Thursday, November 19, 2009

Eastern District Denies Request to Decertify Class in Cartwright v. Viking Industries

On November 17, 2009, the Court in Cartwright v. Viking Indus., 2009 U.S. Dist. LEXIS 107066 (E.D. Cal., 2009) issued an order denying a request to decertify a class composed of California residential property owners having a specific model of defendant’s windows installed in their homes.

The defendant’s decertification request, which was couched in a motion for reconsideration, claimed that “it was clear error (1) to rely on Viking's lifetime warranty and associated marketing to support certification of fraud claims by subsequent owners; (2) to adopt a presumption of reliance with respect to plaintiffs' UCL, CLRA, and fraud claims; and (3) to accept plaintiffs' theory of defect as a sufficient basis for certification.” See id., at 4. As for the first and second argument, the Court rejected the defendant’s position regarding certification of the UCL, CLRA, and fraud claims on the grounds that allegations and evidence of concealment presented common issues with regard to causation:
With respect to defendant's first and second arguments, the court notes that, contrary to defendant's assertion, the court did not rely solely on the lifetime warranty and associated marketing in finding that common issues of law and fact predominated. Rather, the court emphasized plaintiffs' allegations and supporting evidence that defendant fraudulently concealed the defective nature of the window products in order to induce plaintiffs and class members to purchase them. This allegation of non-disclosure applied to all owners, original and subsequent. The court concluded that plaintiffs' allegations of fraudulent concealment satisfied the predominance requirement because the common question of the materiality of the non-disclosed defects may establish common causation. Further, the court relied upon various California and federal court decisions that supported this conclusion. While defendant may seek to distinguish these cases and may disagree with the court's interpretation, it has failed to demonstrate that the court committed clear error.
See Cartwright, 2009 U.S. Dist. LEXIS 107066, at 4-5.

The opinion is noteworthy, as it reflects ongoing efforts of the defense bar to lump certification of UCL claims as being on par with common law fraud and CLRA – both of which involve an element of reliance that must be established by members of the putative class. Of course, the element of reliance is not even a component of absent class members’ UCL claim. This position has been rejected by the California Supreme Court, which held that the “may have been acquired” language of Section 17203 “has led courts repeatedly and consistently to hold that relief under the UCL is available without individualized proof of deception, reliance and injury.” See Tobacco II, 46 Cal. 4th 298, 320 (2009) (reasoning 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—and implicitly overrule a fundamental holding in our previous decisions, including Fletcher, Bank of the West and Committee on Children's Television.”).

The Court did not discuss this distinction, which out of fairness was likely due to the fact the Court’s primary concern involved the defendant’s failure to undertake any effort to couch its motion under the requirements of FRCP Rule 59. See Cartwright, 2009 U.S. Dist. LEXIS 107066, at 7 (“Because defendant's motion is based upon the same factual and legal arguments previously addressed in the court's September 14 order, there is insufficient bases for the court to reconsider class certification.”).

At any rate, absent an appellate opinion that engages in detailed analysis unpacking all components of Tobacco II’s ten page analysis on class member standing, this issue no doubt will continue propel substantial litigation activity by members of both the plaintiff and defense bars.

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