Tuesday, February 4, 2014
C.A. Rejects Consumer Class Action Against Home Depot
By a MetNews Staff Writer
A class action lawsuit against Home Depot will not be certified for lack of a common question of fact, the Ninth U.S. Circuit Court of Appeals held yesterday.
The court, in an opinion by Judge Ronald M. Gould, affirmed the dismissal with prejudice of Benjamin Berger’s suit after failing to meet the certification requirement that common questions predominate over individual issues under Federal Rules of Civil Procedure Rule 23.
Berger filed a putative class-action claim against Home Depot, alleging that the company automatically imposed a 10 percent fee on tool rentals as part of a damage waiver. The waiver, if purchased, allows customers to avoid liability if a particular tool is damaged during the rental.
The damage avoidance provision was optional, but Berger contended that the charge was being imposed on customers without being informed that they could decline the surcharge, in violation of California’s Unfair Competition Law and common law theories of unjust enrichment.
Home Depot did not deny that the fee was added to a rental charge if a customer did not reject the waiver, but argued that customers were informed of the optional nature of the fee by sales associates, signs in stores, or the language of the final contract.
The company has had five different versions of their tool rental agreement since 2002, each discussing the agreement in a different way. Berger argued that his class action should be divided into subclasses to mirror the various agreements over that time period.
Gould declined to entertain the proposed subclasses as a viable means for certifying the suit, explaining that Berger only took part in one transaction, and was not a member of the other subclasses thereby failing to be able to prosecute claims on their behalf.
Berger further argued that each of the subclasses fell within Rule 23(b)(3), which provides that a class action should be a superior means for handling a suit when “questions of law and fact common to class members predominate over any questions affecting only individual members.” The common questions will allow a single adjudication to resolve the case for all the members of the class, he argued.
Gould said this case failed to come under Rule 23(b)’s requirements, citing Mazza v. Am. Honda Motor Co. 666 F.3d 581 (2012). In that case, the court reversed class certification on a claim against Honda for allegedly making deceptive and misleading claims about a particular braking system, where the advertisements fell short of a long-term fraudulent campaign so that every class member would have been exposed to the misleading statements.
As in that case, Gould said, Berger has not alleged that every one of Home Depot’s clients were exposed to its alleged deceptive practices. As a result, he explained, each instance of Home Depot’s contractual agreements would need to be examined to determine if the damage fee being imposed was in violation of law.
“Each of the five contracts used by Home Depot requires an independent legal analysis to determine whether the language and design of the contract did or did not suffice to alert customers that the damage waiver was an optional purchase, and thereby did or did not expose that group of customers to a potentially misleading or deceptive statement.”
“Whether Home Depot’s receipt of funds for the damage waiver was unjust or inequitable, thereby justifying restitution, depends on whether Home Depot told its tool rental customers that the waiver an optional product. [This determination] necessarily rests on individualized determinations about the language of the contract signed by the customer, the placement and content of any signs, and the oral representations from Home Depot employees relating to the damage waiver.”
The case is Berger v. Home Depot USA, Inc., No. 11-55592.
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