The California Supreme Court recently held that claims brought by the government for civil penalties under California’s unfair competition law (B&PC § 17200, et seq.) and false advertising law (B&PC § 17500, et seq.) are to be tried by a court, not by a jury. Under the California Constitution, litigants have the right to a jury trial in cases involving legal claims, but this right does not apply where the claims are solely equitable in nature. In reaching its conclusion, the California Supreme Court explained that causes of action under these two statutes are equitable, rather than legal, in nature because even civil penalties are meant to prevent or discourage future conduct.
Nationwide Biweekly Administration, Inc. v. Superior Court, 9 Cal. 5th 279 (2020)In Nationwide Biweekly, the petitioners (“Nationwide”) operated a debt payment service in California and other states. Under the debt payment service program, a debtor would make biweekly payments to Nationwide of half the debtor’s monthly loan payment, resulting in an extra month’s payment each year, and Nationwide would pay those amounts to the debtor’s lender, for a fee. Nationwide advertised through direct mailers to consumers with residential mortgages, and through follow-up telephone conversations.
In 2015, the district attorneys of four California counties (on behalf of the People) filed a civil complaint alleging that Nationwide had violated California’s unfair competition law set forth at Business & Professions sections 17200, et seq. (the “UCL”) and its false advertising law set forth at Business & Professions sections 17500, et seq. (the “FAL”) by, among other things, (1) implying that Nationwide was affiliated with the consumer’s lender; (2) disguising the amount Nationwide’s services actually cost, and (3) overstating the amount of savings a consumer could reasonably expect to receive. The complaint sought an injunction, restitution of all money wrongfully obtained by Nationwide from California consumers, and civil penalties of up to $2,500 for each violation of the UCL or FAL.
Nationwide demanded a jury trial, and the district attorneys moved to strike the jury demand based on well-settled law that the action was brought in equity and therefore required a court trial. The trial court granted the motion to strike the jury demand. Nationwide filed a petition for writ of mandate in the Court of Appeal, which the Court of Appeal initially denied. The California Supreme Court granted Nationwide’s petition for review, and directed the Court of Appeal to issue an order requiring the government to show cause why Nationwide did not have a right to a jury trial under the circumstances.
Following briefing and argument, the Court of Appeal held that Nationwide had a right to a jury trial under the jury trial provision of the California Constitution (article I, section 16). In doing so, the Court of Appeal relied heavily on the U.S. Supreme Court decision in Tull v. United States (1987) 481 U.S. 412. Tull addressed the application of the civil jury trial provision of the Seventh Amendment to the federal constitution. Relying on Tull, the Court of Appeal concluded that because the government was seeking civil...
