A California court of appeal last month affirmed an award of attorney's fees under the state's Unfair Competition Law (UCL) and a permanent injunction against U-Haul Co. of California from enforcing an illegal non-compete covenant in its standard agreements with California U-Haul dealers.

The case, Robinson v. U-Haul Co., Case Nos. A141396, A145828, centered on a non-competition clause in U-Haul's dealer contracts that prohibited dealers from entering into business with any competitors until a year after U-Haul's Yellow Pages advertisements for that dealer were no longer in print. After one dealer terminated its contract and began renting trucks from a competitor, U-Haul sued for breach of the dealer contract. The dealer cross-complained for a declaration that the non-compete covenant was void and also filed a separate class action against U-Haul alleging malicious prosecution and violation of the UCL.

Despite U-Haul's insistence that the dealer's lawsuit was moot because it had, after the litigation progressed, voluntarily ceased enforcement of the non-compete covenant, the trial court held the non-competition clause was void and unenforceable as a matter of law and permanently enjoined U-Haul from further enforcement of the covenant. The jury also awarded damages on the dealer's malicious prosecution claim, and the trial court awarded the dealer more than US$800,000 in attorney's fees on the UCL claim. The court of appeal affirmed, holding that the trial court had not abused its discretion in issuing the permanent injunction and awarding the dealer attorney's fees.