Case Number: EC062201    Hearing Date: August 08, 2014    Dept: NCB

16. EC062201
WHITE HORSE CAPITAL LLC v REGAL ASSETS LLC
Demurrer and Motion to Strike

The Plaintiff and Defendant are in the business of selling gold and silver coins as investments. DOES 1 to 20 have created online review sites that compare the Plaintiff and Defendant. The Complaint alleges that the DOES 1 to 20 fail to disclose that they are paid by the Defendant. The Plaintiff sent a case and desist letter to the Defendant regarding the websites. The Defendant has refused to remove the websites. The Complaint alleges an unfair business practice. There is a single cause of action for Unfair Business Practices.
This hearing concerns the Defendant’s demurrer and motion to strike.

1. Demurrer
The Defendants argue that the cause of action for unfair business practice lack the particular facts needed to plead claims under Business and Professions Code section 17200.
The Plaintiff’s cause of action is brought for the violation of Business and Professions Section 17200, which defines unfair competition to be any unlawful, unfair, or fraudulent business practice. In order to plead a claim under Business and Professions Code section 17200, there must be allegations showing an unlawful, unfair, or fraudulent business act or practice. Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal. App. 4th 659, 676-677. This includes anything that can properly be called a business practice and that at the same time is forbidden by law. Id. Further, to plead this statutory claim, the pleadings must state with reasonable particularity the facts supporting the statutory elements of the violation. Khoury v. Maly’s of California, Inc. (1993) 14 Cal. App. 4th 612, 619.

A review of the Plaintiff’s allegations in the first cause of action reveals that the Plaintiff has not alleged the particular facts required to plead the statutory elements of the violation. For example, in paragraph 25, the Plaintiff alleges that the Defendants’ acts, which includes both the Defendant, Regal Assets, LLC, and the DOE Defendants, are prohibited and violated the FTC “Disclosure of Material Connections” rule at 16 CFR 255.5 and the California False Advertising Laws. There are no allegations that identify the facts supporting the statutory elements of these rules and statutes, e.g., the particular conduct that violates 16 CFR 255.5 or a particular statute in the False Advertising Laws.

In the opposition papers, the Plaintiff argues that it has pleaded facts indicating an unfair business practices and fraudulent business practices. However, these are not identified in the cause of action. Instead, the Plaintiff alleges the conclusion in paragraph 25 that the Defendants acts constitute unlawful, unfair, and fraudulent business practices. This is insufficient because it does not identify the particular facts that constitute the unlawful, unfair, or fraudulent business practice, as required to plead the statutory claim.

Therefore, the Court sustains the demurrer with 10 days leave to amend the Complaint because it does not plead sufficient facts to constitute a cause of action for unfair business competition.

2. Motion to Strike
The Defendant requests that the Court strike the claim for punitive damages from the Complaint. In light of the tentative to sustain the demurrer, the Court takes the motion to strike off calendar.
However, the Court advises the Plaintiff that California law holds that private persons may not recover damages under the provisions of the unfair competition enacted in Business and Professions Code section 17200 et seq. Chern v. Bank of America (1976) 15 Cal.3d 866, 875. Instead, plaintiffs’ remedies are limited to injunctive relief and restitution ancillary to such relief. Fletcher v. Security Pacific National Bank (1979) 23 Cal.3d 442, 453-54. Since the Plaintiff is seeking relief under section 17200, the Plaintiff cannot recover punitive damages.