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Sanchez v. Wal-Mart Stores

August 5, 2008

ELIZABETH SANCHEZ, FOR HERSELF AND ON BEHALF OF THOSE SIMILARLY SITUATED, PLAINTIFFS,
v.
WAL-MART STORES, INC., DOREL JUVENILE GROUP, INC., AND DOES 1 THROUGH 25, INCLUSIVE, DEFENDANTS.



ORDER DENYING MOTION FOR SUMMARY JUDGMENT

Plaintiff Elizabeth Sanchez ("Sanchez") brought a putative class action, on behalf of herself and others similarly situated, against Wal-Mart Stores, Inc. ("Wal-Mart") and Dorel Juvenile Group, Inc. ("DJG") (collectively "Defendants") claiming that DJG manufactured and Wal-Mart sold defective strollers that she and other class members bought. Defendants now move for summary judgment pursuant to Rule 56(c) of the Federal Rules of Civil Procedure. Sanchez opposes the motion. For the reasons set forth below, Defendants' motion is DENIED.

I. UNDISPUTED FACTS

In June 2005, Sanchez bought a Dorel model 01-834 PGH stroller ("stroller") from Wal-Mart at Florin Road in Sacramento, California. Sanchez contends that she relied on Defendants' representations that the stroller was safe, easy to use, of merchantable quality, and fit for its intended and reasonably foreseeable uses. Sanchez further contends that Defendants failed to adequately warn about a "dangerous, unguarded and unmitigated pinch point" that creates an "unreasonable potential for harm." Sanchez claims that were it not for Defendants false and misleading statements, in the form of written representations and material omissions, she would not have purchased the stroller. According to Sanchez, once she learned of the stroller's potential for harm, she had to replace it, and therefore suffered harm.

On October 2, 2006, Sanchez filed a class action lawsuit against Defendants in state court. On November 16, 2006, Defendants removed the case to this Court on the basis of diversity. On January 18, 2008, Sanchez filed a second amended complaint seeking equitable relief, including restitution and injunctive relief in the form of a recall. Specifically, the second amended complaint alleges three state law claims for relief: (1) violation of the Unfair Competition Law, Business & Professions Code §§ 17200 et seq. ("UCL"); (2) violation of the Consumers Legal Remedies Act, Civil Code §§ 1750 et seq., ("CLRA"); and (3) breach of the implied warranty of merchantability. On December 3, 2007, Defendants moved for summary judgment on the basis that Sanchez lacks standing to bring this action because she has not suffered "injury in fact." Alternatively, Defendants argue that dismissal of this action is appropriate because Sanchez destroyed key evidence in this case, namely her stroller and its accompanying documents.

II. OPINION

A. Legal Standard

Summary judgment is appropriate if "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). An issue of fact is "genuine" if it constitutes evidence with which "a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). If the moving party meets its burden, the burden then shifts to the nonmoving party to go beyond the pleadings and by his or her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial. Celotex, 477 U.S. at 324. "If the nonmoving party fails to produce enough evidence to create a genuine issue of material fact, the moving party wins the motion for summary judgment." Nissan Fire & Marine Ins. Co. v. Fritz Companies, Inc., 210 F.3d 1099, 1102 (9th Cir. 2000). "But if the nonmoving party produces enough evidence to create a genuine issue of material fact, the nonmoving party defeats the motion." Id. Summary judgment is appropriate if, viewing the evidence and the inferences therefrom in the light most favorable to the nonmoving party, there are no genuine issues of material fact in dispute and the moving party is entitled to judgment as a matter of law. Valandingham v. Bojorquez, 866 F.2d 1135, 1137 (9th Cir. 1989).

B. Standing Defendants Argue that Sanchez Lacks Standing to Bring this Action Because She has not Suffered "Injury in Fact"

Standing under Article III is limited to those plaintiffs that have suffered an "injury in fact"-an invasion of a legally protected interest which is: (1) concrete and particularized; and (2) actual or imminent, not conjectural or hypothetical.

See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).

The party invoking federal jurisdiction bears the burden of establishing standing. Id. at 561. Similarly, both the UCL and CLRA protect only plaintiffs who have suffered harm "as a result of" defendant's unlawful or unfair practices. Cal. Bus. & Prof.Code § 17204; Cal. Civ.Code § 1780.

California's UCL prohibits unfair competition, defined to include "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." Cal. Bus. & Prof.Code § 17200. Any person may pursue representative claims or relief on behalf of others only if the claimant meets the standing requirements of § 17204 and complies with California Code of Civil Procedure § 382.*fn1 Cal. Bus. & Prof.Code § 17203. A plaintiff meets the standing requirements of § 17204 if she "has suffered injury in fact and has lost money or property as a result of such unfair competition." Cal. Bus. & Prof.Code § 17204; see also Buckland v. Threshold Enterprises, Ltd., 155 Cal.App.4th 798, 814 (2007) (to demonstrate "injury in fact" under the UCL a plaintiff must satisfy the standing requirements of the United States Constitution). To have standing to assert a claim under the UCL, the plaintiff must have spent money, lost money or property, or been denied money to which he or she was entitled, due to unfair business practices. O'Brien v. Camisasca Automotive Mfg., Inc., 161 Cal.App.4th 388, 399 (2008); see also Walker v. USAA Casualty Ins. Co., 474 F.Supp.2d 1168, 1172 (E.D. Cal. 2007) (to have standing to assert a UCL claim, plaintiff must show either prior possession or a vested legal interest in the money or property allegedly lost).

The CLRA bans certain methods of competition that the California legislature has deemed to be "unfair" or "deceptive." Cal. Civ.Code §§ 1750 et seq. Under the CLRA, certain "unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer are unlawful." See Cal. Civ.Code § 1770(a). In particular, the relevant portion of the act bans: "Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection which he or she does not have." Cal. Civ.Code § 1770(a)(5).

Any consumer who suffers any damage as a result of the use or employment by any person of the unlawful conduct enumerated under § 1770 may bring an action to recover or obtain actual damages, injunctive relief, restitution of property, punitive damages, or any other relief the court deems proper. Cal. Civ.Code § 1780(a). The consumer may also bring a class action on behalf of "other consumers similarly situated." Cal. Civ.Code § 1781(a). To have standing to assert a claim under the CLRA, a plaintiff must have ...


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