possibly misleading things are afoot at the Circle K: discount class certified

Petterson v. Circle K Stores, Inc., 2022 WL 17974463, No. 3:21-cv-00237-RBM-BGS (S.D. Cal. Nov. 23, 2022)

The court certifies a consumer class action for monetary relief with some observations about the kind of evidence required for certification. Petterson bought a lot of cigarettes at Circle K, expecting discounts from their discount program, but they didn’t give him a discount on cartons when he expected a discount based on buying multiple packs at once (their position was apparently that the discount applied to multiple loose packs, but not full cartons of 10 packs). Although the discounts varied, they regularly offered a discount for buying two packs at once.

“The central issue in this case is whether Circle K’s discount advertisements misled customers into believing that the multi-pack discount applied to purchases of cartons.” Petterson brought claims under California’s UCL and FAL and moved to certify a class of “All persons in California who purchased a carton of cigarettes from a Circle K store in California and did not receive an advertised multi-pack discount from December 4, 2016 to the present.”

Two representative ads:

I’m going to skip the easy parts (e.g., numerosity). Variations in which ads class members saw/what Petterson remembered/that he occasionally got a clerk to give him the discount by opening up a carton did not defeat typicality. “Minor variations in the fact patterns underlying class members’ claims do not defeat typicality where the plaintiff has otherwise shown that he has suffered the same or similar injury as those he seeks to represent.”

Because the claim was based on the objective reasonable consumer standard, both commonality and predominance were present. Variations in the ads/discount programs were not big enough to defeat them, even though some ads were sent only to customers who joined Circle K’s Tobacco Club program and others weren’t. Likewise, it didn’t matter that ads displayed discounts in different ways, for example: (i) a specific discount amount on the cigarettes purchased; (ii) a generalized offer of savings while purchasing multiple items (“Buy 2 packs and save”); and (iii) a specific per-pack price that a customer would expect to pay. They also had different durations, different funding sources (manufacturer discounts vs. Circle K discounts), and were occasionally combined to determine the final customer price. But these variations were not material to “the central issue of whether purchasers of cartons received the multi-pack discount that was advertised. Circle K has produced numerous advertisements that show commonality among Circle K’s discount programs: multi-pack purchases receive discounted prices.”

Reliance: The named plaintiff has to show reliance at the certification stage. Petterson did, even though he didn’t recall seeing certain advertisements at issue. A plaintiff does not “need to demonstrate individualized reliance on specific misrepresentations to satisfy the reliance requirement.” “[W]here, as here, a plaintiff alleges exposure to a long-term advertising campaign, the plaintiff is not required to plead with an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements.” Petterson testified to the general contents of the ads he saw and their locations, which sufficed under these circumstances.

Circle K argued that he would have bought cigarettes there regardless, because sometimes he did even without a discount. But he also testified that “before purchasing an undiscounted carton at Circle K, he would go to a nearby 7-Eleven to determine if that store offered a discount; if neither store offered a discount, he would purchase the undiscounted carton at Circle K.” This testimony established that he would change his behavior based on the presence of a discount, which was enough for materiality. “California case law is clear that reliance does not require that the allegedly misleading statement be the ‘sole or even the predominant or decisive factor influencing his conduct[,]’ rather the misrepresentation must have played a substantial part in influencing his decision.”

What about materiality, and thus reliance, for the class? “[A] presumption, or at least an inference, of reliance arises wherever there is a showing that a misrepresentation was material.” Because “[q]uestions of materiality and reliance are determined based upon the reasonable consumer standards, not the subjective understandings of individual plaintiffs,” this could be amenable to class treatment. The court agreed with Petterson that materiality “need not be proven at class certification; instead, Plaintiff needs to show only that a ‘common question of materiality and reliance’ exists.”

Circle K criticized plaintiff’s expert for failing to produce any data regarding how consumers interpret the advertisements at issue, conduct a consumer survey, or speak to Circle K customers about the ads. While some courts have found a plaintiff’s motion for class certification to be deficient where the plaintiff’s expert did not conduct a consumer survey, Amgen Inc. v. Connecticut Retirement Plans & Trust Funds, 568 U.S. 455 (2013), “ instructed that Rule 23(b)(3) requires a showing that ‘questions common to the class predominate, not that those questions will be answered, on the merits, in favor of the class.’” Further, Amgen noted that when materiality is judged on an objective standard, it is a common question for purposes of Rule 23(b)(3). That was the case here.

To generate common answers, plaintiffs can use consumer surveys, expert testimony, Circle K’s Rule 30(b)(6) testimony, and Circle K’s internal documents. Given that materiality is judged on an objective reasonable consumer standard, “the issue is susceptible to generalized, class-wide proof.”

Damages: Petterson argued that he could easily calculate the restitution damages he seeks by multiplying the number of cartons sold by the discount amount offered. This was sufficient at the class certification stage.