Posts belonging to Category Certification Rulings

California-based U.S. District Court Judge Michael W. Fitzgerald has certified a class of consumers accusing the maker of the drink “Supple” of deceptively marketing the beverage by touting its ability to relieve joint pain. See Cabral v. Supple, LLC, No. 12-0085 (C.D. Cal. Feb. 14, 2013) (order granting motion for certification).

The named plaintiff has alleged that she bought Supple in reliance on the defendant’s claims that its “key ingredients” are “clinically proven effective, produce evidence-based solutions for joint problems, and provide fast relief from joint suffering caused by ailments such as arthritis.” Order at 1-2. A 7-week supply of Supple cost the plaintiff $94.95, plus shipping and handling, but it allegedly proved to be useless.

The certified class will consist of all people living in California who bought Supple since December of 2007. As is often the case in contested class certifications, the defendant argued that individual issues predominated, precluding certification. Additionally, the defendant argued that repeat purchases of Supple demonstrated satisfaction with the product and attendant claims about its clinical properties, rather than inducement due to the defendant’s misleading claims.

The court rejected both arguments and found that common questions predominated: “The truth or falsity of Supple’s advertising will be determined on the basis of common proof — i.e., scientific evidence that the Beverage is ‘clinically proven effective’ (or not) — rather than on the question whether repeat customers were satisfied or received multiple shipments of the Beverage because of automatic renewals.” Order at 7.

Notably, despite perhaps indicating some amount of consumer satisfaction, the fact of multiple purchases did not negate the posited link between the defendant’s representations about Supple’s curative properties and consumers buying it.

A nationwide class of annuity purchasers, who alleged that National Western Life Insurance Company made false representations about a “premium bonus,” have successfully rebuffed the defendant’s attempt to decertify the nationwide class. In its decertification motion, National Western argued that the U.S. Supreme Court’s opinion in Wal-Mart v. Dukes rendered the previously-issued certification order in this case untenable, since the judge did not perform a “rigorous analysis of commonality,” but instead found a classwide inference of misrepresentation. See In re: Nat’l Western Life Ins. Deferred Annuities Litig., No. 05-1018 (S.D. Cal. Feb. 14, 2013) (order denying motion to decertify).

The federal district court’s denial of the decertification motion underscored a trend in consumer class action jurisprudence whereby absent class members’ reliance on a misrepresentation can be inferred, and need not be affirmatively established, so long as the reliance comports with “common sense.” Order at 6-7.

The plaintiffs contend that National Western represented that annuity purchasers would receive a reduction in their premium payments, but failed to disclose that the savings realized by consumers through the premium bonus would be negated by countervailing reductions in the interest rates associated with the annuities.

The defendant attempted to demonstrate that the class could not establish reliance by common proof by proffering the deposition testimony of 15 class members, not all of whom testified to having relied on the at-issue representations concerning the premium bonus. However, the court held that the defendant’s depositions could not rebut the common sense presumption of reliance, stating, “National Western’s evidence cannot be properly generalized to the whole class.” Order at 8.

The decertification ruling held that the plaintiffs could in fact demonstrate classwide reliance because of the “common sense link” between the National Western’s alleged misrepresentations and the purchase of annuities by class members. Order at 6.

California’s Fourth Appellate District has reversed a trial court’s denial of class certification as to meal and rest break claims where the employer/defendant had no discernible policy governing employees’ breaks. See Bradley v. Networkers International, LLC, __ Cal. App. 4th __ (2012). In addition to substantial reliance on the California Supreme Court’s landmark Brinker decision, Bradley also substantially relied on Jaimez v. Daiohs USA, Inc., 181 Cal. App. 4th 1286 (2010), in which the trial court was found to have committed reversible error by “focusing on the potential conflicting issues of fact or law on an individual basis, rather than evaluating ‘whether the theory of recovery advanced by the plaintiff is likely to prove amenable to class treatment.’” Jaimez at 1299.

The Bradley analysis is notable in several respects, foremost its finding that plaintiffs’ theory that the defendant entirely lacked a meal or rest break policy necessarily presented a common issue suitable for class treatment. Slip op. at 28-31. Bradley is also notable in underscoring that the pertinent question for trial courts is whether a plaintiff’s meal and rest break theory of liability is amenable to classwide adjudication. See slip op. at 21. In so ruling, the Bradley panel noted that the issue of why breaks were missed is not properly a basis for finding a lack of predominant questions. See slip op. at 20-21. Rather, the reasons underlying a particular missed break and whether there is liability in a particular instance go only to damages. Id. Copious class action jurisprudence holds that individual variations in damages may not be a bar to class treatment.

The Court of Appeal recently denied defendants’ petition for rehearing and modified the opinion without altering the judgment. The order is available here.

The new year began auspiciously for consumers and the plaintiffs’ bar with the Ninth Circuit issuing a twin victory for consumers by underscoring the focus on defendants’ conduct under the “fraudulent” prong of California’s Unfair Competition Law (UCL) and holding that the defendant waived any entitlement to compel arbitration. See Gutierrez v. Wells Fargo Bank, NA, ___ F.3d ___ (9th Cir. Dec. 26, 2012). Though the ruling remanded the action for the district court to apply the proper remedy, and in so doing vacated a judgment entered in favor of the plaintiff class, the Court of Appeals panel affirmed both the district court’s granting of class certification and the finding of classwide liability. See Slip op. at 2-4.

As to the class’ allegations that Wells Fargo made affirmative misstatements about its practices for posting deposits and transactions and making overdraft assessments to consumers’ accounts, the Ninth Circuit first concluded that the UCL is not preempted by federal banking legislation. See Slip op. at 25-27. With the preemption issue resolved, the panel found that the plaintiffs had adduced sufficient evidence of Wells Fargo making misleading statements as to how the bank would post deposits and charges, in particular the order in which such transactions would be recorded, which has direct implications as to the assessment of overdraft fees. See Slip op. at 34.

The court did not respond favorably to Wells Fargo’s contention that individual reliance issues predominate because “some class members would have engaged in the same conduct irrespective of the alleged misrepresentation,” stating, “we are hard pressed to agree that any class member would prefer to incur multiple overdraft fees.” Slip op. at 32.

Additionally, the Ninth Circuit clarified Article III standing vis-à-vis class actions by holding that only a single named class representative – not every class member – must have standing. Slip op. at 30-31.

Finally, with respect to arbitration, the Ninth Circuit held that Wells Fargo had waived any right to seek to compel arbitration, rebuffing Wells Fargo’s contention that seeking to move the action to an arbitral forum would have been futile before the U.S. Supreme Court’s AT&T Mobility v. Concepcion decision. See Slip op. at 10-17.