Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—CalCtApp: Class Certification Denied in Action Against Automobile Club over Membership Renewal Practices, (Jun 10, 2013)

By Tobias J. Gillett, J.D., LL.M.

A California trial court did not abuse its discretion in concluding that a member of an automobile club could not represent a class to pursue claims that the automobile club’s practice of backdating membership renewals violated California’s Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA) claims, a California appellate court has ruled (Thompson v. Automobile Club of Southern California, June 7, 2013, Moore, E.).

According to the complaint, the Automobile Club of Southern California’s practice of back-dating late renewals of membership in the automobile club to the member’s original expiration date if the renewal occurred within 95 days resulted in late-renewing members receiving less than a full year of services. According to the Auto Club, the practice amounted to a grace period, during the first 30 days of which the member would remain eligible for services. The member’s eligibility for services during the rest of the 95-day period would be subject to the discretion of the Auto Club’s agents.

In July 2009, Thompson filed a lawsuit against the Auto Club, alleging that its practices constituted violations of the UCL and the CLRA, among other claims. The trial court denied his motion for class certification, and Thompson appealed.

The appellate court explained that the UCL and CLRA have “substantially similar” requirements for class certification. Among other requirements, both require “the potential class to be sufficiently numerous as to make individual adjudication impractical, although the CLRA does not explicitly require an ascertainable class.” “[F] or all practical purposes,” both also required “the predominance of common issues of law or fact, the typicality of the class representative’s claims, and the adequacy of the class representative.” However, the requirement that the class action procedure be superior to other means of adjudicating the case only applied to the UCL claims.

Ascertainable class. The appellate court concluded that the trial court did not err in finding that the class was not ascertainable. The court explained that the question whether a class is ascertainable “is determined by examining (1) the class definition, (2) the size of the class, and (3) the means available for identifying the class members,” and that class certification could be denied to classes that were overbroad and did not have a means for excluding those who should not be included in the class.

Here, class members could not recover under the UCL if “received benefits during the delinquency period, or were told about the Auto Club’s renewal practices,” and could not recover under the CLRA “[i]f they were not economically damaged.” Substantial evidence showed that these conditions applied “to a significant part of the putative class.” A significant number of people would have either no right to recover, either because they suffered no damages or because they had been informed about the Auto Club’s renewal practices. Although Thompson claimed that only “shoddy recordkeeping” prevented the Auto Club from being able to ascertain class members who “received no services during their delinquency periods,” “renewed on a date where renewing their membership was more expensive, on a pro rata basis, than paying the $20 new membership fee,” and “were unaware of the renewal policy,” the court noted that Thompson did not cite any authority requiring Auto Club to keep those records.

Predominance of common questions of law and fact. The court also concluded that the trial court properly determined that individual issues predominated over common ones. Thompson had argued that the issues of breach and damages could be decided on a classwide basis, relying on the theory “that any expiration less than 365 days after a renewal was a breach of contract and necessarily caused damages.” The court determined that individual issues regarding whether individuals received any benefits during the delinquency period, whether the practice saved them money over paying the $20 new member fee, and whether they were aware of the renewal policy “undermine[d] any benefits of class treatment.”

Typicality of the claims. The trial court did not abuse its discretion in concluding that Thompson’s claims were not typical of the class he sought to represent, according to the court. Thompson had alleged that he did not receive a disclosure of the renewal practices in 2005 and 2007, but the court noted that when he received notification in connection with his 2008 renewal he chose to proceed anyway. This fact “seriously call[ed] into doubt whether the disclosure was material to him or would have been material in earlier years.”

Superiority of the class action procedure. Finally, the court concluded that even if Thompson could show, contrary to the district court’s decision, that a class action was the superior method of resolving the litigation, he still would not have met the requirements for class certification. “Superiority alone is insufficient,” the court noted, and the trial court “therefore properly exercised its discretion when it denied class certification.

The case is No. G046759.

Attorneys: Robyn C. Crowther (Caldwell Leslie & Proctor) and Jeffrey I. Carton (Meiselman, Denlea, Packman, Berg & Eberz) for Stephen Troy Thompson. Phillip R. Kaplan (Manatt, Phelps & Phillips) for Automobile Club of Southern California.

Companies: Automobile Club of Southern California

Cases: StateUnfairTradePractices CaliforniaNews