Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—CDCal: Alleged Misrepresentations Regarding Heat of Crock-Pot Exterior Did Not Support California Consumer Protection Law Claims, (Jan 23, 2013)

By Tobias J. Gillett, J.D., LLM.

The purchaser of a Crock-Pot manufactured by Sunbeam Products Inc. did not adequately allege violations of California’s Consumer Legal Remedies Act, Unfair Competition Law, and False Advertising Law with respect to Sunbeam’s alleged misrepresentations regarding the safety and quality of the Crock-Pot, the federal district court in Los Angeles has ruled (Rice v. Sunbeam Products, Inc., January 7, 2013, Snyder, C.).

The purchaser, Miatta Rice, alleged that she purchased a Sunbeam Crock-Pot and later suffered a burn from touching the stainless steel exterior of the product while it was in use. She alleged that the temperature the exterior of the Crock-Pot reached rendered it unreasonably risky for consumers to use in their homes, and that Sunbeam knew of the defect and failed to correct it. Rice claimed that statements Sunbeam made in connection with the Crock-Pot misrepresented the safety and quality of the product.

Rice filed a putative class action complaint alleging that Sunbeam had violated California’s Consumer Legal Remedies Act, Unfair Competition Law, and False Advertising Law, among other claims. Sunbeam moved to dismiss the complaint.

Consumer Legal Remedies Act

The court explained that the CLRA prohibits “unfair or deceptive acts” in connection with the sale of goods and services to consumers, including “deceptive representations” in connection with the sale of goods. Rice alleged that Sunbeam violated the CLRA by representing through its advertising, packaging, and Owner’s Guide that the Crock-Pot was “fit for household use and could be left unattended for extended periods of time,” while failing to disclose that the surface of the Crock-Pot could reach dangerously hot temperatures. Rice alleged that Sunbeam’s customer service had admitted to some consumers that the Crock-Pot was defective, and hence that Sunbeam knew of the defect.

The court concluded that Rice had not stated a claim under the CLRA. The court found that Rice had failed to allege what misrepresentations she had relied on with adequate particularity to meet the pleading requirements of Federal Rule of Civil Procedure 9(b). Rice had not identified the location of the representations that the Crock-Pot was “safe for household use,” and the only representation she had identified was the statement that the Crock-Pot “cooks all day—while the cook’s away.” Rice had to allege where she encountered the representations, and that she relied on them, in the court’s view.

Moreover, the court was “unconvinced” that Rice had pled “actionable representations.” The court could not determine how a reasonable consumer would view “cooks all day—while the cook’s away” or “safe for household use” as misrepresentations regarding the temperature that the Crock-Pot would reach. Furthermore, the Owner’s Guide included cautionary statements such as an instruction to keep the product “6 inches clear on all sides.”

The court also determined that Rice’s allegations that Sunbeam knew of the Crock-Pot’s defects were “boilerplate and unsubstantiated by factual detail.” Therefore, the court dismissed her CLRA claim.

Unfair Competition Law

The court explained that the UCL prohibits “unlawful, unfair or fraudulent business act[s] or practice[s] and unfair, deceptive, untrue or misleading advertising.” Rice claimed that Sunbeam violated the “unlawful” prong by committing various unlawful acts, including violations of the CLRA; “violated the fraudulent prong by making material misrepresentations and omissions regarding the safety and reliability of the device,” and “violated the fraudulent prong by allegedly marketing slow cookers with a defective heating component and failing to adequately investigate consumer complaints.”

The court initially determined that, since it had determined that none of Rice’s underlying statutory violations withstood Sunbeam’s motion to dismiss, her claim regarding violation of the “unlawful” prong also failed to withstand the motion to dismiss. Moreover, since the court had determined that Rice had failed “to adequately allege how a reasonable consumer would likely be deceived by [Sunbeam’s] alleged representations,” her claim under the “fraudulent” prong also failed.

The court noted a split in authority regarding the appropriate standard for claims under the “unfair” prong between courts that limited it to “conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws,” and courts that found conduct unfair when it “offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.”

The court determined that Rice had failed to state a claim under either standard. Rice’s allegation that Sunbeam “impaired competition” by preventing consumers “from making fully informed decisions about whether to buy a Crock-Pot” was “premised upon the same alleged representations” that the court had already determined “to be wanting,” and thus did not meet the “antitrust” standard. The court had also already found that Rice’s claims that Sunbeam knew of the defect and failed to remedy it were not adequately alleged, and she provided “no factual support” for a claim that the harm to consumers caused by Sunbeam’s conduct outweighed the benefits associated with the sale of the Crock-Pot. Therefore, Rice had not stated a claim under the “public policy” standard.

False Advertising Law

The court explained that a violation of the FAL requires “that a defendant publicly disseminated advertising that [was] false or misleading, and which the defendant knew or reasonably should have known was untrue or misleading.” Rice based her FAL claims on her assertions that Sunbeam had failed to disclose the hazard posed by the Crock-Pot’s exterior heat, had misrepresented the Crock-Pot’s safety, had misrepresented its lack of defects, and had known or should have known that its statements were false or misleading. As with Rice’s CLRA and UCL claims, the court determined that Rice had not pleaded her FAL claims with sufficient particularity to survive a motion to dismiss, and had not adequately alleged Sunbeam’s knowledge of the defect.

Rice did not oppose Sunbeam’s motion to dismiss a claim for breach of contract, and the court also dismissed claims for breach of express warranty and negligent misrepresentation. Therefore, the court dismissed her complaint, with leave to amend it.

The case is No. CV 12-7923-CAS-(AJWx).

Attorneys: Christopher P. Ridout (Ridout, Lyon & Ottoson LLP) for Miatta Rice. Elizabeth Anne Kurtz (Hewitt Wolensky LLP) for Sunbeam Products, Inc.

Companies: Sunbeam Products, Inc.

Cases: StateUnfairTradePractices ConsumerProtection Advertising CaliforniaNews