Senior Citizens Entitled to Triple Restitution for Breach of California Unfair Competition Law

This posting was written by Jody Coultas, Editor of CCH State Unfair Trade Practices Law.

A class of senior citizens could receive triple restitution under the California Civil Code for violations of the California Unfair Competition Law (UCL) by a life insurance company that allegedly engaged in deceptive business practices to induce the purchase of high-commission annuity contracts with large surrender penalties, according to a California appellate court.

The senior citizens alleged that they were duped into buying high-commission annuity contracts with large surrender penalties from the National Western Life Insurance Company in violation of the UCL. The class sought restitution of the allegedly improper surrender penalties and enhanced remedies for each cause of action under California Civil Code Sec. 3345.

Enhanced Remedies for Senior Citizens

Section 3345 authorizes trebling either the amount authorized under a statute or the amount the trier of fact imposed in its discretion. It requires that the action (1) be brought by or on behalf of senior citizens or disabled persons seeking redress for unfair methods of competition and (2) be one in which the trier of fact is authorized by a statute to impose a penalty the purpose or effect of which is to punish or deter.

National Western was granted judgment on the pleadings without leave to amend because the trial court found that that the only available remedy under the UCL did not have the purpose or effect of punishment or deterrence as required by Section 3345. Therefore, Section 3345 was not applicable to the UCL action and the case was dismissed, the trial court held.

According to the appellate court, the language of Section 3345 did encompass actions under the UCL brought by or on behalf of senior citizens. Contrary to the trial court’s ruling, UCL restitution awards have a deterrent purpose and effect.

Damages v. Restitution

It was well established that private plaintiffs could not receive damages—much less treble damages—under the UCL.In this case, however, the senior citizens did not seek to justify monetary relief other than restitution under the UCL. Therefore, the court found that Section 3345 applied to unfair competition actions involving a fine, civil penalty, or any other deterrence remedy.

Section 3345 was enacted as a specific remedy in actions concerning deceptive business practices aimed at senior citizens. It was consistent with the goal of the legislature to construe Section 3345 to apply to UCL actions. Therefore, the trial court’s order was vacated and a new order was entered denying National Western’s motion for judgment on the pleadings.

The May 21 decision—Clark v. The Superior Court of Los Angeles (National Western Life Insurance Co.)—will be reported in CCH State Unfair Trade Practices Law.