The California Court of Appeal for the First District recently affirmed an order denying class certification because the plaintiff did not present evidence to demonstrate how putative class members can be identified from the defendant’s records.

A copy of the opinion is available at:  Link to Opinion.

In July 2013, the plaintiff purchased an inflatable kids pool from a retail vendor.  The plaintiff based his decision to purchase the pool on the pool’s packaging, which showed a photograph of a group of three adults and two children sitting and playing in the pool.  The plaintiff assumed the pool would be large enough to comfortably fit a group of equivalent size.  The box displayed the pool’s dimensions: “8FT X 25IN.”

The plaintiff discovered that the pool was “materially smaller” than the pool shown on the packaging.  Rather than fitting two adults and three children as pictured on the box, the pool was only capable of fitting one adult and four small children.

In November 2013, the plaintiff filed this class action and alleged that the vendor violated the Consumers Legal Remedies Act, Civ. Code § 1750, et seq. (“CLRA”), Bus. & Prof. Code § 17200, et seq. (Unfair Competition Law or “UCL”), and Bus. & Prof. Code § 17500 (False Advertising Law or “FAL”), by selling the pool with deceptive advertising to consumers in its California retail stores.

As you may recall, the CLRA protects consumers against deceptive business practices in the sale of goods and prohibits a seller from representing that goods have characteristics they do not possess.  Civ. Code § 1770(a)(4), (a)(5), (a)(7).  The UCL prohibits acts of unfair competition, defined as “any unlawful, unfair or fraudulent business act or practice.”  Bus. & Prof. Code § 17200.  The FAL is equally comprehensive within the smaller and narrower field of false advertising.  Bus. & Prof. Code § 17500.

The plaintiff sought restitution for all consumers who purchased the pool from the vendor located in California during the four years prior to that date.

In opposing the motion for class certification, the vendor submitted to the court a photograph of the pool properly inflated and filled, which appeared much closer to the size of the pool depicted on the box.  The photo submitted by the vendor showed three adults and two children in the pool.  The vendor’s photo was accompanied by the declaration of an expert in photogrammetric analysis and photo interpretation, concluding that the plaintiff had not set up the pool properly.

The plaintiff’s deposition testimony reflected his belief that he had set up the pool properly, and the trial court accepted that testimony as true.

However, the trial court found that the plaintiff presented “no evidence” to establish “what method or methods will be utilized to identify the class members, what records are available, (either from the [vendor], the manufacturer, or other entities such as banks or credit institutions), how those records would be obtained, what those records will show, and how burdensome their production would be.”  The trial court also found “a class action is not superior to numerous individual actions” and “will be no more efficient than individual actions in light of the individual issues [sic] that must be presented on the issue of reliance and damages.”

Additionally, due to the stricter proof requirements under the CLRA, the trial court found that the plaintiff had not shown the commonality of issues required for the CLRA.

Because the plaintiff did not satisfy the class ascertainability and superiority requirements, the trial court denied the motion for class certification on all three causes of action.

On appeal, the plaintiff raised two arguments.

First, the plaintiff argued that the trial court erred in denying his motion on the UCL and FAL causes of action, because he satisfied the class ascertainability requirement for certification under Code of Civil Procedure section 382.

Second, he argued that the trial court’s statement that the packaging must be “materially misleading as a matter of law” to show common issues of reliance and causation for the CLRA was legally incorrect.

Two class action statutes were at issue.

The first, Code of Civil Procedure section 382, which governed class actions generally, including actions under the UCL and FAL.  Under section 382, a certification motion may be granted where there was “an ascertainable class and a well-defined community of interest among class members.”  Sav-On Drug Stores, Inc. v. Superior Court, (2004) 34 Cal.4th 319, 326.

Courts determine the existence of an ascertainable class using three factors: (1) class definition, (2) class size, and (3) means of identifying class members.  Sotelo v. Medianews Group, Inc., (2012) 207 Cal.App.4th 639, 648.  The community of interest inquiry depended on three criteria: (1) whether common issues predominate over individual issues; (2) whether the plaintiff’s claims are typical of the class he or she seeks to represent; and (3) whether the plaintiff is an adequate class representative.  Id. at 651.

The CLRA contained its own provisions for class actions, similar in many respects to the requirements just cited, under which a court must certify a class when: “(1) [i]t is impracticable to bring all members of the class before the court. (2) The questions of law or fact common to the class are substantially similar and predominate over the questions affecting the individual members.  (3) The claims and defenses of the representative plaintiffs are typical of the claims or defenses of the class.  [and] (4) The representative plaintiffs will fairly and adequately protect the interests of the class.”  Civ. Code § 1781(b).

The Appellate Court began its analysis by reviewing the plaintiff’s evidence for ascertaining the identities of the putative class members.

The plaintiff insisted that the class was ascertainable because the class definition was clear and simple:  “All persons who purchased the Ready Set Pool at a [vendor’s] store located in California within the four years preceding the date of the filing of this action.”  However, the Appellate Court explained that the class definition was not the issue.  Rather, the issue was the lack of business records through which to identify the class members, and the plaintiff did not suggest a realistic method by which the class members might be identified.

The plaintiff pointed to the vendor’s interrogatory responses relating to the number of pools sold (20,752), the number of pools returned (2,479), and the vendor’s gross revenue from sales of the pool ($949,279.34), but submitted nothing offering insight into who purchased the pools or how one might find that out.  The plaintiff did not describe or produce the vendor’s records from which these numbers were derived, and he did not indicate how much other information these records might reveal.

The Appellate Court noted that the plaintiff was not required to actually identify the 20,000-plus individuals who bought pools.  However, he had the burden to come up with any legitimate means of identifying the class members.  The plaintiff merely hypothesized that class members could be notified through the vendor’s rewards program or email lists, without explaining, much less proving, how any cross-referencing between the class members’ transactions and the names on those lists might be achieved to allow for personal notice.  In the Appellate Court’s view, these under-inclusive or over-inclusive lists may not result in notice to the “vast majority” of class members as required for due process.

Because the likelihood of receiving notice decreases with fewer putative class members, the Appellate Court determined that the trial court may exercise its discretion and require personal notice based upon the stake for each individual class member and the size of the class.

Thus, the Appellate Court held that the plaintiff failed to present sufficient evidence to demonstrate a means to identify and give notice to the putative class.

Next, the plaintiff argued that the trial court applied the wrong legal standard under the CLRA in determining that the class claims did not predominate over the individual claims.

As you may recall, “to obtain relief under the CLRA, both the named plaintiff and the unnamed class members must have suffered some damage caused by a practice deemed unlawful under” that act.  Steroid Hormone Product Cases, (2010) 181 Cal. App. 4th 145, 156.

The trial court reasoned that some members of the class may not have relied on the photograph on the box in purchasing their pools, and might instead have relied on the advertised 8” x 25” size of the pool, which was also displayed on the box.  The trial court concluded it would need to find materiality of the photograph “as a matter of law” before it would be required to certify the class under the CLRA.

The plaintiff argued that the trial court’s ruling would, in effect, require him to prove the merits of his CLRA claim, which was not required at the certification stage.  However, the Appellate Court found that because the merits of his claims were intertwined with issues pertinent to class certification, there was no error in considering the vendor’s evidence insofar as relevant to the question raised by the class certification motion.

In other words, as the Appellate Court explained, the trial court’s ruling did not require the plaintiff to prove the merits of his cause of action.  Rather, the ruling was an “evidence-based prediction that disputed issues at trial were more likely to be individual than common.”

Therefore, the Appellate Court held that the plaintiff failed to demonstrate that class issues predominated over individual issues on the CLRA claim.

Finally, the plaintiff argued that the trial court should have granted a continuance to allow him to take additional discovery regarding what records the vendor kept or how the purchasers of the pools could be identified through those records.

However, the Appellate Court did not find anything in the record showing that the plaintiff was not given an opportunity to conduct discovery before moving for class certification.  In fact, the Appellate Court noted that the plaintiff could have withdrawn his motion if he concluded insufficient discovery had been conducted, or if he did not have time to prepare for the hearing.

Because the plaintiff was responsible for the timing of the motion, the Appellate Court concluded that it was not an abuse of discretion to require the plaintiff to prove facts necessary to certify the class.

Accordingly, the Appellate Court affirmed the order denying class certification and denying a continuance for the taking of further discovery.