Consumer Fraud Class Action Developments, Vol. I No. 3

Bare Violation of Statute May Be Insufficient to Confer Article III Standing to Bring Class Action Claims

Spokeo v. Robins, No. 13-1339, 578 U.S.___, 136 S. Ct. 1540 (2016)

In a highly anticipated Article III standing decision concerning online data privacy, the Supreme Court attempted to clarify the minimum threshold required for a plaintiff’s claims to survive the subject matter jurisdiction qualifications found in Article III of the Constitution. At issue was whether search engine Spokeo’s alleged posting of incorrect information about plaintiff on its “people search” site constituted a cognizable harm. The court vacated and remanded the Ninth Circuit’s ruling that plaintiff had standing to bring a class action against Spokeo because it allegedly violated the Fair Credit Reporting Act (FCRA) by posting false information about his employment, marital status and education background. In a 6-2 decision written by Justice Alito, the Court held that because the Ninth Circuit failed to consider the “concreteness” aspect of the injury-in-fact requirement, its Article III standing analysis was incomplete. To establish Article III standing, a plaintiff must demonstrate a concrete harm. In the Court’s view, a bare violation of the FCRA, which provides for statutory damages, does not necessarily confer standing, because some unlawful inaccuracies in a consumer’s information — dissemination of an inaccurate ZIP code, for instance — could not “without more, … work any concrete harm.” The Court remanded to the Ninth Circuit to address “whether the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement” of Article III. View the decision. (Read our discussion of recent decisions applying Spokeo in Consumer Privacy and Data Security.)

Second Circuit: Commonality Not Met Where Plaintiff Failed to Establish a Uniform Representation

Garrido v. Money Store, No. 15-1891, 2016 WL 2956914 (2d Cir. May 23, 2016) (summary order)

Borrowers alleged that defendants made misrepresentations concerning fees that were charged in connection with their loans. The district court found commonality was not satisfied, because the documents containing the allegedly false statements were not routinely disseminated. The Second Circuit affirmed, noting that there was no evidence that class members received and relied on the same false representations. The mere fact that class members paid the disputed fees could not establish that they had done so based on common misrepresentations. View the decision.

Premium Price Alone Cannot Constitute Misrepresentation

Parent v. MillerCoors LLC, No. 3:15-cv-01204, 2016 WL 3348818 (S.D. Cal. June 16, 2016)

Plaintiff’s first amended complaint alleged that he had regularly paid a premium when he purchased Blue Moon beer, based on his impression that Blue Moon is a “craft beer.” Plaintiff pointed to Blue Moon’s packaging and website, its “artfully crafted” trademark, and its “placement among other craft beers” at retail sellers. Plaintiff argued that although the internet advertisements “stop short of calling Blue Moon a craft beer, they feature all of the elements necessary to depict a craft beer.” The court granted defendant’s motion to dismiss, holding that the challenged internet advertisements contained only “mere puffery” and did not amount to actionable misrepresentations. Despite images suggesting a comparatively small-scale brewing operation, the advertisements do not claim that the depicted brewery was the only place Blue Moon was produced, that it was invented by an independent brewery or that it is currently brewed by a small, independent brewery. Moreover, the court held that the alleged “premium price” of Blue Moon, and its placement among other craft beers in retail stores, could not constitute a representation. View the decision.

Individual Understandings of Allegedly Deceptive Product Name Destroyed Predominance

Pierce-Nunes v. Toshiba Am. Info. Sys., No. CV 14-7242-DMG (KSx) (ECF No. 205) (C.D. Cal. June 23, 2016).

A California federal court declined to certify a class of purchasers of defendant Toshiba’s LED lit LCD televisions in a case alleging that Toshiba falsely advertised the television sets as “LED TVs.” Plaintiff argued that “the very name of the product itself” was deceptive, since the “references to light emitting diodes (‘LEDs’) refer to the light source that illuminates the LCD panel, rather than the display technology itself.” The court disagreed. Noting the “lack of uniformity” in Toshiba’s product packaging and advertising during the class period, the court held that many class members would not have been exposed to the LED TV representation. And “[e]ven when the packaging did not reference LCD technology, evidence in the record indicate[d] that many retailers displayed information at the point of sale or online explaining that LED TVs use LEDs to backlight an LCD television.” Thus, the court held, plaintiff “will not be able to demonstrate with common proof … that each class member had the same understanding of the product labeling, let alone relied on the LED TV label when purchasing a Toshiba-brand LED-lit LCD TV.” Noting the many different influences on which consumers rely in purchasing a television, the court held that “[plaintiff] will not be able to demonstrate with common proof that the LED TV label was material to consumers’ purchasing decision.” View the decision.

Plaintiffs Failed to Show Their Evidence of Loss Was Representative

Dicuio v. Brother Int’l Corp., No. 15-2548, 2016 WL 3545552 (3d Cir. June 29, 2016) (unpublished)

Plaintiffs alleged that defendant printer manufacturer designed its printers to signal “Toner Life End” before color cartridges inside the printers had run out of usable toner, such that plaintiffs were deprived of the expected page yield. The district court granted defendant’s summary judgment motion, holding that plaintiffs’ proffered evidence of loss was insufficient to establish injury-in-fact under Article III of the U.S. Constitution or actionable ascertainable loss under the New Jersey Consumer Fraud Act. The Third Circuit affirmed, rejecting plaintiffs’ “conclusory” assertion that the reports on their currently installed cartridges are representative of their average printing habits. In so concluding, the court drew on the Supreme Court’s recent decision in Tyson Foods, Inc. v. Bouaphakeo that “observ[ed] that purported representative evidence cannot support class certification where no reasonable juror could make an inference that the evidence is truly representative.” View the decision.

Class Certification Denied in Common Defect Case Where Individual Issues Predominated

Romig v. Pella Corp., No. 2:14-cv-00433 2016 WL 3125472 (D.S.C. June 3, 2016)

Plaintiff brought suit on behalf of a putative class of owners of New York buildings with Pella windows, alleging that Pella’s windows contained common design defects and that defendant breached its obligation under a limited warranty to repair or replace defective windows. Plaintiff argued that the “repair or replace” provision of the warranty failed in its essential purpose, invariably leading Pella to replace one defective window with another. Plaintiff sought certification of a single question: whether the windows were defective. The court denied the class certification motion. The fact that defects led to the same type of damage did not mean they constituted a common defect. So, the court reasoned, individual causation inquiries predominated over common questions. Additionally, Pella’s affirmative defenses — statute of limitations, in particular — would involve individual inquiries as to when each plaintiff’s claim accrued. View the decision.

Class Claims Mooted by Accepted Offer of Judgment

Montgomery v. Kraft Foods Global, Inc., 822 F.3d 304 (6th Cir. 2016)

The Sixth Circuit affirmed the district court’s order denying class certification of plaintiff’s consumer protection claims relating to her purchase of a Tassimo coffeemaker, holding that her acceptance of a Rule 68 offer of judgment foreclosed her appeal. Plaintiff had accepted an offer including costs and attorney fees, thus eliminating any putative benefit from class certification. The panel observed that the Supreme Court’s decision in Campbell-Ewald “provides little instruction” because that case involved an unaccepted offer of judgment. View the decision. Read our discussion of Campbell-Ewald in Issue 2.

Disclaimer Neutralized Alleged False Advertising

Zito v. United Technologies Corp., No. 3:15-cv-00744, 2016 WL 2946157 (D. Conn. Mar. 11, 2016)

Plaintiff alleged that defendants’ ionization smoke alarms were deceptively marketed as “smoke alarm[s]” because they could not sense smoldering fire as quickly as do photoelectric smoke alarms. The court held that the omission of this fact on the front of the package does not render use of the term “smoke alarm” deceptive because the alarms do, in fact, detect smoke. The court further noted that the packaging included sufficient disclosures about ionization technology and that the notice on the bottom of the box clearly explained that an ionization smoke alarm may not detect smoke from a smoldering fire in as timely a manner as would a photoelectric smoke alarm. View the decision.

Investigation Could Not Support Plaintiff’s Allegations on ‘Information and Belief’

Nunez v. Best Buy, Inc., No. 15-cv-03965, 2016 WL 3189197 (D. Minn. June 7, 2016)

Plaintiff alleged that he purchased a microwave for a “sale” price that was represented to be $20 less than the “regular” price, when in fact Best Buy did not ever sell the microwave at the purported regular price. Plaintiff’s complaint relied on  a study by Consumers’ Checkbook/Center for the Study of Services, a nonprofit organization, which tracked pricing trends on eight items sold by Best Buy. Plaintiff’s claim failed under Fed. R. Civ. P. 9(b) because he did not allege the date on which he purchased the microwave at issue, the model of the microwave, the store in which he made his purchase or the particular advertising on which he relied. The court rejected plaintiff’s allegations pled “on information and belief,” finding that the CSS study did not provide sufficient support, as it did not include pricing details for the particular microwave plaintiff purchased. View the decision.