Business Competitor Alleging Injury Caused By Unfair Competition By An Internet Company With Whom There Had Been No Business Dealings May Pursue Unfair Competition Claim, Even Though A Consumer Could Not.

A law firm brought an unfair competition action [UCL; Business & Professions Code section 17200] against an online legal services provider based upon alleged unauthorized practice of law.  The allegations include claims the internet provider undercut the competition by using unlicensed persons to perform legal work, thereby saving on attorney costs, and by employing unbonded and unregistered legal document assistants, thereby saving on the costs of posting statutorily mandated bonds and paying registration fees.  The trial court sustained defendant’s demurrer without leave to amend, finding the law firm had no standing to bring the action.  The Court of Appeal reversed and remanded the matter, stating “a business competitor who adequately alleges that he or she has suffered injury in fact and lost money or property as a result of the defendant’s unfair competition is not necessarily precluded from maintaining a UCL lawsuit against the defendant just because he or she has not engaged in direct business dealings with the defendant.  Nothing in this opinion is meant to suggest that we approve of the revival of shakedown lawsuits or that a consumer who has never done business with a company has standing to maintain a UCL action against it.”  Law Offices of Mathew Higbee v. Expungement Assistant Services (Cal. App. Fourth Dist., Div. 3; March 14, 2013) 214 Cal.App.4th 544.