People v. E. Inc.

• Citation: 165 Cal.Rptr. 73,106 Cal.App.3d 315
• Court: California Court of Appeals
• Decision Date: 29 May 1980
• Parties: The PEOPLE, Plaintiff and Appellant, v. E.W.A.P., INC., a corporation doing business in California, Defendant and Respondent. Civ. 55992.

Page 73

165 Cal.Rptr. 73

106 Cal.App.3d 315

The PEOPLE, Plaintiff and Appellant, v. E.W.A.P., INC., a corporation doing business in California, Defendant and Respondent.

Civ. 55992.

Court of Appeal, Second District, Division 5, California.

May 29, 1980.

Hearing Denied Aug. 21, 1980

Burt Pines, City Atty., Los Angeles, George C. Eskin, Chief Asst. City Atty., Noel R. Slipsager, Asst. City Atty., Chief, Sp. Operations Div., Richard M. Helgeson, Asst. City [106 Cal.App.3d 317] Atty., Head, Sp. Trials Section, and Maureen R. Siegel, Deputy City Atty., for plaintiff and appellant

Brown, Weston & Sarno, David M. Brown and G. Randall Garrou, Beverly Hills, for defendant and respondent.

ASHBY, Associate Justice.

The People appeal from an order of dismissal following the sustaining of a demurrer to the People's complaint seeking an injunction and assessment of civil penalties for unlawful business practice as defined by former Civil Code section 3369, now Business and Professions Code section 17200. ¹

Section 17200 provides: "As used in this chapter, unfair competition shall mean and include unlawful, unfair or fraudulent business practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code." (Emphasis added.)

Section 17202 states: "Notwithstanding Section 3369 of the Civil Code, specific or preventive relief may be granted to enforce a penalty, forfeiture, or penal law in a case of unfair competition." Sections 17203 and 17204 authorize the Attorney General, any district attorney, and certain city attorneys to bring an action to enjoin an act of unfair competition. ² Sections 17206 and 17207 authorize the assessment of civil penalties for violations of this chapter and violations of any injunction issued pursuant to section 17203. Section 17205 provides: "Unless otherwise expressly provided, the remedies or penalties provided by this chapter are cumulative to each other and to the remedies or penalties available under all other laws of this state."

According to the allegations of the complaint, which must be accepted as true for purposes of a demurrer, defendant E.W.A.P., Inc. (Erotic Words and Pictures, Inc.), is a corporation organized and existing under the laws of California with its principal place of business in Chatsworth. The named individual defendants are officers of the corporation. At least since April 12, 1977, and continuing to the date of filing of this complaint (Apr. 7, 1978) defendants have been engaged in commercially distributing and possessing for commercial distribution obscene matter as defined in Penal Code section 311, subdivision (a). Specifically, defendants have distributed or possessed for distribution various copies of 44 named obscene 8-millimeter films and various copies of 3 named obscene magazines. Such commercial distribution and possession for commercial distribution of each of these films and magazines is an unlawful business practice in that distribution and possession for distribution of obscene matter is prohibited by Penal Code section 311.2. ³

The complaint seeks to enjoin defendants from commercially distributing or possessing for commercial distribution copies of the films and magazines identified in the The trial court sustained a demurrer to the People's complaint, apparently because the People failed to allege specifically an injury or damage to consumers or competitors of defendants. ⁴

complaint and seeks the assessment of a civil penalty of $2,500 pursuant to Business and Professions Code section 17206 for each act of commercial distribution or possession for commercial distribution of each copy of the films and magazines.

DISCUSSION

The People contend the complaint adequately alleges an unlawful business practice within the meaning of section 17200. We agree. Since the addition of the word "unlawful" to the predecessor statute in 1963, this section has been liberally construed so as not to be limited to traditional anticompetitive practices. (Barquis v. Merchants Collection Assn., 7 Cal.3d 94, 111-113, 101 Cal.Rptr. 745, 496 P.2d 817; People v. McKale, 25 Cal.3d 626, 631-632, 159 Cal.Rptr. 811, 602 P.2d 731; see also Diaz v. Kay-Dix Ranch, 9 Cal.App.3d 588, 591-593, 88 Cal.Rptr. 443.) Our Supreme Court has stated that the purpose of the amendment was to " 'extend the meaning of unfair competition to anything that can properly be called a business practice and that at the same time is forbidden by law.' " (Barquis v. Merchants Collection Assn., supra, 7 Cal.3d at pp. 112-113, 101 Cal.Rptr. at p. 758, 496 P.2d at p. 830; People v. McKale, supra, 25 Cal.3d at p. 632, 159 Cal.Rptr. 811, 602 P.2d 731.)

The distribution or possession for distribution of obscene matter is unlawful under Penal Code section 311.2. When such conduct is engaged in as a "business practice" it comes within the meaning of section 17200. The complaint in this case adequately alleges such conduct as a business practice. It alleges that defendant E.W.A.P. is a corporation organized under the laws of California with a principal place of business at a designated address in Chatsworth. Certain individual defendants are alleged to be officers of the corporation. The complaint alleges that the defendants have engaged in "commercial" distribution or possession for "commercial" distribution of obscene matter over a period of approximately a year, and the complaint specifically describes the numerous films and magazines involved. A business practice has been adequately alleged. (See Barquis v. Merchants Collection Assn., supra, 7 Cal.3d at p. 113, 101 Cal.Rptr. 745, 496 P.2d 817; People v. McKale, supra, 25 Cal.3d at p. 632, 159 Cal.Rptr. 811, 602 P.2d 731.)

The Legislature has determined that trafficking in obscene matter is prohibited. When engaged in as a business practice, it is an unlawful business practice. It is not necessary for the People additionally to allege that it is anticompetitive or harmful to the consumer of such products. ⁵

In People v. K. Sakai Co., 56 Cal.App.3d 531, 128 Cal.Rptr. 536, the District Attorney of San Francisco brought an action under former Civil Code section 3369 to enjoin the corporate owner and operators of a grocery store from selling canned whale meat in violation of certain sections of the Penal Code which prohibited importation for commercial purposes or possession with intent to sell the parts of certain endangered species of animals. The purpose of the law was not primarily to protect the consumer or competitors, but to preserve the environment for the benefit of all citizens by eliminating the market for products of these species. (Id., at pp. 535-537, 128 Cal.Rptr 536.) Nevertheless, the action under former Civil Code section 3369 was upheld. ⁶

Traditionally, courts of equity have declined to use the power of injunction to enforce the penal laws. However, the fact that certain conduct is a crime will not prevent the issuance of an injunction if the conduct also falls within a specific statute authorizing an injunction. (People v. Lim, 18 Cal.2d 872, 879-882, 118 P.2d 472 (gambling establishment, nuisance); People ex rel. Busch v. Projection Room Theater, 17 Cal.3d 42, 49-53, 130 Cal.Rptr. 328, 550 P.2d 600 (exhibition of obscene films, nuisance); Weis v. Superior Court, 30 Cal.App. 730, 731-732, 159 P. 464 (indecent exhibition, nuisance).) Here the unfair competition law specifically authorizes injunctions and civil penalties in addition to the remedies of the penal law. Section 17202 provides: "Notwithstanding Section 3369 of the Civil Code, ⁷ specific or preventive relief may be granted to enforce a penalty, forfeiture, or penal law in a case of unfair competition." Section 17205 provides: "Unless otherwise expressly provided, the remedies or penalties provided by this chapter are cumulative to each other and to the remedies or penalties available under all other laws of this state." (People v. McKale, supra, 25 Cal.3d 626, 633, 159 Cal.Rptr. 811, 815, 602 P.2d 731, 735.)

Thus the unfair competition law is not a roving warrant for a prosecutor to use injunctions and civil penalties to enforce criminal laws. Its application to conduct which violates the penal law is limited to circumstances where such conduct is also a business practice. The trial court seemed concerned that if these sections were applicable in the circumstances of this case, they would equally be applicable to a street-walking prostitute or a small-time bookie, who arguably are engaged in "business" of a criminal nature. ⁸ Whether any particular conduct is a business practice within the meaning of section 17200 is a question of fact dependent on the circumstances of each case. The possible misapplication of the law in a future case should not prevent its proper application to the present case.

The civil remedies of the unfair competition law were enacted because criminal remedies were too often inadequate to protect the public, especially where corporate defendants were concerned. (See People v. Superior Court (Jayhill), 9 Cal.3d 283, 288-289 & fn. 3, 107 Cal.Rptr. 192, 507 P.2d 1400; Review of Selected 1965 Code Legislation (Cont.Ed.Bar 1965) p. 21; Bowley, Law Enforcement's Role in Consumer Protection, 14 Santa Clara Law., 555, 564-567 (1974).) Courts can determine on a case-by-case basis whether the defendant's conduct involves "business practice" so as to be subject to the unfair competition law in addition to the criminal law. ⁹

Defendants advance several additional arguments in support of the judgment. They argue that the assessment of the civil damages provided in section 17206 would amount to a penal sanction which would violate due process of law if imposed without the full panoply of rights available in a criminal trial, such as proof beyond a reasonable doubt and the right to a jury trial. The law is well settled to the...