JOHN F. GRADY, District Judge.
Before the court are two motions: (1) the motion of defendant Sears, Roebuck & Company to dismiss Count II of plaintiff Jeffrey Greenfield's first amended class action complaint; and (2) the motion of plaintiff for certification of a Florida class. For the reasons discussed below, defendant's motion is granted, and plaintiff's motion is denied.
In this multidistrict litigation ("MDL"), plaintiffs claim that defendant Sears, Roebuck & Company ("Sears") deceptively advertised its line of "Craftsman" tools as manufactured in the United States when in fact many of the tools are foreign-made or contain significant foreign parts. This is the last remaining member case of the MDL pending before this court. The procedural history of these cases is as follows:
Greenfield's complaint is titled "First Amended Class Action Complaint." Greenfield is a Florida resident who alleges that in 2004, he bought a Craftsman ratcheting screwdriver from the Sears store in Aventura, Florida that "did not qualify to be marketed as Made in the USA." (Am. Compl. ¶¶ 6-7, 64.) He alleges that "[s]urrounding the tool was in-store signage which [he] recalls stated the following: Craftsman Quality, Guaranteed for life, Made in the USA, only $19.95." He also alleges that he "saw print advertisements, in-store signage, television commercials (including ones with Bob Vila and AJ Foyt) and markings on Craftsman tools, all of which stated that Craftsman products are `made in the U.S.A.'" and that he purchased his tool believing that all Craftsman tools were made in the U.S.A. (Am. Compl. ¶ 6.)
The complaint further alleges that in the year 2000, approximately 20 percent of Craftsman products were not made in the United States, and by 2005, this number had increased to 70 percent. (Am. Compl. ¶ 41.) Sears had conducted and was aware of research showing that consumers believed that "Made in USA" was a significant attribute of Craftsman tools. (Am. Compl. ¶¶ 42-44.) In addition:
(Am. Compl. ¶¶ 47-49.)
Greenfield asserts claims for violation of the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA") (Count I), breach of warranty under the Magnuson-Moss Warranty Act (Count II), and unjust enrichment (Count III). He seeks certification of a class of Florida plaintiffs. Sears moves for dismissal of Count II.
In Count II, Greenfield alleges that Sears made false "express warranties" and "express representations" in its advertising and on some of its Craftsman packaging that Craftsman tools were "Made in the USA." (Am. Compl. ¶¶ 111-114.) According to Greenfield, these "Made in USA" representations "constituted warranties that because the Craftsman tools were made in America and by American workers, they were of higher quality than tools made outside America," Am. Compl. ¶ 117, and because they were false, violated the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301
In
15 U.S.C. § 2301(6). In our opinion, we held:
2006 WL 1443737, at *4 (citation omitted).
In his brief in response to the instant motion, plaintiff persists in maintaining that the "`specified level of performance over a specified period of time' is that the Craftsman products are `Made in America' which must be a lifetime level of performance, as the American workmanship of a product cannot change over time from American made to made in China." (Pl.'s Opp'n to Def.'s Mot. to Partially Dismiss the Am. Compl. at 4.) We remain unpersuaded. Plaintiff would have us ignore the plain language of the Act, which requires an affirmance of a specified level of performance and a specified period of time. "Made in the USA" is not a representation that satisfies this subsection (A) requirement. Nor does it meet subsection (B)'s requirement of a written "undertaking. . . to refund, repair, replace, or take other remedial action." No action whatsoever is promised.
Plaintiff contends that even if the phrase "Made in USA" does not constitute a written warranty, he "should be allowed to pursue a claim for breach of implied warranty under the Act." (Pl.'s Opp'n at 6.) This argument strikes us as deliberately vague. It is unclear whether it is an assertion that the complaint adequately alleges a breach of implied warranty, or, rather, a concession that it does not allege such a breach, coupled with a request to amend the complaint. Plaintiff does not explicitly seek to amend the complaint. Either way, the argument fails. In his response brief, plaintiff maintains that Sears breached the implied warranty of merchantability arising under Florida law, but nowhere in the complaint is this breach of implied warranty alleged. And it is far too late in this litigation to permit an amendment to the complaint. In 2006, plaintiffs made the same argument that the phrase "Made in USA" constitutes an "implied" warranty, and we rejected it, stating that we did not understand how the phrase could be both an express and an implied warranty. Black's Law Dictionary defines an "implied warranty" as "[a]n obligation imposed by the law when there has been no representation or promise."
Even if Greenfield's complaint adequately alleged a breach of an implied warranty under the Act, the claim would nonetheless fail because plaintiff has not alleged that he provided Sears with the requisite "reasonable opportunity to cure" the alleged failure to comply with a warranty obligation. The Act provides in pertinent part:
15 U.S.C. § 2310(e) (emphasis added);
Plaintiff argues that pursuant to the language of § 2310(e), "a class action may be filed without notice and opportunity to cure." (Pl.'s Opp'n at 8.) That is true; the statute allows a Magnuson-Moss class action to be brought before the defendant is given an opportunity to cure (only to the point of establishing the named plaintiffs' representative capacity), but plaintiff did not file a Magnuson-Moss class action, which requires at least one hundred named plaintiffs. 15 U.S.C. § 2310(d). As Sears points out, Count II is brought as an individual-consumer claim, which must comply with the pre-filing opportunity to cure requirement.
Plaintiff submits that even if he was not exempted from having to afford Sears a reasonable opportunity to cure, he satisfied this requirement by sending Sears a letter on February 28, 2006, four years before he amended his complaint to add the Magnuson-Moss claim. (Pl.'s Opp'n at 10 & Ex. 1.) The letter is attached to plaintiff's brief. This argument misses the mark. The complaint fails to allege that plaintiff provided Sears with an opportunity to cure, and it does not mention the letter. We will not permit amendments to the complaint at this juncture. Moreover, plaintiff cannot rely on the letter to demonstrate notice because it did not comply with the notice requirements of Fla. Stat. Ann. § 672.607(3)(a), which the parties agree is applicable. The statute, a UCC provision, provides that the "buyer must within a reasonable time after he or she discovers or should have discovered any breach notify the seller of breach or be barred from any remedy." This provision is supplemented by a comment 4, which states: "The content of the notification need merely be sufficient to let the seller know that the transaction is still troublesome and must be watched. . . . The notification which saves the buyer's rights under this Article need only be such as informs the seller that the transaction is claimed to involve a breach, and thus opens the way for normal settlement through negotiation." The letter plaintiff relies upon does not meet even this minimum standard because it fails to identify any "transaction" or product that allegedly involved a breach. The purportedly defective Craftsman tool that Greenfield bought is not identified in the letter, and the complaints on file at the time did not identify any particular tool that Greenfield had bought.
Because plaintiff has failed to state a claim for breach of warranty under the Magnuson-Moss Warranty Act, Count II will be dismissed.
Federal Rule of Civil Procedure 23 allows a member of a class to sue as a representative of the class only if (1) joinder of all members is impractical because the class is so numerous, (2) questions of law or fact are common to the class, (3) the representative's claims are typical of those of the class, and (4) the representative will fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a). "All of these elements are prerequisites to certification; failure to meet any one of them precludes certification as a class."
The plaintiff also must show that the action is maintainable under one of the three categories of Rule 23(b). Here, class certification is sought under Rule 23(b)(3), which requires that common questions of law or fact predominate over questions affecting only individual members and that a class action is the best method for fairly and efficiently adjudicating the controversy. The movant bears the burden of proving that all of Rule 23's requirements are satisfied.
On a motion for class certification, we need not necessarily accept the plaintiff's allegations as true.
As explained above, we denied plaintiffs' previous motions for class certification. In their first motion, plaintiffs defined the putative class as "[a]ll persons and entities throughout the United States" who purchased one or more Craftsman tools that were not all or virtually all made in the United States. They sought certification of a nationwide class for their unjust enrichment claims and an undefined set of classes or subclasses under the laws of seven states for their consumer fraud claims. 2007 WL 4287511, at *4. In the second and third motions, plaintiffs used largely the same definition with geographical and temporal limitations, defining the putative classes as "all persons" who purchased one or more Craftsman tools in Pennsylvania or Indiana between January 1, 2000 and December 2, 2004, that were not all or virtually all made in the United States. 2009 WL 3460218, at *4.
In both of our decisions on plaintiffs' motions, we held that class treatment was not appropriate for several reasons. The proposed classes were wildly overbroad; they included persons who could not prove deception due to the fact that they (1) bought Craftsman tools but never saw any Craftsman advertising; (2) bought the tools but never saw Craftsman "Made in USA" advertising; or (3) bought the tools with the knowledge that they were not made in the United States. We followed the reasoning of
Greenfield now seeks certification of a Florida class. The proposed class consists of "[a]ll persons in Florida who, between May 2000 and the present, purchased in Florida one or more Craftsman tool(s) that were not all or virtually all `Made in USA.'" (Pl.'s Mem. in Supp. of Mot. for Class Certification at 1.)
We will begin, then, with an analysis of the FDUTPA and the case law interpreting the statute. The FDUTPA prohibits "[u]nfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce." Fla. Stat. Ann. § 501.204. It provides: "In any action brought by a person who has suffered a loss as a result of a violation of this part, such person may recover actual damages, plus attorney's fees and court costs. . . ." Fla. Stat. Ann. § 501.211.
The parties agree that there are three elements of a claim for damages under the FDUTPA: 1) a deceptive act or unfair practice; 2) causation; and 3) actual damages.
Each party can find support for its position in relevant case law.
In
In
270 F.R.D. at 692 n.2. Greenfield quotes from this passage and invokes a similar damages theory, arguing that "Sears' misrepresentation that Craftsman products are Made in the USA allowed Sears to charge a premium price for foreign-made products that was not warranted . . ., and consumers paid that unwarranted premium (regardless of what they subjectively believed or what ads they saw)." (Pl.'s Mem. at 24.)
Sears contends that unlike
There are two reasons why we disagree with plaintiff's assertion that the
Second, the federal decisions are factually distinguishable.
Putting to one side the problem that the class includes plaintiffs who could not have suffered injury, plaintiff has also failed to demonstrate that there is a reasonable methodology for proving causation and damages on a class-wide basis. Plaintiff's theory is that common issues predominate as to damages because Sears "is charging a premium that it would not have charged for [Craftsman tools] had it disclosed that the products were not `Made in USA.'" (Pl.'s Reply at 23.)
The "evidence" of this purported premium is addressed at pages 9 through 11 of plaintiff's opening brief. Plaintiff first points out that Sears commissioned marketing research in the years 2003-2005 showing that if it became known among Craftsman customers that Craftsman products were made overseas, nearly half of those customers "would expect to pay 10% to 25% less for such products," and 25 percent would not buy the products at all. (Pl.'s Mem. at 9-10.) In the absence of evidence that the Sears buyers—employees who set the prices for Craftsman tools—took this market research into account when doing their work (or even knew about it), the results of the marketing research—what some customers said they would expect to pay—are not relevant to Sears's actual pricing practices. Plaintiff has no evidence (and Sears's witnesses deny) that the buyers knew about or considered the research.
Plaintiff mischaracterizes and significantly overstates the remainder of the evidence he relies upon. He asserts that Sears employed a "merchandising plan" for Craftsman that it described as "Good, Better, Best" and that it placed Craftsman at the "Better", or middle, level. (Pl.'s Mem. at 10.) The evidence cited by plaintiff does not support the conclusion that there was an overarching "merchandising plan" or that such a "plan" affected pricing. Nor does the cited evidence support plaintiff's next contention—that "Sears' business records consistently frame [Good, Better, Best] as pricing categories." But plaintiff's most serious overstatement is that "Sears' business records provide specific evidence that, within the `Good' to `Better' and/or `Best' price differential, 10% to 25% of the premium is attributable to Craftsman's positioning as a `Made in USA' brand." (Pl.'s Mem. at 11.) Plaintiff cites an e-mail between a Sears buyer of "stationary power tools and accessories" and a vendor wherein the buyer states that a hypothetical domestically-made "tap and die" set could command a $10 (or 20%) higher "target price" as a Craftsman tool. (Pl.'s Ex. 46.) The other two documents plaintiff (conclusorily) relies on contain more general discussion of Craftsman pricing (as compared with Sears's "Companion" tools) (Pl.'s Ex. 63) or profit margins that differ depending on place of manufacture (Pl.'s Ex. 47) and are similarly not "specific evidence" of a 10 to 25 percent across-the-board markup on Craftsman tools due to its position as an American-made brand.
In support of its position that plaintiff's "premium" theory of damages is fatally flawed, Sears submits the expert report of Stephen D. Prowse, who holds a Ph.D. in economics. Dr. Prowse prepared his report in connection with the
It does not require much "experience regarding the calculation of damages in actions involving consumer fraud" to conclude that plaintiff's attempt to demonstrate a likely class-wide damages methodology is a wholesale failure. Because plaintiff's presentation is so conclusory, we did not find it necessary to rely on Dr. Prowse's report; we do, however, agree with him that plaintiff's attempt to show a likely methodology is seriously flawed.
Plaintiff's opening memorandum states simply that "[t]he pricing studies and Sears' data reflecting the actual differentials between Sears' Companion brand and the Craftsman brand for substantially similar products provides a basis to measure damages" and that "evidence from Sears' consumer research and pricing data will establish that everyone in the class paid prices for foreign-made Craftsman products that included a premium attributable to Craftsman's falsely achieved status as a `Made in USA' brand." (Pl.'s Mem. at 11, 25.) It is difficult to gather from the conclusory presentation, but evidently plaintiff is offering two alternative proposed methodologies: one that relies on Sears's pricing studies and historical profit margins on Craftsman tools, and one that relies on the differences between Craftsman pricing and Companion pricing. As discussed above, plaintiff's evidence of a premium, which consists of bits and pieces of items cobbled our class-certification decision. together, is so weak it is virtually nonexistent. His theory rests on a host of baseless assumptions: that Sears's Companion brand of tools is comparable to the Craftsman brand; that there is a 10 to 25 percent premium for Craftsman tools over Companion tools; that the premium applies to all Craftsman tools; and that the premium is attributable to market perception of the country of origin of Craftsman tools and not to some other product attribute. Simply adopting plaintiff's assumptions would not be compatible with the "rigorous analysis" that the Supreme Court in
The putative class of Florida purchasers suffers from a number of the same fatal problems identified in our previous opinions; those problems persist despite the fact that this case involves a different consumer fraud statute. The proposed class is overbroad, and plaintiff has failed to satisfy the typicality and predominance requirements of Rule 23. Although plaintiff contends that "Florida legal precedent regarding substantive liability [for] unjust enrichment claims and the suitability of such claims for class certification . . . differentiate this proposed class action from previous actions," Pl.'s Mem. at 13, these problems apply equally to the unjust enrichment claim. Plaintiffs will have to prove that they conferred a benefit on Sears and that Sears appreciated, accepted and retained the benefit under circumstances that make it inequitable to retain that benefit without paying fair value for it.
Plaintiff Greenfield has failed to establish that the prerequisites of Rule 23 are satisfied, and his motion for class certification will be denied.
The motion of defendant Sears, Roebuck & Company to dismiss plaintiff's claim in Count II for violation of the Magnuson-Moss Act [7] is granted. Count II is dismissed with prejudice. Plaintiff Jeffrey Greenfield's motion for certification of a Florida class [25] is denied. Plaintiff's motion to strike the affidavit of Maria Scavo, or in the alternative for leave to depose her, [54] is denied.
A status hearing is set for April 28, 2012, at 11:00 a.m.
Paragraph 83 of the amended complaint also defines a "Class 2": "All persons in Florida who, between May of 2000 and the present, purchased in Florida one or more Craftsman tool(s) and who paid more than the price Sears would have charged had it been known that Craftsman tools were not all or substantially all Made in the USA." In an order entered on September 23, 2011, we granted Sears's motion to strike the Class 2 allegations from the complaint because plaintiff declined our invitation to file an amended class certification motion that would include a request to certify Class 2, and we will not permit any further motions for class certification in these proceedings.
The affidavit does not factor into our decision, and the motion to strike is therefore denied as moot. The court is quite capable of reviewing the Craftsman commercials and other advertisements and determining what they say. Whether they actually contain misrepresentations is beside the point on a motion for class certification. What matters is whether there is evidence of, as plaintiff puts it, a "ubiquitous `Made in USA' branding campaign." (Pl.'s Mem. at 2.) We have previously found, and find yet again, that there is not, despite plaintiffs' continued insistence to the contrary. Only a portion of Craftsman advertising contained "Made in USA" representations, and only a portion of the putative class viewed those representations. In our 2007 opinion, we rejected as conclusory plaintiffs' argument that the "total mix" of information had the "overriding message" that Craftsman products are American-made. 2007 WL 4287511, at *7. Greenfield attempts to bolster the argument by pointing to an online survey conducted for Sears in 2006, which found that "nearly 90% of consumers believe that Craftsman hand tools and power tools are made in the USA." (Pl.'s Ex. 17.) According to plaintiff, this research demonstrates that "Sears' extensive and deceptive efforts to brand Craftsman as all `Made in USA' succeeded." (Pl.'s Mem. at 6.) Plaintiff conveniently overlooks his own allegations. He does not allege that Sears's "Made in USA" claim was always deceptive, but that it became deceptive at some point in the year 2000 because Sears began outsourcing the production of Craftsman products. The researcher did not trace the origin of the consumers' belief or link it to any particular point in time. It is quite possible that many of those research subjects had formed their belief about the place of manufacture of Craftsman tools well before the class period. It does not follow that the consumers' belief is evidence of, and must have been caused by, a pervasive "false branding" campaign.
In his reply brief, plaintiff raises another evidentiary dispute concerning Sears's submission of the declarations of Tom Arvia, a Sears employee who discusses Sears's Craftsman advertising and pricing (Def.'s Ex. 2), and Arthur McKeague, a Sears employee who discusses Sears's CORE database system for product data (Def.'s Ex. 12). Plaintiff argues in footnote 3 that we should strike these declarations because "Sears never previously identified" them in its interrogatory responses as persons with knowledge, and therefore plaintiff never deposed Arvia or McKeague. We decline to strike the declarations because we did not find it necessary to rely on either of them to decide this motion.