Businesses Facing Civil Penalties Under California UCL Entitled to Jury Trial

On Wednesday, a California district court found that a business has a constitutional right to a jury trial when the state seeks to impose civil penalties for violations of California’s Business and Professions Code (Unfair Competition Law (“UCL”)) and Financial Code.  Prior to the district court’s decision, it was well-known in California that there was no right to a jury trial for violations of the UCL.

In this most recent case, Nationwide Biweekly Admin, Inc. v. Superior Court of Alameda County, First Appellate District No. A150264, the People sought civil penalties and an injunction, among other relief, against Nationwide Biweekly Administration, Inc. and its co-Petitioners (“NBA”) under the UCL and Financial Code in the underlying lawsuit.  The People successfully moved to strike the NBA’s jury demand.  However, the California Supreme Court instructed the district court to hear the issue again.

The district court relied primarily on what it called the “historical character” of governmental actions seeking civil penalties as analyzed in decades-old case law.  It considered:

  • whether, under English common law, a court of law or a court of equity would hear the cause of action; and
  • the type of remedy sought.

Ultimately, the district court found that NBA was entitled to a jury trial as to liability, but that a court should decide the amount of any penalty.  The district court further noted that the right to equitable relief does not necessarily preclude a jury trial on legal issues.  The district court acknowledged its departure from established California case law.  Finding those cases either “not on point” or “not fully analyz[ing] the jury trial issue,” the district court declined to follow them.  For this reason, the NBA decision is significant.  The decision stands to alter black letter law in California regarding the availability of a jury trial to a party accused of violating the UCL who is also subject to a civil penalty.