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Ninth Circuit:
Barring Resolution of UCL Claim in State Court Was Error
U.S. District Court Lacked Jurisdiction to Entertain Equitable Claim Where Remedy at Law Had Existed,
Though Now Time-Barred, Opinion Says, but California Superior Court Might Be Able to Afford Relief
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals held Friday that a judge properly ruled that a claim under a California consumer-protection statute that provides equitable relief could not be maintained because there was an adequate legal remedy under another statute—though that claim is time-barred—but that granting summary judgment in favor of the defendant and dismissing with prejudice was the wrong approach.
As it stands, plaintiff Jeremy Albright’s effort to hold Polaris Industries, Inc. accountable for allegedly representing falsely that its off-road vehicles comply with Occupational Safety and Health Administration (“OSHA”) standards for rollover protection is dead. However, if the case is dismissed for lack of equitable jurisdiction, the opinion notes, Albright might be able to have his action adjudicated under California’s Unfair Competition Law (“UCL”) in state court.
Under federal law, the claim under the UCL is foreclosed because relief had been available under the Consumer Legal Remedies Act (“CLRA”), while under state law, a cause of action under the UCL might be viable, the opinion explains.
Ninth Circuit Precedent
In granting summary judgment in favor of the defendant, District Court Judge Fernando L. Aenlle-Rocha of the Central District of California pointed out that under the Ninth Circuit’s 2020 opinion in Sonner v. Premier Nutrition Corp., an equitable remedy may be sought in federal court only if there is no adequate legal remedy. Noting that Albright’s claim under the CLRA was time-barred, Aenlle-Rocha declared:
“[A]a plaintiff’s failure to timely comply with the requirements to obtain a remedy at law does not make the remedy inadequate, so as to require the district court to exercise its equitable jurisdiction.”
Authoring Friday’s opinion was District Court Judge Eduardo C. Robreno of the Eastern District of Pennsylvania, sitting by designation. He wrote:
“[W]e conclude that Albright had an adequate remedy at law through his CLRA claim for damages, even though he could no longer pursue it, and that the district court was therefore required to dismiss his equitable UCL claim. Under Sonner, Albright could not pursue his equitable UCL claim in federal court while his CLRA claim was timely….Albright’s failure to have timely pursued his CLRA claim cannot confer equitable jurisdiction on a federal court to entertain his UCL claim….In other words. Albright cannot have neglected his opportunity to pursue his CLRA damages claim, which was an adequate remedy at law, and then be rewarded for that neglect with the opportunity to pursue his equitable UCL claim in federal court.”
States Not Bound
Robreno went on to explain:
“Because the district court lacked equitable jurisdiction over Albright’s UCL claim, it could not. and did not, make a merits determination as to liability and should not have granted summary judgment in favor of Polaris on this claim. As is the case when federal courts decline to exercise jurisdiction under abstention principles or the doctrine of forum non conveniens, a federal court that dismisses a claim for lack of equitable jurisdiction necessarily declines ‘to assume the jurisdiction and decide the cause.’…Thus, a federal court’s pre-merits determination to withhold relief is binding on other federal courts, but not on courts outside the federal system that might properly exercise their own jurisdiction over the claim.”
The District Court should not stand in the way of a possible resolution of Albright’s UCL claim in state court, he said. That court would be the Orange Superior Court.
A remand was ordered “with instructions to dismiss Albright’s UCL claim without prejudice.”
The statute of limitation for UCL actions is four years while CLRA claims are barred after three years.
The case is Guzman v. Polaris Industries, 21-55520.
Albright’s co-plaintiff in the putative class action was Paul Guzman. Summary judgment was also ordered in favor of Polaris as to Guzman’s claims, but on a different basis.
Albright and Guzman predicated the action on the theory that consumers purchased Polaris vehicles in reliance on representations on the labels affixed to those vehicles as to rollover protective structures (“ROPS”). The plaintiffs each purchased a Polaris vehicle with this sticker:
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Guzman had no standing, Aenlle-Rocha ruled, because he admitted he had not fully read the label before making his purchase.
“[V]iewing all evidence and inferences in the light most favorable to Guzman, a reasonable jury could find that he relied on the ROP label,” a three-judge panel said in a separate memorandum opinion.
The complaint alleges that the vehicles do not meet OSHA standards and sets forth:
“But for Defendants’ misrepresentations, misleading and fraudulent statements. Plaintiffs would not have purchased the vehicles or would have paid substantially less for the vehicles than the purchase price of upwards of $20,000.00 each. Plaintiffs did not receive the benefit of the bargain.
“In failing to provide consumers accurate and truthful information about the true nature and characteristics of the Class Vehicles pertaining to compliance with all applicable federal and state statutes, standards, and regulations…, consumers are damaged based on the benefit of the bargain, that they have to retrofit the Class Vehicles for adequate safety, and are faced with a strong likelihood of serious injury or death.”
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