Six years after Wilson v. Hewlett-Packard, the Ninth Circuit has reversed course. Plaintiffs are no longer required to allege a safety hazard in order to state an omission claim under California law.
Briefly by way of background, California’s state appellate courts have never expressly adopted a safety requirement in omissions cases. But federal district courts in the Ninth Circuit did so to such an extent that the Ninth Circuit in Wilson adopted the requirement based primarily on the strength of their consensus. The district courts developed their interpretation based on the implied holdings in Bardin v. Daimlerchrysler Corp., 136 Cal. App. 4th 1255 (2006), and Daugherty v. American Honda Motor Co., 144 Cal. App. 4th 824 (2006).
Even after the Ninth Circuit codified the safety requirement in Wilson, California state courts did not. In a recent decision, Rutledge v. Hewlett-Packard, the court appeared to outright reject it, holding that neither Daugherty nor Bardin “preclude a duty to disclose material information” outside the safety context. The court continued: “the Bardin court did not hold that a defect must be related to a safety concern to be material for purposes of fraudulent omission.” 238 Cal. App. 4th 1164, 1174 (2015).… Read more
In a recent published decision, the California Court of Appeal reiterated several concepts central to CLRA omission claims.
To start with, although the CLRA contains a long laundry list of prohibited practices, none of the practices listed expressly involve non-disclosure or concealment. Instead, the CLRA bars conduct like “Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have…” and “Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another.”
Yet courts nonetheless have typically held that the CLRA may be interpreted to prohibit omissions. In Gutierrez v. Carmax, the California Court of Appeal reaffirmed those holdings. The court engaged in a comprehensive analysis of the text, the legislative history, prior decisions, and other considerations, and held:
failures to disclose material facts are actionable under the CLRA. In particular, we conclude paragraphs (5), (7) and (9) of subdivision (a) of Civil Code section 1770 proscribe material omissions in certain situations.
The court also reaffirmed principles concerning a closely related issue: In what circumstances are omissions actionable under the CLRA? The court signed off on the “four situations” that have been incorporated into CLRA jurisprudence from case law concerning common law fraud.… Read more
Six months ago, the US Supreme Court appeared to end a controversy. In the Ninth Circuit, at least, there had been growing confusion over how and when plaintiffs could appeal certification denials. Rule 23(f) allows either party to request interlocutory review of a certification ruling. But what happens when Rule 23(f) review is denied or not requested? Can a plaintiff dismiss her case and then appeal?
In Baker v. Microsoft, that’s what the plaintiff tried. After the district court struck all of the class allegations from the complaint, the plaintiff petitioned for review under 23(f) and the Ninth Circuit declined review. The plaintiff then voluntarily dismissed his claims with prejudice so as to manufacture a final decision subject to appellate review. The Ninth Circuit then agreed to hear the case (and ultimately ruled in plaintiff’s favor).
After a subsequent Ninth Circuit decision appeared to undermine that ruling, the Supreme Court reversed, holding that “Plaintiffs in putative class actions cannot transform a tentative interlocutory order … into a final judgment … simply by dismissing their claims with prejudice.”
Now, the Ninth Circuit has allowed appellate review of a certification denial under different – but not wholly unrelated – circumstances.
In Brown v.… Read more
Late last week, the Ninth Circuit settled a long-running district court split. The split pertains to when consumers have Article III standing to enjoin deceptive business practices. As the Ninth Circuit recognized, “district courts applying California law have split dramatically on this issue.”
The dispute, in short, turns on the requirement that anyone seeking an injunction must be at threat of future injury. Quite a few courts had held that consumers who had already discovered a particular deception were not at threat of future injury, since they necessarily now knew the nature of the deception and thus could avoid being harmed again.
Many of those courts were not swayed even though they recognized their holdings created a paradox: even though injunctive relief lies at the heart of the UCL, in many cases, no plaintiff could enjoin deceptive conduct (at least in federal court). Those consumers who did not yet know of the deception would not know to file suit, whereas those who did know of the deception, would lack standing to seek an injunction.
As the Ninth Circuit recognized:
Were injunctive relief unavailable to a consumer who learns after purchasing a product that the product’s label is false, California’s consumer protection laws would be effectively gutted, as defendants could remove any such case.
… Read more
Earlier today, the Ninth Circuit issued its long-awaited Article III standing opinion in Robins v. Spokeo. The Ninth Circuit’s new opinion comes after the Supreme Court vacated and remanded the Ninth Circuit’s earlier opinion in the same case.
The Ninth Circuit’s opinion today continues a trend among the circuit courts, identifying intangible harms arising from statutory violations that constitute concrete harm under Article III.
In reaching its conclusion, the Ninth Circuit borrowed liberally from the recent Second Circuit decision in Strubel. It also cites a range of other circuit court opinions, suggesting a burgeoning consensus in what had been a murky and arguably dissonant jurisprudence.
The Ninth Circuit laid out its framework as follows:
In evaluating Robins’s claim of harm, we … ask: (1) whether the statutory provisions at issue were established to protect his concrete interests (as opposed to purely procedural rights), and if so, (2) whether the specific procedural violations alleged in this case actually harm, or present a material risk of harm to, such interests.
To answer the first question, the court examined the statutory purpose, and whether those aims were “‘real,’ rather than purely legal creations.” In holding that they were, the court also pointed to the fact that similar interests have been protected at common law:
Just as Congress’s judgment about an intangible harm is important to our concreteness analysis, so is the fact that the interest Congress identified is similar to others that traditionally have been protected.
… Read more
The Third Circuit handed down an opinion Monday holding that a violation of the Telephone Consumer Protection Act (TCPA) confers Article III standing even in the case of intangible injuries.
The opinion may prove to be less interesting for its impact on TCPA jurisprudence than for guiding courts in their efforts to understand and apply the Supreme Court’s Spokeo decision. After all, within the TCPA context, there already appears to be a consensus that statutory violations satisfy Article III’s requirements.
But post-Spokeo, courts have grappled with the opinion’s distinction between “procedural” and “substantive” statutory violations. Some courts have focused on that distinction; others have found it unhelpful.
The Third Circuit’s new decision, in Susinno v. Work Out World, does not require distinguishing between procedural and substantive harms – even though the Third Circuit’s earlier Horizon decision had emphasized the distinction. Per Susinno:
We summarize Horizon’s rule as follows. When one sues under a statute alleging “the very injury [the statute] is intended to prevent,” and the injury “has a close relationship to a harm . . . traditionally . . . providing a basis for a lawsuit in English or American courts,” a concrete injury has been pleaded.
… Read more
The Supreme Court has issued its opinion in Microsoft v. Baker, ruling class action plaintiffs cannot circumvent the Rule 23(f) procedure governing the appeal of class certification denials by voluntarily dismissing their claims with prejudice.
Following oral argument several months back, the consensus had been that the ruling in Baker would be in Microsoft’s favor. In fact, even the Ninth Circuit appeared to back away from its holding in Baker, issuing a contrary ruling while Baker remained pending before the Supreme Court.
The predictions proved right, with the Supreme Court issuing a ruling that reached a unanimous result: plaintiffs cannot appeal a denial of class certification unless they either successfully petition for permission to appeal under Rule 23(f) or continue to litigate after the denial of certification until judgment.
Perhaps most interesting about the ruling was the 5-4 split on the underlying reasoning. Justice Kennedy and the liberal wing of the Court premised the majority ruling on the basis that federal courts of appeals lack jurisdiction under the “final judgment rule” of §1291 to review an order denying class certification (or, as here, an order striking class allegations) after the named plaintiffs have voluntarily dismissed their claims with prejudice.… Read more
It’s axiomatic that – at the pleading stage – all inferences are to be drawn in plaintiffs’ favor. All well pled allegations are to be taken as true.
Yet complaints are often nitpicked, especially by defendants who foresee trouble once discovery is underway. They search for holes in the pleadings, even when (or especially when) those holes are likely to be filled later with evidence.
That strategy often works. So plaintiffs can take solace in the new Second Circuit opinion that not only reiterates these general principles, but expressly relies on them to form the backbone of its opinion.
The case is John v. Whole Foods Market Group. Plaintiff alleged Whole Foods systematically overstated the weights of prepackaged foods, leading to overcharges for its customers. The case followed a New York Department of Consumer Affairs investigation, which concluded some 89% of Whole Foods’ prepackaged foods featured overstated weights.
Whole Foods moved to dismiss on standing grounds. It argued that just because the weight of 89% of its food had been overstated, that didn’t necessarily mean that the weight of plaintiff’s food had been overstated. So, Whole Foods argued, plaintiff could not plausibly allege that he overpaid. Whole Foods also sought dismissal on the ground that the complaint lacked details about the New York investigation’s methodology.… Read more
In a recent unpublished opinion, the Eleventh Circuit refused Toyota’s request to compel arbitration against one of its customers. This decision is consistent with several others, including in the Ninth Circuit.
In Drayton v. Toyota Motor Credit Corp., plaintiff sued Toyota for violating the TCPA and Florida’s analog statute. Toyota moved to compel arbitration, pointing to the purchase contract entered into between plaintiff and her local dealership.
Toyota, like most automotive manufacturers, does not sell vehicles directly to its customers. So as is typical of vehicle purchase transactions, Toyota was not a party to the purchase agreement. And Florida law, like many other states, does not ordinarily allow non-signatories to enforce contracts.
Toyota sought to exploit an exception, arguing that under the equitable estoppel doctrine, plaintiff could not seek to hold a party to the terms of an agreement while simultaneously trying to avoid the agreement’s arbitration clause. The problem? Plaintiff was not seeking to hold Toyota to the terms of the agreement. Her claims stemmed from Toyota attempting to collect a consumer debt.
The Eleventh Circuit’s decision continues the consumer friendly trend of disallowing automotive manufacturer attempts to avoid liability by pointing to the forced arbitration clauses in their dealers’ contracts. … Read more
The Eleventh Circuit yesterday joined several other courts in holding that a bare procedural violation of the Video Privacy Protection Act confers Article III standing under the Supreme Court’s Spokeo decision.
In Perry v. Cable News Network, the plaintiff alleged that a downloadable CNN app for smartphones tracks and records user’s views of news articles and videos. Plaintiff alleged that when a user closes the app, CNN sends the viewing activity and other data to a company called Bango, a third party company that conducts data analytics.
CNN moved to dismiss, arguing plaintiff failed to allege a legally cognizable injury under Spokeo because the alleged violation of a statutory right is not on its own sufficiently concrete. The Eleventh Circuit disagreed:
Perry has established his standing to file this action because his alleged injury is sufficiently concrete. Although Perry does not allege any additional harm beyond the statutory violation, the Supreme Court has made clear that our analysis does not end there. See Spokeo, 136 S. Ct. at 1549. Instead, “the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact” so that “a plaintiff in such a case need not allege any additional harm beyond the one Congress has identified.” Id.; see also Havens Realty Corp.
… Read more