Consumer | CALIFORNIA CLASS ACTION LAW

January 4, 2011

Judge Whyte of the Northern District Certifies Class Action Against Dell Related to Alleged Misrepresentation of Discount

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The Northern District granted in part a class certification motion in Brazil v. Dell Inc., No. C-07-01700 RMW, 2010 WL 5387831 (N.D. Cal. Dec. 21, 2010) (slip op.).

Background

On June 15, 2006, plaintiff Steven Seick purchased directly from defendant Dell Inc. (“Dell”) through its online purchasing process a Dell Dimension B 110 desktop computer (“Dimension Desktop”) and some associated peripheral Dell products. Id. *1. Dell allegedly misrepresented to Seick that the base price of the Dimension Desktop reflected a $50 savings from Dell’s regular price for that computer, but during the three months prior to Seick’s purchase, Dell’s average offered sales price for the Dimension Desktop model was allegedly even lower than the amount paid by Seick. Id. Consequently, rather than having received any discount, Seick asserts that he paid $1.49 in excess of the true regular sales price for the Dimension Desktop. Id. In addition, although Dell represented to Seick that the offer for the $50 savings would expire on June 22, 2006, Dell in fact continued to make the offer until October 12, 2006. Id. Plaintiff Chad Brazil made similar, but not entirely the same allegations. Id.

Brazil and Seick brought a class action claiming that Dell deceives customers by creating the illusion of discounts and savings through false discounts from false former prices. Id. Former prices purportedly mislead purchasers when products have not been sold at non-marked down or “regular” prices with sufficient regularity. Id.

Plaintiffs in their First Amended Complaint alleged various common law claims, claims under California Bus. & Profs. Code sections 17500 and 17200, et seq., and claims under Cal. Civ.Code section 1750, et seq. Id. After several motions to dismiss, motions to strike, and amendments to the complaint, plaintiff’ moved to certify the class alleging claims under California law. Id. *2.

Class Definition

Plaintiffs offered the following proposed class definition: “All persons or entities who are citizens of the State of California who on or after March 23, 2003, purchased via Dell’s Web site Dell-branded products advertised with a represented former sales price (i.e., a “Slash-Thru” price or a “Starting Price”) as indicated and set forth [in attached schedules, with limited exclusions].” Id. Read the rest of this entry »

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October 19, 2010

Second District Holds That Purchasing a Product for the Purposes of Litigation Does Not Constitute Injury in Fact Sufficient to Confer Standing Under the UCL

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The Second District Court of Appeal found that Burger King’s “Transform Your Way” promotional sweepstakes was not a lottery under Penal Code section 319, and that the game pieces were slot machines or punchboards under Penal Code sections 330b and 330c. McVeigh v. Burger King Corp., B220964, 2010 WL 4056857 (Cal. Ct. App. 2d Dist. Oct. 18, 2010). The court also held that purchasing a product for the purposes of litigation did not constitute injury in fact sufficient to confer standing under the Unfair Competition Law. Id. *1.

Background

Plaintiff went to a Burger King restaurant and asked an employee for a free sweepstakes game piece. Id. And although the game piece prominently indicated that no purchase was necessary, appellant alleged he was told he could not receive a free chance for a prize unless he bought a value meal. Id. Plaintiff purchased a value meal and removed a pull-tab game piece from the soda and french fry containers. Id. The game piece required him to scratch off only one of two concealed areas or the game piece would be voided. Id. Plaintiff-appellant filed a complaint against Burger King, asserting that Burger King had illegally conducted a lottery in violation of section 319, and it had distributed slot machines or punchboards in violation of section 330c. Id. Burger King’s business acts or practices allegedly caused appellant and the public unspecified injury, as to which appellant claimed entitlement to relief. Id. Read the rest of this entry »

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August 24, 2010

Judge William Alsup of Northern District Rejects Preemption Argument in Federal Flood Insurance for Home-Equity Line Class Action

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In Hofstetter v. Chase Home Finance, LLC, No. C 10-01313 WHA, 2010 WL 3259773 (N.D. Cal. Aug. 16, 2010) (slip. op.), a putative class action involving federal flood insurance requirements for home-equity lines of credit, defendants JP Morgan Chase Bank, N.A. and Chase Home Finance, LLC moved to dismiss all federal and state claims alleged.

Defendants argued that they were required under the National Flood Insurance Act of 1968 (“NFIA”) to purchase $175,000 worth of flood insurance in connection with plaintiff Sheila Hofstetter’s home-equity line of credit, resulting in plaintiff being billed $1,575 in insurance premiums. Read the rest of this entry »

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August 13, 2010

District Judge William Alsup Issues Order in Gutierrez v. Wells Fargo Bank Class Action After 2 Week Bench Trial

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District Judge William Alsup issued an order in Gutierrez, et al. v. Wells Fargo Bank, N.A., — F.Supp.2d —-, 2010 WL 3155934 (N.D. Cal. Aug. 10, 2010), a certified consumer class action challenging hundreds of millions of dollars in overdraft fees imposed on depositors of Wells Fargo Bank, N.A. through allegedly unfair and fraudulent business practices.

Judge Alsup issued his decision following a two-week bench trial.

The essence of the case is that Wells Fargo has devised a bookkeeping device to turn what would ordinarily be one overdraft into as many as ten overdrafts, thereby dramatically multiplying the number of fees the bank can extract from a single mistake. The draconian impact of this bookkeeping device has then been exacerbated through closely allied practices specifically “engineered”–as the bank put it–to multiply the adverse impact of this bookkeeping device. These neat tricks generated colossal sums per year in additional overdraft fees, just as the internal bank memos had predicted. The bank went to considerable effort to hide these manipulations while constructing a facade of phony disclosure.

Judge Alsup held that these “manipulations were and continue to be unfair and deceptive in violation of Section 17200 of the California Business and Professions Code.” The Court ordered restitution enjoined the bookkeeping device under Cal. Bus. & Prof. Code section 17203.

By CHARLES H. JUNG

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