Unconscionable Contract Terms, Without Actual Damage, Do Not Bestow Standing

Has a person suffered “damage” within the meaning of the Consumer Legal Remedies Act (Civil Code § 1780(a)), such as to allow that person to bring an action under the act, if that person is a party to an agreement containing an unconscionable term, but no effort has been made to enforce the unconscionable term? No; and without such damage, a person lacks standing to bring any action, including one for declaratory relief. Meyer v. Sprint Sprectrum L.P. (2009) __ Cal.4th __.

In this case, plaintiffs sued defendant cellular telephone company alleging that its arbitration agreement and other remedial provisions were unconscionable, although plaintiffs did not otherwise allege that these provisions had been enforced against them or caused them damage. There are two questions before us. First, whether under these circumstances, a plaintiff may obtain injunctive relief to compel the removal of the allegedly unconscionable provisions under the California Consumer Legal Remedies Act (CLRA; Civ. Code, § 1750 et seq.). Second, whether a plaintiff may obtain declaratory relief pursuant to Code of Civil Procedure section 1060 to declare these provisions unlawful and unenforceable.

We conclude that a plaintiff has no standing to sue under the CLRA without some allegation that he or she has been damaged by an alleged unlawful practice, an allegation plaintiffs do not sufficiently make here. Moreover, we conclude the trial court did not abuse its discretion in ruling that declaratory relief was not appropriate under these circumstances. We therefore uphold the Court of Appeal’s judgment affirming the trial court’s order sustaining a demurrer to plaintiffs’ complaint.

You can download the opinion in Meyer v. Sprint Sprectrum L.P. here in PDF or Word format. The opinion has little applicability to wage-and-hour class actions or labor law claims brought under the UCL, but we've been following it, so we followed it to its conclusion.

Comments

[Phoebedog]

Why not UCL and why not wage actions? If an employer has an unlawful employment policy, such as don't tell anyone how much you make, and hasn't enforced it, it still has a chilling effect, but wouldn't this case say, no standing, period.

[michael walsh]

The reason is because the UCL and PAGA have their own specific standing rules. Without a loss of money or property, no UCL. PAGA gives standing without the same damages, but you must follow procedures. Wage claims virtually by definition involve actual damages.