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Class Action Defense Cases–In re Mattel: California Federal Court Dismisses Class Action Claims Under Consumer Protection Safety Act But Refuses To Dismiss Remaining Class Action Claims Arising From Sale Of Lead Tainted Toys

Class Action Complaint Alleging Various Claims Arising from Manufacture and Sale of Toys Tainted with Lead Paint Survives Defense Motion to Dismiss, Save for Class Action Claims under Consumer Protection Safety Act (CPSA) California Federal Court Holds

Numerous class action complaints were filed against various defendants, including are Mattel and Fisher-Price (“Manufacturer Defendants”) and Target, Toys “R” Us, Wal-Mart Stores, KB Toys and Kmart (“Retailer Defendants”), alleging labor law violations; the class action complaint asserted that a computer error caused Sprint to systematically fail to properly calculate commissions due employees of Sprint’s Business Direct Channel. In re Mattel, Inc. Toy Lead Paint Products Liab. Litig., ___ F.Supp.2d ___ (C.D.Cal. November 24, 2008) [Slip Opn., at 1 and nn.2 and 3]. According to the class actions, certain toys manufactured and sold by defendants contained unsafe levels of lead paint. Id., at 1. The toys at issue in the class action lawsuits “were subject to recalls ordered by the Consumer Product Safety Commission (‘CPSC’) in which the Manufacturer Defendants provided replacement toys.” Id. The Judicial Panel on Multidistrict Litigation consolidated the class action lawsuits in the Central District of California, which eventually granted a motion to certify the litigation as a class action, see id. The consolidated class action complaint sought damages under theories of strict liability and negligence, breach of express and implied warrantees, and for violations of the federal Consumer Protection Safety Act (CPSA) and California’s Consumers Legal Remedies Act (CLRA). Id., at 2. Defense attorneys moved the district court to dismiss the second amended class action complaint, id., at 1. The district court granted the motion and dismissed the class action.

Preliminarily, the federal court rejected the defense argument that defendants’ voluntary recall and replacement of the tainted toys, pursuant to CPSC Regulations, precluded a state law claim for refund. See In re Mattel, at 3-4. The district court also found that the class action adequately alleged injury, see id., at 4-6; as the court explained at pages 5 and 6, “The Court knows of no authority for the proposition that a defendant can defeat a plaintiff’s claim on standing grounds through the unilateral offering of a remedy of the defendant’s choosing.” Additionally, the federal court rejected defense claims that the class action theories “sounded in fraud” and so had to be pleaded with particularity, see id., at 6-7, and rejected also defense claims that the Retailer Defendants owed no duty to inspect for latent defects and, accordingly, could not be found liable for negligence, id., at 7-8.

The federal court next turned to defense claims that non-California plaintiffs were prohibited from bringing California state law claims against the Manufacturer Defendants. In re Mattel, at 8. Specifically, defense attorneys for Mattel and Fisher-Price argued non-California Plaintiffs could not bring claims under California’s Unfair Competition Law (commonly referred to as “section 17200”) and under the CLRA, id. The district court disagreed, noting that under California law “state statutory remedies may be invoked by out-of-state parties when they are harmed by wrongful conduct occurring in California.” Id. (citation omitted). However, the district court agreed with defense attorneys that the class action claims under the CPSA fail as a matter of law because “[p]laintiffs have not alleged a violation of any consumer product safety rule promulgated by the CPSC or other act of the CPSC with respect to the magnet toys or the toy blood pressure cuffs.” In re Mattel, at 6. Additionally, “Plaintiffs’ failure to identify a consumer product safety rule or order of the CPSC is fatal as there is no private right of action under the CPSA itself absent a specific rule promulgated by the CPSC.” Id. (citation and footnotes omitted). Accordingly, the district court largely denied the motion to dismiss the class action, id., at 10.

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