California Civil Jury Instructions (CACI) (2017)

3320. Secret Rebates - Essential Factual Elements

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3320.Secret Rebates—Essential Factual Elements
[Name of plaintiff] claims that [name of defendant] [insert one or both of
the following:]
[secretly [gave/received] [payments/rebates/refunds/ commissions/
unearned discounts;]] [or] [secretly [gave to some buyers/received]
services or privileges that were not given to other buyers
purchasing on like terms and conditions.]
To establish this claim, [name of plaintiff] must prove all of the
1. That [name of defendant] secretly [[gave/received]
[payments/rebates/refunds/commissions/unearned discounts]] [or]
[[gave to some buyers/received] services or privileges that were
not given to other buyers purchasing on like terms and
2. That a competitor was harmed;
3. That the [payment/allowance] had a tendency to destroy
4. That [name of plaintiff] was harmed; and
5. That [name of defendant]’s conduct was a substantial factor in
causing [name of plaintiff]’s harm.
New September 2003
Directions for Use
Element 2 should be omitted if the plaintiff is a competitor of the defendant; that
issue is covered by element 4.
Sources and Authority
• Secret Rebates Prohibited. Business and Professions Code § 17045.
• Actual Damages or Injury Not Required. Business and Professions Code section
• “The purpose of the Unfair Practices Act (UPA) is ‘to safeguard the public
against the creation or perpetuation of monopolies and to foster and encourage
competition, by prohibiting unfair, dishonest, deceptive, destructive, fraudulent
and discriminatory practices by which fair and honest competition is destroyed
or prevented.’ It forbids most locality discriminations, the use of loss leaders,
gifts, secret rebates, boycotts, and ‘deceptive, untrue or misleading advertising.’
It also prohibits the sale of goods and services below cost.” (Pan Asia Venture
Capital Corp. v. Hearst Corp. (1999) 74 Cal.App.4th 424, 431–432 [88
Cal.Rptr.2d 118], internal citations omitted.)
• “[T]here are three elements to a violation of section 17045. First, there must be
a ‘secret’ allowance of an ‘unearned’ discount. Second, there must be ‘injury’ to
a competitor. Third, the allowance must tend to destroy competition.” (Diesel
Elec. Sales & Serv., Inc. v. Marco Marine San Diego (1993) 16 Cal.App.4th
202, 212 [20 Cal.Rptr.2d 62].)
• “By its terms, section 17045 requires the plaintiff to prove not only injury to a
competitor, but, in addition, a tendency ‘to destroy competition.’ ” (ABC
International Traders, Inc. v. Matsushita Electric Corp. of America (1997) 14
Cal.4th 1247, 1262 [61 Cal.Rptr.2d 112, 931 P.2d 290], original italics.)
• “[P]roof of a knowing or intentional receipt by a buyer of a secret, unearned
discount is not required under section 17045.” (Diesel Elec. Sales & Serv., Inc.,
supra, 16 Cal.App.4th at p. 214, fn. 4.)
• “[S]ection 17045 does not require a proof of an ‘intent’ to destroy competition,
but only that the secret, unearned discount had a tendency to destroy
competition.” (Diesel Elec. Sales & Serv., Inc., supra, 16 Cal.App.4th at p. 215,
original italics.)
• Those competing against a seller who provides the secret rebate, on the
“primary line,” have standing to sue under the statute. Likewise, a customer of
the seller who is disfavored by that seller providing a secret rebate to
competitors of that customer, creating so-called “secondary line” injury, also has
standing to sue. (ABC International Traders, supra, 14 Cal.4th at p. 1257.)
• “While, similar to other cases, damages cannot be awarded in antitrust cases
upon sheer guesswork or speculation, the plaintiff seeking damages for loss of
profits is required to establish only with reasonable probability the existence of
some causal connection between defendant’s wrongful act and some loss of the
anticipated revenue. Once that has been accomplished, the jury will be
permitted to act upon probable and inferential proof and to ‘make a just and
reasonable estimate of the damage based on relevant data, and render its verdict
accordingly.’ ” (Suburban Mobile Homes, Inc. v. AMFAC Communities, Inc.
(1980) 101 Cal.App.3d 532, 545 [161 Cal.Rptr. 811], internal citations omitted.)
Secondary Sources
1 Witkin, Summary of California Law (10th ed. 2005) Contracts, §§ 609–615
3Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts,
§ 40.153 (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition,
§ 565.52 (Matthew Bender)
23 California Points and Authorities, Ch. 235, Unfair Competition, § 235.29
(Matthew Bender)
1 Matthew Bender Practice Guide: California Unfair Competition and Business
Torts, Ch. 5, Antitrust, 5.46[5], 5.47[4]