Wilson v. Brawn of California, Inc.

Wilson v. Brawn of California, Inc.

Opinion

 [**770]  STEIN, J.—The San Francisco Superior Court entered judgment against Brawn of California, Inc. (Brawn), a mail order company, ruling that Brawn had engaged in a deceptive business practice by charging its customers an “insurance fee” of $ 1.48 with every order placed. The ruling presumed that Brawn, rather than its customers, bears the loss of risk in transit, so that its customers received nothing of value in return for paying the fee. The court also awarded plaintiff litigation expenses in the amount of $ 24,699.21 and attorney fees in the amount of [***2]  $ 422,982.50.

We reverse, concluding that Brawn did not bear the risk of loss of goods in transit under the applicable California Uniform Commercial Code sections discussed, post.

Background

Brawn markets clothing through its catalogs and over the Internet. When a customer places an order, Brawn packages it, and holds it at its warehouse, where it is picked up by a common carrier and delivered to the customer, using an address provided by the customer. At all times relevant, the terms of Brawn's mail order form required the customer to pay the listed price for the goods purchased, plus a delivery fee and a $ 1.48 “insurance fee.” As to the last, the form recited: “INSURANCE: Items Lost or Damaged in Transit Replaced Free.” Brawn based the insurance fee on the costs to it of replacing any goods lost in transit, and Brawn did indeed replace, without further cost to the customer, any goods that had been lost in transit. Brawn rarely, if ever, sold its goods to a customer unwilling to pay the insurance fee.

On February 5, 2002, and again on February 7, 2002, plaintiff Jacq Wilson (plaintiff) purchased items from Brawn's catalogue, each time paying the  [*554]  insurance fee. On February 13, 2002, Wilson,  [***3]  acting on behalf of himself and all other similarly situated persons, brought suit against Brawn, contending that in charging the fee, Brawn violated the unfair competition law, Business and Professions Code section 17200 et seq., prohibiting unfair competition, and Business and Professions Code section 17500 et seq.,  [**771]  prohibiting false advertising. ¹ 

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