Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Consumers’ false and deceptive advertising claims against Temper-Sealy can proceed, (Apr 18, 2014)

By Linda O’Brien, J.D., LL.M.

In a putative class action against a leading bedding manufacturer, a group of bedding purchasers sufficiently alleged false and deceptive advertising claims in relation to the company’s statements of the content and quality of its bedding products, according to the federal district court in San Francisco. Additionally, the purchasers’ claims were not barred by the statute of limitations (Dodson v. Temper-Sealy International, Inc., April 16, 2014, Tigar, J.).

Michael Dodson and other consumers filed a putative class action against bedding manufacturer Tempur-Sealy International, alleging that the company made misrepresentations in the marketing and sale of mattresses, pillows, and other bedding products containing Tempur brand material, in violation of California’s Consumer Legal Remedies Act (CLRA), Unfair Competition Law (UCL), False Advertising Law (FAL), and various state consumer protection laws. Specifically, the consumers alleged that Tempur-Sealy misrepresented that its Tempur-Pedic products were formaldehyde free, allergen resistant, and hypoallergenic, when testing revealed that the products contained formaldehyde and other compounds that could trigger allergy and asthma symptoms. Tempur-Sealy moved to dismiss.

CLRA. In denying the defendant’s motion to dismiss, the court held that the consumers plausibly alleged that Tempur-Sealy had a duty to disclose the true chemical contents of its products and the possible ramifications of the chemicals present in Tempur material. A plaintiff may bring a claim under the CLRA for failure to disclose a material fact if the defendant has a duty to disclose such fact. The consumers sufficiently alleged that Tempur-Sealy had exclusive knowledge of the chemical contents of its products and the volume and nature of customer complaints of allergic symptoms and reactions. They also plausibly alleged that Tempur-Sealy actively concealed the contents of the products through advertisements that attributed the product odor to the manufacturing process and that they would not have purchased the products or paid less for them if they had known the products’ true contents.

Additionally, the court noted that the consumers sufficiently pleaded with specificity, as required by Federal Rule of Civil Procedure 9(b), the timeframe of the misrepresentations, misrepresentation about the contents and quality of the products, the likelihood that misrepresentations would deceive a reasonable consumer, consumer reliance on the misrepresentations in purchase decisions, and injury caused by the misrepresentations.

FAL. The consumers plausibly alleged a cognizable cause of action, duty to disclose, and actual reliance under the FAL in the false or misleading advertising claims. Whether advertising is false or misleading under the FAL is determined from the perspective of a reasonable consumer. Since the consumers alleged that the misrepresentations and false statements were part of an extensive and long-term advertising campaign, they were not required to plead that each consumer relied on the advertisements at issue.

UCL. The consumers sufficiently stated a claim under the UCL. The UCL prohibits any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising. The consumers’ allegations that Tempur-Sealy’s misrepresentations concerning the content of their products led the consumers to purchase the products that triggered their allergies and caused other harm were sufficient to satisfy the “unfairness” prong of the UCL. Moreover, since the consumers sufficiently complied with the heightened pleading requirements of Federal Rule of Civil Procedure 9(b), their claims were sufficient to satisfy the “fraudulent” prong of the UCL.

Statute of limitations. Finally, the consumers’ claims were not barred by the statute of limitations. A claim brought under the CLRA must be commenced no more than three years from the date of the commission of the act or practice, and claims under the FAL and UCL must be brought within four years after the cause of action accrued. The discovery rule and doctrine of fraudulent concealment tolled the applicable statutes of limitations, according to the court. The consumers alleged that they did not discover Tempur-Sealy’s alleged wrongdoing at the time of purchase since the advertisements attributed the product odor to the manufacturing process and Tempur-Sealy had exclusive knowledge of the contents of their products. The consumers could not have reasonably known the true contents of the products at the time of purchase and did not have the opportunity to discover the alleged wrongdoing until subsequent scientific testing exposed Tempur-Sealy’s misrepresentations and omissions that the products contained potentially harmful chemicals. Thus, the claims were not time-barred, the court concluded.

The case is No. 13-cv-04984-JST.

Attorneys: Angelique Adams (Shipman and Wright, LLP) for Michael Dodson. Aaron Lewis Renfro (Call & Jensen PC) for Tempur-Sealy International, Inc. and Tempur-Pedic North America, LLC.

Companies: Tempur-Sealy International, Inc.; Tempur-Pedic North America, LLC

Cases: Advertising StateUnfairTradePractices CaliforniaNews