California Code, Civil Code - CIV § 3343.7

An action may be brought against any nonprofit organization operated on a cooperative basis by and for independent retailers which wholesales goods and services primarily to its member retailers as described in paragraph (3) of subdivision (d) of Section 20001 of the Business and Professions Code or subdivision (c) of Section 31005 of the Corporations Code , for rescission of a membership contract entered into, or for any damages sustained, as a consequence of being fraudulently induced to join the organization.  For purposes of this section, “fraudulently induced” means the misrepresentation of a material fact, or the omission of a material fact, including the failure of the organization to disclose all information required under subparagraph (H) of paragraph (3) of subdivision (d) of Section 20001 of the Business and Professions Code or paragraph (8) of subdivision (c) of Section 31005 of the Corporations Code , unless the defendant proves that the plaintiff knew the facts concerning the untruth or omission or that the defendant exercised reasonable care and did not know (or if the defendant had exercised reasonable care would not have known) of the untruth or omission.


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