Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: UCL ‘unlawful’ claim survives Home Depot’s motion to dismiss, (Sep 12, 2016)

By Michael Menzhuber, J.D., LL.M.

A consumer’s putative class action claims against Home Depot for fraud, negligence, breach of contract, breach of warranty, and violation of California’s False Advertising Law (FAL) were dismissed by the federal district court in Oakland, California. The court dismissed the claims, which arose from her purchase of kitchen cabinets and cabinet installation, as well as her claims under the "fraudulent practice" and "unlawful" prongs of California’s Unfair Competition Law (UCL), for failure to state a claim. The court, however, allowed her UCL claim under the "unfair" prong to proceed (Coffen v. Home Depot U.S.A. Inc., September 9, 2016, Hamilton, P.).

Ellen Coffen purchased kitchen cabinets and cabinet installation from an unidentified Home Depot store after being told by an unnamed sales associate that she could hire kitchen cabinet installers through Home Depot and that they would ensure that the cabinets fit. The cabinets did not fit and Coffen, after Home Depot would not help coordinate the replacement, exchanged the cabinets and scheduled a new installation which she was not charged for.

Coffen alleged that, as a result of Home Depot’s actions, she suffered various harms in the form of "months of delay." She filed a putative class action that asserted violation of the Magnuson-Moss Warranty Act (MMWA), as well as causes of action under California law for: (1) fraud and deceit and negligent misrepresentation; (2) negligence and negligent infliction of emotional distress; (3) breach of contract and breach of the implied covenant of good faith and fair dealing; (4) breach of express and implied warranty; and (5) violation of California’s False Advertising Law (FAL) and Unfair Competition Law (UCL). Home Depot responded by filing a motion to dismiss for failure to state a claim.

Fraud/negligent misrepresentation. The court dismissed Coffen’s fraud and negligent misrepresentation claims with prejudice because she: (1) failed to state the name of the sales associate that advised her or the particular store where the purchase was made; (2) there was no reason that Home Depot would have had superior knowledge of the interaction between Coffen and the sales associate; and (3) the allegedly fraudulent statement by the sales associate did not pertain to a past or existing material fact.

FAL. The court dismissed Coffen’s FAL claim because there were no: (1) facts tending to show the sales associate’s "advertisement" with respect to installation services was false when it was made; and (2) particularized allegations supporting any attempt to defraud by Home Depot or the sales associate.

Negligence claims. The court dismissed Coffen’s negligence and negligent infliction of emotional distress claims because she failed to establish that Home Depot owed her a duty independent from the contract with her for the purchase and installation of the kitchen cabinets.

Contract claims. The court dismissed Coffen’s breach of contract claims because it was not clear from the complaint as to: (1) what specific terms of the contract were breached; and (2) whether Home Depot’s breach was the result of a failure to measure correctly, failure to provide the correct cabinets, or some other deficiency. The court, however, granted leave to amend because it found that the contract claims did provide a possible legal remedy for her.

Warranty claims. The court dismissed Coffen’s breach of warranty claims because her complaint failed to make clear: (1) which California law she was claiming under, thereby making it impossible to determine whether her express warranty allegations were sufficient or whether the warranty must be written; (2) whether her legal theory sounded in express warranty or implied warranty, and if the latter, whether her claim was a violation of the implied warranty of fitness or the implied warranty of merchantability; and (3) whether the warranty was part of the contract for installation/measurement services or the contract for the cabinets themselves. Because Coffen’s state law breach of warranty claims were dismissed, her MMWA claim was also dismissed. The court did, however, granted Coffen leave to amend both her state law breach of warranty claims and her MMWA claim.

UCL. The court: (1) dismissed the "fraudulent practice" prong of the UCL because there were no particularized allegations plausibly establishing scienter or that the sales associate’s statement was false when made; and (2) dismissed, with leave to amend, the "unlawful practice" prong because it was dependent upon Coffen’s FAL and federal warranty claims which were dismissed. The court, however, denied Home Depot’s motion to dismiss the "unfair" prong because, given the vague nature of the balancing test, Coffen’s claim was sufficient for the pleading stage.

The case is No. 16-cv-03302-PJH.

Attorneys: Stephen Noel Ilg (Hoffman Employment Lawyers) for Ellen Coffen. Sidney Stewart Haskins, II (King & Spalding LLP) for Home Depot USA Inc.

Companies: Home Depot USA Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews