Pleading Alternative Consumer Remedies in The Ninth Circuit

POMERANTZ MONITOR | SEPTEMBER OCTOBER 2020

By Jordan L. Lurie and Ari Y. Basser

Pomerantz’s Strategic Consumer Litigation Practice is prosecuting a series of consumer cases that seek to redress a widespread, but little known, abuse in the automotive industry: manufacturers are providing deficient warranty coverage under California emissions warranty law. Car manufacturers fail to identify all of the vehicle parts that should properly be classified as “emissions parts” and “high-priced warranted parts” and covered for extended warranty periods as required by California regulations. Instead, manufacturers omit some parts from their lists of emissions-related and high-priced warranted parts in their warranty books and in submissions to California regulators, in order to reduce the money that they have to pay out in warranty claims.

Consumer actions, brought under California consumer protection statutes, seek both damages for out-of-pocket costs already incurred and equitable remedies in the form of restitution and injunctive relief to compel the car companies to properly identify and cover all high-priced emissions parts under warranty in the future.

Two recent Ninth Circuit cases, Sonner v. Premier Nutrition Corp., 962 F. 3d 1072 (9th Cir. 2020) and Moore v. Mars Petcare US, Inc., 2020 U.S. App. LEXIS 23747 (9th Cir. 2020) (decided a week after Sonner by a different panel of the Ninth Circuit), appear on their face to reach contradictory conclusions regarding the ability of consumers to seek both monetary damages and equitable relief in the same action. The better rule, and the one that Pomerantz has advocated in its consumer cases to reconcile the two opinions, is that before any discovery has been conducted and before a plaintiff can make an informed determination as to whether, in fact, she lacks an alternative legal remedy based on a full development of the record, a plaintiff can plead equitable relief in the alternative. The proper time to elect a remedy is at the end of a case, not the very beginning. We believe that this is the conclusion compelled by the Ninth Circuit’s opinion in Moore, which directly addressed the pleading standard, as opposed to Sonner, which was decided after summary judgement and before trial in a unique procedural context.

Intra-Circuit Split

Prior to the Ninth Circuit’s recent pronouncements, district courts in the Ninth Circuit had been split as to whether plaintiffs alleging state claims providing an adequate remedy at law (such as damages available under the Consumers Legal Remedies Act, the “CLRA”) were barred from also pursuing claims for equitable relief (such as claims under California’s Unfair Competition Law, the “UCL”), unless plaintiffs could first show that damages were inadequate. Courts that disallowed the competing claims reasoned that, because a plaintiff may only seek equitable relief under California’s UCL where she has no adequate remedy at law, if the plaintiff’s other claims provide adequate remedies at law, the UCL claim fails, especially if both claims are based on the same underlying facts.

Courts that have upheld both CLRA and UCL claims reasoned that the appropriate form of relief is not to be decided upon a motion to dismiss and that Rule 8 of the Federal Rules of Civil Procedure expressly allows for pleading in the alternative. These courts also noted that the time to sort out alternatively pled remedial requests is at the end of a case, not at the pleading stage. Once a plaintiff ultimately prevails on her claims, she will still need to show that equitable relief is the only way to remedy a specific type of injury suffered by herself or members of the class, because discovery may reveal that plaintiff’s claims providing legal remedies are inadequate for any number of reasons, despite the fact that her allegations appear adequate. Further, dismissal of the UCL claim at the pleading stage would not save defendant or the Court substantial resources: if the UCL claim is truly identical to plaintiff’s other claims, retention of the UCL claim at the pleading stage would cause only incidental discovery burdens on defendant beyond what would already be necessary to litigate those claims that provide legal remedies.

Interpreting Sonner and Moore

The Ninth Circuit seemed to resolve this intra-circuit split in Sonner. In Sonner, the Ninth Circuit held that before awarding equitable relief under the UCL, a federal court must find that plaintiff lacks an adequate remedy at law. However, Sonner was predicated on a very unusual set of facts in which the plaintiff dismissed her CLRA claim on the eve of trial and elected to proceed only with her UCL claim which provided for a bench trial, in order to avoid a jury trial. The Ninth Circuit excoriated plaintiff’s “gamesmanship” in seeking to deny defendant the constitutional right to trial by jury. Further, in Sonner, the Ninth Circuit determined to not follow state law authorizing equitable remedies and instead applied federal equitable principles, including the requirement that the party pursuing equitable relief establish that it lacks an adequate legal remedy.

Notably, the Sonner Court’s reasoning raises serious issues regarding federalism and the well-settled rule that when forum state law defines the underlying substantive right, state law governs the availability of equitable remedies. These issues likely will be addressed on appeal.

The defense bar has been quick to rely on Sonner to challenge consumer claims seeking both damages and equitable relief, but their rejoicing appears to be premature. Sonner was decided after class certification and summary judgment and immediately before trial. Therefore, Sonner left open the issue of whether plaintiff could legitimately allege alternative remedies at the pleading stage. In Moore, the Ninth Circuit addressed that issue, ruling that “Defendants’ argument that Plaintiffs cannot seek equitable relief under the UCL or FAL, given an adequate legal remedy under the CLRA, is foreclosed by statute. The UCL, FAL and CLRA explicitly provide that remedies under each act are cumulative to each other.”

Thus, Moore would appear to expressly confirm the position taken to date by Pomerantz, that plaintiffs can pursue equitable claims in the alternative to legal claims, at least at the pleading stage. Further, even if it might be proper to dismiss some kinds of equitable claims based on Sonner, there should be no automatic presumption that the existence of legal remedies precludes all forms of equitable relief. For example, a request for prospective injunctive relief is not necessarily foreclosed by the adequacy of damages as a remedy. However, courts that are inclined to dismiss consumer claims for all forms of equitable relief are likely to interpret Sonner as confirming the general rule that a plaintiff must establish that she lacks an adequate remedy at law before securing any form of equitable relief for harm under the UCL and CLRA, even at the earliest procedural stages of the action.