Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Motion to decertify class action against Safeway denied, (May 15, 2015)

By Michael Menzhuber, J.D., LL.M.

A motion to decertify a class in a breach of contract action against grocery store operator Safeway, Inc. relating to the prices it charges for home delivery was denied by the federal district court in San Francisco (Rodman v. Safeway Inc., May 14, 2015, Tigar, J.).

Background. Michael Rodman (Rodman) filed his complaint against Safeway Inc. (Safeway), a grocery store company, alleging that the prices it charged for its online delivery service were higher than those charged in his local store. At the time of the complaint, Rodman filed a motion to certify a class for the purpose of bringing a breach of contract action against Safeway.

In opposing certification, Safeway argued that it would assert affirmative defenses of waiver/affirmation, consent and estoppel because, according to Safeway, “certain customers learned of the additional charges and continued to shop with Safeway.com after so learning.” Because these affirmative defenses would require individualized inquiry, Safeway asserted that the class could not satisfy the predominance requirement of Federal Rule of Civil Procedure 23(b)(3). The court, however, determined that Safeway’s affirmative defenses would not require so much individualized inquiry and granted the certification.

The court subsequently considered Rodman’s and Safeway’s cross-motions for summary judgment which disputed whether Safeway’s contract with its home delivery customers had promised price parity between its online and brick-and-mortar stores. After the court ruled on the motion in favor of Rodman, Safeway filed a motion to decertify the class.

Decertification of Class. Safeway argued that, since the court had already resolved the common issues of the contract’s interpretation and breach, common questions no longer predominated over Rodman’s individual damage issues. Therefore, according to Safeway, the court should reconsider whether certification was appropriate because individualized inquiry would be required to adjudicate Safeway’s affirmative defenses.

The court noted that it had already considered, and found unpersuasive, Safeway’s affirmative defenses argument in resolving the question of predominance under Rule 23(b)(3). It reasoned that, to the extent that it might be required to determine whether online customers, who learned of the price markup, might have waived their contract rights by continuing to shop online, it could subdivide the class as appropriate.

The court also determined that the resolution of certain common issues by summary judgement did not mean that individual issues now predominated the case. According to the court, it would be premature to decertify the class before determining whether those class members who continued to use Safeway’s online shopping service after learning of the price markup waived their right of recovery.

The court rejected Safeway’s argument that a damages model had not been proposed for the class because Rodman had consistently stated that the measure of damages should be the difference between the prices Safeway charged in the store and the prices Safeway charged online. The court also rejected Safeway’s argument that class members received certain benefits due to the markup and should be estopped from claiming the full amount of the markup as damages. Again, the court took the position that this question could be determined on a class-wide basis.

The court noted that, despite Safeway’s arguments with respect to the merits of its affirmative defenses, the only issue before the court was whether the individualized facts underlying the defenses so predominate as to require decertification. The court concluded that, because it did not find any defenses requiring individualized factual inquiry would have any effect on the recovery of any class members, certification in the case continued to be appropriate.

The case is No. 11-cv-03003-JST

Attorneys: James C. Shah (Shepherd, Finkelman, Miller & Shah, LLP) for Michael Rodman. Anna S. McLean (Sheppard Mullin Richter & Hampton LLP) for Safeway Inc.

Companies: Safeway Inc.

Cases: Advertising CaliforniaNews