ND Cal. Declines to Enforce Arbitration Clause


Say you sign up for a department store credit card, and that credit agreement has an arbitration clause.  Then you buy merchandise at the store, using the credit card, and later want to sue because you believe the merchandise was marketed in a fraudulent manner.  Does the arbitration clause bar your suit?  According to one court at least, the answer is no.

Judge Thelton E. Henderson of the Northern District of California recently declined to enforce an arbitration clause within a Banana Republic Visa card agreement. The plaintiff had purchased merchandise at a Banana Republic affiliate (a Gap store) and alleged that the Gap had marketed the merchandise unlawfully.  The Gap moved to dismiss based on the arbitration clause.

Plaintiff argued that The Gap was not privy to the arbitration agreement and so could not enforce it.  Defendant responded that it was a third party beneficiary of the agreement, giving it the right to enforce it.

Judge Henderson sided with the plaintiff:

Here, while the parties’ agreement could be read to make Defendants third-party beneficiaries, the agreement itself is ambiguous. … Further, it is unclear to the Court how Plaintiff’s claims are “related to” her credit card agreement when Plaintiff’s claims are unrelated to her method of payment; in other words, her claims against Defendants would not be affected had Plaintiff made the purchase with a different credit card or payment method.

Read more

11th Circuit: Comcast Doesn’t Require Classwide Proof of Damages


Today, in Carriuolo v. General Motors Co., the Eleventh Circuit joined a group of circuits that includes at least the Second, Third, Seventh, and Ninth, holding that “individual damages calculations alone cannot defeat class certification.” The court rejected defendant’s argument that, after the Supreme Court’s Comcast v. Behrend decision, “damages must be capable of measurement on a classwide basis.”

The underlying case involves allegations that GM advertised that some of its vehicles had achieved safety ratings that they hadn’t really achieved.  Plaintiffs alleged this conduct violates Florida’s deceptive practices statute.  Based on that theory of liability, the Eleventh Circuit held that damages would be a common issue, since individual buying preferences would not alter the overall market price::

a manufacturer’s misrepresentation may allow it to command a price premium and to overcharge customers systematically. Even if an individual class member subjectively valued the vehicle equally with or without the accurate Monroney sticker, she could have suffered a loss in negotiating leverage if a vehicle with perfect safety ratings is worth more on the open market. … Obviously, prices are determined in substantial measure according to market demand. Thus, because a vehicle with three perfect safety ratings may be able to attract greater market demand than a vehicle with no safety ratings, the misleading sticker arguably was the direct cause of actual damages for the certified class even if members individually value safety ratings differently.

Read more

Ninth Circuit: 12(b)(6) Not the Time to Decide Whether a Business Practice Was Misleading


In a brief memorandum opinion issued Friday, the Ninth Circuit issued a reminder that whether a business practice is misleading under California’s consumer protection statutes is typically a question of fact better deferred until later in the litigation.

In McMahon v. Take-Two Interactive Software, Inc., plaintiffs brought suit after purchasing the Grand Theft Auto V video game.  Plaintiffs alleged that the game was marketed in a fashion that misleadingly marketed the game’s online component.  The district court concluded as a matter of law that the alleged misrepresentations were not actionable under the UCL or the FAL.

The Ninth Circuit reversed, explaining:

plaintiffs alleged that they read all the disclosures and statements on GTA V’s packaging, and that these representations led them to believe that GTA Online would be available to play immediately upon purchase of GTA V. Contrary to these representations, GTA Online was not available immediately to any purchasers. The district court erred by failing to construe plaintiffs’ allegations that these representations were misleading in the light most favorable to plaintiffs, and by making the finding that the representations were not misleading. See Lilly v. ConAgra Foods, Inc., 743 F.3d 662, 665 (9th Cir. 2014) (“Whether a business practice is deceptive will usually be a question of fact not appropriate for decision on [a motion to dismiss].”

Read more

In re: Rust-Oleum (N.D. Ill.)


Judge Amy St. Eve’s recent motion to dismiss ruling in the In re Rust-Oleum Restore Marketing, Sales Practices and Products Liability Litigation, 2016 WL 74671 (N.D. Ill. Jan. 7, 2016), is worthy of review — it covers a range of warranty and consumer protection issues.

The opinion is noted without further analysis since my colleagues and I contributed to the pleadings.… Read more