Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—9th Cir.: Charging hotel guests for newspaper did not violate California’s Unfair Competition Law, (Feb 11, 2014)

By Peter Reap, J.D., LL.M.

The federal district court in San Francisco correctly determined that that Hilton Group, Plc., Hilton International Co., and Hilton Hotels Corporation (collectively, “Hilton”) did not violate the California Unfair Competition Law (“UCL”) by including the price of a provided newspaper in the room charge while informing guests in fine print on registration materials that they can receive a $.75 credit if they inform the front desk that they do not wish to receive the newspaper, the U.S. Court of Appeals in San Francisco has decided (Harmon v. Hilton Group, Plc., February 10, 2014, Per curiam). Thus, the lower court’s dismissal of a lawsuit filed by a former guest at one of Hilton’s hotels was affirmed.

Rodney Harmon alleged that Hilton violated all three of the UCL’s prongs. However, Harmon’s unlawful business practice claim failed because the factual allegations of his complaint did not support a plausible inference that Hilton’s newspaper policy violated the California Consumer Legal Remedies Act (“CRLA), as discussed below, the appellate court held. Harmon’s unfair business practice claim failed under all three tests that California courts applied to unfairness claims because his complaint failed to allege that a reasonable consumer could not avoid any harm allegedly caused by the disclosure policy by closely reading the disclosure. Lastly, Harmon’s complaint failed to plead that Hilton’s newspaper disclosure was a fraudulent business practice, because he offered no allegations that the disclosure had “a likelihood of confounding an appreciable number of reasonably prudent purchasers exercising ordinary care,” and only offered one “isolated example[ ] of actual deception”—himself, the court explained. Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1026 (9th Cir. 2008). Thus, regardless of whether Harmon suffered economic harm, the facts in his complaint did not state a plausible UCL claim.

Harmon’s CLRA claim was also without merit. California Civil Code § 1770(a)(14) proscribes “representing that a transaction confers or involves rights, remedies, or obligations which it does not have or involve.” Section 1770(a)(19) bars insertion of unconscionable provisions into a contract. Here, regardless of damages, Harmon’s complaint did not show that he was entitled to relief because it did not adequately allege that the disclosure policy had the likely effect of misleading the public, according to the court. Moreover, Harmon did not plead that Hilton’s disclosure was unconscionable.

The case is No. 11-18056.

Attorneys: Kirk J. Wolden (Arnold Law Firm) for Rodney Harmon. Randall J. Sunshine (Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor LLP) for Hilton Group, PLC.

Companies: Hilton Group, PLC

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