Monday, November 07, 2011

Lashing out the action: battery lawsuit fails

Davis-Miller v. Automobile Club of Southern California, 2011 WL 5080163 (Cal. App. 2 Dist.)

Plaintiffs sued for violations of California’s UCL and CLRA, negligent misrepresentation and omission, intentional misrepresentation and omission, fraud and unjust enrichment in connection with the ACSC’s roadside battery service program, which provides jump-starts and sells and installs batteries for stranded motorists. The trial court denied class certification mainly because common issues didn’t prevail, and the court of appeals affirmed.

Under the ACSC program (which involved contracts with various parties, including a company called Club Assist), when an AAA member’s car won’t start, a technician will drive to the member’s location with a battery tester and a supply of new batteries that fit most cars. The battery tester determines the conductance and voltage of the battery; the customer can decide whether to replace the battery on the spot or just have the technician give a jump. Club Assist provides the batteries and trains the technicians. Each independent contractor can sell the batteries to anyone, with a $25 discount for AAA members. In 2009, member prices for batteries ranged from $105 to $140. After sale, each independent contractor pays the wholesale price to Club Assist, and if the sale was to an AAA member, Club Assist pays the participating regional AAA member $9.

The trial court found that the majority of AAA members who purchased batteries needed new ones. The average life expectancy of a modern battery is 3-4 years, and batteries that have failed at least once are more likely to need replacement. The battery tester used by technicians provides “useful data” on the remaining reliable life of the battery, and most replaced batteries failed the conductance test. The court found that only a small number of batteries would be replaced without testing, and the reasons were good ones: if the battery were too deeply discharged to test, if the battery were leaking or bulging due and can’t be safely tested, or if a member requested replacement without testing. The battery replacement rate under the roadside assistance program was about 22%, lower than the average annual replacement rate. Also, many individual factors affect the likelihood that a battery needs replacement. Given this, the court found that the named plaintiffs didn’t show that their batteries were unnecessarily replaced.

In addition, the proposed class wasn’t uniformly exposed to the allegedly false advertising, which appeared in the AAA member’s magazine during the second year of the class period and only a small number of times in Southern California thereafter. “During the nine-year proposed class period, program ads were included in MemberSaver guides available to walk-in customers for only 16 months. The program was mentioned in renewal mailers during only three months of the proposed class period.” Likewise, the program was advertised on the club’s website, but that page received only a few thousand hits annually, an insignificant fraction of the club’s nearly 6 million members. Sales invoices given to customers after they bought batteries “intermittently” referred to a member discount and free installation, but two of the three named plaintiffs didn’t notice or remember them. Evidence from other consumers didn’t help:
Of the customer declarations provided, the majority had never seen an ad for the roadside battery assistance program. More than half had never heard of the program prior to calling Auto Club for service. The majority of declarants stated that either the ICS technician did not mention any member discount, or they did not recall the ICS technician's mentioning any member discount. The only declarant who stated that the ICS technician mentioned a member discount also noted that the discount did not matter because she previously paid more for a car battery and wanted the new battery installed on the spot without the hassle of going elsewhere.
Plaintiffs’ first theory was that the defendant engaged in false advertising through misrepresentations that batteries are sold with a member discount and with free installation and labor. The second theory was that the defendant unnecessarily replaced properly functioning batteries by providing incentives for its contractors to sell unneeded batteries and by failing to adequately train and oversee contractors to ensure that they didn’t inaccurately recommend battery replacement when a simple jump start would suffice.

The court found that determinations about unnecessary replacement would involve individualized inquiries into each class member’s circumstances. Under the CLRA, unnamed class members who actually needed a new battery couldn’t have been harmed. Given the evidence, it was likely that a significant part of the proposed class was comprised of people who actually needed a replacement.

The court reached similar results with the false advertising theory: large numbers of class members weren’t likely to have been exposed to the allegedly false advertising, and there was therefore no reason to think the misrepresentations were material to their purchases. Representations in sales invoices weren’t subject to common proof because the contractors used a variety of forms, many of which made no reference to member discounts or free installation, and reliance was also unlikely because the invoices were offered after a transaction was complete. Likewise, oral representations by contractors or telephone operators were by their nature inherently not common, at least without proof of the “universality” of such representations (such as if there were a script).

The court of appeals noted that a UCL class action should only proceed when the defendant engaged in uniform conduct likely to mislead the entire class. Thus, it reasoned, a class certification denial woudl be upheld when individual evidence would be required to determine whether the representations at issue were actually made to each member of the class. The CLRA certification requirements are somewhat different, but since CLRA relief is limited to consumers who’ve suffered damage from an illegal practice, injury must be proven as to each member of the class. Classwide causation can be established by materiality in a CLRA false advertising claim. But if materiality or reliance would vary from consumer to consumer, then a class action shouldn’t be certified.

Plaintiffs relied on Tobacco II to argue that the trial court erred. But Tobacco II held that the reliance of absent class members need not be assessed for standing purposes. Standing isn’t the same thing as commonality. As to commonality, the UCL doesn’t allow recovery on behalf of a consumer who was never exposed in any way to an allegedly wrongful business practice. For the unnecessary replacement theory under the UCL and the CLRA, plaintiffs needed to show that unnecessary replacement was common to the class, and they couldn’t. For the false advertising theory, both laws also require exposure to the allegedly false advertising, and the CLRA also requires reliance. The trial court’s concerns about individual factual questions of exposure and reliance were legitimate. An inference of classwide reliance can’t be made without evidence that the allegedly false representations were uniformly made to all members of the proposed class.

1 comment:

  1. This doesn't make sense.

    They had three named plaintiffs in the case. The case was about being sold batteries unnecessarily.

    However - only one of the three named plaintiffs even alleged that her battery could still hold a charge!

    So why did they choose those named plaintiffs for an attempted class action? Surely they couldn't have been the best examples to try and go forward with?