Cal Insurance Regulation

As we discussed in a previous post, the Fourth Appellate District issued a very helpful opinion in which it affirmed the trial court's dismissal of an action brought under California's Unfair Competition Law (UCL), Cal. Bus. & Prof. Code 17200, which challenged a company's alleged sale of insurance without a license.  (The underlying case, which our office (and yours truly) handled, is entitled Medina v. Safe-Guard Products Int'l, Inc.  The opinion and modification of that opinion can be found here and here, respectively.) 

This opinion is important as it makes clear that insurers cannot be simply sued under the UCL for technical violations of regulatory law without also alleging facts showing that the plaintiff meets the harm-standing requirements of the UCL (i.e., showing that the plaintiff has suffered an injury in fact and lost money or property as a result of the alleged unlawful conduct).

Unsurprisingly, a number of pro-consumer organizations had sought to have this opinion depublished so that it could not be cited in future cases.  Notwithstanding these requests, as well as a petition for review to the California Supreme Court, the California Supreme Court denied these requests and denied the petition for review.  As such, this opinion remains good law.

It should be observed that there has been another recent decision in which the Fourth Appellate District made emphatically clear that allegations of non-compliance with licensing laws, without more, is insufficient for a plaintiff to meet the harm-standing requirements of the UCL.  The second decision is Peterson v. Cellco Partnership.

 

In Peterson, the defendant in that case was alleged to have sold cell phone insurance without a license. Similar to the reasoning it employed in Medina (and another helpful case Hall v. Time), the Peterson court held that "plaintiffs here do not allege they paid more for the insurance due to defendant's collecting a commission.  They do not allege they could have bought the same insurance for a lower price either directly from the insurer or from a licensed agent.  Absent such an allegation, plaintiffs have not shown they suffered actual economic injury.  Rather, they received the benefit of their bargain, having obtained the bargained for insurance at the bargained for price."  The Peterson opinion can be found here.

[Please note that this post does not constitute legal advice and provides only the author's own snapshot view of the cited opinion. No warranties are made as to the accuracy of the author's view of the opinion or as to its legal effect (including, but not limited to, whether it may be subsequently modified, depublished, and/or overruled). The import and applicability of a cited opinion to an actual matter depends upon the specific facts presented and should be reviewed by an attorney. ]