The Bang from Zhang: Shockwaves Already Felt in California

December 1, 2013
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The California Supreme Court’s significant decision in Zhang v. Superior Court, reported in our last issue (see Expect Focus, Vol. III, Summer 2013), has already impacted state and federal practice. The key holding, that insurance practices violating California’s Unfair Insurance Practices Act (UIPA) can support a cause of action under that state’s Unfair Competition Law (UCL), has already been relied upon by numerous courts. The Ninth Circuit cited Zhang in reversing a trial court’s dismissal of a UCL claim, finding that the fact that the alleged conduct may have also violated the UIPA did not bar the UCL claim. And the California Supreme Court mentioned Zhang by analogy in holding that violations of the federal Truth in Savings Act could support a UCL "unlawful" claim.

As importantly, the plaintiffs’ bar has been quick to react, and insurers appear more likely to face complaints that allege violations of various insurance laws as predicate UCL claims. In existing cases, plaintiffs may move to amend their complaints or for reconsideration of earlier rulings. For example, in a case involving equity-indexed universal life insurance, Walker v. Life Ins. Co. of the S.W., the plaintiffs recently moved for reconsideration and to amend their complaint to re-allege UCL claims that were dismissed over two years ago. They argued that under Zhang, the purported violation of the state laws regarding the content of illustrations could now support a cause of action under the UCL. Whether or not courts allow plaintiffs to succeed remains to be seen, but companies should be aware that even their past victories may be open to re-litigation.

©2020 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.

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