This is an action against a retail food market and two of its employees for an injunction to prevent alleged violations of the California Unfair Practices Act (Bus. & Prof. Code §§ 17000-17101).
The California Unfair Practices Act prohibits, inter alia, the sale of products below cost when the effect is to injure competitors or destroy competition.
The section involved reads as follows: section 17071.5 "In all actions brought under this chapter proof of limitation of the quantity of any article or product sold or offered for sale to any one customer to a quantity less than the entire supply thereof owned or possessed by the seller or which he is otherwise authorized to sell at the place of such sale of offering for sale, together with proof that the price at which the article or product is so sold or offered for sale is in fact below its invoice or replacement cost, whichever is lower, raises a presumption of the purpose or intent to injure competitors or destroy competition. This section applies only to sales by persons conducting a retail business the principal part of which involves the resale to consumers of commodities purchased or acquired for that purpose, as distinguished from persons principally engaged in the sale to consumers of commodities of their own production or manufacture."
The briefs discussed other issues — namely: (1) Do sections 17030 and 17044 require a specific intent to injure a competitor?; (2) In order to be constitutional, must the statutory presumption set forth in section 17071.5 be based on a reasonable inference of fact?; (3) Is the presumption created by section 17071.5 one "affecting the burden of producing evidence" (Evid. Code, §§ 603 and 604) or is it one "affecting the burden of proof" (Evid. Code, §§ 605 and 606)?
We need not decide these issues on this appeal. Since we conclude that there is a reasonable relationship between the conduct involved and the fact presumed, it follows that section 17071.5 is constitutional. If that section is constitutional, plaintiff sustained whatever proof requirement that the law imposed on it, even if it is required to prove an intent to injure competitors or to destroy competition in an action founded on section 17030. Since the trial court, in effect, nonsuited plaintiff
If a businessman offers to sell goods at a loss in order to rid himself of a stock of an article for which the market has disappeared — either because the article did not meet with customer approval or because it had become outdated, or for any similar reason — it is obvious that he will be both willing and anxious to sell as much of his stock to any customer as that customer will take. And, if he is forced to lower his price to meet an equally low price by a competitor, the exigencies of the market place will compel him to make his goods available to his customers as freely and as fully as does the competitor. But if he offers to sell at a loss in limited quantities only, it is reasonably inferable that he is not engaged in an attempt to clear his shelves of a white elephant nor (unless he can show that his competitor imposes a similar quantity limitation) that he is trying to meet the competition of a competitor. Thus, there is a sufficient rational connection between the limitation of quantity and any requisite evil intent to justify putting a defendant to his proof that he did, in fact, have an honorable intent.
The judgment is reversed.
Jefferson, Acting P.J., and Dunn, J., concurred.
The petition of respondent Food Giant Markets, Inc., for a hearing by the Supreme Court was denied December 17, 1969. Peters, J., was of the opinion that the petition should be granted.
Section 17043 of the Business and Professions Code: "It is unlawful for any person engaged in business within this State to sell any article or product at less than the cost thereof to such vendor, or to give away any article or product, for the purpose of injuring competitors or destroying competition."
Section 17044 of the Business and Professions Code: "It is unlawful for any person engaged in business within this State to sell or use any article or product as a `loss leader" as defined in Section 17030 of this chapter."