Under California Constitution, Shopping Center May Not Prohibit Persons from Urging Customers to Boycott a Mall Store

Case: Fashion Valley Mall, LLC v. National Labor Relations Board, Case No. S144753 (Cal. Sup. Ct. 12/24/07)

The One Sentence Summary: Although shopping centers may enforce reasonable time, place, and manner rules to ensure that free speech activities do not interfere with normal business operations, they may not enforce content-based restrictions such as prohibiting speech that urges a boycott of one or more stores in the center.


What They Were Fighting About: Members of a union representing pressroom employees of a San Diego general circulation newspaper distributed leaflets to customers entering and leaving Robinsons-May department store at Fashion Valley Mall in San Diego. The union and the newspaper had been unable to reach a new collective bargaining agreement. The leaflets alleged that the newspaper treated its employees unfairly and stated that the department store advertised in the newspaper. Mall officials required the leafleting to stop because the union members had not obtained a permit to engage in expressive activity at the mall. Under mall rule 5.6.2, a permit applicant must agree to refrain from conduct urging customers not to purchase merchandise or services offered by one or more stores or merchants in the mall. After the union filed charges with the National Labor Relations Board ("NLRB"), an administrative law judge ruled that the union members were engaged in a lawful boycott of the department store and ordered the mall to cease and desist from prohibiting the leafleting. The NLRB affirmed that order, finding that California law permits speech and petitioning activity in private shopping centers subject to reasonable time, place, and manner rules and that rule 5.6.2 was an impermissible content-based restriction. On appeal, the United States Court of Appeals for the District of Columbia Circuit requested that the California Supreme Court decide whether under California law the mall could maintain and enforce rule 5.6.2 against the union.

Court Holdings: The California Supreme Court granted the request for review and held, in a 4-3 decision, that the right to free speech under the California Constitution includes the right to urge customers in a private shopping mall to boycott one or more of the mall's stores.

• In Robins v. Pruneyard Shopping Center, 23 Cal. 3d 899 (1979), the California Supreme Court held that the California Constitution protects speech and petitioning in shopping centers that are privately owned (even though the First Amendment to the United States Constitution does not), subject to reasonable time, place, and manner rules.
• In the present case, the court rejected the mall's argument that its rule prohibiting speech that advocates a boycott of a mall store or merchant is a reasonable regulation to prevent interference with normal business operations.
• The court found that the mall's rule is not content-neutral because it prohibits speech urging a boycott while permitting speech that does not, precluding an entire category of speech. The court concluded that the mall's rule could not be justified by any legitimate concerns that are unrelated to content. Peaceful leafleting that urges a boycott in a mall does not by its nature create disruptive congestion, nor is it inherently intrusive or coercive like some solicitations for monetary donations that may be prohibited. Leaflets urging a boycott may persuade customers not to patronize a store, but the mall's concern over the effectiveness of the speech's message is not a proper basis for prohibiting it.
• Applying strict scrutiny, the court concluded that the mall's interest in maximizing the profits of its merchants was not compelling compared to the union's right to free speech.
• The three dissenting justices advocated the overruling of Pruneyard (which has been rejected by most other jurisdictions) on the grounds that private property should not be treated as a free speech zone. Moreover, they opined that even under Pruneyard, free speech activity must not be incompatible with the normal use of the property, and that speech urging a boycott of businesses at a shopping center is incompatible with the center's purpose of enabling its tenants to do business. "We should not compel shopping center owners to permit activity that interferes with the purpose for the center's existence."

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For Standing, California's Unfair Competition Law Requires Injury in Fact and Causation

Case: Hall v. Time Inc., Case No. G038040 (Cal. Ct. App. 1/7/08)

The One Sentence Summary: Plaintiff could not establish injury in fact or causation required by California's Unfair Competition Law where merchant's alleged scheme to disregard 21-day free preview period did not induce him to pay for book immediately upon receipt or keep a book that he otherwise would have returned.


What They Were Fighting About:

Plaintiff Jeffrey Hall alleged that Time engaged in an unlawful, unfair, or fraudulent scheme in violation of California Business and Professions Code Section 17200 in offering consumers a free preview period for 21 days in which to review a book and return it to Time with no obligation to purchase. The complaint alleged that during the 21-day period, Time sent consumers invoices demanding payment and not referring to a free preview period, so as to deceive consumers into believing that they had an immediate obligation to pay. Hall ordered a book from Time but did not pay during the 21-day free preview period after receiving an invoice. He paid for the book 10 months later after a collection agency sent a demand for payment. The complaint alleged a single cause of action for class action relief under Section 17200. The trial court dismissed the complaint without leave to amend on the grounds that plaintiff received the book that he ordered, at the price and payment schedule that he requested.

Court Holdings: The court of appeal affirmed the dismissal of plaintiff's complaint because he could not meet the standing requirements under California's Unfair Competition Law ("UCL").

• As a result of Proposition 64 enacted in November 2004, a plaintiff suing for violation of Section 17200 must have "suffered an injury in fact" and "lost money or property as a result of such unfair competition" in order to have standing.
• Plaintiff could not allege an injury in fact because he did not expend money due to Time's alleged acts of unfair competition. Hall paid Time $29.51, but he received the book that he ordered in exchange. "He did not allege he did not want the book, the book was unsatisfactory, or the book was worth less than what he paid for it."
• Plaintiff also could not satisfy the second prong of the standing test - that he "lost money or property as a result of" Time's alleged unfair competition. The court held that this language imposes a causation requirement for UCL standing. In the context of a fraud claim, causation means justifiable reliance on the alleged misrepresentation.
• Hall could not allege causation because Time's conduct did not cause him to believe that he did not have a 21-day free preview period and was obligated to keep and pay for the book upon receipt. Moreover, "Hall did not allege he did not want the book or Time's alleged acts of unfair competition induced him to keep a book he otherwise would have returned during the free trial period."

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