9th Cir. Says No UCL Injunction May Lie When Adequate Remedy at Law “Would” Have Existed under CLRA Claim — Even Though CLRA Claim Was Barred

In Guzman v. Polaris Indus., No. 21-55520, 2022 U.S. App. LEXIS 27293, at *7 (9th Cir. Sep. 29, 2022), the Court of Appeals for the 9th Circuit held that a litigant could not bring his equitable UCL claim in federal court because he had an adequate legal remedy in his time-barred CLRA claim.

We agree with the district court that Albright could not bring his equitable UCL claim in federal court because he had an adequate legal remedy in his time-barred CLRA claim.  In Sonner v. Premier Nutrition Corp., the plaintiff initially brought claims for equitable relief under the UCL and CLRA and for damages under the CLRA, but later strategically dismissed her CLRA damages claim to avoid a jury trial. 971 F.3d 834, 837-38 (9th Cir. 2020). We concluded that “federal courts must apply equitable principles derived from federal common law to claims for equitable restitution under California’s [UCL] and [CLRA],” including “the principle precluding courts from awarding equitable relief when an adequate legal remedy exists.” Id. at 837, 842. We held that under this federal inadequate-remedy-at-law principle, if the plaintiffs had an adequate legal remedy under the CLRA, they could not also maintain equitable claims under the UCL and CLRA in federal court. Id. at 844. We reasoned that, even if the relevant state court would allow the equitable claims to proceed, the federal court must apply federal principles governing equity jurisdiction. Id. at 841-44. As a result, having concluded that the plaintiff had an adequate legal remedy in the CLRA, we affirmed the dismissal of the plaintiff’s equitable UCL and CLRA claims. Id. at 845.   Under those federal equitable principles, we have held that equitable relief must be withheld when an equivalent legal claim would have been available but for a time bar. In United States v. Elias, we affirmed the district court’s decision not to exercise equitable jurisdiction where the plaintiff failed to timely follow the procedures to obtain a legal remedy in connection with his claim for a return of seized property. 921 F.2d 870, 874-75 (9th Cir. 1990). We explained that a “[f]ailure to comply with a remedy at law does not make it inadequate so as to require the district court to exercise its equitable jurisdiction.” Id.; see also United States v. Bame, 721 F.3d 1025, 1031 (8th Cir. 2013) (“[T]he fraudulent transfer statutes are an adequate remedy at law even if recovery under these statutes is time-barred.”); Norris v. Grosvenor Mktg. Ltd., 803 F.2d 1281, 1287 (2d Cir. 1986) (“An equitable claim cannot proceed where the plaintiff has had and let pass an adequate alternative remedy at law.” (citing Russell v. Todd, 309 U.S. 280, 289, 60 S. Ct. 527, 84 L. Ed. 754 (1940))), superseded on other grounds by Fed. R. Civ. P. 11.  Reading Sonner and Elias together, we conclude that Albright had an adequate remedy at law through his CLRA claim for damages, even though he could no longer pursue it, and that the district court was therefore required to dismiss his equitable UCL claim. Under Sonner, Albright could not pursue his equitable UCL claim in federal court while his CLRA claim was timely. 971 F.3d at 844. Albright’s failure to have timely pursued his CLRA claim cannot confer equitable jurisdiction on a federal court to entertain his UCL claim. See Elias, 921 F.2d at 874. In other words, Albright cannot have neglected his opportunity to pursue his CLRA damages claim, which was an adequate remedy at law, and then be rewarded for that neglect with the opportunity to pursue his equitable UCL claim in federal court.  It may be that this case would have come out differently had it been brought in California state court. The California Supreme Court has held that the UCL’s four-year statute of limitations applies even when an equivalent claim for damages would have been available under a state law with a shorter statute of limitations had the plaintiff brought the claim earlier. Cortez v. Purolator Air Filtration Prods. Co., 23 Cal. 4th 163, 96 Cal. Rptr. 2d 518, 999 P.2d 706, 716 (Cal. 2000). But Sonner requires that we consider federal equitable principles even when doing so causes our disposition of the case to diverge from state law. Sonner, 971 F.3d at 841-42.  We reject Albright’s attempt to distinguish Sonner on the ground that the plaintiff in that case was attempting to avoid a jury trial by voluntarily dismissing her CLRA damages claim, while Albright’s claim was dismissed involuntarily and involved no attempts at gamesmanship. Sonner’ s holding applies to equitable UCL claims when there is a viable CLRA damages claim, regardless of whether the plaintiff has tried to avoid the bar to equitable jurisdiction through gamesmanship. Nothing in Sonner’s reasoning suggested that its holding was limited to cases in which a party had voluntarily dismissed a damages claim to avoid a jury trial.2 Indeed, Sonner relies on Guaranty Trust Co. of New York v. York, in which the Supreme Court noted the generally applicable rule that equitable relief is not available in federal court in a diversity action unless “a plain, adequate and complete remedy at law [is] wanting.” 326 U.S. 99, 105, 65 S. Ct. 1464, 89 L. Ed. 2079 (1945). As noted by Polaris, the facts in York did not reveal any ulterior motives by the party against which the equitable principle was applied. We conclude that, because Albright had an adequate legal remedy in his time-barred CLRA claim, the district court lacked equitable jurisdiction to hear Albright’s UCL claim. Therefore, we affirm the district court’s order to that effect. However, and as discussed below, we must still reverse the entry of summary judgment against Albright because no decision was reached on the merits of the claim. Because the district court lacked equitable jurisdiction, which it recognized,3 it should have denied Polaris’ motion for summary judgment and dismissed Albright’s UCL claim without prejudice for lack of equitable jurisdiction.