Procedural Posture

Plaintiff plan enrollee filed suit against defendant health care companies, seeking injunctive relief under the Consumer Legal Remedies Act (CLRA), Cal. Civ. Code § 1770, and Cal. Bus. & Prof. Code §§ 17500 and 17200. He also stated a claim for unjust enrichment. The trial court denied the companies' request to compel arbitration. The Court of Appeal of California, First Appellate District, Division Two, affirmed. The companies appealed.

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The plan enrollee claimed that he had been fraudulently induced into signing up with the health care companies plans, alleging that internal policies interfered with medical care providers' primary goal of providing good care. He requested injunction barring further violations of the unfair competition law (UCL), Cal. Bus. & Prof. Code § 17200; false advertising law, Cal. Bus. & Prof. Code § 17500; and CLRA. He also requested disgorgement of the ill-gotten gains. On appeal the court affirmed the judgment denying the companies' request to compel under the enrollment agreement the arbitration of the UCL, CLRA, and false advertising claims. The court held that the Federal Arbitration Act (FAA) did not compel arbitration in the instant case to the extent that the enrollee was acting as a private attorney general in that such claims were being undertaken for the benefit of all enrollees; this included the UCL, false advertising, and CLRA claims. However, the court held that the disgorgement, restitution, and unjust enrichment claims were fully arbitrable under the FAA, despite their deterrent effect that could benefit a larger class.

Outcome

The court reversed the judgment as to the denial to compel arbitration on statutory and common law claims for equitable monetary relief for restitution, disgorgement, and unjust enrichment. In all other respects the court affirmed the judgment. The court further remanded the cause for further proceedings.