Antitrust Law Daily Wrap Up, ADVERTISING—Cal. App.: Class certification correctly rejected in Sears 'Made in U.S.A.' suit, (Apr 27, 2016)

By Greg Hammond, J.D.

A trial court in Los Angeles did not abuse its discretion in denying consumers’ motion for class certification in a suit alleging that Sears Roebuck & Co. falsely advertised its line of Craftsman tools and products as made in the United States, the California court of appeals in Los Angeles has concluded. In affirming the lower court’s order, the appellate court agreed that the proposed class was overbroad, lacked commonality, and was not ascertainable (Santamarina v. Sears Roebuck & Co., April 26, 2016, Aldrich, R.).

Three consumers filed a putative class action, alleging that Sears violated California’s Unfair Competition Law (UCL) and False Advertising Law (FAL) by mislabeling, misrepresenting, and falsely advertising that its line of Craftsman tools and products was made in the United States, when many of the products were made outside the United States or contained significant foreign-made components. The plaintiffs appealed the lower court’s order denying class certification.

Overbroad class definition. The appellate court agreed that the proposed class was overbroad, the proposed class lacked commonality, and that common issues of fact did not predominate, because the proposed class definition did not require that putative class members saw false or misleading Craftsman advertising. Not all Craftsman ads made the “Made in the U.S.A.” claim, not all Craftsman products were foreign made, and some ads that made the “Made in the U.S.A.” claim were true, according to the court. It further reasoned that only where a plaintiff saw a misrepresentation that a particular Craftsman product, or all Craftsman products, were U.S.A.-made, and then purchased a foreign-made Craftsman product, could he or she possibly have suffered injury.

Ascertainability. The trial court also did not abuse its discretion in concluding that the class was not ascertainable because class members whose tools were unmarked would not know whether their products fell within the class definition, according to the appellate court. The evidence supported the trial court’s ruling because there were more than 900 different product classes and over 10,000 discrete products in the Craftsman line; there were more than 40 million California customers who purchased Craftsman items during the relevant period; and Sears did not maintain a database of historical data containing country of origin information by product for each year, or maintain purchase information for all consumers of Craftsman products. Further, in order to determine the country of origin for a particular product, Sears would need to conduct a tool-by-tool analysis, starting with examination of the product’s “stock keeping unit” or SKU.

The appellate court consequently found that purchasers of Craftsman tools that were made outside the United States, or that contain components made outside the United States, over a 10-year period, were not a readily-identifiable group. Further, the evidence suggested that many purchasers would be unable to determine whether their product was made in or outside the United States—or contained a component made, manufactured, or produced outside the United States—if that product was either mislabeled or unlabeled, or if the foreign-made internal component was hidden from sight. Although some class members could self-identify, this did not mean the class could be found ascertainable as a whole.

The case is No. B246705.

Attorneys: Robert M. Zabb (Motley Rice LLC) for Guillermo Garcia Santamarina. Jeffrey E. Scott (Greenberg Traurig LLP) for Sears Roebuck & Co.

Companies: Sears Roebuck & Co.

Cases: Advertising StateUnfairTradePractices CaliforniaNews