VICKEY KRAUS et al., Plaintiffs and Respondents, v. TRINITY MANAGEMENT SERVICES, INC., et al., Defendants and Appellants, 23 Cal. 4th 116

Opinion BAXTER, J.— We are asked to decide whether, in an action that is not certified as a class action, but is brought on behalf of absent persons by a private party under the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.), the court may order disgorgement into a fluid recovery fund, and whether permitting such UCL action denies due process to the defendants. We also address a claim that the Court of Appeal erred in upholding the trial court’s construction and application of Civil Code

section 1950.5 in this case. We conclude that disgorgement into a fluid recovery fund is not a remedy available in such representative UCL actions and that Civil Code

section 1950.5 does not apply to defendants’ nonrefundable security and administrative fees. We also conclude that defendants in this case have not been denied due process. We shall reverse the judgment of the Court of Appeal. I Factual and Procedural Background Plaintiff Vickey Kraus and five other individual plaintiffs initiated this action on behalf of themselves and the present and former tenants of defendants.

The action sought declaratory relief, restitution, and civil penalties for allegedly unlawful assessments of nonrefundable tenant charges for pre-lease administrative services, liquidated damages, and security for unpaid rent. The named defendants are Trinity Properties, which owns and leases residential rental properties in the City and County of San Francisco, Trinity Management Services, Inc., which manages and operates those properties, and various individuals who are officers and directors of those entities.

The complaint alleged that plaintiffs were former tenants of properties owned and managed by defendants, each of whom, and all other past and present tenants, had been required to pay $100 as a nonrefundable security and administrative fee at the time they entered into the Those plaintiffs who had terminated their leases and vacated the leased apartments prior to the end of the term had been assessed liquidated damages equal to one month’s rent and unpaid rent for the balance of the one-year lease term prior to sublease or re-lease of the apartments.

A security deposit equal to one month’s rent that each tenant was also required to pay was routinely applied to offset liquidated damages. The first cause of action asserted a violation of Civil Code

section 1950.5, which bans nonrefundable security deposits, and was addressed to defendants’ TIER fees, a charge for pre-lease administrative services. The second cause of action asserted that the liquidated damages clause of the leases was void as a penalty banned by Civil Code

section 1671, or, in the alternative, should be construed as authorizing termination of the lease prior to its expiration. The third cause of action alleged that defendants had been unjustly enriched to the extent that they had collected the security deposits and liquidated damages in violation of those statutes, and sought restitution of those tenant payments.

Finally, the fourth cause of action, that with which we are principally concerned here, alleged that defendants’ practice of assessing the TIER fees and their practice of assessing both liquidated damages and the remainder of the rent when tenants terminated their leases before the end of the term were unlawful and unfair business practices that violated the UCL. Plaintiffs sought (1) an order that defendants repay them and all other present and former tenants the full amount of all TIER fees collected from them, with interest since the date of collection; (2) statutory damages of $600 pursuant to Civil Code

section 1950.5, subdivision (k), for each former and present tenant from whom the administrative fee security deposit had been collected; (3) a declaration that the liquidated damages provision of the lease was void or that tenants might elect to treat the liquidated damages as consideration for early termination; (4) an order that defendants return all amounts collected as liquidated damages, or at the tenants’ election, all amounts collected as rent for periods following early termination; (5) assessment of a civil penalty of $2,500 for each violation of the UCL; (6) an order that defendants cease the allegedly unlawful practices; and (7) attorney fees as well as any other appropriate relief.

At a pretrial hearing the court commented that disgorgement, rather than recovery for all injured persons, seemed to be the remedy authorized by the UCL, and that a defendant should disgorge profits obtained as a result of an unfair business practice. Plaintiffs’ counsel concurred that equitable remedies of restitution or disgorgement were authorized, but argued that if there was to be disgorgement the monies should be paid to the tenants and former tenants from whom they had been obtained.

He offered to submit a supplemental brief on the appropriate remedy if it was not possible to locate some of those people, but also agreed that the essential form of recovery was equitable and restitutionary in nature and should begin with disgorgement of the funds unlawfully collected. Counsel’s opening statement then identified rescission or disgorgement as the relief sought on the UCL cause of action.

Plaintiffs’ counsel subsequently advised that he would propose equitable remedies beyond those identified in the complaint and asked that the court order disgorgement of the entire amount of the TIER fees and improperly retained liquidated damages/security deposit funds. Counsel also suggested that, to the extent that restitution could not be made to individual plaintiffs, defendants be ordered to disgorge the money unjustly collected to a fluid recovery fund.

The court found that the challenged practices violated the cited provisions of the Civil Code and constituted unfair business practices that violated the UCL. The court enjoined defendants from assessing TIER fees or any other nonrefundable charges as a condition of tenancy, collecting and retaining security deposits for the purpose of charging them against liquidated damages, and including liquidated damages provisions in the lease.

It ordered Trinity Properties to disgorge $447,700 for liquidated damage/security fee assessments and Trinity Management Services, Inc., to disgorge $447,000 of TIER fees, the sums collected within the four-year statute of limitations period of April 6, 1990, through February 28, 1995, with interest at 6 percent per annum.

After awarding a total of $2,655 in TIER and security deposit money to plaintiffs, the judgment directed that defendant Trinity Management Services, Inc., “shall on the date of this order and for a period of 90 days thereafter, pay to each payor of the $100 TIER fee the sum of $100 as restitution. Such payments shall be made to those persons who may, with due diligence, be found.

Restitution made in accordance with this provision shall be deducted from the amount required for disgorgement.” The court made no express order for restitution to prior tenants of any of the liquidated damage/security fee sums to be disgorged. The judgment directed that the funds disgorged be placed in a fluid recovery fund.

That fund was to be organized and administered as a trust fund “for the purpose of providing financial assistance for the advancement of legal rights and interests of residential tenants in the City and County of San Francisco.” The order for fluid recovery was made over the express objection of defendants that the remedy was available only in a class action. Defendants also objected that no award could be made to persons who were not parties to the action.

Defendants appealed, claiming, inter alia, that the fluid recovery fund award in a matter not certified as a class action exceeded the jurisdiction of the court. They also claimed that the order denied defendants due process because the award left defendants open to repeated litigation by nonparties who would not be bound by the judgment. They also argued that the TIER fees were not unlawful and that collateral estoppel barred plaintiffs’ assertion of illegality. The Court of Appeal held that

section 17203 authorizes an order for disgorgement and/or restitution as relief ancillary to an injunction against an unfair trade practice, and that provision for payment into a fluid recovery fund is within the equitable power of the court regardless of whether the action is one by a private party or one by the Attorney General or a district attorney.

The court did not address defendants’ due process claims, holding only that through the UCL the Legislature had created a streamlined procedure by which to challenge unfair business practices, and that this case was not one in which a class action would be The court approved establishment of a fluid recovery fund in a representative UCL action as a permissible exercise of the broad equitable power granted to the trial court by

section 17203, relying in part on Fletcher v. Security Pacific National Bank (1979) 23 Cal.3d 442, 450 [153 Cal.Rptr. 28, 591 P.2d 51] (Fletcher), where this court commented on the importance of disgorgement as a deterrent. The Court of Appeal acknowledged that class actions might be superior to individual actions in circumstances such as those considered by the Court of Appeal in Bronco Wine Co. v. Frank A. Logoluso Farms (1989) 214 Cal.App.3d 699 [262 Cal.Rptr. 899] (Bronco Wine Co.), but deemed the issue before it to be simply whether the trial court should have certified the action as a class action.

Finding the circumstances in the instant case to be more analogous to those in one of its prior cases, Dean Witter Reynolds, Inc. v. Superior Court (1989) 211 Cal.App.3d 758 [259 CaLRptr. 789], the Court of Appeal concluded that the trial court was not required to certify this action as a class action before ordering disgorgement into a fluid recovery fund. The court also rejected defendants’ argument that a 1983 judgment upholding the TIER fee collaterally estopped plaintiffs from challenging the fee in this action, reasoning that an intervening change in the law removed that barrier.

It then held that the TIER fee was a security within the meaning of Civil Code

section 1950.5, and that since Trinity Management Services, Inc., collected the fee on behalf of Trinity Properties, that

section applied to the TIER fee. Defendants petitioned this court for review. Their principal claim is that the Court of Appeal erred in approving disgorgement into a fluid recovery fund without class action certification. Their due process-based argument that such awards are constitutionally impermissible rests on the proposition that absent persons are not bound by a UCL judgment unless the judgment is rendered in a class action with its attendant protections.

Absent class certification, the defendant in such an action remains subject to countless future lawsuits based on the same conduct and raising the same issues even if the defendant has prevailed in the UCL action. If the plaintiff prevails, the defendant is still liable to all of the nonjoined class members, each of whom is entitled to a similar fund award. This, defendants argue, denies due process to UCL defendants.

Several amici curiae, among them the American Council of Life Insurance (ACLI) and Truck Insurance Exchange, suggest that we need not address the constitutional argument because, properly construed, the UCL does not authorize fluid recovery or representative actions seeking restitutionary relief on behalf of absent persons without class certification. II UCL Monetary Remedies Both consumer class actions and representative UCL actions serve important roles in the enforcement of consumers’ rights.

Class actions and representative UCL actions make it economically feasible to sue when individual claims are too small to justify the expense of litigation, and thereby encourage attorneys to undertake private enforcement actions. Through the UCL a plaintiff may obtain restitution and/or injunctive relief against unfair or unlawful practices in order to protect the public and restore to the parties in interest money or property taken by means of unfair competition. These actions supplement the efforts of law enforcement and regulatory agencies.

This court has repeatedly recognized the importance of these private enforcement efforts. (See La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864, 883 [97 Cal.Rptr. 849, 489 P.2d 1113]; Vasquez v. Superior Court (1971) 4 Cal.3d 800, 807-808 [94 Cal.Rptr. 796, 484 P.2d 964, 53 A.L.R.3d 513]; Daar v.

Yellow Cab Co. (1967) 67 Cal.2d 695, 715 [63 Cal.Rptr. 724, 433 P.2d 732].) In our ensuing discussion of the UCL, when we refer to orders for restitution, we mean orders compelling a UCL defendant to return money obtained through an unfair business practice to those persons in interest from whom the property was taken, that is, to persons who had an ownership interest in the property or those claiming through that person. An order that a defendant disgorge money obtained through an unfair business practice may include a restitutionary element, but is not so limited.

As in this case, such orders may compel a defendant to surrender all money obtained through an unfair business practice even though not all is to be restored to the persons from whom it was obtained or those claiming under those persons.

It has also been used to refer to surrender of all profits earned as a result of an unfair business practice regardless of whether those profits represent money taken directly from persons who were victims of the unfair practice. “The term ‘fluid recovery’ refers to the application of the equitable doctrine of cy pres in the context of a modem class action. {State of California v. Levi Strauss & Co. [, supra,] 41 Cal.3d 460, 472. . . .) ‘The implementation of fluid recovery involves three steps. [Citation.] First, the defendant’s total damage liability is paid over to a class fund.

Second, individual class members are afforded an opportunity to collect their individual shares by proving their particular damages, usually according to a lowered standard of proof. Third, any residue remaining after individual claims have been paid is distributed by one of several practical procedures that have been developed by the courts.’ (Id. at pp. 472-473.)” (Granberry v. Islay Investments, supra, 9 Cal.4th at p. 750, fn. 7.) Authority for Fluid Recovery.

We have not been asked before to consider whether a fluid recovery remedy, a remedy that is necessary only when a defendant must disgorge money that is not to be returned to the persons from whom they were obtained, is authorized by the UCL. Heretofore, this court has sanctioned fluid recovery only in class actions, although two Court of Appeal decisions have approved its use in representative UCL actions. (See People v. Thomas Shelton Powers, M.D., Inc. (1992) 2 Cal.App.4th 330 [3 Cal.Rptr.2d 34] (Powers); People ex rel. Smith v.

Parkmerced Co. (1988) 198 Cal.App.3d 683 [244 Cal.Rptr. 22] (Parkmerced).) Fluid recovery developed as a means by which to distribute the residue of a favorable class action judgment remaining after payment to those class members who have sufficient interest in obtaining recovery and can produce the documentation necessary to file individual claims. In Bruno v.

Superior Court (1981) 127 Cal.App.3d 120, 123-124 [179 Cal.Rptr. 342], a Cartwright Act (§ 16700 et seq.) class action seeking damages on behalf of consumers, the court explained the purpose of fluid recovery: “The theory underlying fluid class recovery is that since each class member cannot be compensated exactly for the damage he or she suffered, the best alternative is to pay damages in a way that benefits as many of the class members as possible and in the approximate proportion that each member has been damaged, even though, most probably, some injured class members will receive no compensation and some people not in the class will benefit from the distribution; or, as one commentator states it, ‘where funds cannot be delivered precisely to those with primary legal claims, the money should if possible be put to the “next best” use.’ (Note, Developments in the Law-Class Actions (1976) 89 Harv.L.Rev. 1318, 1522.)” The Legislature authorized employment of a fluid recovery remedy in class actions by the 1993 enactment of what is now Code of Civil Procedure

section 384 (Stats. 1993, ch. 863, § 2, p. 4574). However, the Legislature has not expressly authorized fluid recovery in UCL actions, where restitution to a person in interest is the only monetary remedy for violation of the UCL described in

section

Section 17203 provides that remedy and reads in its entirety: “Any person who engages, has engaged, or proposes to engage in unfair competition may be enjoined in any court of competent jurisdiction. The court may make such orders or judgments, including the appointment of a receiver, as may be necessary to prevent the use or employment by any person of any practice which constitutes unfair competition, as defined in this chapter, or as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition.” (Italics added.) Thus, restitution is the only monetary remedy expressly authorized by

section 17203. We first address the statutory construction argument of amici curiae. If the language of a statute is clear and unambiguous, judicial construction is not necessary and a court should not indulge in it. (People v. Fuhrman (1997) 16 Cal.4th 930, 937 [67 Cal.Rptr.2d 1, 941 P.2d 1189].) The statutory authorization in

section 17203 to make orders necessary to restore money to any person in interest is clear. When restitution is made to. a person in interest, fluid recovery is unnecessary.

Section 17203 also grants the court the power to make orders necessary to prevent the use of unfair business practices. Such orders may encompass broader restitutionary relief, including disgorgement of all money so obtained even when it may not be possible to restore all of that money to direct victims of the practice. However, the Legislature has not accompanied that grant of power with authorization for fluid recovery in representative UCL actions. A first principle of statutory construction is that the intent of the Legislature is paramount. (Code Civ.

Proc., § 1859.) The court’s role in construing a statute is to ascertain the intent of the Legislature so as to effectuate the purpose of the law and, in doing so, the court looks first to the words of the statute. (People v. Birkett (1999) 21 Cal.4th 226, 231 [87 Cal.Rptr.2d 205, 980 P.2d 912].) If the language is ambiguous, we may look to the history and background of the statute to ascertain legislative intent. (Id. at p. 232.) Also, a court must, whenever possible, construe a statute so as to preserve its constitutional validity. {Hutnick v.

United States Fidelity & Guaranty Co. (1988) 47 Cal.3d 456, 466 [253 Cal.Rptr. 236, 763 P.2d 1326]; People v. Davenport (1985) 41 Cal.3d 247, 264 [221 Cal.Rptr. 794, 710 P.2d 861].) We presume that the Legislature understands the constitutional limits on its power and intends that legislation respect those limits. Nothing in the history of the UCL suggests that fluid recovery was contemplated by the UCL itself. The UCL evolved from a 1933 amendment to Civil Code

section 3369. As enacted in 1872, that statute provided only; “Neither specific nor preventive relief can be granted to enforce a penal law, except in a case of nuisance, nor to enforce a penalty or forfeiture in any case.” In 1933, the

section was extensively rewritten. The original provision became subdivision 1, which itself was amended to add a second exception to the limit on injunctive relief—one for unfair competition. Express authority to enjoin unfair competition was created in subdivision 2.

Unfair competition was defined in subdivision 3 as an “unfair or fraudulent business practice and unfair, untrue or misleading advertising and any act denounced by Penal Code sections 654a, 654b or 654c.” (Stats. 1933, ch. 953, § 1, p. 2482.) Subdivision 5 included a person acting in the interest of the general public among the persons authorized to bring an action for an injunction. (Stats. 1933, ch. 953, § 1, p. 2482.) Notwithstanding the broadly worded definition of unfair competition, the law was not relied on as the basis of general consumer protection actions until the late 1950’s.

Even then, however, the law was relied on principally by public prosecutors until Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94 [101 Cal.Rptr. 745, 496 P.2d 817], a case brought by private plaintiffs, confirmed the breadth of the definition of unfair competition and the availability of the action for injunctive relief to private plaintiffs. (See Howard, Former Civil Code

Section 3369: A Study in Judicial

Interpretation (1979) 30 Hastings L.J. 705.) Express statutory authority to order restitution was added to Civil Code

section 3369, the predecessor to

section 17203, in 1976 (Stats. 1976, ch. 1005, § 1, p. 2378), the year before the unfair competition law was placed in the Business and Professions Code and removed from Civil Code

section 3369. (Stats. 1977, ch. 299, §§ 1, 2, pp. 1202-1203.) ACLI argues that the language and history of

section 17203 suggest that the Legislature did not intend to permit orders directing disgorgement into a fluid recovery fund or actions seeking restitution to any person other than a direct victim of unfair competition. It notes that traditionally only injunctive relief was available in a UCL action. Before the Legislature added express power to order restitution to the false advertising law (§ 17500 et seq.) in a 1972 amendment to

section 17535 (Stats. 1972, ch. 244, § 1, p. 494) and to the UCL in 1976, restitution had been judicially approved as a proper exercise of the equitable power granted by

section 17535 in People v. Superior Court [(Jayhill)] (1973) 9 Cal.3d 283 [107 Cal.Rptr. 192, 507 P.2d 1400, 55 A.L.R.3d 191] (Jayhill), an action brought by the Attorney General. When the Jayhill action was initiated,

section 17535 did not expressly authorize an order for restitution. We held nonetheless that “a court of equity may exercise the full range of its inherent powers in order to accomplish complete justice between the parties, restoring if necessary the status quo ante as nearly as may be achieved.” (Jayhill, supra, 9 Cal.3d at p. 286.) We did not consider whether disgorgement into a fluid recovery fund was authorized. We held only that the court had the power to order defendants to make or offer to make restitution to defrauded customers. (Ibid.) When express authority to order restitution was added to

section 17535 and subsequently to what became

section 17203, therefore, there was no authority for an order directing disgorgement on behalf of third parties into a fluid recovery fund in a UCL action. Although the cy pres concept of putting charitable trust funds to the next best use if the trust purpose can no longer be accomplished was well established and has been expressly authorized by the Legislature (Prob. Code, § 15409), the extension of that equitable concept to other areas of civil litigation is a relative recent judicial development of the law which the Legislature has approved only for use in class actions.

Fluid recovery in class actions was not authorized in this state until 1981, when the Court of Appeal held in Bruno v. Superior Court, supra, 127 Cal.App.3d 120, that this was a permissible means of distributing damages recovered in a state antitrust class action brought under the Cartwright Act (§ 16700 et seq.). In 1986, this court affirmed the propriety of fluid recovery in a class action in State of California v. Levi Strauss & Co., supra, 41 Cal.3d 460. The Legislature responded in 1993 by enacting former

section 383 of the Code of Civil Procedure, to expressly authorize fluid recovery in class actions. (Stats. 1993, ch. 863, § 2, p. 4574; see now Code Civ. Proc., § 384.) The Legislature did not sanction fluid recovery orders as an equitable power available to the court in other proceedings. Plaintiffs have directed us to nothing, and we have found nothing, in the legislative history of sections 17203 and 17535 to suggest that the Legislature intended to authorize fluid recovery in representative UCL actions when it made the power to order restitution statutory.

As we observed in Fletcher, supra, 23 Cal.3d at page 453, footnote 6, and in Jayhill, supra, 9 Cal.3d at page 287, footnote 1, the Legislature added express power to order restitution to

section 17535 only to clarify the law, not to create new authority.

Section 17203 simply tracked the language of

section 17535. In both of those sections the Legislature confirmed, but did not increase, the powers of the court in a UCL action. Nor can we infer that the Legislature contemplated that authority to order disgorgement into a fluid recovery fund would be an appropriate complement to the Federal Trade Commission Act (15 U.S.C. § 45 et seq.) (FTC Act). Both laws prohibit a wide range of unfair practices, but the FTC Act has no private enforcement provision comparable to the UCL. The FTC Act may be enforced only by the Federal Trade Commission. (Holloway v. Bristol-Myers Corporation (D.C.

Cir. 1973) 485 F.2d 986, 1002 [158 App.D.C. 207] (Holloway).) The Court of Appeal here reasoned that the trial court, in the exercise of its broad equitable power, had authority to order defendants to disgorge all illegally obtained money into a fluid recovery fund, the residue of which, after refund of the TIER fees, would be used for purposes other than restitution to present and former tenants of defendants. However, this court has never construed

section 17203 as authorizing an order for disgorgement into a fluid recovery fund, or held that such an order may be made as an exercise of the court’s equitable power. In the past, authority for fluid recovery has not been found in the UCL or the powers it grants the court. Authority to order fluid recovery has its source in the powers of the court when presiding over a class action, as now expressly confirmed in Code of Civil Procedure

section 384. Fletcher, supra, 23 Cal.3d 442, does not suggest otherwise. Fletcher was an action brought under

section 17500, banning false or deceptive advertising, and

section 17535. The plaintiff, a borrower, alleged that a banking industry practice of computing interest on the basis of a 360-day year constituted an unfair trade practice. The principal issue in Fletcher was whether the trial court had abused its discretion in ruling that the action could not be maintained as a class action because individual issues—whether each individual claimant was aware of the fraud—predominated over common questions.

We distinguished a UCL claim from claims based on breach of contract or fraud, and held that once an unfair trade practice was established, a class action could proceed without individualized proof of lack of knowledge of the fraud. The court concluded that the language of

section 17535 reflected legislative intent “to vest the trial court with broad authority to fashion a remedy that would effectively ‘prevent the use ... of any practices which violate [the]

chapter [proscribing unfair .trade practices]’ and deter the defendant, and similar entities, from engaging in such practices in the future. The requirement that a wrongdoing entity disgorge improperly obtained moneys surely serves as the prescribed strong deterrent.” (Fletcher, supra, 23 Cal.3d at p. 450.) Rejecting a claim that the statutory authority to make orders necessary to restore money “which may have been acquired” through an unlawful practice required proof of each transaction in order to determine that each claimant had been defrauded, we also held that

section 17535 authorized a court to order restitution without showing the individual’s lack of knowledge of the fraudulent practice in each transaction. (Fletcher, supra, 23 Cal.3d at pp. 450, 452.) We had no occasion to consider whether an order for disgorgement into a fluid recovery fund was authorized by

section 17203. As noted earlier, fluid recovery in a class action was approved by the Court of Appeal in Bruno v. Superior Court, supra, 127 Cal.App.3d 120, a private antitrust class action brought to recover damages for excessive milk prices. There the court cautioned that the law under which a damage action is brought might preclude fluid recovery (id. at p. 130), but held that the Cartwright Act did allow that remedy. The court rejected an argument that

section 16750, subdivision (

a) precluded fluid recovery because the law authorized a person injured by reason of a forbidden practice to sue for and recover only the damages that person suffered, and fluid recovery would permit recovery by persons who had not sustained damages.

Reasoning that damages are recovered by the recovery of a judgment, not through subsequent distribution of the money, the court concluded that the only persons who would recover damages were the class members in whose favor judgment was entered, i.e., the class of consumer victims. (127 Cal.App.3d at p. 131.) The court also held that the antitrust law did not reflect an intent that no damages could be recovered except those to be distributed to the persons injured, and found legislative sanction for fluid recovery in

section 16760, subdivision (c), which governed distribution of damages recovered in parens patriae actions brought by the Attorney General.

Section 16760 provides for escheat to the state of any residue after individual claims, costs, and attorney fees were satisfied, and thus sanctions one form of fluid recovery. In State of California v.

Levi Strauss & Co., supra, 41 Cal.3d 460 (Levi Strauss), in which this court approved fluid recovery in class actions, the Attorney General had sued the defendant clothing manufacturer on behalf of the state and consumers who allegedly had been overcharged for jeans in violation of the Cartwright Act. (§ 16700 et seq.) Pursuant to the settlement consumers were to be notified of their right to claim a refund from a $12.5 million settlement fund. The issue addressed by this court was how to distribute the residue remaining after costs of distribution, attorney fees, and individual claims were paid.

The appellant, an intervener, and amici curiae proposed establishment of a consumer trust fund.

This court first cautioned that “[t]he propriety of fluid recovery in a particular case depends upon its usefulness in fulfilling the purposes of the underlying cause of action. [Citations.] Fluid recovery may be essential to ensure that the policies of disgorgement or deterrence are realized. [Citation.] Without fluid recovery, defendants may be permitted to retain ill gotten gains simply because their conduct harmed large numbers of people in small amounts instead of-small numbers of people in large amounts.” (Levi Strauss, supra, 41 Cal.Sd at p. 472.) We then reviewed the various alternative means of distributing damages recovered in consumer class actions—price rollbacks, earmarked escheat, general escheat, consumer trust fund, and division among the individual claimants—noting that the choice was within the sound discretion of the trial court.

We emphasized that, in selecting the fluid recovery procedure, a court should consider “(1) the amount of compensation provided to class members, including nonclaiming (or ‘silent’) members; (2) the proportion of class members sharing in the recovery; (3) the extent to which benefits will ‘spill over’ to nonclass members and the degree to which the spillover benefits will effectuate the purposes of the underlying substantive law; and (4) the costs of administration.” (Id. at p. 473.) In Levi Strauss, the court held only that fluid recovery might be appropriate in a consumer class action, noting that the parties did not dispute that fluid recovery methods could be employed in a Cartwright Act action.

The issue of whether fluid recovery was appropriate or permitted in actions other than class actions was not raised. The court next addressed the propriety of fluid recovery in Granberry v. Islay Investments, supra, 9 Cal.4th 738. Again the context was a class action and we held that fluid recovery might be appropriate. There we noted the express statutory authority for fluid recovery in class actions found in Code of Civil Procedure

section 384. Powers, supra, 2 Cal.App.4th 330, and Parkmerced, supra, 198 Cal.App.3d 683, stand alone in approving fluid recovery in a UCL action that has not been certified as a class action. In Powers, a district attorney brought a UCL action seeking injunctive relief, restitution, and a civil penalty on the ground that the defendant violated a city ordinance by selling seven condominiums designated as moderate income housing at prices exceeding those allowed by the city’s subdivision code.

The complaint sought restitution, an order that the defendant disgorge its profits, and judgment requiring the defendant to replace the lost moderate income housing stock. The trial court granted the injunction, but believed it lacked power to order the other remedies. The Court of Appeal reversed, holding that the statutory remedies for unfair business practices contemplated the other forms of relief. It held that

section 17203, like

section 17535, authorizes orders for both restitution and disgorgement of profits, relying on Fletcher for its conclusion that these remedies were available to the court. (Powers, supra, at p. 340.) The court read Fletcher as authorizing orders for disgorgement of profits, not recognizing that Fletcher addressed the propriety of a class action or that Fletcher involved only restitution, not disgorgement of profits.

The court held that ordering a fluid recovery remedy was an appropriate means of preventing the defendant from retaining the illegal profits. {Powers, supra, at p. 343.) The Powers court relied also on Parkmerced, supra, 198 Cal.App.3d 683, where the court had affirmed a trial court judgment ordering defendant to refund security deposits to former tenants and to pay the refunds owed to tenants who could not be located to a residents’ association. That court found authority for the order in Code of Civil Procedure

section 1519.5. That section, an escheat provision of the Unclaimed Property Law, provides for escheat to the state of any sums held by a business association that have been ordered refunded but remain unclaimed by the owner after one year. It also provides that nothing in the

section should be construed “to change the authority of a court or administrative agency to order equitable remedies.” (Code Civ.

Proc., § 1519.5.) The Court of Appeal read the latter provision with sections 17200 and 17203 as a grant of equitable power to remedy unlawful business practices by means other than escheat of unclaimed property to the state. (Parkmerced, supra, 198 Cal.App.3d at p. 693.) Notwithstanding the absence of legislative or other authority for the use of a fluid recovery remedy in a representative UCL action, the Court of Appeal here concluded that such orders are within the broad equitable powers of the court when deemed necessary to deter employment of unfair practices in the future.

The Legislature has authorized the court to enjoin present or proposed unfair business practices in

section 17203. Orders for disgorgement may have deterrent force beyond that of injunctions coupled with restitutionary orders and in some cases might therefore be deemed “necessary to prevent the use or employment... of any practice which constitutes unfair competition.” (§ 17203.) Nonetheless, reading

section 17203 as permitting orders for disgorgement into a fluid recovery fund would be inconsistent with the Legislature’s decision to expressly authorize fluid recovery in class actions and to provide that Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.) suits on behalf of the plaintiff and other similarly situated consumers may be brought as class actions, not representative actions, while failing to authorize fluid recovery in representative UCL actions.

In sum, the Legislature has not expressly authorized monetary relief other than restitution in UCL actions, but has authorized disgorgement into a fluid recovery fund in class actions. Although the Legislature is well aware of the distinction between class actions and representative actions, it has not done so for representative UCL actions. Inasmuch as the Legislature has spoken, any further extension of the fluid recovery remedy should come from the Legislature, not, as the dissent argues, from this court. Therefore, we decline to read the grant of equitable power in

section 17203 as encompassing the authority to fashion a fluid recovery remedy when the action has not been certified as class action. We cannot conclude that this is a proper exercise of the court’s inherent equitable powers. Moreover, allowing fluid recovery in representative UCL actions might implicate the due process concerns raised by defendants here and noted by the Court of Appeal in Bronco Wine Co., supra, 214 Cal.App.3d at page 717.

In addition, because a representative UCL action is not subject to the same level of judicial supervision as a class action, a UCL action seeking disgorgement into a fluid recovery fund on behalf of absent persons may not, in fact, serve the public. For all of these reasons we conclude that

section 17203 does not authorize orders for disgorgement into a fluid recovery fund. To the extent that the trial court ordered defendants to make any refunds other than to refund money to tenants and former tenants, the award was not authorized by the UCL and was not a permissible exercise of the court’s equitable powers. The judgment of the trial court for disgorgement of sums collected to secure liquidated damages may be enforced only to the extent that it compels restitution to those former tenants who timely appear to collect restitution.

This does not mean, as the dissent asserts, that defendants may retain the funds improperly taken from their former tenants as liquidated damages. On remand the trial court should order defendants to identify, locate, and repay to each former tenant charged liquidated damages the full amount of funds improperly acquired from that tenant, retaining the power to supervise defendants’ efforts, to ensure that all reasonable means are used to comply with the court’s directives.

If defendants have already made restitution to any claimant, defendants may introduce evidence of prior payment and need not pay any tenant twice, thus alleviating the due process concerns of defendants. As a practical matter the likelihood that any former tenants could successfully overcome a statute of limitations barrier and separately recover judgment against defendants is too remote to establish any denial of due process in these proceedings.

In light of this conclusion, we need not address defendants’ due process-based argument that UCL defendants must be accorded the protections against multiple suits and duplicative liability, protections available only in a class action. There has been no prejudice to defendants since, as we conclude below, that part of the judgment ordering restitution of the TIER fees must be reversed and the order for disgorgement of the liquidated damages/ security fees may be enforced only to the extent that it compels restitution to former tenants.

We note, moreover, that, because a UCL action is one in equity, in any case in which a defendant can demonstrate a potential for harm or show that the action is not one brought by a competent plaintiff for the benefit of injured parties, the court may decline to entertain the action as a representative suit. (Fletcher; supra, 23 Cal.3d at p. 454.) If the possibility of future suits exists, it may be appropriate for the court to condition payment of restitution to beneficiaries of a representative UCL action on execution of acknowledgment that the payment is in full settlement of claims against the defendant, thereby avoiding any potential for repetitive suits on behalf of the same persons or dual liability to them.

Ill Civil Code

Section 1950.5 and Defendants’ Tier Fees Defendants contend that the TIER fee is not an unrefundable security fee prohibited by Civil Code

section 1950.5. Civil Code

section 1950.5 now provides in relevant part: “(

a) This

section applies to security for a rental agreement for residential property that is used as the dwelling of the tenant. “(

b) As used in this section, ‘security’ means any payment, fee, deposit or charge, including, but not limited to, an advance payment of rent, used or to be used for any purpose, including, but not limited to, any of the following: “

(1) The compensation of a landlord for a tenant’s default in the payment of rent. “

(2) The repair of damages to the premises, exclusive of ordinary wear and tear, caused by the tenant or by a guest or licensee of the tenant. “

(3) The cleaning of the premises upon termination of the tenancy. “

(4) To remedy future defaults by the tenant in any obligation under the rental agreement to restore, replace, or return personal property or appurtenances, exclusive of ordinary wear and tear, if the security deposit is authorized to be applied thereto by the rental agreement.” Subdivision (

e) of Civil Code

section 1950.5 provides that “[t]he landlord may claim of the security only those amounts as reasonably necessary for the purposes specified in subdivision (b). The landlord may not assert a claim against the tenant or the security for damages to the premises or any defective conditions that preexisted the tenancy, for ordinary wear and tear or the effects thereof, whether the wear and tear preexisted the tenancy or occurred during the tenancy, or for the cumulative effects of ordinary wear and tear occurring during any one or more tenancies.” When Civil Code

section 1950.5 was enacted in 1977, and until a 1986 amendment (Stats. 1986, ch. 564, § 1, p. 1991), subdivision (

e) limited use of a security fee to “such amounts as are reasonably necessary to remedy tenant defaults in the payment of rent, to repair damages to the premises caused by the tenant, exclusive of ordinary wear and tear, or to clean such premises, if necessary, upon termination of the tenancy.” The $100 TIER fee was collected from every new tenant by Trinity Management Services, Inc. The fee is usually collected when the tenant signs a standard form lease. The lease imposes an obligation to pay the fee before occupying the premises.

Upon payment the tenant receives a “Receipt and Agreement for Tenancy Initiation Expense Reimbursement” from the landlord. Unlike the Court of Appeal here and in Parkmerced, we do not find subdivision (

e) of Civil Code

section 1950.5, which specifies the uses to which a security may be put by a landlord, useful in determining whether the TIER fee is a security. Subdivision (b) (set out, ante) defines the term and, while it provides that its examples of securities are not exclusive, it supports a conclusion that a security fee paid by a tenant to a landlord is an amount intended to offset expenses incurred by the landlord as a result of tenant conduct during the tenancy. It does not encompass the TIER fee that the trial court included in the restitution order made here.

We begin, as we must, with the term “security.” “We interpret statutory language according to its usual and ordinary import, keeping in mind the apparent purpose of the statute. (Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1386-1387 [241 Cal.Rptr. 67, 743 P.2d 1323].) When no ambiguity appears, we give statutory terms their plain meaning. (People v. Coronado (1995) 12 Cal.4th 145, 151 [48 Cal.Rptr.2d 77, 906 P.2d 1232].)” (Romano v.

Rockwell Intemat., Inc. (1996) 14 Cal.4th 479, 493 [59 Cal.Rptr.2d 20, 926 P.2d 1114].) Excluding meanings for the noun “security” that are irrelevant in this context, the term means “something given, deposited, or pledged to make certain the fulfillment of an obligation.” (Webster’s 9th New Collegiate Diet. (1989) p. 1062.) Every example of a security given in subdivision (

b) of Civil Code

section 1950.5 is consistent with this ordinary meaning of the word. The parties and the Parkmerced court assume that because the TIER charge is a fee it must be a “security” within the definition of security given in subdivision (

b) of Civil Code

section 1950.5. It is apparent, however, that the Legislature included the terms “payment, fee, deposit or charge” in the definition to ensure that a landlord would not be able to use those or similar terms rather than “security” for a charge and thereby avoid the prohibition of nonrefundable securities and the limits placed on the use of a security by that statute. Application of the principle of ejusdem generis and consideration of the remainder of the statute compels that conclusion. “Ejusdem generis applies whether specific words follow general words in a statute or vice versa.

In either event, the general term or category is ‘restricted to those things that are similar to those which are enumerated specifically.’ ” (Harris v. Capital Growth Investors XIV (1991) 52 Cal.Sd 1142, 1160, fn. 7 [278 Cal.Rptr. 614, 805 P.2d 873].) The canon presumes that if the Legislature intends a general word to be used in its unrestricted sense, it does not also offer as examples peculiar things or classes of things since those descriptions then would be surplusage. (See Sears, Roebuck & Co. v. San Diego County Dist.

Council of Carpenters (1979) 25 Cal.3d 317, 331, fn. 10 [158 Cal.Rptr. 370, 599 P.2d 676].) All of the examples of a security set forth in subdivision (

b) of Civil Code

section 1950.5 are charges intended to secure the landlord against future tenant defaults. Subdivision (

e) specifies the only uses to which such fees may be put by the landlord, again confirming that the “fee, deposit, or charge” which may be a security within the subdivision (

b) definition is one held by the landlord to ensure reimbursement for future tenant defaults. This is confirmed by

section 1950.5, subdivision (d), which provides that the landlord holds a security for the tenant, by subdivision (f), which imposes a duty on the landlord to notify a tenant who has vacated the premises of the amount and disposition of the security and to return any remaining portion, and by subdivision (Z), which prohibits a nonrefundable security. Reading the statute as a whole thus confirms that even though a security is not limited to the examples set out in subdivision (

b) of Civil Code

section 1950.5, a security is limited to charges imposed to secure the landlord against future tenant defaults. A fee imposed at the outset of the tenancy to reimburse the landlord for expenses incurred for such purposes as providing application forms, listing, interviewing, screening the applicant, checking credit references, and similar purposes is not a security governed by the provisions of that section. IV Disposition The judgment of the Court of Appeal is reversed and the matter is remanded for further proceedings consistent with this opinion. George, C. J., Mosk, J., Chin, J., and Brown, J., concurred.

Unless otherwise stated, all statutory references are to the Business and Professions Code. Defendants identified this charge as a “Tenant Initiation Expense Reimbursement” or TIER fee.

Section 17200 defines unfair competition as “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by

Chapter 1 (commencing with

Section 17500) of

Part 3 of Division 7 of the Business and Professions Code.” The trial court sustained defendants’ demurrer to this paragraph of the complaint. The court found that the average liquidated damages charge was $700. A security deposit in the amount of one month’s rent required of each tenant was routinely used to secure payment of the liquidated damages amount. The second step of the procedure for implementation of fluid recovery, as described in both Granberry v. Islay Investments (1995) 9 Cal.4th 738, 750, footnote 7 [38 Cal.Rptr.2d 650, 889 P.2d 970], and State of California v.

Levi Strauss & Co. (1986) 41 Cal.3d 460, 472 [224 Cal.Rptr. 605, 715 P.2d 564], both class action cases, permits class members to collect their share of the recovery. The judgment in this case does not expressly provide for any restitution of liquidated damage/security fee payments to tenants. Defendants also argued that the court erred in finding that the liquidated damages clause of the lease was unlawful, denying setoffs, and awarding interest. No issues related to these claims are before this court. A petition for rehearing pointing out this omission (see Cal. Rules of Court, rule 29(b)(2)) was denied.

The action was not instituted as a class action. Only paragraph 27, in the cause of action for unfair business practices, indicated that relief was sought on behalf of absent persons.

That paragraph stated: “Plaintiffs allege this claim on behalf of themselves and all other present and former tenants of the defendants who have been subject to these unlawful and unfair business acts and practices.” As noted earlier, defendants had argued in the trial court that a representative UCL action was not authorized and that class action procedures were required if plaintiffs were to recover on behalf of persons who were not parties to the action. “[A]ny person acting for the interests of itself, its members or the general public,” as well as specified public officials, may seek UCL relief on behalf of the general public. (§ 17204.) We use the term “representative action” to refer to a UCL action that is not certified as a class action in which a private person is the plaintiff and seeks disgorgement and/or restitution on behalf of persons other than or in addition to the plaintiff.

Section 17203 authorizes the court to make orders necessary to restore real or personal property and money “to any person in interest.” The Legislature has used the term “person in interest” repeatedly in contexts that confirm this understanding of its meaning. (See, e.g., §§ 17535, 19214; see also Code Civ. Proc., § 873.810; Pub. Resources Code, § 25966.) Code of Civil Procedure

section 1235.125 provides further: “When used with reference to property, ‘interest’ includes any right, title, or estate in property.” “Interests in Property” are described in Civil Code sections 678 through 703. Code of Civil Procedure

section 384 now provides, in relevant part: “(

a) It is the intent of the Legislature in enacting this

section to ensure that the unpaid residuals in class action litigation are distributed, to the extent possible, in a manner designed either to further the purposes of the underlying causes of action, or to promote justice for all Californians. . . . [U] (

b) Except as provided in subdivision (d), prior to the entry of any judgment in a class action established pursuant to

Section 382, the court shall determine the total amount that will be payable to all class members, if all class members are paid the amount to which they are entitled pursuant to the judgment. The court shall also set a date when the parties shall report to the court the total amount that was actually paid to the class members.

After the report is received, the court shall amend the judgment to direct the defendant to pay the sum of the unpaid residue, plus interest on that sum at the legal rate of interest from the date of entry of the initial judgment, in any manner the court determines is consistent with the objectives and purposes of the underlying cause of action, including to child advocacy programs and to the California Legal Corps . . . .” In 1976, Civil Code

section 3369, as amended, provided: “1. Neither specific nor preventative relief can be granted to enforce a penalty or forfeiture in any case, nor to enforce a penal law, except in a case of nuisance or unfair competition. “2. Any person performing or proposing to perform

an act of unfair competition within this state may be enjoined in any court of competent jurisdiction. The court may make such orders or judgments, including the appointment of a receiver, as may be necessary to prevent the use or employment by any person of any practice which constitutes unfair competition, as defined in this section, or as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition. “3.

As used in this section, unfair competition shall mean and include unlawful, unfair or fraudulent business practice and unfair, deceptive, untrue or misleading advertising and any act denounced by Business and Professions Code Sections 17500 to 17535, inclusive. “4. As used in this section, the term person shall mean and include natural persons, corporations, firms, partnerships, joint stock companies, associations and other organizations of persons. “5. Actions for injunction under this

section may be prosecuted by the Attorney General or any district attorney or any city attorney of a city having a population in excess of 750,000 “6. Unless otherwise expressly provided, the remedies or penalties provided by this

section and

Section 3370.1 are cumulative to each other and to the remedies or penalties available under all other laws of this state.” (Stats. 1976, ch. 1005, § 1, pp. 2378-2379.) When the UCL was adopted in 1977, these provisions became sections 17200-17205. (Stats. 1977, ch. 299, § 1, p. 1202 et seq.) Amicus curiae California District Attorneys Association argues that the court has inherent power to order disgorgement and that the court should be free to determine in the individual representative UCL action by a private party whether to order disgorgement/restitution and payment into a fluid recovery fund, or to require that the action proceed as a class action.

The court’s inherent equitable power may not be exercised in a manner inconsistent with the legislative intent underlying a statute, however. (See Rutherford v. Owens-Illinois, Inc. (1997) 16 Cal.4th 953, 967 [67 Cal.Rptr.2d 16, 941 P.2d 1203]; Bauguess v. Paine (1978) 22 Cal.3d 626, 637-638 [150 Cal.Rptr. 461, 586 P.2d 942].) Except where legislative action impinges on the exercise of fundamental judicial powers and thus violates the separation of powers doctrine (Cal. Const., art.

Ill, § 3), a statute may specify the remedy and/or relief available for violation of the statute and thereby limit the extent of equitable relief a court may grant.

Section 17535: “Any person, corporation, firm, partnership, joint stock company, or any other association or organization which violates or proposes to violate this

chapter may be enjoined by any court of competent jurisdiction. The court may make such orders or judgments, including the appointment of a receiver, as may be necessary to prevent the use or employment by any person, corporation, firm, partnership, joint stock company, or any other association or organization of any practices which violate this chapter, or which may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of any practice in this

chapter declared to be unlawful. “Actions for injunction under this

section may be prosecuted by the Attorney General or any district attorney, county counsel, city attorney, or city prosecutor in this state in the name of the people of the State of California upon their own complaint or upon the complaint of any board, officer, person, corporation or association or by any person acting for the interests of itself, its members or the general public.” As the court explained in Holloway, rejecting a claim that consumers and members of the public at large had standing to enforce the FTC Act, Congress was aware that the breadth of unfair practices that might be subject to the FTC Act required a coherent enforcement regime: “[T]his breadth of prohibition carried with it a danger that the statute might become a source of vexatious litigation.

Expertise was called for . . . to avoid using the statute as a vehicle for trivial or frivolous claims. There was, furthermore, a need to develop a central and coherent body of precedent, construing and applying the statute in a wide range of factual contexts, so as to define its operative reach.

Finally, it would be of assistance to create a specialized forum where businessmen whose methods had been called into question could voluntarily revise their practices without the need to resort to the courts.” {Holloway, supra, 485 F.2d at p. 990, fns. omitted.) Congress also foresaw that private enforcement actions could impose unwarranted burdens on defendants. In exercising its enforcement discretion, the Federal Trade Commission could consider the relative seriousness of a violation and the effect an enforcement proceeding would have on the public and commercial relationships.

It could also consider whether to act against an individual party or on an industrywide basis, what type of action to take, what remedy to seek, and other factors. “Above all, there is [a] need to weigh each action against the Commission’s broad range policy goals and to determine its place in the overall enforcement program of the FTC. ft]] Private litigants are not subject to the same constraints. They may institute piecemeal lawsuits, reflecting disparate concerns and not a coordinated enforcement program. The consequence would burden not only the defendants selected but also the judicial system.

It was to avoid such possibilities of lack of coherence that Congress focused on the FTC as an exclusive enforcement authority.” (Holloway, supra, 485 F.2d at pp. 997-998, fns. omitted.) Earlier, in Blue Chip Stamps v.

Superior Court (1976) 18 Cal.3d 381 [134 Cal.Rptr. 393, 556 P.2d 755], the court held that the trial court had abused its discretion in ruling that a class action seeking refund of excess sales taxes collected on redemption of trading stamp books should be permitted notwithstanding the extremely small potential individual recovery (18 cents), the inability of most class members to establish their entitlement to recover, and the likelihood that few class members would make a claim.

We rejected an argument that the action should be permitted because fluid recovery could be ordered in the form of reduction of future tax charges, reasoning that there was no correlation between those who paid the excess taxes and those who would benefit from a future reduction of the redemption price.

Because an order to disgorge into a fluid recovery fund is not authorized in such representative UCL actions, the trial court may order the defendant to notify the absent persons on whose behalf the action is prosecuted of their right to make a claim for restitution, establish a reasonable time within which such claims must be made to the defendant, and retain jurisdiction to adjudicate any disputes over entitlement to and the amount of restitution to be paid. Civil Code

section 1950.6, enacted in 1996 (Stats. 1996, ch. 525, § 1) now expressly permits a rental application screening fee “[Notwithstanding

Section 1950.5.” Having reached this conclusion, we need not address defendants’ argument that Civil Code

section 1950.5 is unconstitutionally vague, either on its face or in its application to defendants, or their claim that relitigation of the status of the TIER fee is barred by res judicata or collateral estoppel.