Court of Appeal Decides Reach of Civil Code section 1694.4(c)
California Civil Code section 1694 et seq. provides a legislative scheme that provides consumer protection for individuals entering into dating service contracts or offers with organizations that provide social referrals services through different milieus (including the Internet). The contracts must have a 3-day cancellation right and other protections, or are void and unenforceable under section 1694(a). A user injured by a violation of the scheme can bring an action for recovery of damages and a treble damage penalty. As germane to this blog, section 1694.4(c) also provides: “Reasonable attorney fees may be awarded to the prevailing party.”
Plaintiff subscribed to an Internet social referral service called Jdate. Subscriber brought an individual and putative class action against the service alleging numerous claims, including a section 1694.4 violation. The trial court, in effect, bifurcated proceedings and determined that the plaintiff subscriber lacked standing because he suffered no actual damages or injury. He was dismissed as a plaintiff, and the subscriber sought and was awarded fees under section 1694.4(c). Subscriber requested over $390,000 in attorney’s fees, but the lower court only awarded $50,000—stating that “only a small portion of the requested fees regard the standing issue” that was the prevailing issue won by subscriber. Both sides appealed.
The Second District, in an unpublished opinion authored by Justice Croskey, affirmed across the board. The case is Adelman v. Spark Networks Limited, Case Nos. B195332 & B197097 (2d Dist., Div. 3 May 20, 2008).
Its decision is interesting on the scope of the fee shifting provision contained in section 1694.4(c). On appeal, plaintiff subscriber argued that fees can be awarded only if the lower court found that the contract at issue is an actual “dating service contract,” which he contended was not the case. The appellate court disagreed. It found no legislative indication to limit fee shifting only to cases where a dating service contract was at issue, noting “[i]n our view, the purpose of the fee-shifting statute is best served by construing it to apply in any action in which the plaintiff alleges a violation of Civil Code section 1694 et seq.” (Slip Opn., at p. 17.) The Court of Appeal also rejected subscriber’s argument that the fee provision should be construed like employment discrimination or political reform statutes (where the fee claimant must show the suit was frivolous in nature), observing that section 1694 protections “do not involve public policies as vitally important as the laws prohibiting employment discrimination or protecting the political process.” (Slip Opn., at pp. 17-18.)
Turning to the service provider’s argument that the fee award was too small, the appellate court noted that section 1694.4(c) was discretionary in nature and concluded the lower court acted within its discretion, citing one of the leading cases posted in the home page—PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084, 1095-1096 (2000).