Plaintiffs alleged that defendants misrepresented the actual
number of usable airtime minutes in their advertised wireless plans. The basic challenge was to disclosures
relating to the practice of billing for airtime in full minute increments, with
partial minutes rounded up as is standard.
The trial court sustained defendants’ demurrer to the class action
allegations, and the court of appeals largely affirmed, but reversed the
dismissal of equitable claims under the UCL.
The key question was whether the complaint adequately
alleged predominant common questions of law or fact. A previous decision rejecting a complaint
over the same practices, Knapp, held
that the class members lacked the requisite commonality because the alleged
misrepresentations weren’t made uniformly—some were oral and others
written. Plaintiffs alleged that there
were common, standardized misrepresentations in the contract documents,
claiming that subscrubers could get a package of x number of airtime minutes at
a price per month of y. Defendants
argued that plan information was communicated in a variety of ways, including
brochures, mail, websites, on the phone, and in retail stores, and that the
brochures had prominent disclosure of the partial minute policy.
The court agreed that the alleged misrepresentations were
made to the proposed class members in a variety of ways, and individual members
may or may not have seen or relied on any of them. One named plaintiff picked the cheapest plan
available and didn’t recall any discussion of how minutes were calculated. (Isn’t that the “failure to disclose”
argument?) At least in some cases, consumers
received the disclosures in the same documents that allegedly misrepresented
available minutes, and a consumer who saw “or was otherwise aware” of the
disclosures couldn’t have been deceived.
Common-law fraud and CLRA claims require actual reliance for
damages. Classwide causation may be
shown by materiality, but if materiality or reliance would vary from consumer
to consumer the issue wouldn’t be subject to common proof and the case wouldn’t
be suitable as a class action. Here, the
named plaintiffs offered different reasons to choose particular service
plans. In fact, the gist of their claims
was not that the undisclosed rounding up induced any particular choice, but
rather that they received less than what was promised.
Given that the service agreements all disclosed the rounding
up practice, other members of the class may well have seen the disclosure or
discussed it with a sales rep. This
necessarily involved individualized inquiries and meant a lack of commonality.
The UCL analysis was slightly different. Plaintiffs argued that, under Tobacco II, they were entitled to a
presumption or inference of reliance if there was a material
misrepresentation. Some cases have held that
a complaint alleging false advertising under the UCL should survive pleading
challenges unless it can be said as a matter of law that the purported
misrepresentations were immaterial. But
other cases suggest that commonality and factual questions of reliance can be
addressed early on, at least as to people who weren’t exposed to the alleged
misrepresentations and therefore couldn’t have lost money or property from
them. If materiality or reliance would
vary from consumer to consumer, then it shouldn’t be a class action. Given the record here, the court didn’t find
an inference of common reliance justified.
Even assuming a common, material misrepresentation, the UCL
restitution claims would fail. People
aware of the rounding up practice wouldn’t be entitled to the return of any
money. And those who were unaware
wouldn’t be entitled to anything if they never exceeded their available
minutes. However, there might be a claim
for equitable relief under the UCL. The
adequacy of the disclosures and whether at least some members of the public
were likely to be deceived couldn’t be resolved as a matter of law on a
demurrer.
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