Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—MdCtApp: Tender of Damages to Class Representative Did Not Moot Claims , (Jan 25, 2013)

By Jody Coultas, J.D.

A vehicle purchaser’s Maryland Consumer Protection Act (CPA) claim for putative damages was not rendered moot by an offer of compensatory monetary relief by a car dealership that allegedly misrepresented its warranties, according to a Maryland appellate court (Frazier v. Castle Ford, Ltd., January 24, 2013, McDonald, R.).

The purchaser alleged that the dealership sold him an extended warranty for his 2003 Ford Explorer on or about December 23, 2004, stating that the extended warranty would last for 48 months from the date of purchase or for 100,000 miles, whichever occurred first. However, the warranty was calculated from the “build date” of the automobile and actually expired more than two years earlier than the purchaser was led to believe. The purchaser filed the CPA claims for misrepresentation of the warranty on behalf of himself and a class of similarly-situated purchasers.

After the complaint was filed, the dealership paid to extend the warranty approximately four years from the date it was sold. The purchaser also received a check for the amounts he had paid for repairs during the period that his car would have been covered by the warranty that he had intended to purchase. Based on that tender, which was declined, the dealership argued that the purchaser could not prosecute a class action. The circuit court accepted that reasoning and denied class certification on the ground that the tender of individual damages disqualified the purchaser from representing the class.

Class Action

Tender of individual relief to the putative class representative does not moot a class action if the individual has not had a reasonable opportunity to seek class certification, including any necessary discovery, according to the court. In order to state a class action and act as the class representative, the representative’s claim must be typical of the class and the representative must fairly and adequately protect the interests of the class. The dealership argued that the purchaser was not typical of the class because he no longer had any interest in common with the class after being made whole by the tender.

Where a class representative can still file a timely motion for certification, the representative may continue to represent the class until a court decides the class certification issue. If certified, the case may continue despite full satisfaction of the individual’s claim because an offer of judgment to the named representative fails to satisfy the demands of the class. On remand, the circuit court must determine whether the purchaser had an adequate opportunity to file a certification motion and whether a class should be certified.

Punitive Damages

An offer of compensatory monetary relief following the filing of a complaint does not automatically render a claim for punitive damages moot, according to the court. The circuit court held that an award of punitive damages was inappropriate based on the tendered compensatory relief, and awarded summary judgment with respect to the remainder of the claim for punitive damages. However, that ruling must rest on the facts of this case measured against the law of punitive damages. If the circuit court determines that the purchaser pled facts supporting a finding of fraud accompanied by actual malice, then a tender equal to the demanded compensatory damages would fall short of the maximum award. Although the purchaser may have been remedied, the claim has not necessarily been fully satisfied. A tender of compensatory damages alone may not achieve the deterrent effect for which punitive damages are intended as a tender is merely an offer of settlement.

Attorney Fees

The purchaser was properly awarded attorney fees by the circuit court under the CPA, according to the court. In awarding attorney fees in a law suit brought as a class action under the CPA, a circuit court may take into account the extent to which the efforts of counsel obtained beneficial results in correcting practices that may have affected others, even if some of counsel’s efforts occurred after a tender of individual compensatory relief to the plaintiff.

The dissenting judges found the better approach to resolving the issues in this case is to determine whether the purchaser was entitled to punitive damages, and then, whether the class action should have been dismissed, because the appropriate focus was whether the entire relief sought had been tendered.

The case is No. 93.

Attorneys: Leslie Gladstone (The Law Offices of Leslie L. Gladstone, P.A.) for Anthony Frazier. Douglas Biser (Mudd, Harrison & Burch, L.L.P.) for Castle Ford, Ltd.

Companies: Castle Ford, Ltd.

Cases: ConsumerProtection StateUnfairTradePractices MarylandNews