Plaintiff Audrey Medrazo, on behalf of herself and others similarly situated, filed a class action lawsuit against defendant Honda of North Hollywood
As noted, Medrazo's UCL and CLRA claims are based upon her allegation that HNH sold new motorcycles without complying with section 11712.5 and section 24014. Section 11712.5 provides in relevant part: "It is unlawful and a violation of this code for a dealer issued a license pursuant to this article to sell, offer for sale, or display any new vehicle, as follows: [¶] (a) A new motorcycle unless there is securely attached thereto a statement as required by Section 24014." Section 24014 provides: "(a) No dealer shall sell, offer for sale, or display, any new, assembled motorcycle on its premises, unless there is securely attached to its handlebar a label, approved by the Department of Motor Vehicles, furnished by the manufacturer, on which the manufacturer shall clearly indicate the following: [¶] (1) The recommended retail price of the motorcycle. [¶] (2) The recommended price for each accessory or item of optional equipment physically attached to the motorcycle at the time of its delivery to the dealer. [¶] (b) The dealer shall clearly indicate on the label, furnished by the manufacturer, the following: [¶] (1) The amount charged, if any, over and above the suggested retail price for transportation to the dealership. [¶] (2) The amount charged, if any, for the assembly, preparation, or both, of the motorcycle. [¶] (3) The amount
As explained in our prior opinion, in moving for class certification, Medrazo presented evidence that (1) when she bought a Honda motorcycle from HNH, there was no label (also known as a hanger tag or hang tag) attached to it; (2) more than $2,000 in dealer charges was added to the cost of the motorcycle she purchased; (3) HNH did not attach hanger tags to any Suzuki or Yamaha motorcycles it offered for sale (because those manufacturers did not provide hanger tags); (4) although Honda provided hanger tags for all of its motorcycles, HNH did not attach the tags to all of the Honda motorcycles, and did not include the dealer charges on all of the hanger tags that were attached; and (5) in the four years prior to June 30, 2006 (when Medrazo filed her complaint), HNH sold more than 3,000 motorcycles. (Medrazo I, supra, 166 Cal.App.4th at p. 94.) Medrazo sought to certify the class, which was defined as follows: "`All purchasers of new motorcycles who were charged for "destination", "assembly" or other DEALER added "accessories" that were not disclosed on a hanger tag since August 1, 2002, being four years prior to the filing of this lawsuit.'" (Ibid.) The trial court denied class certification, finding (among other things) that common issues did not predominate. (Id. at p. 99.) We reversed the court's denial of certification because even though there are individual issues that must be resolved—for example, each Honda purchaser must establish there was no hanger tag attached to the motorcycle he or she purchased and/or the dealer-added costs were not disclosed on the hanger tag, and a determination must be made of the amount of restitution (if any) owed to each class member—those issues can be effectively managed
In her trial brief, Medrazo explained that her UCL claim was based on three of the four prongs of the UCL. She asserted that HNH's sale of motorcycles without hanger tags that disclosed the dealer-added charges for freight and destination was (1) an unlawful business practice; (2) a fraudulent business practice; and (3) unfair, deceptive, untrue, or misleading advertising. Regarding her CLRA claim, she explained that HNH's alleged conduct fell within the definition of five of the practices proscribed by the CLRA: (1) "Representing that goods or services have ... approval, characteristics [or] benefits ... which they do not have" (Civ. Code, § 1770, subd. (a)(5)); (2) "Advertising goods or services with intent not to sell them as advertised" (Civ. Code, § 1770, subd. (a)(9)); (3) "Making false or misleading statements of fact concerning reasons for, existence of, or amounts of price reductions" (Civ. Code, § 1770, subd. (a)(13)); (4) "Representing that a transaction confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law" (Civ. Code, § 1770, subd. (a)(14)); and (5) "Inserting an unconscionable provision in the contract" (Civ. Code, § 1770, subd. (a)(19)).
Addressing HNH's anticipated defenses, Medrazo argued that (1) HNH's assertion that it did not have to attach any hanger tags on Suzuki or Yamaha motorcycles because those manufacturers did not provide tags was contrary to the history of section 24014; (2) HNH's ultimate disclosure of the dealer-added charges once the customer sat down to negotiate the final purchase terms is not a defense to Medrazo's claims because section 11712.5 and section 24014 are designed to prevent dealers from enticing customers to commence negotiations by quoting a lower price than it intends to charge; and (3) proof of individual reliance by class members on HNH's deceptive practice is not required to impose restitution liability against HNH under the UCL.
Medrazo presented two witnesses at trial: herself and David Denman, HNH's sales manager (examined under Evid. Code, § 776).
Medrazo testified that she went to HNH in September 2005 with her boyfriend to purchase a motorcycle for him. She did not see any hanger tags on any of the motorcycles, although there were some price stickers on the
Denman testified that he is the sales manager for HNH, a position he has held for 18 to 20 years. Since 2002, HNH has sold three lines of motorcycles: Honda, Yamaha, and Suzuki. From approximately 2002 until sometime after the instant lawsuit was filed, the only time HNH put any kind of pricetag on a Suzuki or Yamaha motorcycle was when the motorcycle was on a specific sale (i.e., selling for less than the manufacturer's suggested retail price, or MSRP). Neither Suzuki nor Yamaha provided hanger tags for its motorcycles, but Honda did provide them for its motorcycles. When new Hondas were delivered, HNH lot porters were supposed to attach the hanger tags to the motorcycles, and a salesman was supposed to write the dealer-added charges on the tags, but there was no specific procedure to ensure that those things got done, and sometimes they did not get done. Denman explained that if he was caught up on all of his work and there was a lot porter standing around doing nothing, he would instruct the lot porter to attach hanger tags to Honda motorcycles that were missing tags. Even when hanger tags were attached to the Hondas, however, they did not seem to last more than a few days before they were destroyed, pulled off, or blown off.
Denman testified that a customer who was looking at motorcycles on the lot could ask a salesperson for the price of a motorcycle he or she was interested in if it did not have a hanger tag. The salespeople were instructed to tell the customer only the MSRP. If the customer wanted to purchase the motorcycle, the salesperson would take him or her inside to negotiate the terms of sale. At that time, the salesperson would complete a worksheet that disclosed any dealer-added charges (which were different for each kind of motorcycle; HNH had a list of the standardized charges for each kind). Once
In the course of his testimony, Denman identified the hanger tag for the motorcycle Medrazo bought, which HNH located in response to a discovery request.
Denman also testified that after this lawsuit was filed, HNH changed its practice with regard to hanger tags. First, it created its own hanger tags for Suzukis and Yamahas based upon the Honda-supplied tags. Next, it laminated the hanger tags in plastic to keep them from being destroyed or blown off. Finally, it pays a specific salesperson additional money to walk the floor every day to look for and replace missing hanger tags.
After Denman finished his testimony as part of Medrazo's case-in-chief, Medrazo rested, subject to a proposed stipulation regarding the identities and files of the 4,100 class members and the admission of exhibits referred to at trial.
The trial court granted HNH's motion. In its statement of decision, the court found that (1) Medrazo was informed of all the dealer-added charges and was given an ample opportunity to read the purchase contract and ask questions before she signed the contract; (2) she failed to produce any evidence that she was misled by, or suffered any injury in fact as a result of, HNH's alleged failure to comply with section 24014, and therefore she lacked standing to recover any relief under the UCL or the CLRA; (3) she failed to present any evidence that any class member was injured as a result of HNH's alleged failure to comply with section 24014; (4) her testimony that there was no hanger tag attached to the motorcycle she purchased was not credible; (5) she failed to show the amounts of dealer-added charges that were charged to any other HNH customer; and (6) she failed to establish any basis on which to impose any injunctive relief against HNH. The court entered judgment in favor of HNH, from which Medrazo appeals.
Medrazo contends (1) the trial court's finding that she lacked standing was improper because the standing requirement under the UCL applies only to class certification and the finding is unsupported by the evidence; (2) the trial court erred in concluding that Medrazo and the class members must show actual reliance on the nondisclosure of dealer-added charges in order to establish injury in fact under the UCL; and (3) the trial court's finding that there was insufficient evidence to establish the amount of restitution allegedly owed to each class member was premature. We conclude that the trial court was required to determine whether Medrazo has standing under the UCL, but its finding that she did not suffer injury in fact was based upon an incorrect application of the law and was contrary to the evidence presented at trial; Medrazo was not required to show actual reliance on HNH's alleged nondisclosure— by herself or by the class members—to be entitled to restitution under the "unlawful" prong of the UCL, and she presented sufficient evidence
A. Standard of Review
"The standard of review after a trial court issues judgment pursuant to Code of Civil Procedure section 631.8 is the same as if the court had rendered judgment after a completed trial—that is, in reviewing the questions of fact decided by the trial court, the substantial evidence rule applies. An appellate court must view the evidence most favorably to the respondents and uphold the judgment if there is any substantial evidence to support it. [Citations.] However where, as here, we are called upon to review a conclusion of law based on undisputed facts, we are not bound by the trial court's decision and are free to draw our own conclusions of law. [Citation.]" (Pettus v. Cole (1996) 49 Cal.App.4th 402, 424-425 [57 Cal.Rptr.2d 46].)
In this case, the issues Medrazo raises on appeal challenge the trial court's application of law to undisputed facts. Therefore, our review is de novo.
B. Medrazo Was Required to Establish Her Standing Under the UCL
C. Medrazo Is Not Required to Show Actual Reliance to Establish Standing Under the UCL
Even though we reject Medrazo's assertion that she was not required to establish standing at the time of trial, we agree that the trial court's finding that she failed to establish any injury and therefore lacked standing was based upon an incorrect application of the law. The court found, in effect, that Medrazo failed to establish that she (or any other class member) was injured because all of the dealer-added charges were disclosed in the sales contract, and therefore there was no evidence that Medrazo or other class members actually relied upon or were misled by the nondisclosure of those charges on a hanger tag attached to the motorcycle. The court's analysis fails to take into account the different prongs of the UCL.
In this case, Medrazo argued in her trial brief, and argues on appeal, that HNH's conduct—offering for sale and selling motorcycles that do not have hanger tags attached that disclose the dealer-added charges—constitutes an unlawful business practice, a fraudulent business practice, and unfair, deceptive, untrue, or misleading advertising. However, the trial court's analysis— like HNH's argument in its trial brief, motion for judgment, and respondent's brief on appeal—which requires a showing of actual reliance, addresses only the fraudulent prong of the UCL.
D. Medrazo Presented Sufficient Evidence to Establish Standing Under the "Unlawful" Prong of the UCL
As noted, the amended UCL requires a plaintiff to establish that he or she "has suffered injury in fact and has lost money or property as a result of the unfair competition." (Bus. & Prof. Code, § 17204.) Thus, the plaintiff must establish both injury in fact and "some form of economic injury" that has a causal connection to the unfair competition. (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 323, 326 [120 Cal.Rptr.3d 741, 246 P.3d 877] (Kwikset).)
In the present case, Medrazo presented evidence of injury in fact. She presented evidence that there was no hanger tag showing the dealer-added charges attached to the motorcycle that she and her boyfriend were interested in purchasing,
Medrazo also presented evidence of an economic injury caused by the alleged unfair competition. She testified that she made the first two months' payments, and owes more than $12,000 on a motorcycle that HNH allegedly was not legally allowed to sell (or at least was not allowed to sell at the price for which it was sold) because it failed to disclose the dealer-added charges on a hanger tag attached to the motorcycle.
E. Medrazo Presented Sufficient Evidence of Restitution Amounts at This Stage of Trial
As noted, Medrazo rested her case subject to working out a stipulation with HNH regarding the identities of class members and information from each member's files regarding dealer-added charges. Medrazo sought the stipulation because HNH objected on privacy grounds to the production of class members' files, or the information contained therein (including the identity of the class members), and refused to produce them. Before the stipulation could be worked out, however, HNH moved for judgment and argued that one ground for granting judgment in its favor was Medrazo's failure to show the amount of dealer-added charges imposed on each class member. In granting HNH's motion, the trial court found that Medrazo failed to show the amount of dealer-added charges that was charged to each class member.
While it is true that Medrazo was unable to show each class member's dealer-added charges at the time the motion for judgment was brought— because HNH refused to disclose any information from class members' files—Medrazo did show the amounts HNH charged for each type of motorcycle it sold. Thus, Medrazo could easily establish the amounts that would be owed as restitution (if, after HNH presents its defense, the court determines there was a violation of the UCL) once HNH discloses the necessary information from the class members' files, i.e., either the type of motorcycle each class member bought and/or the dealer-added charges for each sale found to have violated the UCL. Therefore, the trial court's finding that Medrazo failed to show the amounts of restitution owed to class members was premature.
F. Medrazo Has Forfeited Any Issues Regarding Her CLRA Claim
Although Medrazo makes reference in her appellant's opening brief to her CLRA claim, she includes no separate analysis regarding that claim, focusing almost exclusively on her UCL claim. Indeed, at no point does she attempt to explain which of the practices proscribed under the CLRA (Civ. Code, § 1770) apply to HNH's conduct, or how they apply. Moreover, in the
The judgment on the UCL claim is reversed, and the matter is remanded for further proceedings on this claim. The judgment on the CLRA claim is affirmed. Medrazo shall recover her costs on appeal.
Epstein, P. J., and Suzukawa, J., concurred.