Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. N.J.: Consumer denied leave to amend fraudulent omission claim against cellphone manufacturer, (Jun 8, 2015)

By Linda O’Brien, J.D., LL.M.

In an action by a consumer against an electronic manufacturer for alleged omissions regarding the functionality of certain cellular telephones, the consumer failed to allege sufficient facts that the claimed omission was a material fact in his purchasing decision, a magistrate judge in the federal district court in Newark has ruled in an unpublished opinion. Thus, the consumer’s motion for leave to file an amended complaint was denied (Liebler v. LG Electronics U.S.A., Inc., June 5, 2015, Dickson, J.).

In June 2014, David Liebler filed a complaint, alleging that the business practices of consumer electronics manufacturer LG Electronics regarding the marketing and sale of certain of its cellular telephones constituted a violation of New Jersey’s Consumer Fraud Act (NJCFA). Liebler asserted that LG engaged in deceptive practices and made fraudulent misrepresentations and omissions regarding the available internal storage space and the ability to store various applications on removable media of the phones, which run the Android operating system. Liebler filed an amended complaint to add Greg Carey as a named plaintiff and class representative.

After the defendants moved to dismiss the amended complaint, the plaintiffs filed a motion for leave to file a second amended complaint (SAC). The proposed SAC replaced the named plaintiffs with Michael Criaris and revised the NJCFA claim to seek relief solely for fraud by omission.

To establish a claim under the NJCFA, a plaintiff must show unlawful conduct by the defendant, an ascertainable loss, and a causal relationship between the unlawful conduct and the ascertainable loss. In the SAC, plaintiff Criaris stated that he reviewed the packaging for an Optimus L9 model phone in a retail store and purchased it. He alleged that LG’s continued representations that its phones had unencumbered internal storage demonstrated an intent to conceal by failing to inform consumers what the amount of storage they were actually getting.

According to the court, Criaris failed to allege facts on what he believed about the phone prior to purchasing the device or how he developed those beliefs. While the SAC contained allegations derived from websites and instruction manuals for older LG phones, Criaris did not allege that he reviewed any of those materials or that they influenced his understanding of the phone’s capabilities. He also failed to allege that he had any pre-purchase information regarding the phone’s internal storage capacity or ability to utilize removable storage media.

Moreover, the packaging materials for the Optimus L9 phone did not convey any information regarding the phone’s internal storage space or whether the phone could utilize removable media. Since Criaris did not have any information regarding the challenged features of the phone, he could not show that LG’s failure to provide information regarding specific limitations of those features was material to his purchasing decision. Thus, Criaris failed to plead sufficient facts to establish an unlawful act under the NJCFA, the court determined.

The case is No. 14-cv-03500.

Attorneys: Stefan Louis Coleman (Law Offices of Stefan Coleman PLLC) for David Liebler. Jonathan Samuel Hershberg (Rottenberg Lipman Rich PC) for LG Electronics U.S.A., Inc.

Companies: LG Electronics U.S.A., Inc.

Cases: StateUnfairTradePractices NewJerseyNews