Thursday, May 10, 2012

Undisclosed fees ok if total price disclosed and voluntarily paid

Williamson v. Reinalt-Thomas Corp., 2012 WL 1438812 (N.D. Cal.)

Williamson bought tires from RT’s store, and complained that he was charged an undisclosed service fee to dispose of his old tires, $2.50 per tire.  He was quoted a per-tire price, and he also bought insurance at a stated price per tire.  The clerk told him that the total cost was $216.54.  He alleged that he wasn’t aware of the additional fee and simply assumed that the total was the proper mathematical calculation of the tires and insurance plus taxes and installation.  He didn’t get a receipt until after installation, and it was inside an envelope. The fee was a line item on the receipt.  Several months later, he discovered the fee and sued on behalf of a class.  (I understand why this case is going to go badly for Williamson, but the fact of the matter is that we can’t run a modern economy without trust; little things like this—and much worse, for example charges on phone bills for unwanted services that provide no benefit at all—take millions of dollars from consumers each year.  Just as reading all the privacy policies for the services you use would take weeks out of each year, checking every line item on every bill would be an unreasonable burden.  That’s not to say that this particular case should come out differently, but I don’t think that the burden should be on each individual consumer to do the math if there’s a systematic practice of adding undisclosed fees for worthless services bundled in an overall, hard-to-calculate price.)

First, the court kicked out the conversion claim.  Williamson didn’t allege a special relationship between him and RT, nor how RT otherwise misppropriated specific funds held for his benefit.  Thus, he didn’t overcome the general California rule that money isn’t the proper object of a conversion claim.  Also, he failed to properly allege that he had the ownership or right to possession of the property at the time of the conversion.  He paid the amount he was quoted, at which point title to the funds passed to the defendants.

Next, unjust enrichment and restitution: not valid causes of action in California, just theories of recovery.

Williamson argued that there was a breach of an oral contract, one of the terms of which was that RT agreed to perform a correct mathematical calculation, and not to include a tire disposal fee.  This was not a reasonable interpretation based on the factual allegations.

The FAL, CLRA, and UCL claims were also doomed.  Williamson alleged that he actually relied on the misrepresentation because he simply assumed that what the clerk told him was true: that the total was the proper calculation for the tires, insurance, taxes and installation.  He alleged that he could have purchased the tires cheaper elsewhere or disposed of the tires himself, and that he therefore suffered injury. The court found that these “hypothetical” allegations didn’t suffice to plead reliance on the omission of the fee when he actually decided where to buy.  Moreover, the allegations didn’t support a plausible inference that the omission was an immediate cause of the purchase, or that he paid more than he was willing to pay.  “The terms that Plaintiff relied on were price and quality, not on a tire disposal fee that was subsumed into the overall price.”  He didn’t ask for his tires back or look at the receipt for a while, undercutting the plausibility of the allegations that the fee was an important term on which he relied (must mean whose omission was something on which he relied).  Also, since he paid the amount quoted, RT didn’t falsely advertise the total cost.  This failed to meet the plaintiff’s burden to state facts giving rise to a plausible inference that a significant portion of the general consuming public, acting reasonably, could be misled. “Under the circumstances, the reasonable consumer, who has no further need for his old tires, would expect tire installation to include the disposal of these unwanted tires.”  (And a fee for same?)  This understanding was confirmed by the receipt, which clearly disclosed the disposal fee. 

In addition, Williamson failed to state a claim under the “unfair” prong of the UCL. No matter what test was applied (a balancing test or a showing that some specific public policy was violated), there was still no harm.  The fact that he didn’t even inspect the receipt indicated that the disposal fee was immaterial. So long as he got what he paid for, at a price he was willing to pay, there was no claim.

For similar reasons, the fraudulent/negligent misrepresentation and negligence claims failed.

1 comment:

  1. Anonymous11:26 AM

    but see
    Operating Local 649 Annuity Trust Fund v. Smith Barney Fund Mgmt. LLC, 595 F.3d 86 (2d Cir. 2010)

    - ann