Monday, March 19, 2012

Who’s (potentially) defying whom?

Bruno v. Eckhart Corp., 2012 WL 752090 (C.D. Cal.)
Mazza fallout: The district court previously certified a nationwide class, and the defendants moved to decertify based on Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012).  The court disagreed: Mazza was not a material change in the law.  Mazza couldn’t and didn’t change state substantive law, or state law as interpreted by the 9th Circuit, and to rule otherwise would contradict CAFA.  Mazza was also distinguishable on its facts.
Bruno bought “a liquid product that claimed on its packaging to have six times better absorption and effectiveness than the equivalent active ingredient in competing brands” and later sued claiming that these statements were misrepresentations.  The court certified a nationwide class for UCL, CLRA, and breach of express warranty claims, finding due process satisfied and thus that the burden shifted to the defendant to show that the laws of another state should apply.  California choice of law rules require a court to determine whether the relevant law is the same or different across jurisdictions, and then analyze whether there’s a true conflict.  The court held that defendants didn’t meet their burden on showing differences; they only cited another court’s conclusion that material conflicts between state consumer protection laws existed.  That wasn’t enough to show a conflict “on the facts of this case.”  Mazza, by contrast, featured a defendant that “exhaustively detailed the ways in which California law differs from the laws of the 43 other jurisdictions.”  The plaintiffs didn’t contest those differences or their applicability.
Federal courts sitting in diversity must follow substantive state law as announced by the highest court of the state, which is the final authority; the federal court of appeals is not.  Defendants interpreted Mazza to mean that, as a matter of law, they had no further burden in the choice of law analysis; that California consumer protection laws materially differ from other states’ in all cases; and that other states had a greater interest in the application of their law in all cases.
However, the California Supreme Court had expressly ruled on the two key ponts of state law: once due process is satisfied, the choice of law analysis places the burden on the defendant to show that another state's law, rather than California law, should apply to class claims. Moreover, California choice-of-law analysis must be conducted on a case-by-case basis because it requires analyzing various states' laws “under the circumstances of the particular case” and given “the particular [legal] issue in question.”  Mazza couldn’t and didn’t change these rules.  Indeed, Mazza quoted the relevant California Supreme Court case on the burden in determining choice of law, a matter of substantive state law.  “[T]he language of Mazza does not show that the Ninth Circuit was tempting a United States Supreme Court reversal by ignoring or changing state law. Rather, Mazza acknowledged that California law requires the defendant to show that differences in state law are ‘material,’ that is, they ‘make a difference in this litigation.’”  Defendants couldn’t “substitute Mazza’s holding in lieu of Defendants' own careful analysis of choice-of-law rules as applied to this particular case.”  The court also noted that district courts have routinely applied California consumer protection laws to nationwide classes.  “If Mazza was intending to abrogate these holdings, one would expect the Ninth Circuit to have distinguished—or at least mentioned—these cases, which contain excellent reasoning in their choice-of-law analysis and have been cited approvingly several times.”
Anyway, even assuming that Mazza could override California substantive law, a three-judge panel can’t overrule prior 9th Circuit precedent, which also requires defendants to prove a material difference between California and other states’ laws on the facts of a case.
Defendants’ position would also conflict with CAFA, which has as a goal to “assure fair and prompt recoveries for class members with legitimate claims.”  Eliminating a case-specific inquiry would “preclude the certification of nationwide classes in CAFA class actions based on the causes of action at issue in Mazza.  The Court resists Defendants' urging to read CAFA's express purpose as merely an Orwellian pretense that offers consumers nothing but an empty promise.”
In the alternative, the court found Mazza distinguishable, even though it was brought under the same consumer protection laws.  Defendants’ arguments and the facts were both different.  Defendants failed to analyze California and other states’ laws as applied to this case, and thus didn’t meet their burden of showing material differences.  Citing a case reaching the legal conclusion they wanted wasn’t sufficient.  “Defendants cannot profitably rely on the work of a different party in a different case with different facts—or on the Ninth Circuit finding error in a district court rejecting an argument Defendants did not themselves present to this Court—to correct their failure…. Because Defendants provided no law from any jurisdiction, Plaintiff had nothing to contest. Thus, unlike in Mazza, Defendants here can not contend that Plaintiff conceded the material differences between California and other states' laws.”
In conclusion, the court commented: “Defendants seek to deprive consumers in several states who were exposed to misrepresentations of the most efficient vehicle for adjudication of their injury: a nationwide class action. Before this Court deals such a devastating blow to the consumer, the California Supreme Court requires that Defendants analyze various states' laws ‘under the circumstances of the particular case’ and given ‘the particular [legal] issue in question.’”

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