“California’s Expansive Law on Price Discrimination”
(By William Markham, © 2025)

Introduction

California’s prohibitions of commercial price discrimination are set forth in the Unfair Practices Act, which is codified at California Business & Professions Code sections 17000–17101 (the “UPA”). There are surprisingly few published decisions that explain this law, even though it is broader in scope and enforced more expansively than its federal counterpart—the Robinson-Patman Act, 15 U.S.C. § 13 et seq. Broadly speaking, the UPA prohibits predatory pricing and secret, unjustified price advantages, and it reaches the sale of both goods and services (with a few statutory exceptions).

Predatory pricing refers to two kinds of practices: “locality discrimination” and “loss leaders.” Under the UPA, a seller is said to practice “locality discrimination” when (1) it offers lower prices in one locale than it does in others; and (2) by this practice, it aims to undersell and ruin its direct competitors in the targeted locale. A seller is said to use a “loss leader” when (1) it sells a product or service at prices below its own costs; and (2) it aims by this practice to undersell and ruin one or more of its direct competitors. The UPA prohibits these practices, and its prohibitions of them have real teeth, unlike the federal law in the modern era.

Secret, unjustified price advantages are “unearned” discounts, rebates, or other kinds of pricing advantages that a seller secretly offers to one or more favored commercial customers, but withholds from one or more disfavored commercial customers. These pricing advantages become unlawful under the UPA when they permit a favored customer to divert sales from a disfavored customer and thereby harm or tend to harm competition among such customers.

The UPA prohibits the above pricing practices. If a seller uses any of these practices, it commits a violation of this law. So too do commercial customers (or other interested actors) that induce, coerce, or conspire with a seller to use any of the above pricing practices.

In California commerce, a seller must not use predatory pricing to undermine competition in its own markets, nor offer secret pricing advantages to its favored commercial customers when doing so upsets competition in downstream markets. Nor can a dominant commercial customer prevail on a seller to give it secret pricing advantages that give it the upper hand in any downstream market. Those are the basic precepts of the UPA.

Also, the UPA decrees null and void any contract that memorializes or accomplishes any of the above pricing offenses. It even imposes criminal penalties on offenders, but there has never been a criminal prosecution for a violation of the UPA (so far as this author can discern from the published decisions).

Like most other antitrust statutes, the UPA affords strong civil remedies in order to deter violations and reward private plaintiffs for enforcing its provisions. A prevailing plaintiff is entitled to recover treble damages, attorney’s fees, and statutory costs. Upon making a proper showing, a plaintiff can also obtain broad injunctive relief, both temporary and permanent.[1]Unlike the federal Clayton Act or California’s Cartwright Act, the UPA does not impose prejudgment interest on a defendant that is found to have employed dilatory or abusive litigation tactics. … Continue reading

Under the UPA, a plaintiff can also recover these remedies on claims assigned to it by others.

Like other antitrust defendants, a defendant that prevails on a claim under the UPA can recover only its statutory costs of suit, but not its attorney’s fees or expert’s fees, except when the plaintiff’s claim was manifestly frivolous or otherwise lacked probable cause.

Below I address each of these matters more fully and also provide citations to the controlling authorities.

California’s Law of Price Discrimination Reaches the Sale of Services

The UPA reaches the sale of not only of goods, but also services. It excludes only the distribution of motion pictures for exhibition and the sale of utility services that are typically regulated by California’s Public Utilities Commission providers (e.g., the sale of electricity, municipal water, etc.). See Cal. Bus. & Prof. Code, § 17024 (“[As used in the UPA] ‘[a]rticle or product’ includes any article, product, commodity, thing of value, service or output of a service trade. Motion picture films when licensed for exhibition to motion picture houses are not articles or products under this chapter. Nothing in this chapter applies [to the above-described utility services].”); see also Garner v. Journeyman Barbers, etc. (1963) 223 Cal.App.2d 101, 107 (“[The UPA] … applies as well to the rendition of services and the output of a service trade.”).[2]Of note, the UPA establishes specific technical requirements for proving predatory pricing of retail sales of cellphones (Cal. Bus. & Prof. Code, § 17026.1) and sales of cigarettes to … Continue reading

California’s Laws on Price Discrimination Are Construed and Enforced Expansively

By its express statutory language, the UPA must be construed “liberally” and enforced expansively. See Cal. Bus. & Prof. Code, § 17002 (“This chapter shall be liberally construed that its beneficial purposes may be subserved.”). In a landmark decision, the California Supreme Court confirmed and approved of this legislative directive. See ABC Int’l Traders, Inc. v. Matsushita Elec. Corp. (1997) 14 Cal.4th 1247, 1256 (“That it might have a better chance of success, the Legislature specifically directed that the UPA’s provisions ‘shall be liberally construed that its beneficial purposes may be subserved.’”) (quoting Cal. Bus. & Prof. Code, § 17002.).

Unlike the federal Robinson-Patman Act, which has been severely limited in scope by modern federal decisions, the California courts have interpreted the UPA’s provisions very broadly and have readily condemned dominant sellers that use predatory pricing to ruin direct rivals or skew downstream competition by secretly giving unjustified pricing concessions only to favored commercial customers (typically, dominant commercial buyers).

Predatory Pricing Remains a Tenable Claim under California Law

The classical antitrust offense of predatory pricing was targeted by the original version of section 2 of the federal Clayton Act (15 U.S.C. § 13), which was enacted in 1914. The classical offense occurred when a dominant firm offered cutthroat prices only in those regions where it faced meaningful competition and did so only until its smaller rivals either folded or accepted its one-sided offer to be acquired. John Rockefeller’s Standard Oil Co. became infamous for using this tactic in the late 1800s and early 1900s.

In the modern era, the United States Supreme Court has severely limited this offense by imposing arduous evidentiary requirements. To prevail on a federal claim for a predatory pricing, a plaintiff must now prove all of the following matters by a preponderance of evidence, much of which requires very expensive expert testimony: (1) the defendant charged prices lower than its own costs in a successful effort to eliminate competition in a properly defined market; (2) “barriers to entry” will shield the defendant from future competition in this market; and (3) the defendant can therefore recoup its losses from predatory pricing by profitably charging supracompetitive prices to captive customers, who for their part will lack any rival source of supply and therefore must accept the defendant’s high prices.[3]I explain these matters at length and provide controlling authorities in my article on federal price discrimination. In practice, these evidentiary requirements are so onerous as to render the offense of predatory pricing almost impossible to prove under federal law.

California laws on predatory pricing do not impose the same requirements. See Bay Guardian Co. v. New Times Media LLC (2010) 187 Cal.App.4th 438, 445 (“[R]ecoupment of losses by the defendant is not a requirement to prove a violation of section 17043.”). The absence of this requirement distinguishes the UPA from the federal Robinson-Patman Act. It means that predatory pricing can still be successfully challenged and stopped under the UPA.

Here is how a leading California decision described the principal difference between federal and California law on predatory pricing:

The defendant’s ability to recoup losses is unnecessary to the dual objectives of preventing unfair trade practices and protecting comparatively smaller enterprises from predatory pricing schemes of larger competitors. Thus, California and federal cases have recognized that the UPA in many respects does not mirror federal predatory pricing law. Defendant’s reliance on federal law fails to acknowledge the significant differences between the language of the Sherman Act, the federal antitrust statute prohibiting predatory below-cost pricing, and its state counterpart, section 17043 of the UPA. It has been observed that the UPA, in contrast to the federal antitrust statutes, is precisely drawn to eliminate defined commercial practices such as predatory pricing. Therefore, changing judicial perspectives on antitrust enforcement have far less influence on the development of California predatory pricing law than on the development of the federal counterparts.

Bay Guardian Co. v. New Times Media LLC (2010) 187 Cal.App.4th 438, 457–58 (internal quotations and citations omitted).

The UPA thus forbids “locality discrimination” and “loss-leader” pricing that a seller uses to undermine its direct competitors. It does so without regard to whether the predatory seller might later recoup its losses from selling at below-cost prices.[4]Some economists opine that predatory pricing is pernicious only when it permits a predatory seller to exclude all rivals from a market, then profitably impose supracompetitive prices on captive … Continue reading

More specifically, section 17040 of California’s UPA forbids a seller to injure a direct competitor by a “locality discrimination,” which is said to occur when (1) a seller charges lower net prices in one location than it does in others; and (2) it specifically does so to drive its rivals out of the targeted locale. See Cal. Bus. & Prof. Code, § 17040; Cal. Bus. & Prof. Code, §§ 17031, 17049; see also G.H.I.I. v. MTS, Inc. (1983) 147 Cal.App.3d 256, 274 (“[A]ppellants and respondents are in fact ‘primary competitors,’ and the complaint alleges that sales were made by respondents at different prices in the San Francisco area than in other locations with the intent to eliminate competition provided by other retailers such as appellant. We think this is precisely the kind of action contemplated by section 17040….”); Wholesale Tobacco Dealers Bureau of S. California v. Nat’l Candy & Tobacco Co. (1938) 11 Cal. 2d 634, 655 (Section 17040 prohibits a seller from selling its goods or services at different prices to different customers when it does so “with intent to injure a [direct] competitor.”).

In addition, section 17043 of the UPA forbids a seller to sell products below its own costs in order to cause deliberate injury to a direct competitor. See Cal. Bus. & Prof. Code, § 17043 (“It is unlawful for any person engaged in business within this 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.”); see also Fisherman’s Wharf Bay Cruise Corp. v. Superior Ct. of San Francisco (2003) 114 Cal.App.4th 309, 322 (“[T]he prohibitions in the UPA on below-cost sales are designed to protect a competitor whose more powerful neighbor is attempting to drive him out of business.”); Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co. (1999) 20 Cal.4th 163, 174–75 (“[T]o violate section 17043, a company must act with the purpose, i.e., the desire, of injuring competitors or destroying competition.”).

Under the UPA, a seller’s anticompetitive purpose can be inferred when the seller has sold a product below its own costs and thereby diverted sales from a direct competitor. See Cal. Bus. & Prof. Code, § 17071 (“[P]roof of one or more acts of selling or giving away any article or product below cost or at discriminatory prices, together with proof of the injurious effect of such acts, is presumptive evidence of the purpose or intent to injure competitors or destroy competition.”); see also Bay Guardian, 187 Cal.App.4th at 463 (“Under section 17071, proof of one or more acts of selling or giving away any article or product below cost or at discriminatory prices, together with proof of the injurious effect of such acts, is presumptive evidence of the purpose or intent to injure competitors or destroy competition. To create this presumption proof must be had, among other things, of one or more sales of an article or product below cost together with proof of the injurious effect of the practice…. [That means] injury to a competitor or destruction of competition….”) (internal citations and quotations omitted).

Indeed, sections 17030 and 17044 of the UPA expressly decree that a seller cannot use “loss leaders” (products sold at prices lower than the seller’s own costs) in order to “divert trade from or otherwise injure competitors.” See Cal. Bus & Prof. Code, §§ 17030, 17044.

Under California law, then, it suffices to show that the defendant (1) lowered its prices below its own costs and (2) thereby diverted sales from a competitor. When this showing is made, a statutory presumption arises that the defendant lowered its prices in order to harm its direct competitor. If the defendant fails to rebut the presumption, it will be deemed to have violated section 17043 of the UPA. See Bay Guardian, 187 Cal. App. 4th at 463; Cel-Tech Commc’ns, 20 Cal. 4th at 174–75.  

Predatory pricing can thus be challenged and stopped under California law. Predatory sellers and their harmed rivals should take notice.

Secondary-Line and Tertiary-Line Price Discrimination under California Law

Section 17045 of the UPA prohibits certain kinds of price discrimination that harms downstream competition. Specifically, it forbids unearned discounts, rebates, and other pricing advantages that a seller secretly gives to one or more favored commercial customers, but withholds from one or more disfavored commercial customers, but only when the secret pricing concession has the following consequences: (1) a favored customer uses the pricing concession to divert sales from a disfavored customer (or from a customer of the disfavored customer); and (2) thus used, the secret pricing advantage harms or tends to harm competition between commercial purchasers of the products or services in question. See Cal. Bus. & Prof. Code, § 17045; see also ABC Int’l Traders, 14 Cal.4th at 1252 (“[Section 170345] prohibits a seller from secretly allowing a purchaser special ‘unearned discounts’ that injure ‘a competitor’ and tend to destroy ‘competition.’… [A] disfavored buyer adequately plead[s] a cause of action against a seller for violation of section 17045 by alleging the seller’s secret discrimination injured the buyer and tended to destroy competition among buyers….”). 

Section 17045 is therefore similar to secondary-line and tertiary-line price discrimination of the kind prohibited by the Robinson-Patman Act, except that it reaches the sale of most kinds of services and has been interpreted and enforced more expansively in the modern era.

Specifically, section 17045 establishes the following prohibition (emphasis supplied):

The secret payment or allowance of rebates, refunds, commissions, or unearned discounts, whether in the form of money or otherwise, or secretly extending to certain purchasers special services or privileges not extended to all purchasers purchasing upon like terms and conditions, to the injury of a competitor and where such payment or allowance tends to destroy competition, is unlawful.

California Business & Professions Code, § 17045

To prevail on a claim under section 17045, a plaintiff must show the following: (1) the seller discriminated in favor of a favored commercial customer by secretly giving it lower net prices or other pricing advantages that it withheld from a disfavored customer; (2) in consequence, the disfavored customer lost sales to the favored customer and was thereby “harmed”; and (3) in consequence, competition among commercial buyers of the at-issue products or services was either harmed or will likely be harmed unless there is an antitrust intervention. See ABC Int’l Traders, 14 Cal.4th at 1252 (to plead a violation of section 17045, a “disfavored buyer” must allege that (1) it was harmed by “the seller’s secret discrimination” against it; and (2) its own harm tended to destroy competition among commercial buyers of the same or like products); Fisherman’s Wharf Bay Cruise, 114 Cal.App.4th at 331 (“Violation [of Section 17045] requires proof that payments were, in fact, secret and discriminated among customers of the entity granting the rebates.”); Chicago Title Ins. Co. v. Great W. Fin. Corp. (1968) 69 Cal.2d 305, 323 (a violation of section 17045 requires a showing that “the prices charged by [the seller] differ from customer to customer”).

Broadly speaking, the California courts have enforced section 17045 and related provisions of the UPA by adopting and sometimes modifying the legal standards used to decide claims made under the federal Robinson-Patman Act. Compare 15 U.S.C. §§ 13, 13a and 13b with Cal. Bus. & Prof. Code, §§ 17000–17096. See generally ABC International Traders, 14 Cal.4th 1247, 1256–63 (1997) (extended discussion of the history, purpose, and reach of the UPA); Harris v. Capitol Records Distributing Corp. (1966) 64 Cal.2d 454, 459–62 (discussion of the differences between the Robinson-Patman Act and the UPA).

Affirmative Defenses under California’s Unfair Practices Act

The UPA expressly establishes affirmative defenses that are the same or closely similar to those codified in the Robinson-Patman Act.

Specifically, section 17040 of the UPA exempts from its reach any low price in a particular locale that a seller sets merely to meet a competitor’s price in that market. See Cal. Bus. & Prof. Code, § 17040; see also Cal. Bus. & Prof. Code, § 17050(d)–(e).

Also, section 17041 of the UPA exempts a seller from liability when the seller affirmatively shows that its lower per-unit prices in a given locale or to a preferred customer are “justified” by a demonstrable commercial efficiency—”the cost of manufacture, sale or delivery” of each unit sold. See Cal. Bus. & Prof. Code, § 17041; cf. Boise Cascade Corp. v. F.T.C. (D.C. Cir. 1988) 837 F.2d 1127, 1129 (“No violation [of the Robinson-Patman Act] exists where the discount reflects the lower cost to the seller of selling to the favored customer.”).

Also, section 17042 of the UPA authorizes a seller to charge differing prices for the same product or service when selling to different categories of customer, such as wholesale distributors and retail resellers. See Cal. Bus. & Prof. Code, § 17042. But any pricing advantage of this kind must be made available to disfavored customers on “like terms and conditions”—which presumably does not occur when the pricing advantage is secretly conferred only on favored customers. See Cal. Bus. & Prof. Code, § 17045; cf. 15 U.S.C. § 13(d) (establishes a similar affirmative defense to a claim of unlawful price discrimination under the federal Robinson-Patman Act); Texaco Inc. v. Hasbrouck (1990) 496 U.S. 543, 560–61 (under the Robinson-Patman Act, an analogous defense applies only to the extent that the customer actually performed the role ascribed to it: if, for example, a customer acted as a wholesale distributor for only 50% of the products that it purchased from the seller, it would be entitled to a favorable price given to wholesalers only for these products, but not others that it bought and then resold as a retailer); see also Am. Booksellers Ass’n, Inc. v. Barnes & Noble, Inc. (N.D. Cal. 2001) 135 F.Supp.2d 1031, 1064 (“Section 2(d) of the Robinson–Patman Act makes it unlawful for a supplier in interstate commerce to grant advertising or other sales promotional allowances to one ‘customer’ who resells the supplier’s products or commodities unless the allowances are available on proportionally equal terms to all customers competing in the distribution of such products or commodities.”) (citing FTC v. Fred Meyer, Inc. (1968) 390 U.S. 341, 343) (emphasis supplied).

Lastly, there is surprisingly little case law to explain the meaning, reach, or application of the UPA’s express affirmative defenses. In contrast, there is a great body of federal case law that explains the meaning of analogous affirmative defenses under the federal Robinson-Patman Act. A practitioner should therefore consult the federal precedents with great care when litigating a UPA claim. See Diesel Elec. Sales & Serv., Inc. v. Marco Marine San Diego, Inc. (1993) 16 Cal.App.4th 202, 212 (“In general, the [UPA] closely parallels the federal Robinson–Patman Antidiscrimination Act (15 U.S.C. § 13) which also prohibits price discrimination.”); G.H.I.I., 147 Cal.App.3d at 271 (“[The UPA] closely parallels the Robinson-Patman Act, and is based upon the same policy considerations….”).

Even so, a practitioner must tread warily when considering the federal law, since it does not always apply to claims brought under the UPA. See Eddins v. Redstone (2005) 134 Cal. App. 4th 290, 340 (“[The UPA is not a clone of the Robinson–Patman Act, and we cannot apply a ‘meeting competition’ defense that does not exist under the UPA merely because the Robinson–Patman Act provides the defense.”).

California’s Civil Remedies for Unlawful Price Discrimination

A plaintiff’s remedies under the UPA are the same as they are under federal law and California’s Cartwright Act, except that the UPA does not expressly confer prejudgment interest to a prevailing plaintiff who shows that the defendant prolonged the litigation by dilatory or abusive litigation tactics.[5]Prejudgment interest on this ground is expressly conferred by section 4 of the federal Clayton Act (15 U.S.C. § 15) and also by section 16761 of the Cartwright Act (Cal. Bus. & Prof. Code, § … Continue reading

A prevailing plaintiff on a UPA claim is entitled to recover treble damages and attorney’s fees. See Cal. Bus. & Prof. Code, § 17070 (confers compensatory damages and injunctive relief); Cal. Bus. & Prof. Code, § 17082 (imposes mandatory treble damages and mandatory award of attorney’s fees); see also G.H.I.I., 147 Cal.App.3d at 277 (“[T]he Unfair Practices Act provides for recovery of actual and treble damages. An award of treble damages is mandatory under section 17082 if a violation of the Uniform Practices Act is established.”); Turnbull & Turnbull v. ARA Transportation, Inc. (1990) 219 Cal.App.3d 811, 827 (“[T]he treble damages provision [in the UPA at section 17082] is mandatory.”); Uneedus v. California Shoppers, Inc. (1978) 86 Cal.App.3d 932, 944  (where plaintiff prevails on claim under UPA and proves the fact of its damages, it becomes entitled to “three times the damages awarded.”).

Upon proper showings, a prevailing plaintiff can also obtain broad injunctive relief, both temporary and permanent. See Cal. Bus. & Prof. Code, §§ 17079–81 (these statutes confer on trial court broad powers to impose injunctive relief in cases that arise under the UPA). Indeed, section 17080 of the UPA states the following: “Any injunction against a violation of this chapter, whether interim or final, shall cover every article or product and not merely the particular article or product involved in the action.”

The UPA even permits a plaintiff to bring a claim for injunctive relief even when he has not suffered any compensable damages and is not itself himself to any such harm. See Cal. Bus. & Prof. Code, §§ 17082 (“In any action under this chapter, it is not necessary to allege or prove actual damages or the threat thereof, or actual injury or the threat thereof, to the plaintiff.”); See Mering v. Yolo Grocery & Meat Mkt. (1942) 127 P.2d 985, 990–91 (“It is of course true that it is the general rule that a private individual cannot maintain a suit for an injunction unless he suffers a special injury different from that suffered by the public at large. However, it is also true that the state may grant permission to any citizen to maintain such an action. (….) [Because of the wording of section 17082], it was not necessary for respondent to allege or prove any special damage or injury to himself [when alleging a violation of the UPA and seeking injunctive relief..]”).

California’s Criminal Penalties for Unlawful Price Discrimination

The UPA includes criminal penalties. Each violation of the Act constitutes a criminal misdemeanor, for which the defendant can be punished by (1) a fine of $100 to $1,000 per violation; and/or (2) incarceration for six months for each violation. See Cal. Bus. & Prof. Code, § 17100. The author of this article is unaware of any case in which a defendant was criminally prosecuted for any such violation.

A Prevailing Defendant’s Remedies

The general rule, applicable in most cases, is that a defendant that defeats a UPA claim can recover only its statutory costs of suit, but not attorney’s fees or expert’s fees. See Cal. Bus. & Prof. Code, § 17082 (on a claim made under the UPA, a prevailing plaintiff is entitled to an award of attorney’s fees, but by design no similar provision is made for a prevailing defendant); cf. Carver v. Chevron U.S.A., Inc. (2004) 119 Cal. App. 4th 498, 503 (“The Cartwright Act [a related California antitrust law] contains a unilateral fee–shifting provision that allows an award of attorney fees to a prevailing plaintiff but not to a prevailing defendant.”).

There is, however, one important exception to this rule. When a defendant defeats an “obviously” frivolous or malicious claim made in a California court, it can seek significant sanctions under California’s Code of Civil Procedure, § 128.7. See Cal. Code. Civ. Proc., § 128.7(b)–(d); see also Kumar v. Ramsey (2021) 71 Cal. App. 5th 1110, 1120 (“Under [CCP section 128.7], trial courts may issue sanctions, including monetary and terminating sanctions, against a party for filing a complaint that is legally or factually frivolous. A claim is factually frivolous if it is ‘not well grounded in fact’ and is legally frivolous if it is ‘not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.’ In either case, to obtain sanctions, the moving party must show the party’s conduct in asserting the claim was objectively unreasonable. A claim is objectively unreasonable if any reasonable attorney would agree that it is totally and completely without merit.”).

If, as sometimes happens, a malicious litigant adds a frivolous UPA claim to its complaint in a federal court, a prevailing defendant can seek sanctions under Rule 11 of the Federal Rules of Civil Procedure and also bring a sequel suit for malicious prosecution. See Fed. R. Civ. Proc., rule 11.

Under certain circumstances, a prevailing defendant can choose instead to bring a sequel suit for malicious prosecution and thereby seek to recover damages caused by the wrongful prior litigation (e.g., attorney’s fees and expert’s fees) as well as punitive damages. A claim for malicious prosecution is one brought by a prevailing defendant against the losing plaintiff and/or the losing plaintiff’s attorney for having litigated a baseless claim against it. The action will lie when the losing plaintiff (the malicious litigant) or his attorney knowingly filed a baseless civil claim or persisted in litigating a civil claim after learning that it was baseless. See Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871 (“The common law tort of malicious prosecution originated as a remedy for an individual who had been subjected to a maliciously instituted criminal charge, but in California, as in most common law jurisdictions, the tort was long ago extended to afford a remedy for the malicious prosecution of a civil action.”); see also Zamos v. Stroud (2004) 32 Cal.4th 958, 969 (“Continuing an action one discovers to be baseless harms the defendant and burdens the court system just as much as initiating an action known to be baseless from the outset.”); 1 Harper et al., The Law of Torts (3d ed.1996), § 4.3, p. 4:13 (“Clearly, it is as much a wrong against the victim and as socially or morally unjustifiable to take an active part in a prosecution after knowledge that there is no factual foundation for it, as to instigate such a proceeding in the first place.”); see also Zamos, 32 Cal.4th at 970 (An attorney may be held liable for malicious prosecution when he knowingly files an untenable claim or continues “to prosecute a lawsuit discovered to lack probable cause.”).

Prevailing defendants can obtain these kinds of remedies only in the most egregious instances of bad-faith litigation. Otherwise, the mere threat of such remedies would overly discourage plaintiffs from asserting sound or innovative claims against pugnacious, well-funded adversaries. Also, the courts would find themselves burdened with an endless succession of sanction motions and sequel claims for malicious prosecution. See Levy v. Blum, (2001) 92 Cal.App.4th 625, 637 (“The Legislature crafted sections 128.5 and 128.7 to strike a balance between competing interests: the need to control improper litigation ‘tactics’ and the desire to avoid chilling vigorous advocacy.”); see also Zamos, 32 Cal. 4th at 966 (“The tort of malicious prosecution is disfavored both because of its potential to impose an undue ‘chilling effect’ on the ordinary citizen’s willingness to … bring a civil dispute to court and because, as a means of deterring excessive and frivolous lawsuits, it has the disadvantage of constituting a new round of litigation itself.”).

To obtain sanctions or damages for a frivolous or malicious claim, a prevailing defendant typically must make one or more of the following showings: (1) the plaintiff alleged or persisted in alleging material facts that it knew or discovered to be false; (2) the plaintiff purposefully misstated the controlling law or invoked a patently frivolous interpretation of a statute or legal doctrine; or (3) the plaintiff vexatiously initiated numerous or unreasonably burdensome civil procedures to try to extort a nuisance-value settlement. See Cal. Code Civ. Proc., § 128.7 (imposes sanctions for filing patently frivolous claims); § 128.5 (imposes sanctions for dilatory or abusive litigation tactics that no reasonable attorney would believe were proper or well-founded); Bertero v. Nat’l Gen. Corp. (1974) 13 Cal.3d 43, 50 (“To establish a cause of action for the malicious prosecution of a civil proceeding, a plaintiff must plead and prove that the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in his, plaintiff’s favor; (2) was brought without probable cause; and (3) was initiated with malice.”); Albertson v. Raboff (1956) 46 Cal.2d 375, 383 (“The malice required in an action for malicious prosecution is not limited to actual hostility or ill will toward plaintiff but exists when the proceedings are instituted primarily for an improper purpose…. [One such purpose will be found when] the proceedings are initiated for the purpose of forcing a settlement which has no relation to the merits of the claim.”); Sycamore Ridge Apartments, LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1402 (“A litigant will lack probable cause for his action either if he relies upon facts which he has no reasonable cause to believe to be true, or if he seeks recovery upon a legal theory which is untenable under the facts known to him.”).

Conclusion

California’s laws on price discrimination are codified in the UPA and prohibit a seller’s predatory pricing as well as preferred pricing that a seller secretly gives only to one or more favored commercial customers, but not to others. To prevail on such a claim, a plaintiff must make the required showings explained above. The UPA’s prohibitions govern sales of goods and services, except for the distribution of motion pictures for exhibition and common utilities regulated by public authorities. There are also minor, technical qualifications that concern retail sales of cellphones and sales to cigarette wholesalers.

When bringing or opposing a claim under the UPA, a litigator must bear in mind that the California courts have adopted an expansive definition of “harm to competition,” deeming it to occur even when the challenged practices do not lead to a market-wide increase in prices or a reduction in output. It suffices under California law to show that the challenged practices are calculated and likely to suppress competitors and thereby lessen or eliminate consumer choice. See Lloyd Design Corp. v. Mercedes Benz of North America, Inc. (1998) 66 Cal.App.4th 716, 721 (California’s antitrust laws broadly condemn business practices that serve no purpose other than the “suppression of competition” since such practices “deny competitors free access to the market” and “[a]t the same time buyers are forced to forego their free choice between competing products.”).

William Markham, © 2025.