Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—9th Cir.: Home Depot customer class action dismissed, (Feb 4, 2014)

By Jody Coultas, J.D.

A Home Depot customer could not state California Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA) class action claims against Home Depot USA, Inc. because individualized issues predominated, the U.S. Court of Appeals in San Francisco has held (Berger v. Home Depot USA, Inc., February 3, 2014, Gould, R.).

The customer alleged that, in violation of California consumer protection laws, Home Depot automatically imposed a ten percent surcharge for a damage waiver on tool rentals in its California stores, and failed to inform customers of their ability to decline the surcharge.

After a district court denied the customer’s motion for class certification, the customer stipulated with Home Depot to dismiss the action with prejudice, noting his intent to appeal the denial of class certification. Home Depot contested his ability to appeal. The district court dismissed the action and the customer appealed.

Because the customer alleged that he took part in one transaction, he was not a member of two of the three proposed subclasses. The customer could not state claims on behalf of subclasses to which he did not belong, according to the court.

The district court properly found that individualized issues precluded certification of the customer’s UCL class action claims, according to the court. Certification of UCL claims is available only to those class members who were actually exposed to the business practices at issue. The customer did not allege that all of the members of the proposed class were exposed to Home Depot’s alleged deceptive practices. Home Depot used five different contracts that included damage waivers. The different contracts meant that the court would have to conduct an independent legal analysis to determine whether the language and design of each contract alerted customers that the damage waiver was an optional purchase. The proposed subclass was also properly dismissed because the customer did not allege that each individual was exposed to the same misrepresentations or deceptions.

Because the consumer’s CLRA class claim required individualized inquiries, the court found that the class was properly dismissed. The issue of whether the allegedly misleading statements were actually made to the consumers in the class could not be proven on a class-wide basis because the contracts used by Home Depot contained distinct terms. The question of whether a material misrepresentation was made to the entire class required individualized determinations.

The case is No. 11-55592.

Attorneys: Taras P. Kick (The Kick Law Firm) for Benjamin Berger. S. Stewart Haskins II (King & Spalding LLP) for Home Depot USA, Inc.

Companies: Home Depot USA, Inc.

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