Thursday, January 7, 2010

First District Rules Trial Court Erred By Decertifying UCL / Breach of Warranty Claims In Weinstat v. Dentsply International, Inc

On January 7, 2009, the First District Court of Appeal reversed a trial court’s decertification of a UCL / breach of warranty action in Weinstat v. Dentsply International, Inc, __ Cal.App. 4th __ (2009).  The case was brought on behalf of a class consisting of dentist purchasers of the “Cavitron ultrasonic scaler” (which appears to be an advanced version of a water-pick ) based on the alleged deceptive representation “that Cavitrons can be used in oral surgery” when “in fact they are unsafe for such use because the device is incapable of delivering a safe water stream during oral surgical procedures.” See Slip Opinion, at 3-4. The opinion turns on the trial court’s subsequent decertification of both the UCL and breach of warranty claims based on issues relating to absent class member reliance set forth in the Second District’s decision in Pfizer, Inc. v. Superior Court, 141 Cal.App.4th 290 (2006), an opinion issued just prior to the California Supreme Court granted review in Tobacco II. The opinion has some very interesting discussion, especially with regard to the breach of warranty claim.

The Court’ analysis on the UCL claim is relatively straight forward. Subsequent to the Second District’s decision in Pfizer, Dentsply moved to decertify the UCL claim based on Pfizer’s conclusion that Prop 64 standing extended to members of the class. See id., at 5-6. The motion was granted. On appeal, the CAP concluded that the trial court’s basis for reversal was erroneous in light of Tobacco II, and reversed with instruction to consider the limited issue of the named plaintiff’s standing:
Here it is abundantly clear that the trial court incorrectly believed that each class member must establish standing, thereby requiring the court to delve into individual proof of material, reliance and resulting damage. Tobacco II has dispatched that reasoning and therefore reversal is appropriate.
...we reverse that aspect of the order without further analysis or ado in light of the trial court’s indisputably erroneous reasons for decertification. We remand for the limited purpose of determining whether the named representatives can meet the UCL standing requirements announced in Tobacco II and if not, whether amendment should be permitted
See Slip Opinion, at 9.

The Court’ analysis on the Breach of Warranty is a bit more complex. As explained by the CAP, the trial court decertified the warranty class, based on the influence of Pfizer, despite a clear lack of any new law or evidence:
The trial court proceeded also to decertify the class as to the breach of express warranty claims, notwithstanding that there were no changed circumstances and no newly discovered evidence. Instead, based on existing law that predated the original certification motion, and obviously influenced by the Pfizer decision, the trial court ruled that (1) appellants could not prove reliance on Dentsply‟s alleged misrepresentations on a classwide basis; although reliance could be presumed under some circumstances, the presumption was rebuttable and use of the class procedure would circumvent Dentsply‟s right to rebut; and (2) variations in the wording of the Directions for the different Cavitron models created predominantly individual fact issues concerning reliance, so the court could not infer classwide reliance.
See Slip Opinion, at 6.

As reasoned by the Court, controlling Supreme Court authority deprived the trial court of discretion to reverse its prior ruling absent a material change in the law or the evidence:
In Green v. Obledo (1981) 29 Cal.3d 126, our state’s high court focused on the propriety of decertification after a decision on the merits. The court observed that prior to judgment “a class should be decertified ‘only where it is clear there exist changed circumstances making continued class action treatment improper.’ [Citation.] A fortiori, a similar showing must be made to warrant decertification after a decision on the merits. This standard will prevent abuse on the part of the defendant while providing the trial court with enough flexibility to justly manage the class action.” (Id. at p. 148 & fn. 17.) In that case, the court pointed out that the belated motion was not based on changed circumstances, nor did the defendant adduce new evidence. (Id. at p. 148.)
See Slip Opinion, at 11.

According to the Court, a trial court may not extend a changed circumstances warranting decertification of one theory as a basis to decertify claims predicated upon other non-effected theories:
In the case at hand, Dentsply’s motion for decertification was accompanied by changed circumstances, most notably the Pfizer decision. However, this circumstance only pertained to the UCL cause of action. Nevertheless, the trial court went on to address Dentsply’s reassertions as to why the breach of warranty class should be decertified as well. Decertifying one theory should not sanction decertifying another absent some commonality with the changed circumstance or some other situation justifying reconsideration. Here there was none.
See Slip Opinion, at 12.

Finally, the CAP concluded that the trial court also erred by assuming that the element of reliance is an element of an express warranty claim. The CAP engaged in significance analysis demonstrating that is not the case.  See id., at 12-18. The CAP's finding on this point is perhaps the most significant and far reaching, for obvious reasons.

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