Defeating class certification is always a hot topic of interest for companies facing large consumer class actions. A class may be certified under Rule 23(b)(3) only if it meets the four prerequisites found in Rule 23(a) – including numerosity, commonality, typicality, and adequacy of representation – and the two additional requirements found in Rule 23(b)(3) – “predominance” and “superiority.” Predominance requires that common questions “predominate over any questions affecting only individual members.” The failure to satisfy the predominance requirement is sufficient by itself to deny class certification.
Overly broad classes often lead to individualized issues and the need for multiple mini-trials, which if argued, may successfully defeat certification for lack of predominance. Just a few weeks ago, the Northern District of Texas denied a motion for class certification based on these precise arguments. These same arguments may be applicable in other consumer class actions attempting to certify a class based on a common defect.
In Galitski, et al. v. Samsung Telecommunications America, LLC, No. 3:12-CV-4782-D (N.D. Tex. August 28, 2015), Plaintiffs commenced a putative class action against Samsung on behalf of hundreds of thousands of California consumers who purchased allegedly defective phones. Plaintiffs asserted claims for breach of express warranty, breach of implied warranty, violation of the Song-Beverly Act, violation of the Magnuson-Moss Act, violations of the Consumer Legal Remedies Act (“CLRA”), and violations of the California Unfair Competition Law (“UCL”). Specifically, Plaintiffs claimed that all four Galaxy S models suffered from a common hardware defect that caused the phones to randomly freeze, shutdown, reboot, and power off. Samsung sold each phone with a one-year limited warranty, which warranted the phone against defects in material and workmanship.
As to the express warranty claims, Plaintiffs argued that common issues predominate since Samsung provided the same written warranty to all class members and all phones had the alleged common hardware defect. The Court, however, rejected Plaintiffs’ position, setting forth the many individualized inquiries required to address Plaintiffs’ claim. First, the Court emphasized the need to determine whether the power-off issue was actually caused by the alleged common design, as opposed to something else. In fact, Samsung presented evidence through expert testimony that the power-off issue may have been caused by various reasons wholly unrelated to hardware failures, including customer misuse. Second, the Court highlighted the need to determine, on an individualized basis, whether the phone exhibited the power-off issue during the warranty period. Under California law, a latent defect discovered after the warranty period has expired cannot form the basis of a breach of express warranty claim. As a result, it would be necessary for each Plaintiff to not only prove that their phone experienced the power-off issue as a result of the alleged defect, but also that it occurred during the one-year warranty period.
And, if these issues were not enough, the Court further found that individual issues also predominate with respect to Samsung’s warranty precondition, which required phone purchasers to return their phones during the warranty period. The Court explained that because returning their phones within the one-year warranty period is a precondition to recovery, a trial of Plaintiffs’ express warranty claims would require the jury to determine, for each individual class member, whether and when the class member returned his or her phone. The Court found that only “mini-trials can determine these issues” and therefore, held that predominance was not satisfied as to Plaintiffs’ express warranty claim.
With respect to Plaintiffs’ implied warranty claim, Plaintiffs had to prove a fundamental defect that rendered the product unfit for its ordinary purpose. However, Samsung introduced evidence that not all Galaxy S phones experienced the power-off issue. In fact, Samsung’s evidence revealed that most class members likely never experienced the alleged issue. Accordingly, the Court found that a trial of Plaintiffs’ implied warranty claims would require individualized proof that each particular phone actually experienced the issue with such frequency as to render the phone unfit for its ordinary purpose. For class members who experienced the power-off issue only a few times or even less, a jury may find that their phones were nevertheless fit for their ordinary purpose, despite the occasional issue.
As to Plaintiffs’ UCL claim, which forbids unlawful, unfair or fraudulent business acts or practices, the Court found that Plaintiffs failed to show damages could be determined on a class-wide basis. Plaintiffs attempted to argue that disgorgement and restitution were two primary remedies available and that this could be established without individualized proof. Specifically, Plaintiffs sought disgorgement of all profits Samsung earned from the sale of the allegedly defective phones. The Court, however, explained that Plaintiffs cannot establish through class-wide proof the amount Samsung must disgorge from profits earned because there is evidence that Samsung is entitled to present at trial that most class members received some benefit from their phones and in fact, many received the full benefit from their phones. As for restitution, the Court explained that an individualized inquiry would be required to determine whether and to what extent a particular phone exhibited the power-off issue. Lastly, as to Plaintiffs’ consumer fraud claims under the CLRA, Samsung argued – and the Court agreed – that again, Plaintiffs could not establish predominance because each of their claims required individualized proof of an actual defect.
In sum, the Court highlighted the fact that Plaintiffs attempted to certify “a class of literally every purchaser” of a Galaxy S phone in California by relying on “an oversimplified methodology to establish liability and available remedies.” The Court stressed in its decision, however, that “this macro-level methodology will not withstand micro-level rigorous analysis and close scrutiny” for class certification.