Tuesday, November 10, 2009

Are Issues Relating to UCL Standing Irrelevant to Predominance? Not According to the Court in Plascencia v. Lending 1st Mortage

Of note, I just stumbled across an insightful UCL certification opinion out the Northern District addressing the issue of predominance, post Tobacco II. The opinion, Plascencia v. Lending 1st Mortage, 2009 U.S. Dist. LEXIS 79585 (N.D. Cal. Aug. 21, 2009), granted a plaintiff’s motion to certify a claim under the fraudulent prong of the UCL based on principles of absent class member standing articulated in Tobacco II.  The plaintiff's UCL claim was predicated upon an alleged failure to disclose that a specific type of home loan offered by the defendant was subject to negative amortization.

As concluded by the Court, predominance was met in that case because liability under the fraudulent prong of the UCL required only a singular showing of “likelihood of deception.” See Plascencia, 2009 U.S. Dist. LEXIS 79585, at 30-31 (“[w]ith respect to fraudulent conduct, the UCL prohibits any activity that is ‘likely to deceive’ members of the public” and as such, “liability under the UCL does not require reliance and injury.”). Importantly, the Court reasoned that individualized issues relating to each class member’s reliance and damage were not properly a component of the court’s predominance analysis after In re Tobacco II:
The degree to which the UCL claim involves individual issues turns on whether Proposition 64 imposed a new standing requirement that all class members must satisfy, or whether it is sufficient for Plaintiffs to show that they have standing. The California Supreme Court recently answered this question in In re Tobacco II Cases, 46 Cal. 4th 298, 93 Cal. Rptr. 3d 559, 207 P.3d 20 (2009). The court clarified that only the named plaintiff in a UCL class action need demonstrate injury and causation.

Plaintiffs may prove with generalized evidence that Defendants' conduct was "likely to deceive" members of the public. The individual circumstances of each class member's loan need not be examined because the class members are not required to prove reliance and damage. Common issues will thus predominate on the UCL claim.
See Plascencia v. Lending 1st Mortage, 2009 U.S. Dist. LEXIS 79585, at 31-32.

Of course, such analysis runs counter to the Second District’s recent decision in Cohen v. DirecTV, which inexplicably found “Tobacco II to be irrelevant because the issue of ‘standing’ simply is not the same thing as the issue of ‘commonality.’” See Cohen, 2009 Cal. App. LEXIS 1728, 29. The Cohen court’s statement in this regard is absolutely mystifying, as a court’s predominance analysis by necessity is built upon the foundation of the requirements necessary to state a claim.

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