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Utility Consumers' Action Network v. Certification Sprint Solutions

June 23, 2009


The opinion of the court was delivered by: Robert J. Bryan United States District Judge


This matter comes before the Court on Plaintiffs' Motion for Class Certification (Dkt. 69). The Court has considered the relevant documents and the remainder of the file herein and heard oral argument on June 9, 2009.


On November 21, 2007, the Plaintiffs filed a class action complaint against the Defendants alleging, among other things, violations of California's Consumer Protection Acts. (Dkt. 1). The Plaintiff filed a Second Amended Complaint on May 9, 2008, that alleged seven causes of action:

(1) violation of the California Business and Professional Code §17200 (also known as the "Unfair Competition Law" or "UCL"); (2) Breach of Contract; (3) violation of the California Civil Code §1750, et seq. (also known as the "Consumer Legal Remedies Act" or "CLRA"); (4) Declaratory Relief; (5) violation of the Federal Communications Act, 47 U.S.C. §201(b); (6) Unjust Enrichment; and (7) Cramming under the California Public Utilities Code §2890. (Dkt. 30). On July 10, 2008, Plaintiffs' fifth cause of action regarding violations of the Federal Communications Act was dismissed. (Dkt. 37). On April 17, 2009, the Plaintiffs' filed this motion to certify a class in this action (Dkt. 69). On June 9, 2009, arguments were heard regarding the class certification.

The first question to be resolved is whether a nationwide class is appropriate under Fed.R.Civ.P. 23(a), and/or 23(b). Those rules are attached hereto for ease of reference.


1. Nationwide Class Certification under 23(b)(3)

The Plaintiffs assert that certification of a nationwide class is appropriate in this case because the prospective class meets all the requirements of Fed.R.Civ.P. 23(a) and it is warranted under Rule 23(b)(3). The Plaintiffs argue that there is no jurisdictional bar to certifying a nationwide class. Additionally, the Plaintiffs argue that California law applies to non-California residents because there is a presumption California law applies absent a showing to the contrary under California choice of law principles, and that California law does not conflict with other state laws. The Plaintiffs also argue that certifying a nationwide class would be a superior method of adjudication because the common issue is the misbilling practices of the Defendants, and there is little or no interest by the prospective members of the nationwide class to individually control the prosecution of the action. Finally, the Plaintiffs argue that the trial of the class claims would be manageable.

The Defendants disagree and respond that a nationwide class is inappropriate, arguing that there are individual issues that predominate; that various states will enforce several provisions in the terms and conditions of relevant contracts in various ways; that California statutes cannot be applied to consumers outside of California; and that Plaintiffs' proposed trial plan is unworkable. The Defendants also argue, among other things, that any class period could not start before the effective date of the "Benny/Lundberg Class Settlement."

Class actions are governed by Federal Rule of Civil Procedure 23. Zinser v. Accufix Research Institute, Inc., 253 F.3d 1180, 1186 (9th Cir. 2001). The party seeking class certification bears the burden of demonstrating that the party has met each of the four requirements of Rule 23(a) and at least one of the requirements under Rule 23(b). Id. (citing Hanon v. Dataproducts Corp., 976 F.2d 497 (9th Cir. 1992)). Before certifying a class, the Court must conduct a "rigorous analysis" to determine whether the party seeking certification has met the prerequisites of Rule 23. Id. (citing Valentino v. Carter-Wallace, Inc., 97 F.3d 1227 (9th Cir. 1996)). The Court has broad discretion to certify a class, as long as it is within the framework of Rule 23. Id. (citing Doninger v. Pacific Northwest Bell, Inc., 564 F.2d 1304 (9th Cir. 1977)).

Under Fed.R.Civ.P. 23(b), a class action may be maintained if Rule 23(a) is satisfied and the court finds that the question of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.

Fed.R.Civ.P. 23(b)(3). Factors pertinent to finding whether a class certification is appropriate include: class members' interests in individually controlling the prosecution or defense of separate actions; the extent and nature of any action already begun; the desirability of concentrating an action in a particular forum; and the difficulties of managing a class action. Fed.R.Civ.P. 23(b)(3)(A)(B)(C) & (D).

"When common questions present a significant aspect of the case and they can be resolved for all members of the class in a single adjudication, there is clear justification for handling the dispute on a representative rather than on an individual basis." Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). "Variations in state law do not necessarily preclude a 23(b)(3) action, but class counsel should be prepared to demonstrate the commonality of substantive law applicable to all class members." Id. at 1022. The party seeking certification of a nationwide class bears the burden of demonstrating a suitable and realistic plan for trial of the class action. See Zinser, 253 F.3d at 1189. Where the complexities of class action treatment outweigh the benefits of considering common issues in one trial, class action treatment is not the superior method of adjudication. See Id. at 1192.

The elements of Fed.R.Civ.P. 23(a) are not in serious dispute and will not be discussed in this Order. The Court will focus its attention on the requirements of Fed.R.Civ.P. 23(b). In this case, the Court is convinced that the Plaintiffs have not met their burden of proving that applying California statutes to a nationwide class would be appropriate; that certification of a nationwide class is the superior method of adjudication, that a nationwide class is manageable, nor that the other matters pertinent under Fed.R.Civ.P. 23(b)(3)(A)(B)(C) and (D) have been proven to support a national class.

The Plaintiffs first argue that Phillips Petroleum, Co. v. Shutts, et al., 472 U.S. 797, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985), is applicable in this situation and supports the Plaintiffs' assertion that a nationwide class is appropriate. They argue that Phillips allows this Court to apply California law to non-residents. The Court disagrees.

Phillips stands for the proposition that "[t]here can be no injury in applying forum state law if it is not in conflict with that of any other jurisdiction connected with this suit." Phillips, 472 U.S. 797 at 816; provided that constitutional consideration of due process and full faith and credit are met. Id. at 822.

In Phillips, only eleven states were involved; in this case there would be fifty states (and maybe some districts, territories and commonwealths) involved. Furthermore, the main state law differences in Phillips amounted to interest rates, unlike this case, where plaintiffs want to apply multiple California statutes (and presumably the California Administrative Regulations and common law that have interpreted and applied those statutes in California) to a national class. Plaintiffs position is particularly questionable in light of the statement of California Appellate Court Judge Bamattre-Manoukian in Wershba v. Apple Computer Inc., 91 Cal. App. 4th 224, 242 (2001): "California's consumer protection laws are among the strongest in the country." If that is true, it seems unfair to apply those laws across the country in jurisdictions less concerned with consumer protection.

Phillips did not apply Kansas law to other connected states, but remanded the case for determination of the appropriate law to apply.

Furthermore, the Phillips court stated that "for a State's substantive law to be selected in a constitutionally permissible manner, that State must have a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair." Phillips, 472 U.S. at 818. The Court must consider the expectation of the parties in considering fairness. Id. at 822. The Plaintiffs have failed to show that California has a significant aggregation of contacts that create a California interest in applying its law nationally. The Plaintiffs have not shown that application of the California law to non-residents is neither arbitrary nor unfair. It is reasonable to assume that when non-California-residents entered into contracts with the Defendants, they were availing themselves of the laws of their states, the defendant's home states or the state that was designated in the contract, rather than California statutory law.

The Plaintiffs also cite Hanlon to support their assertion that a nationwide class is appropriate. The procedural stance of that case was substantially different from the case before this Court. In Hanlon, the case involved a settlement class certification on the basis of a settlement agreement. In this case, the Plaintiffs are seeking certification of a class for all litigation purposes, over strong objections. While Hanlon is instructive, it ...

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