Timeshare case: proof of causation/damages is difficult especially w/o grasp of Bayesian probability

Wyndham Vacation Ownership, Inc. v. Sussman, 2021 WL 4948099, No. 6:18-cv-2171-GAP-DCI (M.D. Fla. Sept. 20, 2021)

In this timeshare exit false advertising litigation, the court excludes Wyndham’s expert. Timeshare exit entities like defendant TET used “online advertising and oral sales pitches to timeshare owners to convince them to sign up for TET’s service.” TET then contracted with Sussman, an attorney, who would receive a timeshare owner’s documents, send letters on behalf of that owner to timeshare businesses, and communicate with those businesses to get the owner out of his or her obligations. Wyndham claims that TET and Sussman falsely advertised and induced timeshare owners to breach their contracts with Wyndham by ceasing payments. Wyndham’s expert surveyed timeshare owners who are not related to this case to gauge their responses to TET’s advertisements. Scene-setting:

A repeated issue in all these cases is how the timeshare companies can prove that the timeshare exit entities caused their damages—i.e., did the entities induce each of the timeshare owners at issue to stop making their timeshare payments. The most obvious route to proving these cases would be to solicit testimony from the owners as to their reason for breaching their contracts. However, these lawsuits have involved hundreds of timeshare owners, and obtaining testimony from every owner would be a labor-intensive effort. Hoping to avoid such a task, the timeshare companies have attempted, with little success, to find a shortcut.

It's not enough to add up the total of all missed payments without a link between the defendants and the owners’ actions. In a previous timeshare case, the court ruled that, “absent direct testimony from the owners regarding their missed payments, [plaintiff] would not be permitted to proceed to trial based on the expert’s testimony.” The court then “entertained the possibility that statistical evidence, rather than direct testimony, might support causation.” The plaintiff thus offered a statistical expert who used a subset of “influenced” accounts and extrapolated those to the remaining hundreds of accounts at issue.  “This testimony was excluded as unreliable due to the +22% margin of error the expert’s method produced, and significant issues with the way the expert obtained his data.”

This time, Wyndham tried a consumer survey of timeshare owners. Respondents saw a TET webpage, a video performance of TET’s sales presentation script, and a welcome email that TET used. Survey questions included whether respondents believed they were being told to stop making timeshare payments and whether they would be inclined to stop making timeshare payments. The expert opined that, based on the survey: (1) 32.2% of the respondents believed the statements in the emails told them to stop making timeshare payments; (2) 18.5% of those respondents were either very likely or somewhat likely to act on those instructions and stop making payments; and (3) the survey results “demonstrate that [TET] customers were likely misled by [TET’s] sales practices and believed that it was appropriate to cease making payments to their timeshare company.”

However, the expert did not perform any statistical or other analysis comparing the sample population to Wyndham’s owners. He didn’t explain explain why his methodology reliably enabled the trier of fact to apply his results on causation to the owners at issue in this case. “[T]his case is not about the average consumer. This case is about an identified set of timeshare owners, every one of whom acted on facts and circumstances specific to him or her. [The expert] may have analyzed timeshare owners in general but his failure to connect his analysis to the Wyndham owners renders his remaining opinions irrelevant to this case.” A jury couldn’t extrapolate the results to the 270 defaulting Wyndham owners at issue, especially since, per the survey, only 16 of those 270 would likely stop making payments as a result of TET’s ads, and it wasn’t clear which 16 to pick for purposes of calculating damages.

[This last bit seems like an error about the nature of the universe of Wyndham owners at issue—as I understand it, the 270 did stop, one way or another, so rather than the probability of whether someone who saw the ads would rely on the ads to stop making payments, P[A|B], we really need to know whether someone who stopped making payments did so because they saw the ads, P[B|A], something that needs more information to be calculated even if we know P[A|B]. The survey is relevant to show P[A|B], which itself is relevant to the overall question though insufficient on its own.] 

Wyndham Vacation Ownership, Inc. v. Sussman, 2021 WL 4949162, No. 6:18-cv-2171-GAP-DCI (M.D. Fla. Sept. 27, 2021)

With the expert out, Sussman did much better on the substantive causes of action. The remaining claims against him were for contributory false advertising in violation of the Lanham Act; tortious interference with existing contracts under Florida law; civil conspiracy to commit tortious interference; and violations of Florida’s Deceptive and Unfair Trade Practices Act.

The Lanham Act false advertising claim was based solely on TET’s oral sales presentations (OSPs).  Such oral statements, if widely disseminated, can be commercial advertising.  But there wasn’t sufficient evidence that TET “routinely” told Wyndham’s timeshare owners to stop making timeshare payments in the OSPs. TET’s script for the OSPs didn’t contain an instruction to cease making timeshare payments. The owner testimony wasn’t consistent—only one said she was told to stop making timeshare payments during a sales presentation. TET officers’ testimony didn’t specify that any instructions to stop payments were disseminated during a sales presentation. Thus, Sussman got summary judgment.

Tortious interference: There was no testimony that Sussman ever told a TET-referred client to stop paying. “In every owner deposition that Wyndham submitted, the owner states they stopped paying because of TET, not Sussman. In fact, when asked about Sussman, the owners stated that they had no recollection of speaking with him or who he even was.” No tortious interference.

Conspiracy to commit tortious interference: Was there an agreement with TET? Not a written one, but “Sussman told TET that he would not accept any owner who had not stopped or did not intend to stop making payments to his or her timeshare company. Sussman explained that this was because he could not successfully negotiate a release for any owner who continued to make payments on their timeshare—i.e., carry out the service he was being paid to do.” Thus, a jury could reasonably find an agreement that TET would interfere with Wyndham’s contracts.

What about damage causation? Three relevant owners testified that they stopped paying because of TET, so that created an issue of fact on whether TET caused the breach for those three. But what about the other 247 relevant owners? There was only testimony about TET’s general practices in communicating with clients, and the fact that 208 of the 250 relevant owners stopped making their timeshare payments after hiring TET. “Wyndham’s circumstantial evidence may permit a juror to infer that TET interfered with some contracts, but no juror could reasonably infer from this evidence that TET proximately caused Wyndham’s damages…. Without some form of direct testimony from these owners or expert testimony to fill in the gaps between TET’s general practices and the decisions of the individual owners, Wyndham cannot prove causation.” TET’s CEO stated by affidavit that,while some company representatives advised clients to stop making payments, TET did not have a companywide policy of doing so,” and that “clients had varying reasons for not wanting to pay; some had already planned to stop making payments and others could not afford to pay anymore.” Without the owners’ testimony, a factfinder couldn’t determine which owners would have stopped paying regardless of TET’s involvement.

FDUTPA: Sending letters about the timeshares fell within FDUTPA’s definition of trade or commerce. However, as to loss causation, Sussman was entitled to summary judgment on the damages claim with respect to any owner who didn’t testify about causation, though injunctive relief was still possible.