Company facing county civil claims not entitled to jury trial, state high court rules

Reversing an appellate court decision, the state Supreme Court ruled Thursday a company accused by four counties of unfair business practices and false advertising is not entitled to a jury trial and must have the case decided by a judge.

High court justices concluded the lawsuit against a debt repayment service company seeking injunctive relief and civil damages "are equitable in nature and are properly tried by the court rather than a jury," Chief Justice Tani G. Cantil-Sakauye wrote for the court. Nationwide Biweekly Administration Inc. et al. v. Superior Court of Alameda County et al., 2020 DJDAR 4019 (State Supreme Court, filed July 18, 2018).

She wrote the "gist" of the state statutes is equitable even though Alameda, Monterey, Marin and Kern counties are also seeking damages. James R. Saywell, an attorney with Jones Day who represented Nationwide Biweekly Administration during oral arguments, cited those possible penalties to say during oral arguments the company is entitled to a jury trial.

Cantil-Sakauye rejected the 1st District Court of Appeal's reliance on a 1987 U.S. Supreme Court decision, which reversed a judge's decision to impose civil penalties on a developer who violated the federal Clean Water Act because that violated his rights under the Seventh Amendment to the U.S. Constitution. Tull v. United States, 481 U.S. 412 (1987).

Cantil-Sakauye wrote Tull did not apply to state actions under the California Constitution.

"The federal civil jury trial provision of the Seventh Amendment applies only to civil trials in federal court; federal decisions explicitly hold that the civil jury trial provision of the Seventh Amendment does not apply to state court proceedings," she added.

Justice Leondra R. Kruger, in a concurring opinion joined by Justices Goodwin H. Liu and Mariano-Florentino Cuellar, agreed with the majority's conclusion the counties' action is "predominantly equitable in nature."

Kruger, who most aggressively questioned Matthew L. Beltramo of the Alameda County district attorney's office during oral arguments, agreed with the majority a judge should decide the unfair business practice claims but raised concerns about the false advertising claims.

"At least considered in isolation, then, nothing about the nature of liability determination under the [False Advertising Law] suggests it sits beyond the scope of the jury right," Kruger wrote, expressing concern about the majority's view that it's preferable to have a judge consider such cases -- an argument she said could be made with many civil claims.

But in this case, Kruger concluded, it wouldn't make much difference because the claims are intertwined with the unfair business practices claims.

Saywell declined to comment on the ruling Thursday, including the question of whether the company would appeal the decision to the U.S. Supreme Court in light of the dispute over the Tull ruling.

Teresa M. Drenick of the Alameda County district attorney's office voiced satisfaction with the ruling.

"We are pleased by the decision by the California Supreme Court and believe that it is consistent with the state's consumer protection laws," she said.

Cases cited in the opinion covered a host of court rulings going back centuries, and oral arguments included discussion that went back to the Federalist Papers.

Willis M. Wagner, a Sacramento-based partner with Greenberg Traurig LLP who is not involved in the case, said the ruling's outcome -- if not overturned by the U.S. Supreme Court -- is straightforward in requiring companies accused of unfair business practices and false advertising to face court trials.

But, he said, "it will be interesting to see how the opinion impacts similar statutory enforcement action schemes, like Proposition 65, that have an injunctive and penalty component."

Wagner said Thursday's ruling leaves the door open, albeit "only to a very small degree," for jury trials in cases filed under the Safe Drinking Water and Toxic Enforcement Act of 1986.

Cantil-Sakauye's majority opinion was joined by Justices Ming W. Chin, Carol A. Corrigan and Joshua P. Groban.