A recent Ninth Circuit opinion on class certification demonstrates both the potentially fact-intensive nature of class action “typicality” issues and the importance of substantive law in determining whether common issues predominate over individual issues.
In Stearns v. Ticketmaster Corp., the Ninth Circuit Court of Appeals reviewed several decisions denying class certification to various plaintiffs challenging an allegedly deceptive internet scheme involving Ticketmaster and its one-time affiliate, Entertainment Publications, Inc. (“EPI”). At issue is a link on Ticketmaster’s website to EPI’s Entertainment Rewards program, which allows members paying a monthly fee to download printable coupons.
After customers purchase tickets from Ticketmaster’s website, the Entertainment Rewards “ad unit” is displayed on the purchase confirmation page, inviting customers to click another button to learn how to obtain benefits from Entertainment Rewards, such as “cash back” on their next Ticketmaster purchase. Customers who click on the ad unit are taken to a landing page on the EPI website. If they enter their email address twice and click on a “Sign Me Up” or “Yes” button, they are enrolled in the program, the credit or debit card information given to Ticketmaster is transferred to EPI automatically, and after a thirty-day trial period, the customers’ credit cards or bank accounts are charged on a monthly basis. The customer does not receive a confirmation page or communication from Ticketmaster or EPI to the effect that this transaction has occurred and they will be charged.
The plaintiffs, in various lawsuits brought by the same attorney, alleged that these practices violated federal and California law. The plaintiffs sought to certify a class of all persons in the United States who (i) made a purchase at Ticketmaster’s website during the class period, (ii) were enrolled in Entertainment Rewards through Ticketmaster’s passing of their information to EPI; (iii) were charged for Entertainment Rewards, and (iv) did not print any coupon or apply for any cashback award from Entertainment Rewards.
Two of the plaintiffs appealed a determination by the district court that they failed Rule 23(a)’s typicality requirement. One of the plaintiffs “insisted” that he was not deceived into joining the Entertainment Rewards program, but had decided not to do so and must have accidentally clicked “Yes.” The other plaintiff alleged that he never saw the site and did not know how his son had signed up for the program. In both cases, the Ninth Circuit affirmed, holding that these plaintiffs’ claims were not typical of those of the class, which was alleged to have been falsely induced into signing up for the program.
The panel’s analysis of Rule 23(b)(3)’s predominance requirement, which the plaintiffs invoked, was more complicated. The district court determined that for purposes of the plaintiffs’ claim under California’s unfair competition law, individual issues predominated, because individualized proof of reliance and causation would be required. The Ninth Circuit, however, relied on an intervening California Supreme Court decision holding that unfair competition plaintiffs need show only that members of the public are likely to be deceived. Because the district court had relied on what proved to be an inaccurate reading of California law, the Ninth Circuit reversed the district court’s Rule 23(b)(3) determination.
The district court also denied class certification with respect to the plaintiffs’ claims for injunctive relief under the California Consumers Legal Remedies Act, on the ground that there was no showing of material misrepresentations or omissions to the whole class. The Ninth Circuit upheld this ruling with respect to one plaintiff because of the breadth of the proposed class. The court noted, for example, that the class definition would include consumers who intentionally signed up for the program but never took advantage of it, whether due to illness or emergency, lack of interest in any of the coupons available, or a decision “after a few months that the premiums were not worth the price of admission.”
Another plaintiff, however, had proposed an amended complaint that narrowed the class by adding a limitation to those who “reported in the course of cancellation or seeking a refund that they were unaware that they would be enrolled in or charged for Entertainment Rewards.” The district court dismissed this case at the pleading stage on the basis that it was simply duplicative of the earlier case and suffered from the same defects. The Ninth Circuit disagreed, rejecting the district court’s finding that the limitation in the class definition made no difference. The change, according to the panel, limited the class to people for whom the websites were presumptively materially deficient, “because they told EPI they had been signed up for Entertainment Rewards without realizing it.” Therefore, this case was “significantly different” from the earlier case, and the panel remanded the case to the district court for a determination as to whether the narrower class could be certified.
Finally, the district court denied one plaintiff’s request for class certification for an actual damages claim under the federal Electronic Funds Transfer Act, which prohibits electronic fund transfers from a consumer’s account without the consumer’s written authorization. The district court denied class certification on the ground that common issues did not predominate over individual issues. The Ninth Circuit upheld the denial, based again on the overbreadth of the proposed class. The panel held that because the class was defined to include consumers who had knowingly signed up for the program, and had intended to have the membership fee deducted from their account via their debit card, the funds deducted from their account could not constitute actual damages incurred by reason of EPI’s failure to obtain the proper authorization.
The Ninth Circuit opinion on these various issues is lengthy and detailed, and illustrates the extent to which class certification can turn on nuances in fact patterns, class definitions, and substantive law.
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