THOMAS CORBETT, Petitioner, v. THE SUPERIOR COURT OF ALAMEDA COUNTY, Respondent; BANK OF AMERICA, N.A., et al., Real Parties in Interest, 101 Cal. App. 4th 649

Opinion LAMBDEN, J. In the case before us, Thomas Corbett (Corbett) filed his petition for extraordinary relief challenging the trial court’s conclusion, as a matter of law, that it could not certify a class to pursue a claim for violating the unfair competition law (UCL), Business and Professions Code

section 17200 et seq. The court struck the portion of Corbett’s pleading against Bank of America, N.A., Bancamerica Auto Finance Corporation, Bank of America Corporation (collectively Bank of America), and Hayward Dodge, Inc. (Hayward Dodge) for disgorgement of unlawful profits into a fluid recovery fund. Although numerous courts have presumed they have the authority to certify UCL claims as class actions and reviewing courts have considered what factors must be considered when certifying a class in a UCL lawsuit (e.g., Fletcher v.

Security Pacific National Bank (1979) 23 Cal.3d 442, 454 [153 Cal.Rptr. 28, 591 P.2d 51] (Fletcher)), no appellate court has directly addressed the question of whether UCL and class actions are fundamentally incompatible. The question before us is therefore one of first impression. Bank of America and Hayward Dodge, however, maintain that the Supreme Court in Kraus v.

Trinity Management Services, Inc. (2000) 23 Cal.4th 116, 137 [96 Cal.Rptr.2d 485, 999 P.2d 718] (Kraus) already settled this question when it concluded that “section 17203 does not authorize orders for disgorgement into a fluid recovery fund.” We do not agree that Kraus holds that class actions and UCL claims are mutually exclusive.

The Supreme Court in Kraus made it clear that the question before it was whether a fluid recovery remedy, which it had “sanctioned” only in class actions, was also authorized by the UCL. (Kraus, supra, 23 Cal.4th at p. 127.) The court concluded that “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.” (Id. at p. 137.) Thus, its holding barred a liquid recovery remedy in non-class UCL actions and did not address class UCL actions. The

interpretation of Kraus advocated by Hayward Dodge and Bank of America would have required the Supreme Court to disapprove of its earlier opinion in Fletcher.

In Fletcher, the Supreme Court implicitly ruled that a UCL claim could properly be brought as a class action when it held that the trial court improperly rejected class certification of a UCL claim because plaintiffs could not prove that each individual borrower lacked knowledge of the bank’s unfair practice. (Fletcher, supra, 23 Cal.3d at p. 453.) Not only did the Supreme Court in Kraus quote approvingly from Fletcher, but it pointed out that it had already held in Fletcher that “once an unfair trade practice was established, a class action could proceed without individualized proof of lack of knowledge of the fraud.” (Kraus, supra, 23 Cal.4th at p. 134, italics added, citing Fletcher, supra, 23 Cal.3d at p. 450.) In addition to the language in Kraus approving of class UCL claims, nothing in the language of the UCL or in its legislative history suggests that UCL claims and class actions are incompatible.

Despite numerous modifications to the UCL, the Legislature has never added language barring class actions. Furthermore,

section 17205 expressly provides that the remedies under the UCL “are cumulative to each other and to the remedies or penalties available under all other laws of this state.” Consequently, a plaintiff in a class UCL action is expressly entitled to an injunction and restitution, authorized under the UCL, and to disgorgement into a fluid recovery, as authorized under the class action statutes. Finally, public policy also compels us to reject the argument of Hayward Dodge and Bank of America.

Refusing to ever permit a liquid recovery in a UCL claim would thwart the purpose of the UCL because it would permit defendants to keep a portion of their illicit profits (see, e.g., Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1267 [10 Cal.Rptr.2d 538, 833 P.2d 545]). If a plaintiff in a UCL action was precluded from seeking disgorgement into a fluid recovery, those ill-gotten profits that could not be returned to identifiable injured or deceived parties would be retained by the defendants.

This would “ ‘impair the full impact of the deterrent force that is essential if adequate enforcement’ ” of the UCL is to be achieved. (Fletcher, supra, 23 Cal.3d at p. 451.) Accordingly, we hold that UCL claims and class actions are not mutually exclusive as matter of law. Where a class has properly been certified, a plaintiff in a UCL action may seek disgorgement of unlawful profits into a fluid recovery fund.

Background On April 17, 2000, Corbett, individually and on behalf of all others similarly situated, filed a class action complaint for damages and for an injunction against Bank of America and Hayward Dodge. On August 27, 2001, the court denied without prejudice Corbett’s motion for class certification for failure to set forth evidence in support of his motion. On August 30, 2001, Corbett filed a third amended complaint and alleged that he purchased a motor vehicle under a five-year simple interest motor vehicle installment contract and security interest, financed by Bank of America.

According to the pleading, Hayward Dodge arranged the financing. Corbett was unaware that Bank of America had approved his loan application at an interest rate of approximately 12.50 percent, but Hayward Dodge prepared the loan documents for an interest rate of 17.50 percent. Bank of America and Hayward Dodge shared the difference between the interest rate approved and the interest rate charged. Neither Bank of America nor Hayward Dodge disclosed any of this information to the consumer.

Corbett alleged on behalf of himself and all other consumers who had similarly been harmed by this deceptive and misleading business practice causes of action for violating the Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.), fraud, intentional interference with prospective contract, permanent injunction under Civil Code

section 1780, subdivision (a)(2), and violating the UCL (§ 17200 et seq.). On September 19, 2001, Hayward Dodge filed a motion to, among other things, strike Corbett’s “allegations seeking disgorgement of ill-gotten gains and profits, as that relief is not recoverable under the unfair competition statutes.” On November 8, 2001, the court granted the motion to strike the prayer for disgorgement relief related to the claim under

section 17200. The court stated: “Motion of Hayward Dodge to strike the prayer for disgorgement relief related to the 5th cause of action under Business and Professions Code 17200 is Granted. Kraus v. Trinity Management Services, Inc.[, supra,] 23 Cal.4th 116, 138, holds that disgorgement is not a remedy in and of itself. Rather, Kraus holds that disgorgement of allegedly ill-gotten profits is a remedy only insofar as it [is] a mechanism to permit restitution of funds.

Business and Professions Code 17203 (Court may enter orders 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.’) This does not preclude the possibility of an order for restitution of improper interest charges to affected borrowers on a borrower by borrower basis or the use of disgorgement as a mechanism to effect restitution. [¶] Plaintiffs’ argument that they may obtain disgorgement relief under Business and Professions Code 17200 because that claim is plead as a class action is misplaced.

Plaintiffs cannot, as a matter of law, certify a class to pursue [a claim under sections 17200 and 17500], There is a distinction between bringing a claim in a representative capacity and bringing a claim on behalf of a class. . . .” The court cited Kraus, supra, 23 Cal.4th at page 137, and stated that the Kraus court noted that the Legislature is aware of the distinction between representative and class actions. The court continued: “Claims under [section] 17200 are defined by statute as representative claims. . . .

These representative claims can seek equitable relief to remedy unlawful business acts, but they are not direct claims seeking damages for the alleged unlawful business acts. A plaintiff can pursue a class action asserting a direct claim to obtain damages for the same alleged unlawful business acts for him or herself and all other persons who are similarly situated, but that direct claim is not the same as the claim under [section] 17200.

The Court cannot, as a matter of law, certify a class to pursue a claim under [section] 17200. . . .” On November 26, 2001, Corbett filed a renewed motion for class certification on all of his causes of action except for his UCL claim. On December 24, 2001, Judge Ronald M. Sabraw denied this motion on grounds that the class was not ascertainable, individual issues predominated over common issues, and Corbett was not typical of the putative class.

Corbett filed a petition for peremptory writ of mandate from the November 8, 2001 order finding, as a matter of law, that he could not pursue a class action for violating the UCL. We issued an order to show cause. Discussion Although courts generally deny writ relief (e.g., Science Applications Internat. Corp. v. Superior Court (1995) 39 Cal.App.4th 1095, 1100 [46 Cal.Rptr.2d 332]; Omaha Indemnity Co. v.

Superior Court (1989) 209 Cal.App.3d 1266, 1272 [258 Cal.Rptr. 66]), a writ of mandate should not be denied when “the issues presented are of great public importance and must be resolved promptly.” (County of Sacramento v. Hickman (1967) 66 Cal.2d 841, 845 [59 Cal.Rptr. 609, 428 P.2d 593].) Clearly these criteria are present here. Our receipt of numerous amicus curiae briefs underscores the importance of this issue. In addition, a conflict currently exists among trial courts.

Judge Sabraw, the designated complex litigation judge for Alameda County, has ruled that UCL claims and class actions are mutually exclusive, while Judge Charles R. Hayes at the Superior Court of San Diego County has certified UCL claims for class action. (See, e.g., Mass. Mutual, supra, 97 Cal.App.4th 1282; see also fn. 2 ante) Judicial economy therefore requires a prompt resolution of this controversy. I. Corbett’s UCL Claim

Section 17200 defines unfair competition as “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising . . . .” The question before us is whether the trial court erred in striking the request for disgorgement relief and in finding that an unfair competition claim cannot be pursued as a class action as a matter of law. If the court erred, Corbett should be permitted to apply for class certification for the UCL claim and add the disgorgement language to the pleading.

To determine the answer to this question we examine the prior case law on this issue, the legislative history and purpose of UCL claims and class actions, the omission of any language expressly permitting class actions in the UCL, and differences in proof and procedure between the UCL and class actions. We emphasize that there is absolutely no dispute that a UCL claim is procedurally distinct from a class action and that the two have different purposes. However, the mere fact that they differ does not mandate a conclusion that they are incompatible.

In fact, as we discuss infra, under the proper circumstances set forth in Code of Civil Procedure

section 382, certifying a UCL claim as a class action furthers the purposes and goals underlying both of these actions. When reviewing an order granting or denying class certification, we reverse if the order is based upon improper criteria or incorrect legal assumptions “ ‘ “even though there may be substantial evidence to support the court’s order.” ’ ” (Linder v.

Thrifty Oil Co. (2000) 23 Cal.4th 429, 435-436, 448 [97 Cal.Rptr.2d 179, 2 P.3d 27].) “In other words, we review only the reasons given by the trial court for denial of class certification, and ignore any other grounds that might support denial.” (Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 829 [97 Cal.Rptr.2d 226].) If the trial court’s ruling that the UCL claim could not be maintained as a class action as a matter of law is legally flawed, no other basis remains for sustaining the court’s ruling. A.

Case Law Regarding Class Certification and UCL Claims The most recent Supreme Court case to address the question of whether a UCL claim may be maintained as a class action is Kraus, supra, 23 Cal.4th 116. Corbett argues that the Supreme Court in Kraus implicitly approved of a class action for UCL claims whereas Hayward Dodge and Bank of America contend that the Kraus court recognized the separate, and irreconcilable, procedures created by the Legislature for a class action (Code Civ. Proc., § 382) and UCL claim (§ 17200 et seq.).

In Kraus, supra, 23 Cal.4th at pages 121-122, six former tenants brought a number of claims, including one under the UCL, on behalf of themselves and absent persons, for the disgorgement into a fluid recovery fund, the illegal nonrefundable security and administrative fees collected by the owners and property managers of residential rental properties. They did not seek certification of their UCL claim as a class action. (Id. at p. 121.) The Supreme Court explained that implementing a fluid recovery involves three steps: “ ‘ “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 p. 127.) The Kraus court stated that the Legislature had not expressly authorized a fluid recovery in UCL actions. (Kraus, supra, 23 Cal.4th at pp. 129-137.)

Section 17203 provides the remedy for UCL actions and it expressly authorizes only restitution as the monetary remedy. After reviewing the statutory history of the UCL, the Supreme Court stated that it had found nothing to suggest that the Legislature intended to authorize a fluid recovery in representative UCL actions when it made the power to order restitution statutory. (Kraus, supra, at p. 132.) The court declared that

section 17203 does not authorize disgorgement into a fluid recovery, and “[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.” (Kraus, supra, at p. 133.) The court held: “[R]eading

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.” (Kraus, supra, at p. 137.) Further, the court stressed: “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.” (Ibid.) Although the Supreme Court in Kraus stressed that the Legislature expressly authorized fluid recoveries for class actions and did not do so for the UCL, the court did not suggest that fluid recoveries could never be a remedy in a UCL action; that action was not presented.

Rather, it indicated that courts retained the authority to order liquid remedies pursuant to Code of Civil Procedure

section 384 when the plaintiffs had certified the UCL claim as a class action pursuant to Code of Civil Procedure

section 382. The Kraus court added: “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.“ (Kraus, supra, Cal.4th at p. 137, italics added.) The court further explained that allowing a fluid recovery in representative UCL actions, when the action has not been certified as a class action, may implicate due process concerns and may not serve the public because judicial supervision of a class action is greater than that of a representative UCL action. (Ibid.) We conclude that the Kraus court recognized the procedural and statutory differences between representative and class actions but did not hold, as the trial court ruled, that a representative action is necessarily incompatible with a class action.

Our

interpretation of the majority’s opinion finds further support in Justice Werdegar’s concurrence and dissent in Kraus.

She disagreed with the majority’s holding to the extent it barred a liquid recovery for private, uncertified UCL actions, because UCL actions are often formally incompatible with class treatment. (Kraus, supra, 23 Cal.4th at p. 147 (conc. & dis. opn. of Werdegar, J.).) Her concern was not that the majority’s holding foreclosed the availability of a liquid recovery in all UCL actions, but that it would never be available “in a critical class of UCL actions— those brought by personally unaggrieved plaintiffs.” (Id. at pp. 147-148.) Prior to Kraus, the Supreme Court addressed in Fletcher, supra, 23 Cal.3d 442 the question of the compatibility of a class action and a UCL claim.

In Fletcher, bank customers in a class action sought restitution under the UCL because the bank had computed the per annum interest rates on the basis of a 360-day year separately for each loan. (Id. at p. 445.) The court held that the lower court had used the improper basis in refusing to certify the suit, and noted that the trial court could “determine in subsequent proceedings that the maintenance of the present suit as a class action is precluded on other grounds.” (Id. at p. 453.) The following statement indicates that the court did not consider class actions and representative actions under the UCL fundamentally incompatible: “Although an individual action may eliminate the potentially significant expense of pretrial certification and notice, and thus may frequently be a preferable procedure to a class action, the trial court may conclude that the adequacy of representation of all allegedly injured borrowers would best be assured if the case proceeded as a class action.

Before exercising its discretion, the trial court must carefully weigh both the advantages and disadvantages of an individual action against the burdens and benefits of a class proceeding for the underlying suit.” (Id. at p. 454, italics added.) Bank of America attempts to dismiss Fletcher, supra, 23 Cal.3d 442, and the other cases that predate Kraus, by arguing that Kraus disagreed with them and therefore essentially overruled them. Kraus did not overrule Fletcher.

To the contrary, the Kraus opinion quoted extensively from and relied on Fletcher and expressly stated that it had already held in Fletcher that a UCL claim could proceed as a class action.

In discussing Fletcher, the Kraus court stated: “We distinguished a UCL claim from claims based on breach of contract or fraud [in Fletcher], 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.” (Kraus, supra, 23 Cal.4th at p. 134, italics added, citing Fletcher, supra, 23 Cal.3d at p. 450.) Similarly, the Supreme Court in Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 582, footnote 3 [71 Cal.Rptr.2d 731, 950 P.2d 1086] stated: “Fletcher was brought as a class action.

We stated there that the court might order restitution to the class or, if the class action was precluded, relief ancillary to an injunction. (23 Cal.3d at pp. 453-454.)” In a case decided after Fletcher, and shortly before Kraus, the Supreme Court in Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906 [103 Cal.Rptr.2d 320, 15 P.3d 1071] (Washington Mutual) again appears to recognize the appropriateness of UCL class actions.

In Washington Mutual, the trial court had certified a nationwide class action against a bank; the Supreme Court reversed because the court had failed to resolve choice-of-law issues and the impact of applying different states’ laws on the unfair business practices claim. (Washington Mutual, supra, p. 927.) The court stated: “Without expressing any views on this dispute, we note that, if the trial court were to determine that the claims of out-of-state residents must be resolved under the unfair business practices laws of their own states, instead of California’s UCL, then at present such claims appear to be outside the scope of [the plaintiff’s] complaint.” (Id. at p. 928, fn. 13.) The court cautioned that it had not considered all of the issues involved with a nationwide class action certification: “For example, determinations regarding the applicable law may affect issues other than predominance and manageability, such as whether the representative plaintiffs have claims or defenses typical of those of the class or whether the representative plaintiffs can fairly and adequately protect the interests of the entire class.” (Id. at pp. 928-929.) The Supreme Court never proposed that the plaintiffs may be precluded from pursuing the UCL claim as a class action as a matter of law; rather, it held that the trial court must consider the factors set forth in Code of Civil Procedure

section 382 when determining the appropriateness of class certification. Similarly, without directly addressing whether UCL suits may be brought as class actions, several Court of Appeal decisions have presumed or implied that plaintiffs may bring UCL claims as class actions in appropriate cases. In Dean Witter Reynolds, Inc. v.

Superior Court (1989) 211 Cal.App.3d 758, 773 [259 Cal.Rptr. 789] (Dean Witter), our division held that the lower court abused its discretion by permitting the UCL action to proceed by class action when the plaintiffs had not established that class treatment was demonstrably superior to an individual, representative action. The court explained: “The suitability of the unfair competition claims for class action treatment must be tested by principles developed under the general class action statute, Code of Civil Procedure

section 382.” (Dean Witter, supra, at p. 772, fn. omitted.) Citing both Dean Witter and Fletcher, the Fifth District in Bronco Wine Co. v. Frank A. Logoluso Farms (1989) 214 Cal.App.3d 699, 720 [262 Cal.Rptr. 899] reversed a judgment that awarded restitution awards under UCL to growers who were not parties to the action. The court suggested that, because judgments in unfair business actions are not binding as to nonparties, it may be improper to maintain an individual, representative action for unfair competition outside the confines of a class action. (Ibid.) In Norwest Mortgage, Inc. v.

Superior Court (1999) 72 Cal.App.4th 214, 229 [85 Cal.Rptr.2d 18], the Fourth District reversed an order certifying a nationwide class in a pleading that included a UCL claim, because nonresidents of California could not assert UCL claims. The court, however, specifically stated that it was reversing the certification order without prejudice, and plaintiffs could move to certify a new class to pursue this claim. (Ibid.) In Payne v.

National Collection Systems, Inc. (2001) 91 Cal.App.4th 1037, 1039 [111 Cal.Rptr.2d 260], the court held that prior UCL actions successfully prosecuted by the Attorney General and the Los Angeles County District Attorney did not bar a UCL class action by 23 plaintiffs who received no restitution or monetary relief in the actions brought on behalf of the People.

The court held that res judicata did not apply even though the class action was premised on the same conduct litigated by the Attorney General and the Los Angeles County District Attorney. (Ibid.) Most recently, the Fourth District considered a claim that the trial court improperly certified a class action in a case alleging that the defendant had violated the UCL and the Consumer Legal Remedies Act. (Mass. Mutual, supra, 91 Cal.App.4th 1282.) The defendant in Mass.

Mutual did not assert that a UCL claim could not be maintained as a class action, but argued only that a class could not be certified in that case because the plaintiff failed to satisfy the requirements of Code of Civil Procedure

section 382. (Mass. Mutual, supra, at p. 1287.) The Court of Appeal affirmed the lower court and held that the “plaintiffs’ UCL claim presents common legal and factual issues which were plainly suitable for treatment as a class action.” (Id. at p. 1292, italics added.) We conclude that a trial court may certify a UCL claim as a class action when the statutory requirements of

section 382 of the Code of Civil Procedure are met. B. Legislative History and Purpose of UCL and Class Actions Hayward Dodge and Bank of America contend that the purpose of the UCL, which is brought on behalf of the public (§ 17204; see also People v. Pacific Land Research Co. (1977) 20 Cal.3d 10, 17 [141 Cal.Rptr. 20, 569 P.2d 125]), is distinct from that of a class action, which is brought on behalf of private litigants.

They maintain that our Supreme Court in Fletcher has recognized this distinction and has emphasized that these two separate mechanisms are each to be given their separate effect. (See Kraus, supra, 23 Cal.4th at p. 137.) A brief review of the legislative history of the statutes governing the UCL and class actions reveals that their procedural histories are distinct, but not incompatible. 1. The UCL Our Supreme Court set forth the legislative history of the UCL in Kraus, supra, 23 Cal.4th at pages 129-131, which we briefly summarize here. Former Civil Code

section 3369, enacted in 1872, provided: “ ‘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.’ ” The Legislature amended the statute in 1933 to retain the original provision and added an unfair competition exception to the limit on injunctive relief, which became subdivision 1, and express authority to enjoin unfair competition, which became subdivision 2. (Kraus, supra, at pp. 129-130.) Subdivision 3 defined unfair competition 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.’ ” (Kraus, supra, at p. 130, citing 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.” (Kraus, supra, at p. 130, citing Stats. 1933, ch. 953, § 1, p. 2482.) Primarily used by public prosecutors until 1972, the Supreme Court in Barquis v.

Merchants Collection Assn. (1972) 7 Cal.3d 94 [101 Cal.Rptr. 745, 496 P.2d 817] confirmed that private plaintiffs could use the unfair competition law for injunctive relief. The Legislature amended Civil Code

section 3369 in 1976 (Stats. 1976, ch. 1005, § 1, p. 2378) to provide the courts with authority to order restitution. (Kraus, supra, 23 Cal.4th at p. 130.) The following year, the Legislature removed the unfair competition law from Civil Code

section 3369 and placed it in the Business and Professions Code (Stats. 1977, ch. 299, §§ 1, 2, pp. 1202-1203).

Section 17203 provides; “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.” Thus, the express language and history of

section 17203 limited the relief available to restitution and injunctions. As discussed ante, the majority in Kraus held that nothing in the statutory history or language permitted a disgorgement into a fluid recovery fund or restitution to any person other than a direct victim of unfair competition. (Kraus, supra, 23 Cal.4th at p. 131.) 2. Liquid Recovery and Class Action Probate Code

section 15409 expressly authorized the cy près concept of putting charitable trust funds to the next best use if the trust purpose could no longer be accomplished. Not until 1981, did California courts in Bruno v.

Superior Court (1981) 127 Cal.App.3d 120, 123-124 [179 Cal.Rptr. 342] (Bruno) apply a fluid recovery to class actions. (Kraus, supra, 23 Cal.4th at p. 132.) The Bruno 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.’ [Citation.]” (Bruno, supra, at pp. 123-124.) In 1993, the Legislature enacted former Code of Civil Procedure

section 383, which authorized fluid recovery in class actions. (Kraus, supra, 23 Cal.4th at p. 132, citing 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.” (Kraus, supra, at p. 132.) 3. Comparing the Language and the Purpose of the UCL with the Class Action Statute Nothing in the legislative history suggests that the Legislature intended to prohibit class certification in connection with unfair competition claims. Indeed, Kraus did not suggest that such actions are barred and, as already noted, only declined “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.” (Kraus, supra, 23 Cal.4th at p. 137, italics added.) As Justice Werdegar pointed out,

section 17203 expressly authorizes courts to make such orders “ ‘necessary to prevent. . . unfair competition . . . or as may be necessary to restore to any person in interest any money or property’ (italics added) . . . (Kraus, supra, at p. 145 (conc. & dis. opn. of Werdegar, J.).) Thus, a liquid recovery may not be expressly authorized, but the language of the UCL did not bar the relief authorized under Code of Civil Procedure

section 384. Further, the relief set forth in Code of Civil Procedure

section 384 is entirely consistent with the broad provision of

section 17203 in the UCL, and may be necessary to achieve the purpose of the UCL in appropriate cases. Hayward Dodge complains that the remedies under

section 17203 should not be expanded and Bank of America cites Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173-174 [96 Cal.Rptr.2d 518, 999 P.2d 706] (Cortez) as evidence that the Supreme Court has rejected the notion that a fluid recovery scheme such as disgorgement of profits is compatible with restitution. Bank of America quotes the following: “[T]he trial court may not make an order for disgorgement of all benefits defendant may have received from failing to pay overtime wages.

It may only order restitution to persons from whom money or property has been unfairly or unlawfully obtained.” (Id. at p. 172.) However, Bank of America has conveniently omitted the sentence preceding the quoted

section where the Cortez court admonishes: “Fluid recovery is not authorized in a UCL action that is not certified as a class action. For that reason the trial court may not make an order for disgorgement of all benefits . . . .” (Ibid., italics added.) Thus, far from supporting Bank of America’s viewpoint, the Cortez opinion, again, bolsters the position that a class action may be brought in a UCL claim. The dissent’s contention that a fluid recovery is inconsistent with a class UCL claim also relies on Justice Bird’s majority opinion in State of California v.

Levi Strauss & Co. (1986) 41 Cal.3d 460 [224 Cal.Rptr. 605, 715 P.2d 564] (Levi Strauss). The Levi Strauss court considered the cy pres doctrine in the class action context prior to the enactment of former

section 383 of the Code of Civil Procedure, the first statute to authorize fluid recovery in class actions.

Thus, it has limited relevance to the issue here, but the opinion’s logic supports our conclusion as follows: “The 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 Straus, supra, at p. 472.) Although the Legislature has only authorized disgorgement into a fluid recovery fund in class actions and in consumer actions under the Consumers Legal Remedies Act (see Kraus, supra, 23 Cal.4th at p. 137), this does not mean that class UCL claims cannot include fluid recovery relief.

As already stressed, the Kraus court does not suggest that the cy pres doctrine would be barred if the plaintiff were bringing a class UCL claim. Indeed, such a holding would be directly contrary to the Legislature’s clear intent, as expressly set forth in

section

Section 17205 provides: “Unless otherwise expressly provided, the remedies or penalties provided by this

chapter are cumulative to each other and to the remedies or penalties available under all other laws of this state.” Accordingly, the statute authorizes relief set forth in other statutes and does not exclude liquid recovery, which is available under another section. Hayward Dodge and Bank of America maintain that the fact that the UCL contemplates representative actions on behalf of the general public renders it inconsistent with the notion of a class, which is designed to benefit a limited number of individuals.

We see nothing in the legislative history, however, indicating that the authorization of representative actions was designed to exclude class actions. In fact, permitting a UCL claim on behalf of the class, when appropriate, would further the purpose of the UCL. When the UCL claim is not brought on behalf of a class and all of the victims of the unfair practice cannot be located, the company engaging in the unfair practice keeps the monies that cannot be returned to the individual victims. Thus, the company retains some of the profits from its unfair practice, and this contravenes the deterrent goal of the UCL.

In a different context, the Supreme Court has already declined to permit defendants to a UCL action to retain their profits gained from their unfair practices. (Bank of the West v.

Superior Court, supra, 2 Cal.4th at p. 1254.) In Bank of the West, the Supreme Court refused to allow companies violating the UCL to shift their loss to the insurer because it would permit the company to retain the proceeds of its unlawful conduct. (Id. at p. 1267.) The court clarified: “Such a result would be inconsistent with the act’s deterrent purpose. ... ‘ “[T]o permit the [retention of even] a portion of the illicit profits, would impair the full impact of the deterrent force that is essential if adequate enforcement [of the law] is to be achieved.

One requirement of such enforcement is a basic policy that those who have engaged in proscribed conduct surrender all profits flowing therefrom.” ’ ” (Ibid.) If, however, the UCL claim is brought as a class action, the total monies to be disgorged can be placed in a fluid recovery fund, thus preventing the company from benefiting from its wrongfully obtained profits. In many UCL actions defendants found to have committed unfair practices can be prevented from retaining wrongfully obtained profits only if the proceeding has been certified as a class action.

In this manner, the purpose of a liquid recovery, as described in Bruno, supra, 127 Cal.App.3d at pages 123-124, complements and, under the appropriate circumstances, furthers the deterrent purpose of the UCL. Absent language in the text of the UCL or its legislative history suggesting a UCL claim can never be maintained as a class action or a reason to believe that seeking class certification would obstruct the purpose of the UCL, we decline to impose such a restriction, which would usurp a power that belongs to the Legislature, not the courts. C.

No Statute Specifically Permits a UCL Class Action Hayward Dodge and Bank of America argue that the Legislature did not intend to permit UCL claims, because otherwise it would have specifically provided for it. They contrast the language in

section 17204 of the UCL with that in Civil Code

section 1752 of the Consumer Legal Remedies Act (CLRA). Civil Code

section 1752 of the CLRA reads: “The provisions of this title are not exclusive. The remedies provided herein for violation of any

section of this title or for conduct proscribed by any

section of this title shall be in addition to any other procedures or remedies for any violation or conduct provided for in any other law. [¶] Nothing in this title shall limit any other statutory or any common law rights of the Attorney General or any other person to bring class actions. Class actions by consumers brought under the specific provisions of

Chapter 3 (commencing with

Section 1770) of this title shall be governed exclusively by the provisions of

Chapter 4 (commencing with

Section 1780); however, this shall not be construed so as to deprive a consumer of any statutory or common law right to bring a class action without resort to this title. If any act or practice proscribed under this title also constitutes a cause of action in common law or a violation of another statute, the consumer may assert such common law or statutory cause of action under the procedures and with the remedies provided for in such law.” Hayward Dodge and Bank of America argue that no such language authorizing class actions appears in the UCL.

Since the Legislature did not include this language when it repeatedly amended the statute, Hayward Dodge maintains that it did not intend to permit class actions for UCL. This argument, however, ignores one of the probable reasons for the Legislature’s specifying the permissibility of a class action in the CLRA. The statutory authorization for class action in the CLRA is unique. Civil Code

section 1781 governs a class action under the CLRA rather than the more general provision of Code of Civil Procedure

section 382. (See, e.g., Caro v. Procter & Gamble Co. (1993) 18 Cal.App.4th 644, 655, fn. 6 [22 Cal.Rptr.2d 419].) Since the Legislature specifically intended that the Code of Civil Procedure

section 384 not apply to the CLRA, it had to specify that a class action may be brought and the requirements for bringing it under the CLRA. As discussed ante, nothing in the UCL suggests that Code of Civil Procedure sections 382 and 384 should not apply to the UCL. To the contrary, the UCL has been repeatedly amended since Fletcher, supra, 23 Cal.3d 442, and the Legislature has never seen fit to interfere with the common practice, since Fletcher, of certifying UCL claims in appropriate cases. (See fn. 2 ante) As discussed ante, Code of Civil Procedure

section 384 provides that unpaid class action residuals shall be “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 . . . .” This statute is consistent with

section 17203 of the UCL, which authorizes “such orders or judgments” as “may be necessary” to deter unfair competition or to restore its proceeds to interested persons. Further, as already stressed, the UCL expressly states that its remedies are cumulative and do not displace others (§ 17205). The UCL is a substantive statute and the class action statute is a procedural device for collectively litigating substantive claims. The statutes complement each other and the Legislature had no reason to specify that a fluid recovery and/or class certification is permitted with a UCL action. D.

Differences in Proof and Procedure Hayward Dodge contends that permitting a class action for a UCL claim would thwart the goal of permitting a swift remedy in UCL suits and unfairly prejudice defendants because UCL claims require a lesser measure of proof. (See, e.g., Cortez, supra, 23 Cal.4th at pp. 173-174, quoting Dean Witter, supra, 211 Cal.App.3d at p. 774 [“ ‘The exclusion of claims for compensatory damages [in UCL claims] is also consistent with the overarching legislative concern to provide a streamlined procedure for the prevention of ongoing or threatened acts of unfair competition.

To permit individual claims for compensatory damages to be pursued as part of such a procedure would tend to thwart this objective by requiring the court to deal with a variety of damage issues of a higher order of complexity.’”].) Consumers filing a UCL action do not have to prove that they actually have been deceived, but simply that they are likely to be deceived; the plaintiffs also do not need to prove that the defendant intended to injure anyone. (See, e.g., State Farm Fire & Casualty Co. v.

Superior Court (1996) 45 Cal.App.4th 1093, 1102 [53 Cal.Rptr.2d 229].) Hayward Dodge fails to identify how class certification would actually harm the defendants other than by being required to give up wrongfully obtained profits. It is true, as already noted, that the disgorgement of wrongfully obtained profits could be larger when the victims are not completely identified. However, the purpose of the UCL is to deprive the defendant of these profits.

As previously noted, allowing the defendants to retain any portion of their illicit profits would “ ‘impair the full impact of the deterrent force that is essential if adequate enforcement’ ” of the UCL is to be achieved. (Fletcher, supra, 23 Cal.3d at p. 451.) In fact, permitting a class action for UCL claims may not prejudice but benefit defendants. Judgments in individual representative UCL actions are not binding as to nonparties. Thus, a defendant may be exposed to multiple lawsuits and therefore reluctant to settle a case that will not be final as to all injured parties.

With a class action, each participating member of the class is a party to the lawsuit and subject to the court’s jurisdiction. Class action defendants can achieve final repose of the claims against them. Finally, we can quickly dispose of the argument that permitting a class action would thwart the streamlined procedure intended by the UCL. There is no evidence that the purpose of the lower standard of proof in a UCL claim was to offset the consequences of prohibiting a class action.

Moreover, the streamlined procedure is designed to benefit the public; the consumer would have to balance the burden and expense of a class action by its potential benefit. Providing the plaintiff with this alternative would not obstruct the purpose of the UCL, nor would it place any greater burden on the defendants. Moreover, the court would only permit class certification when the benefits outweigh the burdens.

As our Supreme Court stated: “Although an individual action may eliminate the potentially significant expense of pretrial certification and notice, and thus may frequently be a preferable procedure to a class action, the trial court may conclude that the adequacy of representation of all allegedly injured [plaintiffs] would best be assured if the case proceeded as a class action.

Before exercising its discretion, the trial court must carefully weigh both the advantages and disadvantages of an individual action against the burdens and benefits of a class proceeding for the underlying suit.” (Fletcher, supra, 23 Cal.3d at p. 454.) II. Individualized Issues Bank of America acknowledges that the trial court rejected the class certification of the UCL claim as a matter of law, but it contends that the court’s order should be affirmed on the alternative basis that individual factual issues predominate, making a class action inappropriate.

It argues that the order must be affirmed if the trial court’s action is correct on any legal theory. (See, e.g., Cohen v. Equitable Life Assurance Society (1987) 196 Cal.App.3d 669, 673 [242 Cal.Rptr. 84]; J.B. Aguerre, Inc. v. American Guarantee & Liability Ins. Co. (1997) 59 Cal.App.4th 6, 15-16 [68 Cal.Rptr.2d 837].) On November 8, 2001, the trial court ruled that Corbett cannot, “as a matter of law, certify a class to pursue [a claim under sections 17200 and 17500].

There is a distinction between bringing a claim in a representative capacity and bringing a claim on behalf of a class.” On November 26, 2001, Corbett filed a renewed motion for class certification on all of his causes of action except for his UCL claim. The court, on December 24, 2001, denied this motion on grounds that the class was not ascertainable, individual issues predominated over common issues, and Corbett was not typical of the putative class because he neither read the financing contract nor recalled the transaction.

Bank of America argues that the factual issues related to the other claims and set forth in the order dated December 24, 2001, apply equally to the UCL claim. We disagree. The refusal to certify a class on other claims is not dispositive on whether the UCL claim should be certified, because the UCL claim is materially different from the other causes of action. Relief under the UCL is available without individualized proof of deception, reliance, and injury. (Fletcher, supra, 23 Cal.3d at pp. 452-453; Mass.

Mutual, supra, 97 Cal.App.4th at p. 1288.) Much of the court’s reasoning with respect to its refusal to certify a class for the non-UCL causes of action focused upon the problems of individual questions of reliance—what each class member knew and whether each member would have acted differently had the person known of the dealer reserve. Under the UCL, a plaintiff need not show reliance or injury and therefore many of the problems with certification relating to the other claims may not apply here. (See, e.g., Prata v.

Superior Court (2001) 91 Cal.App.4th 1128, 1144 [111 Cal.Rptr.2d 296] [“[U]nder the UCL, a representative plaintiff need not prove that members of the public actually were deceived, relied upon the fraudulent practice, or sustained any damage.”].) Since the manner of proof differs between UCL claims and other tort claims, we are not in a position to determine whether the problems with certifying a class as to the other claims have any applicability to the UCL claim. We express no opinion as to whether a class should be certified, since the trial court is better suited to address this issue.

However, the trial court erred when it ruled that Corbett may not bring a class action for the UCL claim as a matter of law. Disposition Let a peremptory writ of mandate issue directing respondent court to vacate its order refiising to consider a class action under the UCL, and to consider further disposition of this matter in accordance with the views expressed herein. Costs are awarded to Corbett. Kline, P. J., concurred. All further unspecified code sections refer to the Business and Professions Code. For example, Judge Charles R.

Hayes at the Superior Court of San Diego County certified a UCL claim as a class action, and the Fourth District affirmed in Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 97 Cal.App.4th 1282 [119 Cal.Rptr.2d 190] (Mass. Mutual). In addition, a leading treatise on the UCL contains a

section entitled “True Class Actions Are Permissible Under §17200[.]” (Stern, Unfair Business Practices and False Advertising Bus. & Prof. Code § 17200 (The Rutter Group 2000) ¶ 7.28, p. 218.) Under this section, it explains that the class action department of the Superior Court of Los Angeles County distributes a flyer containing the following: “ ‘Class certification is not necessary to obtain collective restitution and injunctive relief for absent persons, assuming due process is satisfied. Class certification may not be “superior” in an action to obtain only those remediesM’ ” (Id. at ¶ 7.29, p. 218.) Code of Civil Procedure

section 382 provides: “If the consent of any one who should have been joined as plaintiff cannot be obtained, he may be made a defendant, the reason thereof being stated in the complaint; and when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court, one or more may sue or defend for the benefit of all.”

Section 17204 provides: “Actions for any relief pursuant to this

chapter shall be prosecuted exclusively in a court of competent jurisdiction by the Attorney General or any district attorney or by any county counsel authorized by agreement with the district attorney in actions involving violation of a county ordinance, or any city attorney of a city, or city and county, having a population in excess of 750,000, and, with the consent of the district attorney, by a city prosecutor in any city having a full-time city prosecutor or, with the consent of the district attorney, by a city attorney in any city and county 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.” Probate Code

section 15409 provides: “(

a) On petition by a trustee or beneficiary, the court may modify the administrative or dispositive provisions of the trust or terminate the trust if, owing to circumstances not known to the settlor and not anticipated by the settlor, the continuation of the trust under its terms would defeat or substantially impair the accomplishment of the purposes of the trust. In this case, if necessary to carry out the purposes of the trust, the court may order the trustee to do acts that are not authorized or are forbidden by the trust instrument. [¶] (

b) The court shall consider a trust provision restraining transfer of the beneficiary’s interest as a factor in making its decision whether to modify or terminate the trust, but the court is not precluded from exercising its discretion to modify or terminate the trust solely because of a restraint on transfer.” Code of Civil Procedure

section 384 provides: “(

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. . . . [¶] (

b) Except as provided in subdivision (c), 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. . . . [¶] (

c) This

section shall not apply to any class action brought against any public entity, .... However, this

section shall not be construed to abrogate any equitable cy pres remedy which may be available in any class action with regard to all or part of the residue.” The question is not, as the dissent asserts, whether the only monetary relief available in a UCL action is restitution. (Dis. opn., post, at p. 678.) That has already been settled in Kraus, supra, 23 Cal.4th at pages 137-138. Rather, the question is whether a UCL claim may be a class action, which would permit a remedy authorized by the class action statutes. Indeed, although the dissent implies to the contrary, the court in Day v.

AT & T Corp. (1998) 63 Cal.App.4th 325, 339 [74 Cal.Rptr.2d 55] does not suggest that a fluid recovery is incompatible with a UCL claim. Rather, it points out that a fluid recovery in a UCL action may be appropriate when the amount the defendant would have received but for the unfairly competitive practice is “objectively measurable.” The court explained that in the case before it, which involved deceptive advertising to induce people to purchase prepaid phone cards, there were “no ill-gotten profits to restore.

Any amount taken away from respondents for services provided using properly filed tariffs would amount to a rebate. This, as we have seen, is not permitted.” (Ibid.) The court concluded: “To summarize, the notion of restoring something to a victim of unfair competition includes two separate components. The offending party must have obtained something to which it was not entitled and the victim must have given up something which he or she was entitled to keep.

Because the filed rates charged by respondents are presumptively correct, a consumer who uses a prepaid phone card obtains the full value of what was paid for and therefore has given up nothing, regardless of whether he or she was improperly induced to purchase the card in the first place. Any attempt to calculate a monetary amount to be paid on behalf of those who purchased the cards would necessarily result in a refund or rebate of properly collected fees for services. This would enmesh the court in the rate-setting process and directly contravene the filed rate doctrine.

Appellants are not entitled to seek restoration of any money under

section 17203.” (Id. at p. 340.) Civil Code

section 1781 provides: “(

a) Any consumer entitled to bring an action under

Section 1780 may, if the unlawful method, act, or practice has caused damage to other consumers similarly situated, bring an action on behalf of himself and such other consumers to recover damages or obtain other relief as provided for in

Section 1780. [¶] (

b) The court shall permit the suit to be maintained on behalf of all members of the represented class if all of the following conditions exist: [¶]

(1) It is impracticable to bring all members of the class before the court. [¶]

(2) The questions of law or fact common to the class are substantially similar and predominate over the questions affecting the individual members. [¶]

(3) The claims or defenses of the representative plaintiffs are typical of the claims or defenses of the class. [¶]

(4) The representative plaintiffs will fairly and adequately protect the interests of the class. . . . [¶] . . . [¶] (

e) The notice required by subdivision (

d) shall include the following: [¶]

(1) The court will exclude the member notified from the class if he so requests by a specified date. [¶]

(2) The judgment, whether favorable or not, will include all members who do not request exclusion. [¶]

(3) Any member who does not request exclusion, may, if he desires, enter an appearance through counsel. [¶] (

f) A class action shall not be dismissed, settled, or compromised without the approval of the court, and notice of the proposed dismissal, settlement, or compromise shall be given in such manner as the court directs to each member who was given notice pursuant to subdivision (

d) and did not request exclusion. [¶] (

g) The judgment in a class action shall describe those to whom the notice was directed and who have not requested exclusion and those the court finds to be members of the class. The best possible notice of the judgment shall be given in such manner as the court directs to each member who was personally served with notice pursuant to subdivision (

d) and did not request exclusion.” Unlike a plaintiff proceeding under Code of Civil Procedure

section 382, a plaintiff moving to certify a class under the CLRA is not required to show that substantial benefit will result to the litigants and the court. (Hogya v. Superior Court (1977) 75 Cal.App.3d 122, 134-135 [142 Cal.Rptr. 325].) Thus, unlike Code of Civil Procedure

section 382, the CLRA does not require that a plaintiff show a probability that each class member will come forward and prove his or her separate claim to a portion of the recovery. (Hogya, at pp. 134-135.) Moreover, the reality is that often UCL actions will not be on behalf of a class because class plaintiffs must be “truly representative of the absent, unnamed class members” (Bartlett v. Hawaiian Village, Inc. (1978) 87 Cal.App.3d 435, 438 [151 Cal.Rptr. 392]), while a private party has UCL standing even if he or she is not aggrieved (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 211, 215 [197 Cal.Rptr. 783, 673 P.2d 660]).