Saturday, December 12, 2009

District Court Grants Summary Judgment on Prop 64 Standing Issue in Baghdasarian v. Amazon

On December 9, 2009, Judge Andrew J. Guilford of the Central District of California granted defendant Amazon.com Inc.’s motion for summary judgment on the issue of Proposition 64 standing in Baghdasarian v. Amazon, 2009 U.S. Dist. LEXIS 115265 (C.D. Cal. Dec. 9, 2009). As one may recall, the plaintiff in this action previously obtained certification of his UCL claim, in part, based upon Tobacco II's ruling concerning the inapplicability of the element of reliance to absent class members (see previouse post here).  Here, however, the Court granted dismissal based on another aspect of Tobacco II – the requirement that the named plaintiff establish actual reliance to maintain standing to prosecute a UCL claim.

As a threshold matter, the Court considered plaintiff’s argument that the “law of the case” doctrine precluded the Court from revisiting the Court’s ruling on the issue of plaintiff standing contained in its order granting class certification. The Court rejected this argument, asserting that plaintiff conflated the distinction between class certification, a procedural devise which precludes consideration of the merits, and summary judgment:
Plaintiff's argument ignores the difference between the procedural stages of class certification and summary judgment. Cf. Central Valley Water Agency v. United States of America, 327 F. Supp. 2d 1180, 1212 (E.D. Cal. 2004) (holding that a ruling on a pleading motion was not law of the case establishing that the plaintiffs had suffered actual injury for the purpose of a summary judgment motion). At the class certification stage, Plaintiff must make certain allegations concerning standing. Now, to survive summary judgment, Plaintiff must establish certain facts. So while the Court previously held that Plaintiff had standing for class certification purposes, the earlier holding does not automatically extend to the summary judgment stage.
See Baghdasarian, 2009 U.S. Dist. LEXIS 115265, at 9-10.

The Court thereafter considered the factual merits of the standing issue, concluding that “[p]laintiff's own deposition testimony establishes that Plaintiff cannot show actual reliance.” See id., at 12. As reasoned by the Court, the plaintiff admitted at deposition that he would have purchased items from Amazon notwithstanding the alleged hidden shipping fees – a fact that served to undermine the materiality of the challenged promotions to plaintiff, and with it, the presumption of reliance:
Plaintiff here cannot take advantage of a presumption or inference of reliance. In this case, Plaintiff's own deposition testimony undermines his own claims, showing that he did not actually rely on Defendant's statements. Plaintiff admits that the alleged misrepresentation was not an influential factor in his decision to buy from the marketplace. He testified, "[i]t's not that if they had told me of the fees . . . I would have never bought something from Amazon. But the fact that they hid it . . . kind of turned me off . . . ." (Baghdasarian Depo. 32:12-17.)
See Baghdasarian, 2009 U.S. Dist. LEXIS 115265, at 15.

In addition, the Court further reasoned that the plaintiff had failed to provide evidence sufficient “to establish that Defendant's shipping and handling policy was a substantial factor in influencing Plaintiff's decision to buy products on Amazon Marketplace”:
The full extent of Plaintiff's evidence on the point is found in one paragraph in his Declaration. The Baghdasarian Declaration states that Plaintiff “relied on the fact that the shipping and handling fee would be passed on in full to the marketplace seller in order to offset the seller's cost of shipping and handling,” (Baghdasarian Decl. P 2.) This statement is insufficient to establish that Defendant's shipping and handling policy was a substantial factor in influencing Plaintiff's decision to buy products on Amazon Marketplace.
Plaintiff also points out that he stopped buying items from Amazon Marketplace after he learned about Defendant's shipping policy. But this does not link Defendant's shipping policy with Plaintiff's injury.
See Baghdasarian, 2009 U.S. Dist. LEXIS 115265, 15-16.

Based on such evidence, the Court concluded that standing was lacking because “[p]laintiff does not show that he would have declined to enter into the transactions in the absence of the shipping policy. See id., at 16-17.

The Court’s decision, however, is silent as to what will occur with regard to the certified class. This consideration is an important one, as Rule 23(d) vests a district court with a duty to protect the interests and rights of class members.  See Hanlon v. Chrysler Corp., 150 F.3d 1011, 1025 (9th Cir.,1998).

One option would be to allow class counsel to substitute a new class representative. As held by the California Supreme Court, when “in light of Proposition 64, the named representatives are no longer adequate representatives of the class because they lack standing, the proper procedure would not be to decertify the class but grant leave to amend to redefine the class or add a new class representative.” See In re Tobacco II Cases, 46 Cal. 4th 298, 328 (2009). As held by at least one district Court “these cases demonstrate that leave to substitute a different class representative may be granted when there is a certified class already in place.” See Sanchez v. Wal Mart Stores, Inc., 2009 U.S. Dist. LEXIS 89057, 8-9 (E.D. Cal. Sept. 11, 2009).

However, knocking out the named plaintiff cannot be worked into a scenario where the defendant achieves a judgment that will be res judicata as to the class as a whole. Issues relating to Prop 64 standing only impact the claims of the named plaintiff, as the Court itself acknowledged in its Order certifying the class:
Proposition 64 did not determine whether a plaintiff who has standing under the UCL must also show reliance by each class member. The California Supreme Court recently addressed this issue in the Tobacco II Cases. The California Supreme Court concluded that "standing requirements are applicable only to the class representatives, and not all absent class members." In re Tobacco II Cases, 46 Cal. 4th 298, 306, 93 Cal. Rptr. 3d 559, 207 P.3d 20 (Cal. 2009). Thus, Plaintiff does not need to show affirmative proof that each individual class member relied on Defendant's deceptive conduct.
See Baghdasarian v. Amazon.Com, Inc., 258 F.R.D. 383, 387 (C.D. Cal. 2009).

Moreover, under the present circumstances, decertification cannot be worked into a scenario where a subsequent action, on behalf of the very same class, would be collaterally estopped from availing itself of the class mechanism. See In re Bridgestone/Firestone, Tires Prods. Liab. Litig., 333 F.3d 763, 768 (7th Cir., 2003) (“A decision with respect to the class is conclusive only if the absent members were adequately represented by the named litigants….”).

Thus, considering the advanced stages of the proceedings, and the amount of time and effort invested by the Court, parties and counsel, allowing leave to find a substitute representative would seem to be the most prudent approach.

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