Opinion
NOT TO BE PUBLISHED
OPINION ON REMAND FROM THE CALIFORNIA SUPREME COURT. (Super. Ct. No. 02AS01561)
CANTIL-SAKAUYE, J.
This case is before U.S. upon transfer from the California Supreme Court for reconsideration in light of Branick v. Downey Savings and Loan Assn. (2006) 39 Cal.4th 235 (Branick), which held “Proposition 64 [limiting standing to sue under California’s statutory unfair competition and false advertising laws] does not affect the ordinary rules governing the amendment of complaints and their relation back.” (Id. at p. 239.) In accordance with the direction of the Supreme Court, we have vacated our earlier decision and requested supplemental briefing in order to consider whether real party in interest Robert Lynch (Lynch) should be given the opportunity to amend his complaint. We conclude Lynch has not alleged sufficient standing in his current complaint and therefore, the trial court erred in denying the motion for judgment on the pleadings filed by petitioner Young America Corporation (Young America). We reject Lynch’s contention that we should remand for the trial court to consider in the first instance whether his complaint can be amended to allege standing. We conclude as a matter of law, under the ordinary rules governing amendment of complaints, amendment of the complaint in the manner proposed by Lynch will not state a cause of action after Proposition 64. We shall direct issuance of a writ of mandate directing the trial court to vacate its order denying Young America’s motion for judgment of the pleadings and to enter a new order granting that motion without leave to amend.
FACTUAL AND PROCEDURAL BACKGROUND
Lynch brought suit against petitioner Young America as “an individual, on behalf of the general public” for unfair business practices under California’s Unfair Competition Law (UCL). (Bus. & Prof. Code, § 17200 et seq.) Lynch alleged Young America, a promotion fulfillment company, violated California’s Unclaimed Property Law (Code Civ. Proc., § 1500 et seq.) by keeping funds from uncashed rebate checks sent to consumers in California rather than reporting and surrendering the funds to the State of California. Lynch alleged he is a California resident, bringing the action pursuant to the UCL.
Young America describes a promotion fulfillment company as a company providing services to manufacturers who sponsor contests, games and rebate programs as part of the advertising of their products. With respect to rebate programs, the fulfillment company receives claims submitted by the customer or consumer, processes those claims and sends out checks to the customer or consumer. A percentage of the rebate checks that are mailed out never get cashed. The amount of money represented by uncashed checks is known in the industry as “slippage.” Slippage is either returned to the manufacturer or booked as revenue by the fulfillment company, depending on the contractual arrangement between the manufacturer and the fulfillment company.
Young America demurred to the complaint, contending Lynch lacked standing to bring the action because Lynch was not truly suing on behalf of the public, but on behalf of the California State Controller’s Office and the State of California was already investigating and pursuing the same remedies by making an audit demand of the records of Young America. Young America contended Lynch lacked standing as a private attorney general because the lawsuit was unnecessary. In the alternative, Young America asked for a stay of the action pending resolution of a federal lawsuit and the actions of the State of California. The trial court overruled the demurrer and denied the request for stay.
Thereafter, on November 2, 2004, the California electorate approved Proposition 64, which amended the UCL to limit standing to sue under the UCL to government prosecutors or a “person who has suffered injury in fact and has lost money or property” as a result of unfair competition (Bus. & Prof. Code, §§ 17204, 17535) and, if acting on behalf of others, has satisfied the class certification requirements set forth in Code of Civil Procedure section 382. (Bus. & Prof. Code, §§ 17203, 17535.) Proposition 64 became effective on November 3, 2004. (Cal. Const., art. 11, § 10, subd. (a).)
Following the passage of Proposition 64, Young America moved for judgment on the pleadings, arguing Proposition 64 retroactively applied to eliminate any standing Lynch had under the UCL. In opposition to the motion, Lynch argued Proposition 64 did not apply to pending cases, claimed he still had standing even under the amended statute, and requested leave to amend if additional facts were necessary to adequately allege standing. The trial court denied Young America’s motion, ruling the amendments approved in Proposition 64 did not apply to pending actions.
Young America filed a petition for writ of mandate or other appropriate relief seeking review of the trial court’s rulings on its demurrer and motion for judgment on the pleadings. We issued the alternative writ and stayed further proceedings in the superior court. We subsequently decided Proposition 64 applies to pending cases and as the complaint filed by Lynch alleged he was bringing this action only as an individual on behalf of the public, Lynch failed to satisfy the new standing requirements. We also concluded the complaint was incapable of amendment to assert standing in a specific individual or class of individuals under the amended UCL. We directed issuance of a writ of mandate directing the trial court to grant Young America’s motion for judgment on the pleadings without leave to amend.
The denial of a motion for judgment on the pleadings may be reviewed by means of a petition for writ of mandate. (Fire Ins. Exchange v. Superior Court (2004) 116 Cal.App.4th 446, 452.) An order overruling a demurrer, while not routinely reviewable by writ proceedings, may be considered on a petition for a writ of mandate where the issue is one of substantial legal importance. (Babb v. Superior Court (1971) 3 Cal.3d 841, 851; City of Ontario v. Superior Court (1993) 12 Cal.App.4th 894, 898.)
The California Supreme Court granted Lynch’s petition for review. After the Supreme Court decided Branick, supra, 39 Cal.4th 235, and its companion case of Californians for Disability Rights v. Mervyn’s LLC (2006) 39 Cal.4th 223 (holding Proposition 64 governs pending cases), the Supreme Court transferred this case back to U.S. for consideration in light of Branick.
DISCUSSION
I.
The Trial Court Erred In Denying Young America’s Motion For Judgment On the Pleadings
A. Standard of Review for a Motion for Judgment on the Pleadings
“In deciding or reviewing a judgment on the pleadings, all properly pleaded material facts are deemed to be true, as well as all facts that may be implied or inferred from those expressly alleged. [Citation.] A ruling on a motion for judgment on the pleadings ‘resolves a mixed question of law and fact that is predominantly one of law, viz., whether or not the factual allegations that the plaintiff makes are sufficient to constitute a cause of action. [Citation.] The resolution of a question of this sort calls for examination de novo. [Citation.]’ [Citation.]” (Fire Ins. Exchange v. Superior Court, supra, 116 Cal.App.4th at pp. 452-453.)
B. Lynch Lacks Standing Under the UCL To Bring this Complaint
The complaint alleges Lynch is a California resident bringing this action pursuant to the UCL as “an individual, on behalf of the general public[.]” The complaint contains no allegations, since it was filed prior to the passage of Proposition 64, that Lynch is a “person who has suffered injury in fact and has lost money or property as a result of such unfair competition.” (Bus. & Prof. Code, §§ 17204, 17535.) The complaint only alleges Lynch’s standing on behalf of the general public. The current complaint, therefore, fails to satisfy the new standing requirements of the UCL after Proposition 64, which the California Supreme Court has determined applies to pending cases. (Californians for Disability Rights v. Mervyn’s, LLC, supra, 39 Cal.4th at p. 227.) As the complaint fails to state a cause of action in Lynch, the trial court erred in denying Young America’s motion for judgment on the pleadings. (Code Civ. Proc., § 438.)
The remaining issue before U.S. is whether Lynch should be allowed an opportunity to amend his complaint.
II.
Leave To Amend Should Not Be Allowed In This Case
A. Branick
In Branick, supra, 39 Cal.App.4th 235, the California Supreme Court concluded Proposition 64 did not forbid amendment of complaints, under the established rules governing leave to amend, to cure standing defects resulting from application of the proposition to pending complaints. (39 Cal.4th at pp. 239, 242.) The court held plaintiffs should be permitted to substitute a new plaintiff who has standing under the amended UCL, subject to the important limitation that the proposed plaintiff “may not ‘state facts which give rise to a wholly distinct and different legal obligation against the defendant.’” (Id. at p. 243.)
The court declined any attempt to decide “at this stage of the proceedings” whether the plaintiffs could amend their complaint. (Branick, supra, 39 Cal.App.4that p. 244.) Procedurally, in Branick the plaintiffs had never had an opportunity to file a motion in the trial court for leave to amend because judgment on the pleadings had been granted in the trial court on the basis of federal preemption, plaintiffs had appealed and while the case was pending on appeal Proposition 64 took effect. (Id. at pp. 240, 242.) As a result, the Supreme Court stated it did not “know the facts that would necessarily inform the superior court’s discretionary decision on [a motion for leave to amend], such as the identity of any person plaintiffs might attempt to substitute and the nature of the claims any substituted plaintiff might assert.” (Id. at pp. 242-243.) The matter belonged to the trial court in the first instance. (Id. at pp. 243-244.) The Supreme Court rejected certain categorical arguments made by the defendants, which are not advanced by Young America here. (Ibid.)
B. Ordinary Rules Regarding Leave To Amend
Since “[a] motion for judgment on the pleadings is tantamount to a general demurrer” (Orange Unified School Dist. v. Rancho Santiago Community College Dist. (1997) 54 Cal.App.4th 750, 764), leave to amend should be granted if there is any reasonable possibility that the plaintiff can state a good cause of action. (Ramirez v. USAA Casualty Ins. Co. (1991) 234 Cal.App.3d 391, 397.) However, “[t]he burden of proving such reasonable possibility is squarely on the plaintiff.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) To meet this burden, the plaintiff must demonstrate how the complaint can be amended to state a cause of action. Such showing may be made either at the trial court or appellate level. (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1386.) If there can be no liability as a matter of law, the party shall not be given leave to amend. (Ramirez v. USAA Casualty Ins. Co., supra, at p. 397.)
C. Analysis
California’s Unclaimed Property Law (UPL) “compels holders of certain classes of abandoned property subject to escheat to report and deliver the property to the State Controller (Controller), who is responsible for enforcing the UPL and may investigate suspected violations. (Code Civ. Proc., §§ 1530, 1532, 1571.) The Controller may examine the records of any person reasonably believed to have failed to report property subject to escheat. ([Code Civ. Proc.,] § 1571.) The Controller can opt to bring an action to enforce the right to an examination or to obtain a judicial determination that property is subject to escheat. ([Code Civ. Proc.,] § 1572, subd. (a)(1), (2).)” (State of California ex rel. Grayson v. Pacific Bell Telephone Co. (2006) 142 Cal.App.4th 741, 745, fn. omitted.)
The California State Controller’s Office has apparently conducted an examination of Young America’s records to determine its compliance with the UPL. We also note that after the Supreme Court transferred this case to U.S. for consideration of Branick, supra, 39 Cal.4th 235, Lynch filed a “Notice Of Intention To Dismiss [underlying] Action” seeking our remand of the case to the trial court so that Lynch could cause it to be dismissed without prejudice. We denied Lynch’s notice. We mention, however, that the notice indicated “the State of California has now joined with about thirty or more other states in an action pending in Iowa state court Fitzgerald, et al. v. Young America Corporation, Civ. No. 6030 (Iowa Dist. Ct., Polk County) . . . seek[ing] to hold Young America accountable for failing to escheat uncashed rebate checks.” Lynch stated, “the relief sought in the Iowa action is essentially the same as that sought by Plaintiff in this action[.]” Thus, it appears California is currently pursuing an enforcement action against this defendant under the UPL.
The complaint filed by Lynch in this case alleges Young America is a holder of property subject to the UPL in the form of uncashed rebate checks sent to consumers in California and that its failure to report and surrender the funds to the State of California is an unlawful business practice under the UCL.
In his opposition in the trial court to Young America’s motion for judgment on the pleadings, Lynch contended he could still have standing under the amended UCL, if it applied, because “one of the objectives of the UPL is to give the State of California use of escheated property until it is claimed by the owner [citation], no doubt so that such monies can be applied for the welfare and needs of all California residents. By alleging that Young America has wrongfully retained monies that should be available to the State for this purpose, plaintiff essentially alleges that he and the other residents of the State have been injured in the same manner as if Young America had taken money directly from their pockets.” Lynch claimed he was injured by Young America’s practice of not reporting and escheating funds to the state because such funds could have been put to use “for the benefit of its residents.” If the trial court determined standing had not been adequately alleged, Lynch requested leave to amend to allege additional facts, but gave no indication what such facts would be. Lynch repeated these contentions nearly verbatim in his return to Young America’s petition for writ of mandate here, but again gave no details of what additional facts he could allege. In his supplemental brief on remand, Lynch asserts his cause of action adequately states his injury in fact under Proposition 64 because nothing in Proposition 64 eliminates the possibility that an unfair business practice claim can be stated where the defendant’s conduct causes injury to all residents of the state.
The nature of the injury asserted by Lynch is not a specific individual injury to each resident of the state, but a very generalized injury shared by all the residents of the state alike. The unfair practice alleged by Lynch under the UPL consists of the failure to escheat funds from uncashed rebate checks to the State, depriving the State of the use of such monies. “By definition, therefore, his individual injury, if any, is coextensive in scope and kind with the general public. Yet Proposition 64 requires some wrong or harm to an interest or right over and above the interests and rights held in common with the public at large in order for an individual to have standing to sue.” (State of California ex rel. Grayson v. Pacific Bell Telephone Co., supra, 142 Cal.App.4th at p. 758 [plaintiff could not amend complaint to allege sufficient standing under UPL in escheat action].) Otherwise the amendments to sections 17203 and 17204 enacted by Proposition 64 will have changed nothing, contrary to the expressed intent of the California voters “that only the California Attorney General and local public officials be authorized to file and prosecute actions on behalf of the general public.” (Prop. 64, § 1(f).) As a matter of law, there is no reasonable possibility Lynch can plead sufficient standing as an individual under the amended UPL for the escheat action he has alleged.
Lynch admits the relief his complaint seeks is essentially the same as the relief sought in the Iowa action in which the State of California has joined. (See fn. 3, ante.)
Lynch claims, for the first time in his supplemental brief on remand, that he can amend his complaint to allege injury in fact based on Young America’s failure to comply with the reporting obligations of the UPL. Lynch references the provisions of the UPL requiring every holder of funds or other property escheated to the state to report to the Controller the name and last known address of each owner of property of at least $50 value escheated (Code. Civ. Proc., § 1530, subd. (a) & (b)(1)) and requiring the Controller in turn to give publication notice to the owners of unclaimed property that information reqarding the property may be obtained from the Controller. (Code Civ. Proc., § 1531.) “Since the obvious purpose of these provisions is to reunite the owner with his or her property,” Lynch claims “the failure of a holder of property to comply with this provision interferes with the owner’s right to assert a claim for the rightful return of his or her property[.]”
An individualized mailed notice is required in the limited situation where the account paid or delivered to the Controller contains a social security number and the Franchise Tax Board provides a current address for the owner that is different from the address previously reported to the Controller. (Code. Civ. Proc., § 1531, subd. (d).)
It is the Controller who has power to investigate and enforce by suit the reporting provisions of the UPL. (Code Civ. Proc., § 1571 et seq.) Lynch has informed this court that such an investigation and suit has been undertaken against Young America, but it is apparently Lynch’s theory that a person who has not cashed a rebate check can still pursue a UCL action against Young America based on the Controller’s failure to give notice. We can see a number of problems with Lynch’s theory, but point out two. Since Lynch does not suggest he is such a person, apparently he proposes to substitute such a person as plaintiff if allowed to amend. Lynch does not name any such proposed plaintiff or provide any factual details regarding the status of such person’s uncashed rebate. Nor does Lynch explain how any such identified person could be injured “in fact” by the lack of publication notice by the Controller in light of the Controller’s pending action against Young America and Lynch’s concession, in a footnote in his supplemental brief, that as a result, “whatever notification requirements might be imposed on the State Controller by the UPL have likely been satisfied.” Lynch has not adequately identified a way his complaint could be amended to plead sufficient standing.
Nevertheless, citing Branick, supra, 39 Cal.4th at pp. 242-243, Lynch argues this case should be remanded to the trial court to consider in the first instance whether there is any new plaintiff or new viable claim that Lynch could assert through amendment. There is a critical difference between the procedural posture of the case in Branick and the case here. Proposition 64 was passed while Branick was on appeal and the plaintiffs there never had any opportunity to file a motion to amend explaining the identity of any new proposed plaintiff and the nature of the claims he or she might assert. In contrast here, Proposition 64 was passed while this case was still in the trial court. Young America brought its motion for judgment on the pleadings on that basis. Lynch responded with opposition that included a request for leave to amend if the trial court decided standing was not adequately alleged. Lynch had an opportunity in that request to explain how he proposed to amend to correct any defect in standing, but he provided no such explanation. In his original briefing to this court, Lynch repeated his argument that he still had standing. He requested leave to amend if we determined he had not adequately alleged standing, but he did not give U.S. any further information regarding what he could add or change to plead sufficient standing. Lynch has now had a third opportunity after remand to demonstrate how the complaint can be amended. We have rejected his proffered suggestions.
Neither the ordinary rules governing leave to amend nor Branick require U.S. to give Lynch yet another opportunity to show there is a reasonable possibility the complaint can be amended to state a cause of action under the UCL. (Cryoport Systems v. CNA Ins. Companies (2007) 149 Cal.App.4th 627, 632-633.) “The burden of proving such reasonable possibility is squarely on the plaintiff.” (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) Lynch has failed to meet this burden despite three opportunities, starting in the trial court. Where there can be no liability as a matter of law, the party shall not be given leave to amend. (Ramirez v. USAA Casualty Ins. Co., supra, 234 Cal.App.3d at p. 397; Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 711.)
DISPOSITION
Let a writ of mandate issue directing respondent superior court to vacate its order denying Young America’s motion for judgment on the pleadings and enter a new and different order granting that motion and denying leave to amend. Young America is awarded costs. (Cal. Rules of Court, rule 8.490(m).)
We concur: SIMS , Acting P.J., DAVIS , J.