In this matter, we have consolidated two appeals. Both arise from the denial of plaintiffs' motions for class certification. In the first, plaintiffs and appellants Paul Martin Davis-Miller (Davis-Miller),
In the second appeal, plaintiff and appellant Amy Reed (Reed) seeks to reverse an order denying her motion for class certification in her action against the same defendant and respondent. However, Reed's complaint alleged violations of the Consumers Legal Remedies Act (Civ. Code, § 1750
The trial court, in a consolidated opinion addressing both cases, denied plaintiffs' motions for class certification mainly on the basis that common issues did not prevail, specifically concluding that plaintiffs failed "to meet their burden of establishing substantial evidence of a well-defined community of interest," inter alia. The trial court also granted Auto Club's motion for an order that the putative class could not be certified and denied plaintiffs' motion to strike
Because both appeals involve claims arising from the same operative facts, we similarly resolve them both in one decision, taking into consideration the distinct legal standards and applicable facts where necessary. As substantial evidence supports the trial court's factual findings with respect to both cases and the trial court properly applied the law, we will affirm.
Auto Club is a nonprofit mutual benefit corporation and a regional AAA (American Automobile Association) motor club. It licenses the use of the AAA trademark from AAA National, which coordinates nationwide programs that regional motor clubs may offer including the roadside battery assistance program at issue.
The United States subsidiary of Club Assist LLC (Club Assist), an Australian company, provides roadside battery service programs through contracts with AAA National. Under this program, when an AAA member's car will not start, a technician will drive to the member's location in a service truck equipped with a sophisticated battery tester and a supply of new batteries that includes a selection that covers most types of cars. The battery tester determines the conductance and the voltage of the battery to assist the customer in making a decision regarding whether to replace the battery on the spot versus simply having the technician jump-start the car.
Under the terms of the arrangements between Club Assist and each independent contracting station (ICS) that provides roadside assistance through AAA National and regional motor clubs, including Auto Club, Club Assist both provides the batteries and trains the technicians how to use the battery tester. Each ICS can sell the batteries to both AAA members and nonmembers, but must charge the AAA members $25 less than the general public. In 2009, the member prices for batteries ranged from $105 to $140, depending on the make and model of the car. There is no additional charge for installation.
After selling a battery, each ICS pays the wholesale price to Club Assist, retaining the remaining balance of the sale price. If the sale was made to an AAA member, Club Assist then must pay the participating regional AAA motor club a fee of $9.
Batteries for modern cars have an average life expectancy of three to four years which results in a need for replacement of between 25 percent and 33 percent of all car batteries each year. Car batteries that have failed at least once are more likely to need to be replaced. The conductance battery test used by ICS technicians provides useful data regarding the "remaining reliable life of the tested battery." Most of the batteries that were replaced by the ICS technicians had failed the conductance test. Only a small number of batteries are replaced without such a test being performed, for reasons such as when the battery is too deeply discharged to test, if the battery is leaking or bulging due to plate expansion and cannot be safely tested, or if a member requests a battery be replaced without testing.
The battery replacement rate of ICS technicians under the roadside battery assistance program is approximately 22 percent, which is lower than the average annual replacement rate. Moreover, because, by definition, the AAA members who purchased batteries through the program had batteries that failed at least once, the 22 percent rate is potentially substantially lower than the average rate for similar batteries.
Additionally, many other factors individual to each AAA member affect the likelihood that his or her battery will need to be replaced. These factors may include the age of the battery, the testing result, any history of prior battery
Two of the three named plaintiffs in the Davis-Miller case, Miller and Michel, did not even allege that their batteries could still hold a charge. Both Miller's and Michel's batteries failed the conductance test administered on site by an ICS technician. In his deposition, Miller stated that he had no reason to believe that the test performed on his battery was inaccurate or that the old battery was still viable. Prior to replacement, Michel's battery had failed on two separate occasions, increasing the likelihood that the battery was no longer reliable. Moreover, Michel drove her vehicle less than 2,000 miles per year, a factor that is likely to reduce the life of a battery.
Only plaintiff Keeler alleges that her battery was replaced unnecessarily. The record contains no evidence as to whether Keeler's battery was subjected to the conductance test by the ICS technician. But, as mentioned above, there are many reasons why a battery may not be tested. For example, the battery may have been too deeply discharged or unsafe to test. Like Michel, Keeler's mileage was low; she drove her vehicle only a few hundred miles per year, usage that is known to reduce a battery's expected useful life. In her deposition, Keeler stated that she retained her old battery and that she believed her husband tested it but she did not see him do so. She stated that he told her he "knew it was still good." However, it was not determined whether the battery was reliable and could actually start a car.
Plaintiff Reed had her car towed to her boyfriend's house after it would not start. Her boyfriend, John Romero, believed the problem was related to the battery. Reed called AAA to request a jump-start. Reed's battery failed the conductance test administered by the ICS technician who responded to her call. Based on the test, the ICS technician recommended to Romero (while Reed remained inside the house) that a new battery be installed. Romero, after discussing the option with Reed and without mentioning any member discount, had the new battery installed. Romero took the old battery to a garage and had it recharged. Romero kept the battery in his garage at home but since has not reinstalled it in any car to determine whether the battery is reliable or could actually start a car.
AAA members receive copies of Westways Magazine. The roadside battery assistance program was advertised in Westways in San Diego during the second year of the class period and only a small number of times in Southern California thereafter.
During the nine-year proposed class period, program ads were included in MemberSaver guides available to walk-in customers for only 16 months. The program was mentioned in renewal mailers during only three months of the proposed class period.
Additionally, Auto Club included ads for the program on its Web site. However, the page discussing the program received only a few thousand "hits" annually—which is an insignificant number (less than 0.2 percent of Auto Club's nearly six million members).
Sales invoices typically delivered to customers after they purchase a battery intermittently referred to the member discount and free installation as well. Two of the three named plaintiffs in the Davis-Miller case, however, gave little consideration to the invoices they received. Miller stated that he did not read his invoice and Keeler stated she had no recollection of whether she read the invoice or not.
Of the customer declarations provided, the majority had never seen an ad for the roadside battery assistance program. More than half had never heard of the program prior to calling Auto Club for service. The majority of declarants stated that either the ICS technician did not mention any member discount, or they did not recall the ICS technician's mentioning any member discount. The only declarant who stated that the ICS technician mentioned a member discount also noted that the discount did not matter because she previously paid more for a car battery and wanted the new battery installed on the spot without the hassle of going elsewhere.
Two of the three named plaintiffs in the Davis-Miller case (Keeler and Michel) admitted that they never saw any roadside battery assistance program ads prior to purchasing a battery through the program. Only plaintiff Miller states that he recalled seeing an article in Westways describing the program and receiving a mailer that included the program in the list of member benefits. However, Miller stated that the member discount did not matter because he appreciated the time savings and convenience of on-the-spot battery replacement and installation.
Reed also stated that she did not know that Auto Club offered the roadside battery assistance program until she called AAA for service and that she had
The trial court held a joint hearing with respect to both cases on Monday, January 25, 2010, and on Tuesday, January 26, 2010. The trial court's order was filed on April 23, 2010.
The trial court separated plaintiffs' claims into two factual bases for recovery. "The first theory of recovery is that Auto Club engages in false advertising through misrepresentations (disseminated in advertising and at point of sale) that batteries are sold with a member discount and with free installation and labor." The trial court referred to this theory as the "false advertising" cause of action. And, "[t]he second theory of recovery is that Auto Club unnecessarily replaces properly functioning batteries through the use of systemic incentives for its contractors to sell unneeded batteries, and by failing to adequately train and oversee contractors to ensure that field test results do not inaccurately recommend battery replacement when a simple jump start will suffice." The trial court referred to this theory as the "unnecessary replacement" cause of action. The trial court then analyzed each theory under the class certification rules applicable to UCL and CLRA claims.
With respect to plaintiffs' UCL claims, the trial court relied on Code of Civil Procedure section 382, which "allows the maintenance of a class action when the plaintiff can establish the existence of both an ascertainable class and a well-defined community of interest among the class members." (See Vasquez v. Superior Court (1971) 4 Cal.3d 800, 809 [94 Cal.Rptr. 796, 484 P.2d 964]; Code Civ. Proc., § 382.) The trial court found that the class plaintiffs sought to certify was sufficiently ascertainable. With respect to the
With respect to plaintiffs' CLRA claims, the trial court utilized Civil Code section 1781, "which sets out the four conditions that, if met, mandate certification of a class: (1) it is impracticable to bring all members of the class before the court; (2) the questions of law or fact common to the class are substantially similar and predominate over the questions affecting the individual members; (3) the claims or defenses of the representative plaintiffs are typical of the claims or defenses of the class; and (4) the representative plaintiffs will fairly and adequately protect the interests of the class."
In its analysis, the trial court treated the commonality requirements
Without detailing its analysis in the opinion, with respect to the UCL claim, the trial court found that plaintiffs were not able to demonstrate common questions of fact
The trial court determined that under the CLRA, plaintiffs must show actual injury as to each class member or a classwide injury and that "[u]nnamed class members who actually needed and received a new battery could not have suffered any damage by Auto Club's conduct . . ., no matter how inaccurate the field testing or how egregious the pressure on contractors to sell batteries." The trial court relied on Auto Club's evidence showing that the average ratio of battery replacements to jump-starts during the class period is 22.08 percent, never exceeding 25.3 percent, in any given year which is similar to replacement rates in traditional service locations. As a result, the trial court reasoned, "[e]vidence (though disputed) and common sense suggest that a more significant number of the class" is comprised of class members who actually needed their battery replaced.
Similarly, the trial court addressed the commonality requirements under the UCL and the CLRA together with respect to plaintiffs' false advertising cause of action and found that plaintiffs failed to produce sufficient evidence of such commonality.
The trial court analogized the two cases to Cohen v. DIRECTV, Inc. (2009) 178 Cal.App.4th 966 [101 Cal.Rptr.3d 37], and Pfizer, Inc. v. Superior Court (2010) 182 Cal.App.4th 622 [105 Cal.Rptr.3d 795] (Pfizer), because both involved allegedly false representations to which large numbers of class members are not likely to have been exposed. The trial court found that there was no evidence that the advertising and marketing of the battery service program was seen by the entire class and that substantial evidence shows that many members purchased batteries with no exposure to the advertising. Specifically, the trial court found that the advertisements in Westways, the member magazine, were made "in a sporadic and limited manner," and that any exposure via the Auto Club's Web site to advertisements was minimal. "Thus, only a small portion of the classes in both actions are likely to have seen the alleged false advertising, and even among that small portion, there is no basis to uniformly infer that the advertising was material to the purchase of decisions of large numbers of the class."
The trial court also found that, with respect to representations in sales invoices, such representations are not subject to common proof because the
Without setting forth its entire analysis in the opinion, the trial court concluded that "for the same reason that commonality is lacking factually as to the two factual theories, it follows that the named plaintiffs' claims are not really typical of those of the class" in part because "at least some of the named plaintiffs did not even personally suffer from the alleged problem which they seek to redress."
In addressing the adequacy prong under the community of interest requirement, the trial court found that plaintiffs also failed to show that the named representatives in both actions adequately represent the classes because they lack standing to assert the claims alleged in the respective complaints.
With respect to plaintiffs' UCL claim, the trial court noted that "Proposition 64 requires that the named representative in a UCL action must have suffered actual injury and loss of money or property caused by the defendant's unfair competition." (See Bus. & Prof. Code, § 17204.) The trial court then found that all three of the Davis-Miller plaintiffs, Keeler, Michel and Miller, admit that they did not rely on roadside battery service program advertising and thus any injury such plaintiffs may have suffered could not have been caused by Auto Club, which such cause is required to be shown with respect to plaintiffs' false advertising cause of action. Further, the court found that because only Keeler of the three kept her old battery, the bulk of plaintiffs could not show that each suffered injury under the unnecessary replacement theory, which makes them inadequate representatives.
With respect to plaintiffs' CLRA claim, the trial court pointed out that Civil Code section 1780, subdivision (a) contains the standing requirement "that `[a]ny consumer who suffers any damages as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770 may bring an action' under the CLRA." The court found that
In addition to the findings discussed above, the trial court also concluded that, consistent with the CLRA class action requirements, "[i]t is impracticable to bring all members of the classes before the [c]ourt."
Finally, the trial court concluded that because plaintiffs failed to meet their burden of establishing a well-defined community of interest among the proposed class and failed to offer any other reasons the trial court determined were persuasive as to why the cases should be allowed to proceed as class actions, proceeding as a class is not superior to other methods of adjudication in either case.
Plaintiffs timely filed two separate notices of appeal on May 10, 2010.
Having lost their motion for class certification on the bases on which it was brought, the Davis-Miller plaintiffs attempt to expand their arguments for class certification on appeal. These plaintiffs now attempt to argue that the trial court failed to analyze the issue of standing with respect to both the unlawful and the unfair prongs of the UCL. However, as noted above, the Davis-Miller plaintiffs failed to argue this contention as a basis for class certification before the trial court. Because this issue was not before the trial court when it ruled on the motion for class certification, we decline to consider it now. (People ex rel. Dept. of Transportation v. Superior Court (2003) 105 Cal.App.4th 39, 46 [129 Cal.Rptr.2d 60].) Instead, we limit our consideration to only the theories on which plaintiffs' pursued class certification below.
In both appeals, plaintiffs argue that the order cannot be upheld on any basis, because the trial court erred, both in its application of the law and its
A lower court's ruling on a motion for certification of a class is reviewed for abuse of discretion. (Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 326.) "`Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification. . . . [I]n the absence of other error, a trial court ruling supported by substantial evidence generally will not be disturbed "unless (1) improper criteria were used [citation]; or (2) erroneous legal assumptions were made [citation]."' [Citations.]" (In re Tobacco II Cases (2009) 46 Cal.4th 298, 311 [93 Cal.Rptr.3d 559, 207 P.3d 20] (Tobacco II).) "Where a certification order turns on inferences to be drawn from the facts, `"the reviewing court has no authority to substitute its decision for that of the trial court."'" (Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 97 Cal.App.4th 1282, 1287 [119 Cal.Rptr.2d 190].)
With respect to Reed's unnecessary replacement theory of recovery, under the CLRA, relief is limited to consumers who have suffered, in fact, damage as a result of an illegal practice. (Civ. Code, § 1780, subd. (a).) In other words, injury must be proven as to each member of the class. (Steroid Hormone Product Cases, supra, 181 Cal.App.4th at p. 155.)
The Davis-Miller plaintiffs contend that they "sought certification of a class of battery purchasers, some of whom unnecessarily purchased a battery as a result of AAA's unlawful business practices" and therefore, under the Tobacco II court's interpretation of Collins v. Safeway Stores, Inc. (1986) 187 Cal.App.3d 62 [231 Cal.Rptr. 638] (Collins), the lower court was in error for denying the motion. Similarly, Reed asserts that the trial court erred in concluding that the class is not certifiable on the basis that the class includes members who potentially purchased batteries under the program as a result of accurate conductance tests. Reed contends, citing Tobacco II, that "where, as here, there is an unlawful business practice, and `the "money or property" of the entire class of purchasers "may have been acquired by means" of an unfair practice,' the class is thus entitled to restitution for their loss."
Additionally, plaintiffs assert that the trial court erred in concluding that class certification is not permissible on the basis that the alleged false advertising was not "uniformly made to or considered by members." The Davis-Miller plaintiffs contend that "Tobacco II held that `relief under the UCL is available without individualized proof of deception, reliance, and injury' [and that] the correct legal standard is not whether the absent class members were actually deceived, as the trial court required, but whether members of the public are likely to be deceived." Reed contends that, under Steroid Hormone Product Cases, supra, 181 Cal.App.4th 145, reliance could be inferred because the misrepresentations regarding the price of the battery replacement service are material under a "reasonable person standard."
As the commonality requirement under the UCL and the CLRA are substantially similar, we address them simultaneously as one requirement below.
Here, as in Cohen, Tobacco II is "irrelevant because the issue of `standing' simply is not the same thing as the issue of `commonality.' Standing, generally speaking, is a matter addressed to the trial court's jurisdiction because a plaintiff who lacks standing cannot state a valid cause of action. [Citations.] Commonality, on the other hand, and in the context of the class certification issue, is a matter addressed to the practicalities and utilities of litigating a class action in the trial court. We see no language in Tobacco II that suggests to us that the Supreme Court intended our state's trial courts to dispatch with an examination of commonality when addressing a motion for class certification. On the contrary, the Supreme Court reiterated the requirements for maintenance of a class action, including (1) an ascertainable class and (2) a `"community of interest"' shared by the class members. [Citation.]" (Cohen v. DIRECTV, Inc., supra, 178 Cal.App.4th at p. 981.)
Instead of Tobacco II, we summarized the correct legal standard in Cohen with respect to the commonality requirement under both the UCL and the CLRA: the UCL does not "authorize an award for injunctive relief and/or restitution on behalf of a consumer who was never exposed in any way to an allegedly wrongful business practice." (Cohen v. DIRECTV, Inc., supra, 178 Cal.App.4th at p. 980.) "[A]ctual reliance must be established for an award of damages under the CLRA." (Ibid.)
Thus, with respect to the unnecessary replacement theory of recovery asserted by plaintiffs, both the UCL and the CLRA require that plaintiffs show that the replacement of batteries without there being a need for such replacement, which is the alleged wrongful business practice asserted by plaintiffs, is common to the class.
Plaintiffs' reliance on the Tobacco II court's disapproval of Collins in dicta is unhelpful to their argument. As the Tobacco II court pointed out, "Collins involved the preliminary step of identifying the existence of an ascertainable class." (Tobacco II, supra, 46 Cal.4th at p. 323.) Here, the lower court determined that the class was ascertainable and that finding is not being challenged on appeal. Rather, the focus of this portion of the appeal is on the commonality requirement, which is separate and distinct from ascertainability.
With respect to plaintiffs' false advertising theory of recovery, both laws require, at a minimum, that the class be exposed to the allegedly false
With respect to the false advertising theory of recovery, the roadside battery assistance program was minimally advertised during the proposed class period in Westways Magazine, MemberSaver guides, renewal mailers and on Auto Club's Web site. Further, sales invoices delivered to customers after their purchase inconsistently referred to the member discount and free installation. Of the named plaintiffs who stated they saw either an advertisement or an invoice, none stated such information played a role in the decision to purchase a battery from Auto Club. Finally, of the declarations admitted into evidence, the majority of declarants (1) had never seen an ad for the roadside battery assistance program; (2) had never heard of the program prior to calling Auto Club for service; and (3) stated that either the ICS technician
Therefore, we find that the trial court's order is supported by substantial evidence in the record and the trial court applied the proper legal criteria in addressing the class certification issue. Because the trial court stated at least one valid reason for denying the motion, we will affirm its order. (Cohen v. DIRECTV, Inc., supra, 178 Cal.App.4th at p. 981.)
The order denying class certification is affirmed. Auto Club shall recover its costs on appeal from plaintiffs in each of these consolidated cases.
Klein, P. J., and Kitching, J., concurred.