Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—NDCal: Class Action Against Sears for Misrepresenting Its Tire Warranty Not Certified , (Apr 23, 2013)

By Jody Coultas, J.D.

The federal district court in Oakland declined to certify a class of California consumers who purchased tires from Sears Roebuck and Company, alleging that Sears’ failed to disclose the terms and conditions of its tire warranties in violation of the California Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA) (Faulk v. Sears Roebuck and Company, April 19, 2013, Rogers, Y.). The one issue common to the class did not predominate over the individualized issues.

Sears provides a limited tire warranty, at no charge to purchasers, that covers manufacturing defects and a specified number of miles. The purported class representative alleged that Sears refused to honor the warranty unless purchasers could show that they had rotated their tires at specific intervals and had a wheel alignment at least once per year. These conditions were not included in the warranties, and Sears argued that it did not have a policy of rejecting warranty coverage based on these conditions.

Federal Rule of Civil Procedure 23(b)(3) requires that questions of law or fact common to the class predominate over any individualized questions and that a class action was the superior method of adjudication.

The issue common to the class was whether Sears disclosed all terms and conditions in its standard written warranties, according to the class. An issue is common to a class if, when answered by one class member, it advances the resolution of the claims of all class members. In this instance, proof that there were terms that Sears failed to disclose to one class member would establish the same for every other class member. Sears’ argument that the claim would fail had no bearing on the certification issue.

Although there was one common issue, the court found that the individualized issues would predominate over the common issue. The CLRA claim would require inquiries into whether each class member relied on the alleged misrepresentations. Although class-wide reliance may be implied where the omitted terms were uniformly made to all members, reliance could not be implied because the purchaser failed to show that the alleged omissions were uniform.

The purchaser also could not show that Sears’ unlawful acts under the UCL were susceptible to common proof, according to the court. The UCL unfair prong is violated by acts that offend public policy or that are immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers. According to the purchaser, Sears violated the unfair prong by systematically breaching its contract with consumers. However, the purchaser could not show that a systematic breach of contract is susceptible to common proof or that a systematic breach can be resolved on a class-wide basis.

The case is No. 11-CV-02159 YGR.

Attorneys: Robert Gordon Padrick (Law Offices of Robert G. Padrick, A PLC) for Kevin Faulk. Bruce Alan Khula (Squire Sanders LLP) for Sears Roebuck and Company.

Companies: Sears Roebuck and Company

Cases: StateUnfairTradePractices CaliforniaNews