Senior citizen James Clark filed suit against National Western Life Insurance Company in 2004, alleging that deceptive business practices induced him and a class of other California senior citizens purchase high-commission annuity contracts with large surrender penalties in violation of, among other things, California’s Unfair Competition Law (the UCL). The suit sought restitution of the allegedly improper surrender penalties and enhanced remedies under Section 3345 of the California Civil Code. Section 3345 authorizes awards of up to three times the amount of a fine, civil penalty “or any other remedy the purpose or effect of which is to punish or deter” that would otherwise be awarded in actions brought by or on behalf of senior citizens or disabled persons seeking to “redress unfair or deceptive acts or practices or unfair methods of competition.”

On November 14, 2008, the trial court granted National Western’s motion for judgment on the pleadings, concluding Section 3345 is inapplicable in a private action seeking restitution under the UCL because “restitution, the only available remedy, does not have the purpose or effect of punishment or deterrence.” Clark, on behalf of the certified class, petitioned for writ of mandate compelling the trial court to vacate its ruling. On May 21, 2009, the California Court of Appeal granted the petition, labeling the trial court’s conclusion that the UCL’s restitution remedy is not intended to deter unlawful conduct “unduly cramped.” Finding that California courts have long recognized that restitution awarded under the UCL has a deterrent purpose and effect, the Court of Appeal agreed with Clark that enhancement is authorized under the plain language of Section 3345. National Western has petitioned the California Supreme Court to review the appellate court decision.