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Class Action Defense Cases–Utility Consumers’ Action Network v. Sprint: California Federal Court Denies Nationwide Class Action Treatment To Class Action Complaint Alleging Violations Of California Laws

Class Action Complaint Alleging Violations of California State Laws not Entitled to Nationwide Class Action Treatment because Plaintiffs Failed to Establish that California Law Applies to Non-Residents or that Nationwide Class Action Treatment would be “Superior” Means of Adjudicating Dispute or that Trial of Nationwide Class Action would be Manageable California Federal Court Holds

Plaintiffs filed a putative nationwide class action against Sprint Solutions and Sprint Spectrum (Sprint) alleging violations of various California consumer protection statutes; specifically, the class action complaint alleged inter alia claims under California’s Unfair Competition Law (UCL), Consumer Legal Remedies Act (CLRA), and Public Utilities Code (for cramming), as well as under the Federal Communications Act, 47 U.S.C. §201(b). Utility Consumers’ Action Network v. Sprint Solutions, Inc., ___ F.R.D. ___ (S.D.Cal. June 23, 2009) [Slip Opn., at 1]. Plaintiffs moved the district court to certify the litigation as a class action, id., at 1-2. Defense attorneys opposed class action certification, in part on the ground that various states will interpret the relevant contracts differently and have different consumer protection laws such that a nationwide class action would be unworkable. Id., at 2. The federal court refused to grant class action treatment to the lawsuit.

In arguing in favor of a nationwide class action, plaintiffs asserted that “California law applies to non-California residents because there is a presumption California law applies absent a showing to the contrary under California choice of law principles, and that California law does not conflict with other state laws. “ Sprint, at 2. Plaintiffs further argued that a nationwide class action was the “superior” means of adjudicating the dispute “because the common issue is the misbilling practices of the Defendants,” id. Defense attorneys countered “that there are individual issues that predominate; that various states will enforce several provisions in the terms and conditions of relevant contracts in various ways; that California statutes cannot be applied to consumers outside of California; and that Plaintiffs’ proposed trial plan is unworkable.” Id. The district court cited well-settled law that the moving party bears the burden of establishing that the requirements for class action treatment have been met, id., at 2-3, and turned immediately to a “rigorous analysis” of whether the class action requirements of Rule 23(b)(3) had been met because the elements of Rule 23(a) “are not seriously in dispute,” id., at 3-4.

The district court first rejected plaintiffs’ claim that California law could be applied to non-residents. Sprint, at 4. We believe it sufficient to quote a portion of the opinion that highlights the difficulty with plaintiffs’ argument: “Plaintiffs position is particularly questionable in light of the statement of California Appellate Court Judge Bamattre-Manoukian in Wershba v. Apple Computer Inc., 91 Cal. App. 4th 224, 242 (2001): ‘California’s consumer protection laws are among the strongest in the country.’ If that is true, it seems unfair to apply those laws across the country in jurisdictions less concerned with consumer protection.” Sprint, at 4. Further, the district court found at page 5, “It is reasonable to assume that when non-California-residents entered into contracts with the Defendants, they were availing themselves of the laws of their states, the defendant’s home states or the state that was designated in the contract, rather than California statutory law.” Finally, the district court rejected plaintiffs’ claims that a nationwide class action would be “superior” or “manageable,” id., at 5. This is particularly true because “application of several state laws to one action would make the trial exceedingly complex.” Id.

The district court next addressed whether nationwide class action treatment was warranted under either Rule 23(b)(1) or (b)(2). Sprint, at 6. We do not discuss the district court’s reasoning in detail, noting only its conclusion that as the class action complaint primarily seeks damages class action certification under Rule 23(b)(1) would be inappropriate, see id., at 7, and that while “[a] class seeking monetary damages may be certified pursuant to Rule 23(b)(2) where such relief is merely incidental to the primary claim for injunctive relief,” this is not such a case, see id., at 7-8. And rather than address at this time whether class action treatment of a California-only class was warranted, the district court referred the parties to various issues that should be addressed as part of such a motion, see id., at 8-9. Accordingly, it denied plaintiffs’ motion to certify a nationwide class action, but did so without prejudice to plaintiffs’ right to seek certification of a California-only class action, id., at 10-11.

Download PDF file of Utility Consumers’ Action Network v. Sprint Solutions