Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—S.D. Ga.: California and Texas purchasers of Frigidaire washing machines obtain class certification for unfair trade practice, warranty claims, (Oct 15, 2013)

By Tobias J. Gillett, J.D., LL.M.

The federal district court in Augusta, Georgia has granted certification to classes of California and Texas purchasers of Frigidaire washing machines asserting California Unfair Competition Law (UCL), Texas Deceptive Trade Practices-Consumer Protection Act (DTPA), and state and Magnuson-Moss Act express and implied warranty claims over alleged defects in the machines that caused them to emit odors (Terrill v. Electrolux Home Products, Inc., October 11, 2013, Wood, L.).

Electrolux Home Products, Inc. manufactures and sells home appliances, including Frigidaire front-load washing machines. According to the purchasers, a defect in the convoluted bellows employed in certain models of those washing machines caused the machines to accumulate mold and mildew and emit an odor, allegedly resulting in damage to clothes.

Ascertainability. The court found the purchasers’ proposed definition of the classes as “All persons and entities in the states of California and Texas who purchased, other than for resale, during the previous four (4) years any of the Washing Machines that were equipped with a convoluted bellows” to be sufficiently ascertainable. Electrolux’s serial numbers, dates of manufacture, customer information, and other data could be used to determine which purchasers fell within the proposed classes.

Breadth. The class definitions were also not overbroad, according to the court, even though they included all purchasers of the affected machines, whether or not they had experienced a problem with their machines or had sought warranty service for them. The purchasers contended that all machines sold with the convoluted bellows were defective, and hence a class that included all purchasers of the machines was “well-tailored to the allegations” in the complaint. Moreover, the class members’ requests for warranty service were likely irrelevant to many of their claims.

Numerosity. The proposed classes satisfied the requirement that the class must be so numerous that joinder of all members was impracticable because Electrolux had received more than 1,500 product registration cards from Texas purchasers, and more than 1,700 from California purchasers, and had distributed more than 10,000 machines in each state during the relevant time period.

Commonality. The classes met the requirement that they present “questions of law or fact common to the class.” The claims included common issues that were capable of classwide resolution and that were central to each class member’s claims, including whether the machines contained a common defect in their bellows design; whether the defect proximately caused—or inevitably would cause—biofilm, mold, or mildew to grow; whether Electrolux adequately warned consumers about the propensity for biofilm, mold, or mildew growth; and whether Electrolux knew about the defect at the point of sale.

Typicality. The claims of the representative plaintiffs were typical of the claims of the putative classes. All claims were based on the same legal theories and arose from the same event, pattern, or practice. Electrolux’s assertion that the claims of two of the plaintiffs were subject to unique defenses did not render the claims atypical, because “the presence of unique defenses does not necessarily defeat typicality,” and “if an affirmative defense against the class representatives becomes a distraction from the larger issues affecting the proposed class as a whole, a new class representative can take the class representative’s place.”

Adequacy. The class representatives shared the interests of the members of the proposed class members, and would adequately represent them. Moreover, the purchasers’ counsel were “qualified, experienced, and generally able to conduct the proposed litigation.”

Predominance

Questions of law or fact common to the proposed class members predominated over any questions affecting only individual members for each of the purchasers’ claims.

Express warranty. For the purchasers’ claims for breach of express warranty under California’s Song-Beverly Consumer Warranty Act, common issues existed with respect to “(1) whether the Washing Machine’s bellows had a design defect, (2) whether the defect reduced the value of the Washing Machine, (3) whether the express warranty covered the design defect at issue in this case, (4) whether each class member was required to give pre-suit notice, and (5) whether [Electrolux’s] prior notice of the design defect satisfied or nullified any alleged notice requirement.” These issues predominated over “factual inquiries into (1) the notice provided by each individual putative class member (if such an inquiry is required at all) and (2) [Electrolux’s] efforts to cure, and efficacy in curing, the defect after notice was provided.”

Implied warranty of merchantability. With respect to the purchasers’ claims for breach of the implied warranty of merchantability under California law, common issues existed regarding “(1) whether the Washing Machine’s bellows had a design defect, (2) whether that design defect rendered the Washing Machines unmerchantable, (3) whether an implied warranty is breached where a latent defect exists during the warranty period but is discovered after the warranty period expires, (4) whether the implied warranty of merchantability covered the design defect at issue in this case, and (5) whether the latent defect reduced the value of the Washing Machines.” These issues predominated over “factual inquiries—assuming such inquiries are even required—concerning (1) the types of individualized problems that each putative class member encountered with his machine, (2) when those problems arose, and (3) whether the putative class members continued to use their machines.”

Similarly, common questions for the plaintiff’s implied warranty claims under Texas law existed with respect to “(1) whether [Electrolux] sold the washing machines, (2) whether the washing machines’ bellows had a design defect at the time of sale, (3) whether that design defect rendered the Washing Machines unmerchantable, (4) whether the defect prevented the purchasers from receiving the benefit of their bargain, (5) whether each class member was required to give pre-suit notice, and (6) whether [Electrolux’s] prior knowledge of the design defect satisfied or nullified any alleged notice requirement.” These issues predominated over “the factual inquiries into the notice provided by each individual putative class member (if such an inquiry is required at all).”

Magnuson-Moss Act. Since a court analyzing a claim under the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act will look to the substantive law of the applicable state to determine whether the claim was viable, common issues predominated over individualized ones for that claim as well.

California Unfair Competition Law. Each element of the purchasers’ unfair business practices claim under the UCL was susceptible to classwide proof, according to the court. Common issues existed regarding “whether a consumer is substantially injured when the consumer’s Washing Machine soils, rather than cleans, clothing and whether a consumer is injured by a household appliance that cultures mold, mildew, and foul odors”; whether there is any countervailing benefit to consumers or competition”; and “whether the consumers could reasonably have avoided their alleged injuries.”

Common issues also predominated over individualized ones with respect to one representative purchaser’s fraudulent practices claim under the UCL as well. Common issues existed regarding “(1) what [Electrolux] said or did not say to consumers, (2) whether [Electrolux’s] alleged omissions regarding the design were material, and (3) whether [Electrolux’s] alleged omissions were likely to deceive the public.” Moreover, the California courts had “repeatedly held that relief under the UCL including restitution is available without individualized proof of deception, reliance, and injury.” Therefore, the issues of reliance and injury did not foreclose the purchaser’s UCL class action.

Texas Deceptive Trade Practices-Consumer Protection Act. Each element of one representative purchaser’s DTPA claim was also susceptible to classwide proof, according to the court. Common issues existed with respect to “whether the class members were consumers and whether [Electrolux] made a misrepresentation that caused the class members’ injuries.” Moreover, the purchasers could show their reliance on Electrolux’s failure to disclose the defect and the consequences of the defect “through classwide proof that they purchased Machines to clean and freshen their clothes rather than to soil and odorize them.”

Affirmative defenses. Electrolux’s assertion that the purchasers’ claims were subject to “individualized inquiries regarding a number of affirmative defenses” also did not demonstrate that individualized issues predominated over common questions, according to the court. The court noted that “unique affirmative defenses rarely predominate where a common claim is established.” Moreover, although Electrolux listed many possible affirmative defenses, it failed to raise those defenses in its answer, or to show how any of the defenses predominated over the common issues. Finally, the court observed that “the presence of individualized damages issues does not prevent a finding that the common issues in the case predominate.”

Superiority. A class action would be superior to other methods for fairly and efficiently adjudicating the purchasers’ claims, in the court’s view. “A single, coordinated proceeding [was] superior to hundreds of discrete and disjointed suits addressing the same facts and legal issues,” the claims of each class member were “so small that it would cost them much more to litigate an individual case than they could ever hope to recover in damages,” concentrating the litigation in the present court was “logical and desirable,” and the proposed classes “appear[ed] to be manageable, as they each contain[ed] discreet legal issues involving individual state and federal law.”

The case is No. CV 108-030.

Attorneys: Charles A. McCallum, III (McCallum, Hoaglund, Cook & Irby, LLP) for Michael Terrill. Benjamin H. Brewton (Tucker, Everitt, Long, Brewton & Lanier, PC) for Electrolux Home Products, Inc.

Companies: Electrolux Home Products, Inc.

Cases: StateUnfairTradePractices GeorgiaNews