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Meyer v. Sprint Spectrum L.P.

January 29, 2009


Ct.App. 4/3 G037375 Orange County Super. Ct. No. 04CC06254 Judge: Sheila Fell.

The opinion of the court was delivered by: Moreno, J.

In this case, plaintiffs sued defendant cellular telephone company alleging that its arbitration agreement and other remedial provisions were unconscionable, although plaintiffs did not otherwise allege that these provisions had been enforced against them or caused them damage. There are two questions before us. First, whether under these circumstances, a plaintiff may obtain injunctive relief to compel the removal of the allegedly unconscionable provisions under the California Consumer Legal Remedies Act (CLRA; Civ. Code, § 1750 et seq.). Second, whether a plaintiff may obtain declaratory relief pursuant to Code of Civil Procedure section 1060 to declare these provisions unlawful and unenforceable.

We conclude that a plaintiff has no standing to sue under the CLRA without some allegation that he or she has been damaged by an alleged unlawful practice, an allegation plaintiffs do not sufficiently make here. Moreover, we conclude the trial court did not abuse its discretion in ruling that declaratory relief was not appropriate under these circumstances. We therefore uphold the Court of Appeal's judgment affirming the trial court's order sustaining a demurrer to plaintiffs' complaint.


The facts, taken largely from the Court of Appeal's opinion, are not in dispute. Susanne Ball sued Sprint Spectrum L.P. (Sprint) on May 27, 2004, on behalf of the general public, for violating the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.). Following the enactment of Proposition 64, the complaint was amended; Ball, who was not a Sprint customer, withdrew from the litigation, and Meyer and Phillips were substituted as plaintiffs.

After three more amendments of the complaint, two in response to the trial court's sustaining a demurrer with leave to amend, plaintiffs filed a fourth amended complaint, which alleged three causes of action: violation of the UCL; violation of the CLRA; and for declaratory relief. The basis for each cause of action was plaintiffs' claim that certain provisions of Sprint's customer service agreement were unconscionable and illegal because they: (1) required that the parties to submit disputes under the customer service agreement to binding arbitration pursuant to the rules of Judicial Arbitration and Mediation Services, National Arbitration Forum, or an organization chosen by the parties; (2) waived the right to resolve disputes through a jury trial; (3) waived class action in arbitration; (4) failed to provide for discovery before arbitration; (5) split the cost of arbitration; (6) disclaimed warranties and limited liability; (7) permitted Sprint to unilaterally change the terms of the customer service agreement; (8) imposed a 60-day limitation period for initiating billing disputes; and (9) imposed a $150 early-termination fee.

Sprint demurred to the fourth amended complaint, arguing plaintiffs lacked standing to assert any of the alleged causes of action. The trial court sustained the demurrer without leave to amend. It concluded that "[p]laintiffs have not shown they were personally damaged or that the allegedly unconscionable or illegal provisions have been enforced against them." Plaintiffs did not request leave to amend from the trial court.

The Court of Appeal affirmed the trial court, holding that (1) plaintiffs could not demonstrate an "injury in fact," which is a prerequisite to asserting a claim under the UCL; (2) without any showing of damage, plaintiffs had no standing to sue under the CLRA; and (3) plaintiffs had alleged no actual controversy between them and Sprint, and that therefore declaratory relief was not available. Plaintiffs sought review in this court of the second and third issues only, and we granted review.


A. Does the CLRA Require a Showing of Damages in Order to Demonstrate Standing?

The CLRA makes unlawful, in Civil Code section 1770, subdivision (a), (all undesignated statutory cites are to the Civil Code) various "unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer." These include, most pertinently to the present case, "[r]epresenting that a transaction confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law" (id., subd. (a)(14)) and "[i]nserting an unconscionable provision in the contract." (Id., subd. (a)(19).) Plaintiffs contend that with various unconscionable provisions in the arbitration agreement and various other unlawful restrictions on remedies and penalties, Sprint violated the CLRA and may be enjoined from including such provisions in its customer services agreement.

Plaintiffs do not allege that there was any dispute between them and Sprint that necessitated resort to arbitration or to the other remedial provisions. Rather, theirs can be characterized as a preemptive lawsuit to strike these terms should any dispute arise. The question is whether the CLRA gives standing to permit such preemptive suits.

This question is one of statutory interpretation. When a court attempts to discern the meaning of a statute, "it is well settled that we must look first to the words of the statute, 'because they generally provide the most reliable indicator of legislative intent.' [Citation.] If the statutory language is clear and unambiguous our inquiry ends. 'If there is no ambiguity in the language, we presume the Legislature meant what it said and the plain meaning of the statute governs.' [Citations.] In reading statutes, we are mindful that words are to be given their plain and commonsense meaning." (Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1103.)

Sprint contends that plaintiffs do not have standing, relying on the plain language of section 1780, subdivision (a) (hereafter section 1780(a)), which states: "Any consumer who suffers any damage as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770 may bring an action against that person to recover or obtain any of the following: [¶] (1) Actual damages, but in no case shall the total award of damages in a class action be less than one thousand dollars ($1,000). [¶] (2) An order enjoining the methods, acts, or practices. [¶] (3) Restitution of property. [¶] (4) Punitive ...

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