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Court ruling re false advertising by web reseller

Court ruling re false advertising by web reseller

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Published by Daniel Ballard
California case holding that a web reseller may be liable for false advertising by the manufacturer of a product sold on the reseller's site.
California case holding that a web reseller may be liable for false advertising by the manufacturer of a product sold on the reseller's site.

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Published by: Daniel Ballard on Dec 18, 2010
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12/18/2010

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 IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICTDIVISION THREE
RICHARD M. KERSHENBAUM, PLAINTIFF AND APPELLANT,v.BUY.COM, INC., DEFENDANT AND RESPONDENT.
 Appeal from an order of the Superior Court of Orange County, Gail Andrea Andler, Judge.Reversed with directions. (Super. Ct. No. 07CC01336).September 30, 2010The opinion of the court was delivered by: Fybel, J.OPINIONRichard M. Kershenbaum did not receive an advertised rebate on a product he purchased throughBuy.com, Inc.'s Web site. Buy.com contended the rebate was offered by the product manufacturer, andit was therefore not responsible for compensating Kershenbaum. Kershenbaum sued Buy.com, andsought class certification of the lawsuit. The trial court denied the motion, and Kershenbaum appeals.We reverse.The trial court erred in denying the motion for class certification. The different definitions of theproposed class contained in the memorandum of points and authorities and the proposed order did notwarrant denial of the motion for lack of ascertainability. Any confusion caused by the differentdefinitions could and should have been remedied by the trial court, either by correcting the proposedorder, or by independently drafting a new order.We further conclude the trial court erred in denying the motion on the ground that common questionsof law did not predominate. The California choice-of-law provision in Buy.com's terms of use agreementapplies to the claims asserted by the class. Even if the choice-of-law provision did not apply, classcertification was still appropriate because significant contacts with California have been shown to exist,and Buy.com cannot demonstrate that any foreign law, rather than California law, should apply to theclass claims.We also conclude the trial court erred in determining the claims asserted by the class were vague.Finally,Kershenbaum had standing to assert a claim for misleading advertising; the trial court erred indetermining otherwise.STATEMENT OF FACTS AND PROCEDURAL HISTORYOn February 5, 2007, Kershenbaum purchased a Connect 3D memory card from Buy.com for $30, with a$30 mail-in rebate. Kershenbaum sent in the appropriate rebate forms, and was approved to receive the$30 rebate. Connect 3D, however, failed to pay the rebate. In July 2007, Buy.com offered thosecustomers who had not received their rebates a $10 gift certificate.
 
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 Kershenbaum filed a class action lawsuit against Buy.com. In his second amended complaint (which isthe operative complaint), Kershenbaum allegedcauses of action against Buy.com for violations of theunfair competition law (Bus. & Prof. Code, § 17200 et seq.) (UCL) and the Consumers Legal Remedies Act(Civ. Code, § 1750 et seq.) (CLRA), and for negligent misrepresentation.On December 10, 2008, Kershenbaum filed a renewed motion for class certification. (Kershenbaum'soriginal motion for class certification was denied without prejudice for failure to meet his burden of showing an ascertainable class.) The trial court denied Kershenbaum's renewed motion for classcertification. The court's order reads, in relevant part, as follows: "Plaintiff's Motion for Renewed ClassCertification, assuming it is meant to be a new class certification motion, is denied based on thefollowing grounds: [¶] a. Plaintiff presented the Court with three different definitions of the class. Thereare two differing definitions in the Points and Authorities . . . and there is a third definition in theProposed Order. Therefore, Plaintiff has not proven that there is an ascertainable class. [¶] b.Additionally, it is vague as to what claims Plaintiff asserts against Buy.com: the failure of Buy.com toperform 'due diligence' as to Connect 3D's financial condition, or misleading advertising. [¶] c. If Plaintiff is asserting 'misleading advertising,' i[t] appears the proposed class representative lacks standing, in thathe testified he did not rely on any of Buy.com's representations or omissions before purchasing theConnect 3D rebated products. [¶] d. Plaintiff has not established that common issues of lawpredominate." Kershenbaum timely appealed from the order denying the motion for class certification.DISCUSSIONI. STANDARD OF REVIEW AND STANDARDS FOR CLASS CERTIFICATION"Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permittinggroup action, they are afforded great discretion in granting or denying certification. . . . [I]n the absenceof 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]' [citation]. Under this standard, an order based upon improper criteria or incorrectassumptions calls for reversal '"even though there may be substantial evidence to support the court'sorder."' [Citations.] Accordingly, we must examine the trial court's reasons for denying classcertification. 'Any valid pertinent reason stated will be sufficient to uphold the order.' [Citation.]" (Linderv. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435-436.)"'Code of Civil Procedure section 382 authorizes class suits in California when "'the question is one of acommon or general interest, of many persons, or when the parties are numerous, and it is impracticableto bring them all before the court.' To obtain certification, a party must establish the existence of bothan ascertainable class and a well-defined community of interest among the class members. [Citations.]The community of interest requirement involves three factors: '(1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) classrepresentatives who can adequately represent the class.' [Citation.]"' [Citation.]" (Kaldenbach v. Mutualof Omaha Life Ins. Co. (2009) 178 Cal.App.4th 830, 843.) As the moving party, Kershenbaum bore theburden of proving all the elements for class certification. (Richmond v. Dart Industries, Inc. (1981) 29Cal.3d 462, 470.)II. IS THE CLASS ASCERTAINABLE?The trial court found the class was not ascertainable because Kershenbaum had offered multiple
 
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 definitions of the class in his motion papers: "Plaintiff presented the Court with three differentdefinitions of the class. There are two differing definitions in the Points and Authorities . . . and there is athird definition in the Proposed Order. Therefore, Plaintiff has not proven that there is an ascertainableclass." The memorandum of points and authorities in support of the renewed motion for classcertification defined the proposed class as follows: "All persons in the United States who purchased aConnect 3D product from Defendant Buy.com, Inc. ('Buy.com') that included a rebate offer and whoserebate submissions were approved for payment. [¶] Excluded from the Class are the Court, Defendant,its affiliates, employees, officers and directors, and anyone who was paid his or her rebate by Buy.com."(Fn. omitted.)*fn1The proposed order, however, defined the proposed class as follows: "All persons inthe United States who purchased a Connect 3D product (including Hannspree products) from DefendantBuy.com, Inc. ('Buy.com') that included a rebate offer and whose rebate submissions were approved forpayment. Excluded from the Class are the Court, Defendant, its affiliates, employees, officers anddirectors, and anyone who was paid his or her rebate by Buy.com." (Italics added.) Nowhere in therenewed motion for class certification are Hannspree products mentioned.Kershenbaum's appellate briefs simply ignore this issue on which the trial court based its order denyingclass certification. Kershenbaum merely reiterates that Buy.com has all the necessary information aboutthe individuals who purchased "Connect3D rebate eligible products." The problem is that Kershenbaumnever states whether the purchasers of Hannspree products are within this group.*fn2"'Ascertainabilityis required in order to give notice to putative class members as to whom the judgment in the action willbe res judicata.' [Citations.] The representative plaintiff need not identify the individual members of theclass at the class certification stage in order for the class members to be bound by the judgment.[Citation.] As long as the potential class members may be identified without unreasonable expense ortime and given notice of the litigation, and the proposed class definition offers an objective means of identifying those persons who will be bound by the results of the litigation, the ascertainabilityrequirement is met." (Medrazo v. Honda of North Hollywood (2008) 166 Cal.App.4th 89, 101.)Kershenbaum argues that even if the class was not adequately defined, the trial court had the discretionto redefine the class, quoting from Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908,916: "Furthermore, if necessary to preserve the case as a class action, the court itself can and shouldredefine the class where the evidence before it shows such a redefined class would be ascertainable."Although Kershenbaum does not state it explicitly, presumably he means to argue that the trial courtshould have removed the reference to Hannspree products from the class definition in the proposedorder.We agree with Kershenbaum that the class was defined in the memorandum of points and authoritiesand the court's reason for denying the motion was legally erroneous. The trial court did not findanything in that definition that made the class unascertainable. If the definition of the class contained inthe proposed order did not match that in the memorandum of points and authorities, the trial courtcould have deleted the Hannspree reference from the proposed order, directed the prevailing party todraft an order consistent with the court's ruling, or drafted its own order. In failing to do so, and insteaddenying the renewed motion for class certification for an improper reason, the court erred. We reversethe order; the trial court is directed to issue a new order finding ascertainability of a class defined in itsdiscretion. The trial court has the discretion to order additional briefing and a hearing in order to do so.Buy.com also notes that the proposed class definition did not account for the CLRA's limitation toconsumers. This argument was not raised in the trial court. Even if we were to consider it, it does notaffect our opinion.

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