Opinion
Case No. CV 12-cv-04457-SC
07-27-2015
SANDRA MCKINNON and KRISTEN TOOL, individually and on behalf of others similarly situated, Plaintiffs, v. DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. d/b/a DOLLAR RENT A CAR; DOLLAR RENT A CAR, INC.; DTG OPERATIONS, INC. d/b/a DOLLAR RENTA A CAR; et al., Defendants.
ORDER DENYING WITHOUT PREJUDICE PLAINTIFFS' MOTION FOR CLASS CERTIFICATION
Plaintiffs Sandra McKinnon and Kristin Tool (collectively "Plaintiffs") bring this putative class action against Dollar Thrifty Automotive Group, Inc., d/b/a Dollar Rent A Car, Dollar Rent A Car, Inc., and DTG Operations, Inc., d/b/a Dollar Rent A Car, which are now wholly-owned by Hertz Global Holdings, Inc. (collectively "Dollar" or "Defendants"). Plaintiffs, customers of Defendants, allege in their third amended complaint that Defendants defrauded Plaintiffs and other customers in California and Oklahoma. ECF No. 79 ("TAC"). Plaintiffs now move to certify two plaintiff classes, a "California Class" and an "Oklahoma Class." ECF No. 92 ("Mot.") at 1. The motion is fully briefed. Pursuant to Civil Local Rule 7-1(b), the Court finds this matter appropriate for disposition without oral argument. For the reasons set forth below, Plaintiffs' motion is DENIED. Defendants' motion to exclude the expert testimony of Donald Lichtenstein in support of Plaintiffs' motion for certification (ECF No. 105) is also DENIED as moot.
ECF Nos. 110 ("Opp'n"); 120 ("Reply); 126 ("Sur-Reply").
I. BACKGROUND
A. Facts
Dollar is one of the nation's largest car rental companies. In addition to providing car rentals, Dollar offers customers different types of liability coverage and damage waivers. This case focuses on the sale of three of those products in California and Oklahoma: Loss Damage Waiver ("LDW"), Supplemental Liability Insurance ("SLI"), and roadside assistance service ("RoadSafe") (collectively "Add-On Products").
LDW is an agreement with the customer that relieves the customer of financial responsibility for unintentional damage to the rental car. In California, the sale of LDW is regulated by Section 1936 of the California Civil Code. Oklahoma does not have laws or regulations that specifically address LDW.
SLI is a liability insurance product that provides coverage against claims by third parties arising from accidents involving the rental car. In California, SLI is subject to California insurance law. See Cal. Ins. Code § 1758.86.
RoadSafe provides assistance in the event of problems that may arise with the rental car that are caused by the customer, such as draining the battery, locking a key in the car, or running out of gas.
Many customers' personal automobile insurance and/or credit cards already provide protections similar to Dollar's LDW offering, subject to various limits and deductibles. In part for that reason, California requires that car rental companies provide customers with oral and written disclosures concerning the potential overlap. The disclosures must be made "in the rental contract or holder in which the contract is placed and, also, in signs posted at the place, such as the counter, where the renter signs the rental contract." Cal. Civ. Code 1936(g). In addition, the rental car company must provide oral disclosures, and the customer's receipt of those disclosures must be demonstrated by initialing a document. Id. Finally, "[a] rental company that disseminates . . . an advertisement containing a rental rate [is required to] include in that advertisement a clearly readable statement of the charge for a damage waiver and a statement that a damage waiver is optional." Id. at (h)(i).
The disclosure must include the following:
(A) the nature of the renter's liability . . . (B) the extent of the renter's liability . . . (C) the renter's personal insurance policy or the credit card used to pay for the car rental transaction may provide coverage for all or a portion of the renter's potential liability, (D) the renter should consult with his or her insurer to determine the scope of insurance coverage, including the amount of the deductible, if any, for which the renter is obligated, (E) the renter may purchase an optional damage waiver to cover all liability, subject to whatever exceptions the rental company expressly lists that are permitted under subdivision (f), and (F) the range of charges for the damage waiver.Cal. Civ. Code § 1936(g).
Dollar trains its agents in California to disclose orally that LDW is optional and may overlap with other sources of coverage. ECF Nos. 107-2 ("Capsanes Decl.") ¶¶ 21, 31; 107-4 ("Hayes Decl.") ¶ 7; 107-3 ("Lainez Decl.") ¶ 14; 107-5 ("Raman Decl.") ¶ 8. Dollar's agents, however, cannot advise customers on the specific terms of any third-party product that might be duplicative of the coverage provided by Dollar's LDW or other Add-On Products. Capsanes Decl. ¶ 21; Hayes Decl. ¶ 8; Lainez Decl. ¶ 10; Raman Decl. ¶ 9. Customers at Dollar's California locations also have to confirm their product elections and that they have been provided oral disclosures on a console known as a "SigCap."
After confirming product elections, the customer signs the SigCap console and then receives a print-out of the rental agreement, which states the estimated cost of the rental, including line-items for all optional products, and a "rental jacket" containing further terms and conditions. Lainez Decl. ¶ 20; Raman Decl. ¶ 13; Hayes Decl. ¶ 13; Perring Decl. ¶ 11. Dollar's California locations also include written disclosures on the rental agreement and rental jacket as required by Civil Code Section 1936. ECF No. 110-14 ("Selco Decl.") ¶ 9. In addition to those disclosures, Dollar's California locations provide the same disclosures on signs, placemats, brochures, and pamphlets. Capsanes Decl. ¶ 34; Lainez Decl. ¶¶ 22-23; Raman Decl. ¶¶ 11-13; Hayes Decl. ¶¶ 14-15; ECF No. 126-7 ("Lainez Dep.") at 61:23-65:19; ECF No. 126-5 ("Hayes Dep.") at 46:12-47:6; ECF No. 126-1; ECF No. 126-2; ECF-No. 126-3; ECF No. 126-4. Plaintiffs, however, have presented evidence showing that such disclosures may sometimes be absent at certain locations. See ECF Nos. 120-14; 120-15.
Dollar's customers make reservations with Dollar through multiple channels, including through Dollar's website, third-party travel services (such as Priceline or Expedia), over the telephone, or by walking into a Dollar location. Regardless of how they make reservations, customers are first presented with the opportunity to purchase Add-On Products when they go to pick up their car rental at the Dollar rental counter. The conversations between customers and agents at the Dollar rental counter vary depending on the customer's questions, the types of products customers are interested in purchasing, and other factors. Perring Decl. ¶ 8; Capsanes Decl. ¶ 26; Hayes Decl. ¶¶ 4, 9; Lainez Decl. ¶¶ 4, 6-7; Raman Decl. ¶¶ 5-6.
Sales of Add-On Products are a significant part of Dollar's revenue. ECF No. 94-10, Ex. 14. Dollar agents are trained to sell Add-On Products to as many customers as possible using a variety of persuasive techniques, and they are paid commissions, in part, based on such sales. See ECF No. 94-8, Ex. 5; ECF No. 94-9, Ex. 8. For example, agents are instructed on how to overcome customer objections such as "I'm fully covered" and "My credit card covers me" by noting that the customer may still want to purchase Dollar's coverage so that the customer's insurance or credit card company does not have to get involved in the event coverage is needed. Id.
B. The Named Plaintiffs
Plaintiff Sandra McKinnon rented a car at Dollar's Tulsa, Oklahoma airport location from March 29 to April 13, 2012. Mot. at 12. Ms. McKinnon's partner booked the reservation for the car on Ms. McKinnon's behalf through the Southwest Airlines website. TAC ¶ 13. Ms. McKinnon herself did not view any of the information presented during the reservation process. ECF No. 107-12, Ex. B ("McKinnon Dep.") at 41:6-11, 43:19-22. Ms. McKinnon alleges that, once at Dollar's rental counter, an agent tried to up-sell her on a variety of products, including LDW, but that she orally declined those offers. TAC ¶ 14; McKinnon Dep. at 62:23-63:17. She then signed an electronic signature pad and initialed the areas the Dollar agent allegedly indicated to her were to be checked to decline Add-On Products. TAC ¶ 14. Ms. McKinnon was then handed a folded copy of a vehicle rental contract inside a rental contract jacket. Id. The information regarding the additional fees for LDW was printed on the contract, allegedly in tiny font with faded ink. Id. Dollar charged Ms. McKinnon for LDW, but not for any other Add-On Product. Mot. at 14-15. After returning her rental car, Ms. McKinnon sent Dollar a letter demanding a return of the money she paid for LDW, but Dollar rejected her request. Id.
Plaintiff Kristen Tool rented a car at Dollar's San Francisco airport location form August 31 to September 9, 2012. Mot. at 15-16. Ms. Tool's sister made the reservation for the rental on a travel broker's website, and Ms. Tool herself did not participate in making the reservation. ECF No. 107-12, Ex. C ("Tool Dep.") at 19:10-20. Ms. Tool alleges that, once at the Dollar counter, she orally declined to purchase LDW and SLI and checked the required boxes on the SigCap in order to decline those options. TAC ¶ 16. Nevertheless, Dollar charged her $231 for those products. Id. at 47:6-10, 91:17-24. After unsuccessfully appealing those charges with Dollar, Ms. Tool disputed the charges with her credit card company and received a refund. TAC ¶ 17. Ms. Tool also alleges that she was not provided with oral disclosures at the rental counter, did not receive an advance copy of the Dollar contract or folder, and did not see a sign at the rental counter providing disclosures as required by California Civil Code Section 1936. Id. at 16.
Based on the facts described above, Plaintiffs' TAC asserts eight causes of action against Defendants: (1-3) violations of California's Unfair Competition Law ("UCL") (Cal. Bus. & Prof. Code §§ 17200 et seq.), for unlawful, unfair, and fraudulent business acts and practices; (4) violation of California's Consumers Legal Remedies Act ("CLRA") (Cal. Civ. Code §§ 1750 et seq.); (5) violation of the Oklahoma Consumer Protection Act ("OCPA") (Okla. Stat. 15, § 751 et seq.); (6) breach of contract and breach of the covenant of good faith and fair dealing; (7) declaratory relief; and (8) unjust enrichment.
C. Plaintiffs' Motion for Class Certification
Plaintiffs seek to represent and have the Court certify two classes (collectively "the Class"). The California Class is defined as "all persons in the United States either residing in or who rented cars in California from Dollar since January 1, 2009 and were charged for Loss Damage Waiver ('LDW'), SLI and/or Road Safe by Dollar other than as part of a pre-paid tour reservation." Mot. at 1. The Oklahoma Class is defined as "all persons in the United States either residing in or who rented cars in Oklahoma from Dollar since January 1, 2009 and were charged for Loss Damage Waiver ('LDW'), SLI and/or Road Safe by Dollar other than as part of a pre-paid tour reservation." Id.
Plaintiffs' motion relies heavily on the claim that Dollar's website fails to provide disclosures in violation of California Civil Code Section 1936(h). Plaintiffs do not explain, however, how this alleged violation creates a common factual or legal issue as to class members who purchased Add-On Products other than LDW or who purchased LDW outside of California. In addition, Plaintiffs fail to address the Court's earlier order which held that Section 1936 does not apply to a car rental company's website. See ECF No. 68 ("MTD Order") at 10-12.
Plaintiffs also argue that Dollar violated Section 1936 by failing to provide written disclosures on signage at the rental counter and by failing to provide oral disclosures in violation of California Civil Code Section 1936. Plaintiffs do not explain, however, how these alleged violations create common factual or legal issues as to class members who purchased Add-On Products other than LDW or who purchased LDW outside of California. Even within California, Plaintiffs do not provide evidence showing that Dollar systematically failed to provide such disclosures throughout its California locations.
Plaintiffs provide declarations from customers who claim that Dollar did not have signs at the specific locations where they rented cars and that they were not provided with oral disclosures. Dollar has presented evidence, however, showing that such signs are present at its California locations (except under certain circumstances, such as when an office is undergoing renovations) and that its agents are trained to provide oral disclosures. The evidence suggests that signs were not always present at every California location. It also suggests that there were at least some occasions when oral disclosures were not provided. However, Plaintiffs do not provide evidence demonstrating that signs were generally absent throughout Dollar's California locations or that Dollar agents systemically failed to provide oral disclosures.
Finally, Plaintiffs claim that Dollar trains its employees to use deceptive practices to induce customers into purchasing Add-On Products. As evidence, Plaintiffs assert that they have reviewed hundreds of complaints by consumers who claim that they were pressured and deceived into purchasing Add-On Products. Plaintiffs also point to training materials used to teach Dollar agents how to persuade customers to purchase Add-On Products and to the fact that agents are paid a commission based on how many Add-On Products they sell. Although Plaintiffs' evidence establishes specific examples of deception by particular Dollar agents, it does not point to specific company-wide practices, trainings, or policies; describe how those specific practices, trainings, or policies are deceptive; or provide evidence showing that the alleged practices, trainings, and policies were applied uniformly to all members of the class.
II. LEGAL STANDARD
"The class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only." Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2550 (2011) (internal quotations and citations omitted). "In order to justify a departure from that rule, a class representative must be part of the class and possess the same interest and suffer the same injury as the class members." Id. (internal citations omitted). Under Rule 23(a), four prerequisites must be satisfied for class certification:
(1) the class is so numerous that joinder of all members is impracticable;Fed. R. Civ. P. 23(a). In addition, "apart from the explicit requirements of Rule 23(a), the party seeking class certification must demonstrate that an identifiable and ascertainable class exists." Wolph v. Acer Am. Corp., 272 F.R.D. 477, 482 (N.D. Cal. 2011).
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.
A plaintiff also must satisfy one or more of the separate prerequisites set forth in Rule 23(b):
A class action may be maintained if Rule 23(a) is satisfied and if:Fed. R. Civ. P. 23.
. . .
(2) the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or
(3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.
If a case does not qualify for class certification because of individualized issues relating to damages, a court can still allow it to proceed as a class action by certifying particular liability issues pursuant to Rule 23(c)(4). Fed. R. Civ. P. 23(c)(4) ("When appropriate, an action may be brought or maintained as a class action with respect to particular issues.").
On a motion for certification, the plaintiff holds the burden. Thus, "Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule -- that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc." Dukes, 131 S. Ct. at 2551 (emphasis deleted); see also Massa v. American Honda Motor Co., 666 F.3d 581, 588 (9th Cir. 2012) ("The party seeking class certification has the burden of affirmatively demonstrating that the class meets the requirements of Federal Rule of Civil Procedure 23."). A court's analysis of these factors "generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff's cause of action." Id. at 2552 (internal quotations and citations omitted). "Nor is there anything unusual about that consequence: The necessity of touching aspects of the merits in order to resolve preliminary matters, e.g., jurisdiction and venue, is a familiar feature of litigation." Id.
III. DISCUSSION
Plaintiffs' motion for class certification is DENIED because the proposed class definition is overbroad; it fails to satisfy Rule 23(a) requirements of commonality, typicality, and adequacy of representation; and it fails to satisfy the requirements of Rules 23(b)(2), 23(b)(3), and 23(c)(4).
A. Adequacy of the Class Definition
"A class definition should be precise, objective, and presently ascertainable." O'Connor v. Boeing N. Am., Inc., 184 F.R.D. 311, 319 (C.D. Cal. 1998). "The class definition must be sufficiently definite so that it is administratively feasible to determine whether a particular person is a class member." Wolph, 272 F.R.D. at 482. Though there is a split among district courts in the Ninth Circuit on the issue, the Court has followed the guidance of the Third Circuit in requiring plaintiffs to "show, by a preponderance of the evidence, that the class is currently and readily ascertainable based on objective criteria." Carrera v. Bayer Corp., 727 F.3d 300, 306 (3d Cir. 2013). "Administrative feasibility means that identifying class members is a manageable process that does not require much, if any, individual factual inquiry." Id. at 307-08.
Although Plaintiff's class as currently defined can be identified through objective proof, it is overbroad. It encompasses three different products; transactions that have no connection to California or Oklahoma; and purchasers who benefited from their purchase, were provided with adequate disclosures, were never exposed to any of the alleged deceptive practices, and/or received refunds.
Plaintiffs' definitions include every customer that purchased any one of three different products from Dollar -- LDW, SLI, or RoadSafe -- with no explanation as to why those products should be treated together. While LDW is subject to certain statutory requirements in California (see Cal. Civ. Code § 1936), SLI is subject to an entirely different set of rules (See Cal. Ins. Code § 1758.86), and no such requirements apply to RoadSafe in California or to any of the products in Oklahoma. While it is true that "[d]ifferences as to the various products purchased . . . do not negate a finding of typicality, provided the cause of action arises from a common wrong" (In re Cathode Ray Tube (CRT) Antitrust Litig., MDL No. 1917, 2013 WL 5429718, at *10 (N.D. Cal. June 20, 2013)), the common wrong in this case centers on alleged violations of California Civil Code Section 1936. Section 1936, however, only applies to LDW sold in California.
What is more, Plaintiffs include in their class definition customers who "reside in" California and Oklahoma but who purchased Add-On Products in other states. In its order on Defendants' motion to dismiss, the Court expressly held that the statutes that are the focus of Plaintiffs' motion -- particularly Section 1936 of the California Civil Code -- do not have extraterritorial application. MTD at 8-15. Nevertheless, Plaintiffs have included in their class definition transactions that have no connection whatsoever to California or Oklahoma.
For example, California law would not apply to a California resident who, upon arriving at an airport in New York, approaches Dollar for the first time to reserve a car and purchase Add-On Products.
Plaintiffs attempt to hold their proposed class together with alleged "per se" violations of California Civil Code Section 1936. See Mot. at 4, 6, 18-19, 30. Section 1936, however, only applies to one of the Add-On Products -- LDW -- and only LDW that is sold in California.
Even with regard to customers who purchased LDW in California, Plaintiffs fail to provide evidence of a uniform violation applicable to all California class members. Plaintiffs' motion leans heavily on the fact that Dollar's website does not contain Section 1936 disclosures. The Court has already held, however, that the disclosure requirements of Section 1936 do not apply to Dollar's website. See MTD Order at 8-12. As to other potential Section 1936 violations, the evidence shows that many, if not the vast majority, of California customers are provided with the disclosures mandated by Section 1936. See Capsanes Decl. ¶¶ 21, 31, 34; Lainez Decl. ¶¶ 14, 20, 22-23; Raman Decl. ¶¶ 8, 11-13; Hayes Decl. ¶¶ 7, 13-15; Perring Decl. ¶ 11; Hayes Dep. at 29:13-32:5, 37:24-38:5, 46:12-47:6; Lainez Dep. at 61:23-65:19, 79:21-80:11; Raman Dep. at 30:8-13, 31:7-11; ECF No. 126-1; ECF No. 126-2; ECF-No. 126-3; ECF No. 126-4.
In addition to purported "per se" violations of Section 1936, Plaintiffs allege that the Defendants engaged in a variety of deceptive practices, including training employees on how to persuade customers to purchase Add-On Products, paying employees commissions based on how many Add-On Products they sell, and failing to adequately respond to customer complaints regarding Add-On Products. Plaintiffs, however, fail to specify which aspects of these practices are deceptive. Separately, Plaintiffs' class definition is flawed because it includes persons who were not exposed to any of the alleged practices, or who received a benefit as a result of their purchase. See Diacakis v. Comcast Corp., No. C 11-3002 SBA, 2013 WL 1878921, *4 (N.D. Cal. 2011) (rejecting as overbroad a definition that "includes anyone who purchased [the product], irrespective of whether he or she was deceived"). It also includes people who received a full refund for their purchase of the Add-On Products. See Turcios v. Carma Labs., Inc., 296 F.R.D. 638, 645 (C.D. Cal. 2014) (finding class was overbroad "because it would include consumers who already received refunds and, therefore, have not suffered any damages").
Mazza v. American Honda Motor Co. is instructive. 666 F.3d 581 (9th Cir. 2012). In Mazza, the Ninth Circuit reversed a district court's decision to certify a class of all consumers who purchased or leased Acura RLs equipped with a Collision Mitigation Braking System ("CMBS"). Plaintiffs alleged that certain advertisements misrepresented the characteristics of the CMBS and omitted material information on its limitations in violation of California's Unfair Competition Law (UCL) and other statutes. Plaintiffs further argued that class certification was appropriate because reliance as to the class as a whole could be inferred in a UCL class action. The Ninth Circuit, however, held that the class definition was overbroad insofar as it was not "defined in such a way as to include only members who were exposed to [the] advertising . . . ." Id. at 596; see also Berger v. Home Depot USA, Inc., 741 F.3d 1061 (9th Cir. 2014) (holding that a presumption of reliance in a UCL class action does not apply where there is no uniform exposure to the alleged deceptive practice); In re Clorox Consumer Litig., 301 F.R.D. 436, 444 (N.D. Cal. 2014) (denying certification where plaintiffs sought to certify an "all purchasers" UCL class on the basis of an allegedly misleading advertisement where the evidence showed that a substantial portion of class members likely never saw the advertisement); Davis-Miller v. Automobile Club of S. Cal., 201 Cal. App. 4th 106, 125 (2011) ("An inference of classwide reliance [under the UCL] cannot be made where there is no evidence that the allegedly false representations were uniformly made to all members of the proposed class.").
Here, Plaintiffs have neither alleged facts nor presented evidence establishing that all members of the class were exposed to a deceptive practice. Plaintiffs argue that lack of exposure to a deceptive practice should not defeat their motion because exposure to an alleged deceptive practice is "not an element of their claims." Reply at 4. In support, they cite Astiana v. Kashi Co., a class action involving alleged deceptive advertising by a cereal manufacturer. 291 F.R.D. 493 (S.D. Cal. 2013). The Astiana court, however, explicitly held that "all class members were exposed to [the alleged deceptive] representations . . . ." Id. at 500; see also In re Tobacco II Cases, 46 Cal. 4th 298, 324 (presuming reliance where "[t]he class, as certified, consists of members of the public who were exposed to defendants' allegedly deceptive advertisements and misrepresentations").
Because Plaintiffs' proposed class definition is overbroad, the Court finds that it is neither "precise" nor "ascertainable". See O'Connor v. Boeing N. Am., Inc., 184 F.R.D. 311, 319 (C.D. Cal. 1998).
B. Rule 23(a) Requirements
Rule 23(a) requires numerosity, commonality, typicality, and adequacy of representation. See Mazza, Inc., 666 F.3d at 588.
1. Numerosity
Federal Rule of Civil Procedure 23(a)(1) requires that the proposed classes be "so numerous that joinder of all members is impracticable." Generally, "classes of forty or more are considered sufficiently numerous." Delarosa v. Boiron, Inc., 275 F.R.D. 582, 587 (C.D. Cal. 2011). Plaintiffs demonstrate using documents produced by Dollar that at least 1.75 million customers purchased one or more of the Add-On Products when renting a car from Dollar in California or Oklahoma during the relevant period. Defendants do not contest these claims. The Court finds that the numerosity requirement of Rule 23 is met.
2. Commonality
Commonality requires that "there are questions of law or fact common to the class." Fed. R. Civ. P. 23(a)(2). The Supreme Court noted that this requirement is easy to misread, "since '[a]ny competently crafted class complaint literally raises common questions.'" Dukes, 131 S. Ct. at 2551. The claims must depend upon a "common contention" that is "of such a nature that it is capable of classwide resolution -- which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." Id. What matters "is not the raising of common questions -- even in droves -- but rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation." Id.
As a common claim applicable to all, Plaintiffs focus on alleged "per se" violations of California Civil Code Section 1936. Mot. at 4-6, 18-20, 30. Specifically, they argue that Dollar fails to provide disclosures required by sub-sections (j) and (g) for reservations made through Dollar's website. The Court already rejected this approach in its order on Defendants' motion to dismiss. See MTD Order at 10-12 ("[N]othing in Section 1936(g) purports to cover online reservations . . . The Court finds Plaintiff's proposed interpretation of Section 1936(g) unconvincing . . . Section 1936(j) concerns advertisements in California . . . The Confirmation is not an advertisement."). In any event, even if the reservations made through Dollar's website constituted a per se violation of Section 1936, it is undisputed that many of the proposed class members did not use Dollar's website to make a reservation.
At other points in their motion and reply, Plaintiffs claim that Dollar engaged in per se violations of Section 1936 by failing to provide required disclosures in advertisements and signage. Mot. at 18. The evidence shows, however, that Dollar has in fact posted signs providing Section 1936 disclosures at its California locations. Lainez Decl. ¶ 22, Hayes Decl. ¶ 14, Raman Decl. ¶¶ 11-12. Although Plaintiffs have provided evidence showing that Dollar may have sometimes failed to provide adequate disclosures at certain locations, determining whether Dollar failed to provide the required signage is an individualized matter that would depend on the specific location visited and the date of that visit. See Berger, 741 F.3d at 1069 (holding that varying LDW signage "over time and among the different locations" is a "crucial issue" that the "district court reasonably held must be resolved on an individual rather than a class-wide basis").
Plaintiffs also assert that Dollar representatives failed to provide oral disclosures required by Section 1936. Plaintiffs do not present any evidence, however, demonstrating that Dollar representatives throughout California uniformly failed to provide such disclosures. Thus, determining whether a Dollar representative failed to provide oral disclosures would require a level of individualized analysis incompatible with a class action. See Berger, 741 F.3d at 1069 ("[O]ral notice given by employees about the optional nature of the damage waiver during a particular rental transaction would necessarily be a unique occurrence.").
In fact, the evidence suggests that Dollar's representatives generally provide such oral disclosures. Lainez Dep. at 79:21-80:11; Hayes Dep. at 46:12-47:6; ECF No. 126-6 ("Raman Dep.") at 30:8-13, 31:7-11; Capsanes Decl. ¶¶ 21, 31; Hayes Decl. ¶ 7; Lainez Decl. ¶ 14; Raman Decl. ¶ 8.
Even if Plaintiffs had effectively argued for an alleged "per se" violation of Section 1936 as a common claim applicable to all, this claim would only apply to persons who purchased LDW in California. It would not apply to class members who rented cars from Dollar in Oklahoma or class members who reside in California but did not purchase LDW in California. Further, even with respect to the California class members who made their purchase in California, Section 1936 does not apply to customers who purchased SLI or RoadSafe.
Since there is no "per se" violation applicable to all class members, Plaintiffs' motion turns on whether Plaintiffs can establish a scheme to defraud customers that is sufficiently uniform and widespread that it poses common questions of law and fact. Plaintiffs' theory is that Defendants' reservation system, coupled with its alleged practice of tricking customers into paying add-on fees once they rent their cars, amounts to a "bait and switch" scheme that renders Defendants' quoted reservation prices unfair or fraudulent. Plaintiffs' allegations are vague, but they seem to include the following: omission of "material information to customers" (Reply at 10-12), deceptive marketing efforts (Reply at 11), paying commissions that encourage deceptive behavior by Dollar agents (Mot. at 7), using a dark electronic pad that prevents customers from being able to review the terms of their rental agreement (Mot. at 7), and implementing a customer complaint system designed to deflect complaints about Add-On Products (Mot. at 8).
Plaintiffs point out that Dollar does not offer "advice, input or instruction on the coverage [that] consumers likely already have." Reply at 12. There is nothing deceptive about Dollar not providing advice about third party products. Moreover, Dollar representatives explain that "every coverage is different" and a customer should "talk to [his/her] credit card or insurance" carrier. Raman Dep. at 32:15-23, 37:20-38:2, 39:14-23.
Plaintiffs list practices that they characterize as deceptive, such as training agents how to persuasively sell Add-On Products, only offering Add-On products at the rental desk, and training agents not to ask a consumer if they have coverage through another source. Reply at 11. As a general matter, there is nothing obviously or inherently deceptive about these practices. Before class certification can be granted, Plaintiffs must identify the deceptive aspects of these practices with some amount of specificity and then articulate the common issues of fact and law, if any, that apply to the proposed class as a whole.
The Ninth Circuit's decision in Berger v. Home Depot USA, Inc. is instructive. 741 F.3d 1061 (9th Cir. 2014). There, the plaintiff alleged that Home Depot automatically imposed a ten percent surcharge for a damage waiver on tool rentals in its California stores, and although that fee was to be optional, Home Depot's failure to inform customers of their ability to decline the surcharge allegedly violated California's Unfair Competition Law ("UCL"), the California Consumer Legal Remedies Act, and common-law theories of unjust enrichment. Id. In affirming the district court's denial of class certification, the Ninth Circuit held that "variance over time and among the different Home Depot locations, and any oral notice given by Home Depot employees about the optional nature of the damage waiver during a particular transaction would necessarily be a unique occurrence." Id. at 1069; see also Szabo v. Bridgeport Machines, Inc., 249 F.3d 672, 673-74 (7th Cir. 2001) (rejecting class certification where "[i]t is unlikely that dealers in different parts of the country said the same things to hundreds of different buyers"); In re Life USA Holding Inc., 242 F.3d 136, 146 (3d Cir. 2001) (rejecting class action based on representatives made to 280,000 purchasers by 30,000 sales agents); Herskowitz v. Apple, Inc., 301 F.R.D. 460, 481 (N.D. Cal. 2014) (rejecting class certification in case involving "Apple's variable conduct in the course of diverse, individualized transactions").
As in Berger, whether Dollar violated the UCL by engaging in unfair or deceptive practices depends on what particular agents said to particular customers. Although Plaintiffs claim that Dollar engaged in "uniform" deceptive practices in violation of the UCL, they do not describe with any precision the deceptive aspects of the alleged practices or the extent to which all members of the proposed class were exposed to those practices. As a result, there is no commonality. See Herskowitz, 301 F.R.D. at 476 (holding that a business practice that allegedly violates the UCL must be "amenable to some degree of precise definition" or the commonality analysis will "devolve into an individualized inquiry into [Defendants'] behavior in the course of specific transactions").
Commonality also fails as to Plaintiffs' CLRA claim because the CLRA requires that "each potential class member have both an actual injury and show that the injury was caused by the challenged practice." Mazza, 741 F.3d at 1069. Plaintiffs' class definition, however, includes individuals who were not injured because they were not deceived or because they benefited from the additional coverage. Further, although an inference of reliance can sometimes be made, a plaintiff must "point to some type of common proof" of materiality. Badella v. Deniro Marketing LLC, 2011 WL 5358400, at *7-9 (N.D. Cal. 2011). Plaintiffs have not pointed to common proof. Instead, they allege facts that apply only to some customers, at some locations, some of the time.
Likewise, there is no commonality as to Plaintiffs' OCPA claim because Plaintiffs do not provide any evidence of uniform unlawful conduct across all of the transactions that took place in Oklahoma. Nor do they provide evidence of class-wide "loss or injury resulting from a violation of the [OCPA]." Walls v. American Tobacco Co., 11 P.3d 626, 630 (Okla. 2000).
Finally, the individualized inquiries at issue in the case defeat commonality as to the Plaintiffs' breach of contract and unjust enrichment claims. While Plaintiffs allege that an on-line reservation is a contract that is breached by additional products sold at the rental counter, the parties are free to change a prior agreement. Whether a class member agreed to make a change to the agreement is an individualized question. Similarly, whether a sale of Add-On Products is unjust is an individualized question that focuses on the individualized circumstances of the sales based on the oral transactions between the class members and the Dollar agents. See Berger, 741 F.3d at 1070 ("Whether receipt of funds for the damage waiver was unjust or inequitable . . . necessarily rests on individualized determinations . . . [including the] oral representations from employees.").
Further, many members of the proposed class did not reserve a rental ahead of time, and most did not use Dollar's website. As a result, there was no preexisting contract for those customers.
The cases cited by Plaintiffs are distinguishable. In the Schwartz case, the court found that commonality could be shown because the plaintiff "will be able to prove this element using common evidence given the fact that Avis entered into a standard form contract . . . over the class period and that the surcharge information was presented in a similar manner to most Avis customers for that period." Schwartz v. Avis Rent A Car System, LLC, No. 11-4052 (JLL), No. C 10-03908 CRB, 2014 WL 4272018, at *9 (D.N.J. Aug. 28, 2014). In Sobel, the court found common questions where the class members' claims arose "out of Hertz's standard practice of quoting and charging unbundled [surcharge for airport concession fees] at Nevada airports." Sobel v. Hertz Corp., 291 F.R.D. 525, 541 (D. Nev. 2013). In contrast, the information regarding the Add-On Products in this case was not presented through a contract applicable to all class members or in a standardized way such as through a script. The evidence shows that what the class members were told or understood regarding the products, and their reasons for purchasing the products, could have varied greatly depending on their individualized communications with Dollar agents.
Plaintiffs make reference to scripts throughout their motion and reply and cite to training materials that instruct Dollar agents on how to persuade customers to purchase Add-On Products. Plaintiffs fail to identify, however, the deceptive aspects of these "scripts," nor do they establish that all class members were exposed to them.
For these reasons, the Court finds that the commonality requirements of Rule 23(a) have not been met.
3. Typicality
Typicality requires that "the claims or defenses of the representative parties are typical of the claims or defenses of the class." Fed. R. Civ. P. 23(a)(3). The Ninth Circuit has interpreted the typicality requirement permissively. For example, although class representatives' claims must be "reasonably co-extensive with those of absent class members[,] they need not be substantially identical." Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998). "In determining whether typicality is met, the focus should be on the defendants' conduct and plaintiff's legal theory, not the injury caused to the plaintiff. Typicality does not require that all class members suffer the same injury as the named class representative." Simpson v. Fireman's Fund Ins. Co., 231 F.R.D. 391, 396 (N.D. Cal. 2005). Typicality is not satisfied, however, when "[a] named plaintiff who proved his own claim would not necessarily have proved anybody else's claim." Sprague v. Gen. Motors Corp., 133 F.3d 388, 399 (6th Cir. 1998). Moreover, "[c]ourts of appeal have held that unique defenses bear on . . . typicality." In Re Hurethane Antitrust Litig., 251 F.R.D. 629, 642 (D. Kan. 2008) (citing Beck v. Maximus, Inc., 457 F.3d 291, 296 (3rd Cir. 2006)); see also Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (holding that the typicality requirement precludes certification "if there is a danger that absent class members will suffer if their representative is preoccupied with defenses unique to it").
The requirement of typicality has not been met for many of the same reasons that the requirement of commonality was not met. Because there are not sufficient legal and factual issues common to the class, Plaintiffs' cases are not typical of class members. This makes sense given that "[t]he commonality and typicality requirements tend to merge." Gen. Telephone Co. v. Falcon, 457 U.S. 147, 157 n.13 (1982). "Both serve as guideposts for determining whether [in] the particular circumstances maintenance of a class action is economical and whether the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence." Id.
The named Plaintiffs are also not typical of the other class members as a whole because they are subject to unique factual circumstances and defenses such that proof of their own claims would not necessarily prove the other class members' claims. Plaintiffs' motion argues that class members were deceived into purchasing the Add-On Products as a result of deceptive sales techniques and omitted disclosures. However, neither named Plaintiff alleges that she was misled into purchasing the Add-On Products. Rather, Ms. Tool and Ms. McKinnon both claim they knew they did not wish to purchase the Add-On Products, expressly declined to purchase the Add-On Products at the counter, but were charged for Add-On Products nevertheless. That is a fundamentally different set of facts from Plaintiffs' averments on behalf of the class as a whole, which center on alleged practices (primarily a failure to provide disclosures) that induced class members to purchase Add-On Products that they would not have otherwise purchased.
Plaintiffs argue that their claims "are typical of the claims of the Class because all Dollar customers in California and Oklahoma that purchased Add-On Products were subjected to Dollar's uniform advertising and sales practices." Mot. at 20. California and Oklahoma customers, however, were not exposed to uniform advertising and sales practices. For example, most class members did not use Dollar's website. Further, most Dollar locations in California provided disclosures orally and on rental contracts, contract sleeves, signs placemats, and other materials.
Plaintiffs cannot satisfy the requirements of Rule 23 by stating in conclusory fashion that Dollar engaged in "uniform advertising and sales practices." They must be specific, and they must provide evidence to support their claims. --------
There are various other typicality problems. Plaintiff Tool received a refund for her purchase. In a case against Dollar involving an identical set of facts, the District of Colorado found in that a plaintiff who received a refund does not satisfy the typicality requirement because the refund "negat[es] any claimed injury." Friedman v. Dollar Thrifty Auto. Grp., Inc., 304 F.R.D. 601, 612 (D. Colo. Jan. 27, 2015). Further, neither Ms. McKinnon nor Ms. Tool purchased all three products at issue. See Wiener v. Dannon Co., Inc., 255 F.R.D. 658, 666 (C.D. Cal. 2009) (holding that "named plaintiff that purchased a different product than that purchased by unnamed plaintiffs fails to satisfy the typicality requirement"). This is particularly important given that Defendants' liability as to each product differs as a result of the different regulations and legal theories that apply to each (especially with regard to the disclosure requirements of California Civil Code Section 1936, which only appliy to LDW sold in California).
For these reasons, the Court finds that the typicality requirement of Rule 23(a) has not been met.
4. Adequacy of Representation
This requirement ensures that plaintiff "will fairly and adequately protect the interests of the class." Fed. R. Civ. P. 23(a)(4). The Ninth Circuit applies a two-part test to determine the adequacy of class representation. First, the representative plaintiffs and their counsel must not have conflicts of interest with other class members. Second, the representative plaintiffs and their counsel must prosecute the action vigorously on behalf of the class. Staton v. Boeing Co., 327 F.3d 938, 957 (9th Cir. 2003).
This factor is satisfied as to Plaintiffs' law firm, Whatley Kallas, LLP, an experienced consumer class action firm. Further, Plaintiffs' counsel possess the skill, time, and resources needed to pursue this case to resolution, and they have vigorously prosecuted this action on the Class's behalf.
Plaintiffs are not adequate representatives, however. As already discussed, Plaintiffs have conflicts with other class members due to their unique factual circumstances and the unique defenses Defendants will likely assert against them that are not applicable to the class as a whole.
For these reasons, the Court finds that the adequacy of representation requirement of Rule 23(a) has not been met.
C. Rule 23(b) Requirements
In addition to satisfying the requirements of Rule 23(a), a class action must fit at least one of the categories defined in Rule 23(b). Plaintiffs assert that this class action qualifies under Rule 23(b)(2) and Rule 23(b)(3).
Rule 23(b)(2) states that "a class action may be maintained if Rule 23(a) is satisfied and if . . . the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole." Rule 23(b)(2) does not authorize class certification therefore in the context of "diverse, individualized transactions" that vary "depending on the specific facts giving rise to the individual customer's claim." Herskowitz, 301, F.R.D. at 481. Further, Rule 23(b)(2) "does not authorize class certification when each class member would be entitled to an individualized award of money damages." Dukes, 131 S. Ct. at 2557. Nor is certification under Rule 23(b)(2) permitted where plaintiffs seek monetary relief for the class and such relief is not merely incidental to the injunctive or declaratory relief. Kanter v. Warner-Lambert Co., 265 F.3d 853, 860 (9th Cir. 2001); see also Robertson v. North American Van Lines, No. C-03-2397, 2004 WL 5026265, *4 (N.D. Cal. 2004) (holding that injunctive relief must be the "primary relief sought").
As already discussed, liability in this case turns on individualized interactions between Dollar agents and customers involving unique facts and defenses that make it unsuitable for certification under Rule 23(b)(2). Algarin v. Maybelline, LLC, 300 F.R.D. 444, 459 (N.D. Cal. 2014) (denying Rule 23(b)(2) certification because the facts would require an "assessment of each class member's claim . . . [such as] which products she purchased"). Certification under Rule 23(b)(2) is also inappropriate because Plaintiffs primarily seek individualized monetary damages, including "actual, compensatory, statutory, and/or exemplary damages" and "restitution of all monies paid for unwanted products." TAC ¶¶ 27, 38. Finally, certification under Rule 23(b)(2) is inappropriate because "Plaintiffs have not adequately defined what injunctive/declaratory relief is applicable to the entire class, i.e., Plaintiffs have not specified the class- wide injunction that would be appropriate to all class members." Friedman, 304 F.R.D. at 614.
Rule 23(b)(3) requires the Court to find that "questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods . . . ." Fed. R. Civ. P. 23(b)(3). The burden of demonstrating that common questions predominate lies with the party seeking class certification. Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1188 (9th Cir. 2001).
As already discussed, the Plaintiffs have not met the commonality requirements of Rule 23(a). Because "[t]he commonality preconditions of Rule 23(a)(2) are less rigorous than the companion requirements of Rule 23(b)(3)," the Court need not provide additional analysis on predominance. Hanlon, 150 F.3d at 1019. Thus, the Court finds that questions of law or fact common to class members do not predominate over questions affecting only individual members. See generally, Berger, 741 F.3d 1061 (affirming the district court's denial of class certification because common questions did not predominate over individual issues where liability turned on the oral representations made during each transaction); Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1020 (9th Cir. 2011) ("We do not, of course, suggest that predominance would be shown in every California UCL case. For example, it might well be that there was no cohesion among the members because they were exposed to quite disparate information from various representatives of the defendant."); Friedman, 304 F.R.D. at 616 (rejecting plaintiffs' argument "that the case involves standard sales practices that are uniform to all class members").
D. Rule 23(c)(4) Requirements
Rule 23(c)(4) states that "[w]hen appropriate, an action may be brought or maintained as a class action with respect to particular issues." The rule "authorizes certification even if common issues do not predominate over the individual questions because the common issues can be separated by the court and certified for independent treatment." Emig v. Am. Tobacco Co., Inc., 184 F.R.D. 379, 395 (D. Kan. 1998). For example, a class may be certified for liability purposes only, leaving individual damages calculations to subsequent proceedings. See Slaven v. BP Am., Inc., 190 F.R.D. 649, 658 (C.D. Cal. 2000).
As discussed above, individualized damage and liability issues pervade this matter. Because no efficiency will be achieved in light of those issues, Plaintiffs' motion to certify under Rule 23(c)(4) is DENIED.
IV. CONCLUSION
For the reasons set forth above, Plaintiffs' motion for class certification is DENIED WITHOUT PREJUDICE. Plaintiffs may, if they choose, file a new motion for class certification with a revised class definition within thirty (30) days of this order. As set forth above, Plaintiffs' revised definition must identify common issues of fact and law -- for example, by identifying specific deceptive practices applicable to all members of the proposed class. The revised definition cannot be overbroad, and the claims of the named Plaintiffs must be typical of the class as a whole. Plaintiffs revised definition must also satisfy the requirements of Rule 23(b).
Defendants' motion to exclude the expert testimony of Donald Lichtenstein is also DENIED as moot.
IT IS SO ORDERED.
Dated: July 27, 2015
/s/_________
UNITED STATES DISTRICT JUDGE