class members, not the attorney general or a prosecutor, in the case of class actions. This proposition aimed to limit frivolous claims of unfair competition.
Statute of Limitations
All lawsuits for unfair competition in California must be brought within four years. Unfair business practices are subject to the same accrual and equitable exceptions to the running of the statute of limitations as any common law claims. [Cal. Bus. & Prof. Code § 17208.]
There are both legal and equitable remedies available for unfair competition, and a plaintiff may pursue either or both. Legal remedies would recover the plaintiff’s actual economic damages, which is the remedy less favored by the courts. Equitable remedies would provide for injunctive relief, where a court would step in and prohibit the unfair competition from continuing.
Under the California Business and Professions Code, “any person who engages, has engaged, or proposed to engage in unfair competition shall be liable for a civil penalty not to exceed two thousand five hundred dollars ($2,500) for each violation.” [Cal. Bus. & Prof. Code § 17206.]
Need more information?
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This article is based on the law as of the date posted at the top of the article. This article does not constitute the provision of legal advice, and does not by itself create an attorney-client relationship with Eskridge Law.