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Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co.

Supreme Court of California

April 8, 1999, Decided

No. S066735.

Case Summary

Procedural Posture

Plaintiffs, a communications company and others, appealed the judgment of the Superior Court of Los Angeles County (California) holding that defendant telephone company did not violate the Unfair Practices Act, Cal. Bus. & Prof. Code § 17000 et seq. Defendant appealed the judgment holding that defendant might have violated the unfair competition law, Cal. Bus. Code § 17200 et seq., and remanding the issue for retrial.

Overview

Defendant sold cellular telephones and services. Defendant was one of two service providers licensed by the federal government. In an effort to increase its number of subscribers, defendant sold telephones below cost. Plaintiffs were companies that sold cellular telephones, but were not licensed to sell services. Plaintiffs brought action against defendant under the Unfair Practices Act, Cal. Bus. & Prof. Code § 17000 et seq. and unfair competition law, Cal. Bus. & Prof. Code § 17200 et seq., alleging that defendant's below-cost sales practice harmed them. Section 17043 prohibited defendant from selling any product at less than cost for the purpose of injuring competitors or destroying competition. Because defendant did not act with the purpose of injuring plaintiffs, defendant did not violate § 17043. Section 17044 prohibited defendant from selling a product as a loss leader. Plaintiffs argued that under § 17044, defendant's particular mental state was irrelevant. The word "unfair" meant conduct that significantly threatened or harmed competition. Plaintiff was allowed to present evidence to meet the test set forth by the court to determine the extent of defendant's unfairness.

Outcome

The court affirmed the judgment that defendant did not violate the Unfair Practices Act and affirmed the judgment that defendant might have violated the unfair competition law, holding that defendant did not act with the purpose of injuring plaintiffs and that, because the applicable test for an unfair competition law action was stated for the first time by the court, plaintiff was allowed to present additional evidence to meet that test.

LexisNexis® Headnotes

 

 

Antitrust & Trade Law > Regulated Practices > Trade Practices & Unfair Competition > General Overview

HN1  Regulated Practices, Trade Practices & Unfair Competition

To violate Cal. Bus. & Prof. Code §§ 17043, 17044, which prohibit below-cost sales and loss leaders, a company must act with the purpose or desire of injuring competitors or destroying competition.

 

Antitrust & Trade Law > Regulated Practices > Trade Practices & Unfair Competition > General Overview

HN2  Regulated Practices, Trade Practices & Unfair Competition

Cal. Bus. & Prof. Code § 17043 provides that it is unlawful for any person engaged in business within the state to sell any article or product at less than the cost thereof to such vendor, or to give away any article or product, for the purpose of injuring competitors or destroying competition.

 

Torts > Intentional Torts > Defenses > Intent

HN3  Defenses, Intent

"Intent," in the law of torts, denotes not only those results the actor desires, but also those consequences which he knows are substantially certain to result from his conduct.

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20 Cal. 4th 163 ; 973 P.2d 527 ; 83 Cal. Rptr. 2d 548 ; 1999 Cal. LEXIS 1656 ; 99 Daily Journal DAR 3360; 99 Cal. Daily Op. Service 2576; 1999-1 Trade Cas. (CCH) P72,495

CEL-TECH COMMUNICATIONS, INC., et al., Plaintiffs and Appellants, v. LOS ANGELES CELLULAR TELEPHONE COMPANY, Defendant and Respondent.

Prior History:  [1]  Superior Court of Los Angeles County. Super. Ct. No. VC015535. C. Robert Simpson, Jr., Judge.

Disposition: The judgment of the Court of Appeal is affirmed. The unfair competition law cause of action shall be retried consistently with the legal principles stated in this opinion.