Low, Ball & Lynch’s

WEEKLY LAW RESUME

January 20, 2005 Issue      By: Mark Hazelwood

Public Entities - California Unfair Competition Law

People For The Ethical Treatment Of Animals v. California Milk Producers Advisory Board 

Court of Appeal, First District

(January 11, 2026)

California’s Unfair Competition Law, codified under Business and Professions Code sections 17200 through 17209, is California’s controversial consumer protection statute. Over the past few years, Section 17200 claims have risen dramatically.  The statute has come under criticism based on accusations that attorneys are improperly using the law to extort attorneys fees from small businesses.

In this case, the issue was whether a public entity could be subject to suit under the Unfair Competition Law (UCL). Plaintiff People For The Ethical Treatment Of Animals (PETA) sued Defendant California Milk Advisory Board (CMAB), alleging that CMAB’s “Happy Cows” advertising campaign violated California’s UCL, because the advertisements were false and deceptive. PETA claimed in its complaint that PETA’s representations in ads that “Great Cheese comes from Happy Cows. Happy Cows come from California,” were blatantly untrue.  PETA sought injunctive relief to halt the advertising campaign and attorneys fees and costs. 

CMAB demurred to the complaint on several grounds. The primary contention was that CMAB could not be considered a “person” as defined by the UCL, and, thus, could not be subject to the suit under the statute.  The trial court sustained the demurrer without leave to amend, and PETA appealed. The First Appellate district affirmed the trial court decision.

The UCL defines unfair competition as: “any unlawful , unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.”  The false advertising proscription of the UCL prohibits any person, firm, corporation or association ... from falsely advertising goods or services.  The term “person” is defined as “natural persons, corporations, firms, partnerships, joint stock companies, associations and other organizations of persons.”  The Appellate Court, agreeing with the trial court, found that in performing a plain reading of the text of the statute, public entities were not included in the definition. There was no dispute that CMAB, an agricultural advisory board to the California Department of Food and Agriculture, is a public entity. Therefore, the court held that public entities should not be subject to suit under the UCL.

PETA maintained that a public entity could be properly excluded from the statutory definition of person, only if the civil action sought to interfere with a valid exercise of the state’s sovereign powers. Because participation in deceptive consumer advertising could not be construed as falling within the ambit of the proper use of governmental authority, PETA claimed CMAB was a “person” as contemplated by the UCL.  The Appellate Court disagreed with cases cited by PETA for this proposition. Even if this “infringement of sovereign power” analysis were to be used, the court held that CMAB’s work in promoting California’s agricultural economy through ad campaigns were important public interests of the State. Therefore, there would be an infringement of sovereign power for the CMAB to be subject to suit under the UCL for the content of its’ promotional campaign. The Court, therefore, affirmed the trial court’s demurrer.

Comment

Given the rapid increase in UCL actions in California, this is an important decision for public entities. The First Appellate Court’s decision makes clear that public entities were not intended by the California Legislature to have been subject to suit under unfair competition laws.

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