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Porath v. Logitech Inc.

United States District Court, N.D. California

November 18, 2019

JAMES PORATH, individually and on behalf of all others similarly situated, Plaintiff,
v.
LOGITECH, INC., Defendant.

          ORDER DENYING CLASS CERTIFICATION

          WILLIAM ALSUP, UNITED STATES DISTRICT JUDGE

         INTRODUCTION

         In this consumer putative class action, plaintiff moves to certify two classes under Rule 23(b)(3). For the reasons stated herein, however, the proposed class representative, a three-time convicted felon, cannot be trusted as a fiduciary to lead any class. The motion for class certification is Denied.

         STATEMENT

         Defendant Logitech, Inc. manufactures, distributes, and sells a computer speaker system called the “Logitech Z200.” The complaint alleges that Logitech falsely and deceptively advertised its Z200 speakers as containing four drivers when two of those “drivers” did not independently produce sound and were merely parasitic. In brief, speaker systems contain a component called a “driver, ” which is an electromagnetic coil that turns modulated electrical signals into sound waves. So, the greater number of drivers, the louder, perhaps richer, the sound (Dkt. No. 1 ¶¶ 1, 3-5, 30, 32, 41, 42).

         Another component in the Z200 looks like a driver, but does not independently produce sound, called the “passive driver” (by Logitech) or the “passive radiator” (by plaintiff). This component merely allows sound to resonate within a set frequency range. The essential legal question is whether Logitech engaged in fraud when it advertised this passive component as a “driver” (id. ¶¶ 4, 35).

         Plaintiff's law firm discovered this discrepancy, advertised for a plaintiff, and James Porath answered the call. He owns a small business specializing in electronics repairs. He purchased Logitech Z200 speakers from a third-party website called Newegg.com. Plaintiff soon “discovered” that the speakers at issue here did not contain four drivers, but instead contained two “active” drivers and two “passive” drivers (Porath Decl. ¶¶ 3-5, 9) (Balabanian Decl. ¶ 3) (Dkt. Nos. 57-2; 61-1).

         In May 2018, plaintiff filed the instant putative class action, alleging three claims: (i) common law fraud; (ii) violation of Section 17200 of the California Business and Professions Code; and (iii) violation of Section 17500 of the California Business and Professions Code. Plaintiff also sought to represent two consumer classes under Rule 23(b)(2) and Rule 23(b)(3). First, he sought to represent a nationwide class of “[a]ll individuals in the United States who purchased Logitech's Z200 stereo sound system.” Second, he sought to represent a California subclass of “[a]ll members of the [n]ationwide [c]lass that are domiciled in the State of California.” In July 2018, defendant answered the complaint (Dkt. Nos. 1 ¶ 47; 18).

         In August 2018, two days before the initial case management conference, plaintiff moved to be appointed interim class counsel so that the parties could discuss class-wide settlement (Dkt. No. 25). Here, this order pauses to provide context. To protect absent class members and to assist counsel in understanding the factors the Court considers in evaluating proposed class settlements, the undersigned judge has long provided guidance to both sides at the outset of any proposed class action. One aspect of this guidance has regulated the timing of class-wide settlement discussions. Specifically, the order herein prohibited any discussion of class settlement prior to the certification of claims worthy of class treatment and identifying the scope of any class. Prior to formal class certification, there is a risk that class claims will be discounted, not only on the merits (which is proper) but also by the risk that class certification might be denied (which is improper or at least adverse to absent class members). Or, to quote directly from the order (Dkt. No. 16 at 5) (internal citation omitted) (emphasis added):

Absent class members, of course, should be subject to normal discounts for risks of litigation on the merits but they should not be subject to a further discount for a risk of denial of class certification, such as, for example, a denial based on problems with a proposed class representative, including a conflict of interest or a prior criminal conviction. This is a main reason the Court prefers to litigate and vet a class certification motion before any class settlement discussions take place. That way, the class certification is a done deal and cannot compromise class claims. Only the risks of litigation on the merits can do so.

         Once a class is certified, counsel for the class can negotiate with the strength of a certification order in hand, all to the good of the class. Nevertheless, the order also advised that “[i]f counsel believe settlement discussions should precede a class certification, a motion for appointment of interim class counsel must first be made” (ibid.). This guidance order issued herein in June 2018.

         Despite this express reference to a prior criminal conviction, plaintiff's counsel neglected to vet their client's criminal history and moved to be appointed as interim class counsel. The parties even stipulated to reasons why they believed pre-class certification settlement discussions might have been appropriate at that moment (Dkt. No. 24 at 2). In considering the arguments from the parties' motion at the initial case management conference, the Court explained the problem as follows (Dkt. No. 30 at 3:14-23, 4:5-6) (emphasis added):

See, look, here's the problem. It's called collusive settlements. I've had the following scenario. You apply to be - you bring a class action. The other side realizes that you've got a convicted felon. I'm making this up hypothetically. Or there's some other reason that you don't want the judge to know. Then you go do a collusive deal, come back, and say: oh, Judge, we got it off your calendar, no problem. Great. And for X dollars to the class and a huge, much bigger amount to the lawyer, you're going to settle the case . . . . So we are going to find out if you have got a legitimate class first.

         So, again, the Court flagged the danger in discussing settlement on a class-wide basis when there is a plaintiff with a criminal history. To be clear, the judge had no clue that James Porath was, in fact, a convicted felon. The judge, though, had seen that scenario enough in the past to use it as an illustration. The Court ended by urging counsel on both sides to do their homework and specifically told counsel: “I want to go through the normal Rule 23 process. I want to see if the plaintiff is a legitimate ...


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