Thursday, October 8, 2009

Central District Court Denies Class Certification of UCL Class Based on Issues Relating to Restitution

On September 14, 2009, class certification of a construction defect action brought (in part) under the UCL was denied in Kingsbury v. U.S. Greenfiber, LLC, 2009 U.S. Dist. LEXIS 92014 (C.D. Cal. Sept. 14, 2009).  The plaintiff alleged, among other things, that he and the putative class had “purchased mass-produced homes containing a type of ‘cellulose insulation’… that can cause dangerous and difficult-to-detect mold growth because it retains too much water during and after installation.” See id., at 3.  As to claims under the UCL, plaintiff pursued various theories, including that the defendant had used false and deceptive advertising to conceal the risks and dangers of the insulation from the original home purchasers. Id., at 25-26.

While the plaintiff asserted that his UCL claim warranted certification under the principles espoused in In re Tobacco II, the District Court disagreed.  The Court denied certification of the UCL claim on the grounds that the proposed class definition was overly inclusive “because it included current owners of Pulte-built homes who did not purchase their homes from Pulte and thus have no claim to restitutionary relief under the UCL.” See id., at 26.  The Court further reasoned that the remedy sought by Plaintiff – the cost of repair – was not restitutionary in nature, but rather constituted damages (which are not recoverable under the UCL). Id., at 27.  Finally, the Court concluded that the named plaintiff failed to establish Prop 64 standing, as he testified at deposition that he did not rely on the defendant’s promotional materials. Id., at 29-30.

Putting the standing issue aside, the Court's opinion is troubling insofar as the court's analysis travels heavily into the merits of the case.  Moreover, the Court's analysis regarding class member restitution conflicts with the analysis in In re Tobocco II (discussed in earlier posts here and here), as the California Supreme Court concluded that the issue of putative class member injury is not properly a part of a court's certification calculous under the UCL.  Out of fairness to the Court, however, the plaintiff in this case may be partially to blame by failing to articulate a restitutionary theory that was viable under the UCL (and tailored to the proposed class).  However, resolution of this issue relates to the merits of the case, and as such, would have been more properly addressed by way of a motion to dismiss.

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