Tuesday, September 29, 2009

Second District Upholds Denial of Cert in Cohen v. DirecTV, Inc.

On September 28th the Second District Court of Appeal affirmed the trial court's denial of class certification in Cohen v. DirecTV, Inc. The Court's Opinion, which is unpublished, concluded that the trial court correctly denied class certification of a class that included persons who had not viewed alleged deceptive promotions by Direct TV. The Court reasoned that "we do not understand the UCL to authorize an award for injunctive relief and/or restitution on behalf of a consumer who was never exposed in any way to an allegedly wrongful business practice" and thereafter deemed the California Supreme Court's decision in Tobacco II "irrelevant because the issue of 'standing' simply is not the same thing as the issue of 'commonality.'" See Cohen, at pp. 15-16.

With all due respect to the Cohen Court, it got it wrong. The California Supreme Court rejected this very proposition in In Re Tobacco II, concluding that “to hold that the absent class members on whose behalf a private UCL action is prosecuted must show on an individualized basis that they have ‘lost money or property as a result of the unfair competition” (§ 17204) would conflict with the language in section 17203 authorizing broader relief – the ‘may have been acquired’ language….” See In re Tobacco II Cases, 46 Cal.4th 298, 320 (2009).

Moreover, the Court expressly rejected the argument that standing requirements could be "back-doored" on absent class members through the class elements:
At argument, defendants acknowledged that the text of Proposition 64 does not apply the standing requirements to unnamed class members. Defendants maintained, rather, that application of these requirements to absent class members is mandated by class action principles, specifically, that a class member must have standing to bring the action individually and that the aggregation of individual claims into a class action cannot be used to transform the underlying claim. We reject these arguments.
See Tobacco II, 46 Cal. 4th at 321 (emphasis added).

Importantly, the Court rejected this line of reasoning because it would substantively alter the focus of UCL which is concerned solely with the defendant’s conduct:
Defendants also argue that Proposition 64's standing requirement must be applied to all class members because otherwise the class representative would be permitted “to assert ‘claims’ that the absent class members do not have.” According to defendants this would violate the principle that the aggregation of individual claims into a class action “does not serve to enlarge substantive rights or remedies.” [] We disagree.
The substantive right extended to the public by the UCL is the “'right to protection from fraud, deceit, and unlawful conduct’” [], and the focus of the statute is on the defendant's conduct. As we have already observed, the proponents of Proposition 64 told the electorate that the initiative would not alter the statute's fundamental purpose of protecting consumers from unfair businesses practices. Rather, the purpose of the initiative was to address a specific abuse of the UCL's generous standing provision by eliminating that provision in favor of a more stringent standing requirement. That change, as we observed in Mervyn's, did not change the substantive law.
See Tobacco II, 46 Cal. 4th at 324 (emphasis added).

In re Tobacco unquestionably permits certification of the very type of restitutionary class at issue in Cohen. My further thoughts on this may be found here: The Scope of Class Restitution in the Wake of In Re Tobacco II Cases, Mealey's Litigation Report: Class Actions, Vol. 9, #14 (Sept. 17, 2009).

1 comment:

  1. I completely agree the Cohen Court has it wrong. Glad to hear someone else feels the same!