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March 01, 2019 Practice Points

Three Tips to Get a Multi-State Consumer Class Certified in California’s Federal Courts

Next time you’re presented with a potential multi-state case, consider using one or more of these strategies.

By Jonathan Udell

Many people think a class including consumers from multiple states all pursuing claims under California’s consumer-protection laws is not certifiable following Mazza v. American Honda Motor Company, 666 F.3d 581 (9th Cir. 2012). But that may not be true.

In Mazza, the Ninth Circuit held that California’s choice-of-law analysis generally precludes district courts from certifying nationwide classes involving California consumer-protection claims. However, what is often ignored is that Mazza involved a proposed nationwide class concerning purchases from brick-and-mortar retail locations. I believe there are at least three strategies to distinguish your cases from Mazza and better your chances of certification.  Next time you’re presented with a potential multi-state case, consider using one or more of the following strategies:

  1. Bring an action against a California company that does not operate brick-and-mortar retail stores. The holding in Mazza resulted from the court’s conclusion that the district court had “erred by discounting or not recognizing each state’s valid interest in shielding out-of-state businesses from what the state may consider to be excessive litigation.” In other words, it believed that some states may wish to minimize liability to attract businesses and foster economic development. If only online transactions are at issue, however, and a defendant has no business operations in your client’s state, you can make a stronger argument that Mazza’s reasoning does not control in your case.
  2. Select states whose laws do not materially differ, at least for purposes of your case. As the Mazza court acknowledged, “[t]he fact that two or more states are involved does not itself indicate that there is a conflict of law problem.” Rather, a defendant must show that the laws materially differ, i.e., that the differences will matter for purposes of resolving the dispute in question. The Ninth Circuit identified several differences between the states’ laws in Mazza, including (a) the degree of scienter required, (b) the existence of a reliance presumption for absent class members, and (c) the available remedies. Actual deception is another element that often creates differences between states. By limiting your case to class members from states with materially identical laws, you can better distinguish Mazza. If the court finds that the various laws at issue do not meaningfully differ, then you may be able to certify a multi-state class by avoiding the states’ interest question altogether.
  3. Restrict your class to people who made online transactions with a California company with servers in California. To resolve true conflicts of law, California’s courts consider whether “the interests of other states . . . outweigh California’s interest in having its law applied.” Mazza, 666 F.3d at 590 (quoting Wash. Mut. Bank v. Superior Court, 24 Cal. 4th 906, 921 (Cal. 2001)). However, according to the Mazza court, “California recognizes that ‘with respect to regulating or affecting conduct within its borders, the place of the wrong has the predominant interest,’ Id. at 593 (quoting Hernandez v. Burger, 102 Cal. App. 3d 795, 802 (Cal. Ct. App. 1980)), and “the ‘place of the wrong’ [is] the state where the last event necessary to make the actor liable occurred,” Id. (citing McCann v. Foster Wheeler LLC, 48 Cal. 4th 68, 94 n.12 (Cal. 2010)). For online transactions, you might argue that “the place of the wrong” is where the misleading representations were made or the location where the defendant processed the consumers’ payments. Assuming the same California-based web server houses the defendant’s website and payment processing system, you could also argue that the California server constitutes the place of the wrong to support applying California law. See, e.g., Emory Grp. LLC v. ID Solutions, LLC, No. 14-CV-13, 2014 WL 1415021, at *3 (N.D. Ga. Apr. 10, 2014) (“When the tortious conduct occurs over an internet website, ‘the situs of this tort is . . . where the website or servers which maintain the website, are located.’”) (quoting Gucci Am., Inc. v. Frontline Processing Corp., 721 F. Supp. 2d 228, 241 (S.D.N.Y. 2010)) (citing Swift v. Medicate Pharmacy, Inc., Nos. 10 C 689, 10 C 1874, 2010 WL 3548006, at *4 (N.D. Ill. Sept. 3, 2010)); Eurotech, Inc. v. Cosmos European Travels Aktiengesellschaft, 189 F. Supp. 2d 385, 390 n.6 (E.D. Va. 2002) (finding location of server relevant to determining the place of wrong in tortious-interference action concerning a website).

I hope you found my tips for certifying a multi-state class useful. Please email me to share your post-Mazza experience with multi-state classes, and watch for my upcoming article addressing this topic in more detail.

Jonathan Udell is an attorney at Rose Law Group pc in Scottsdale, Arizona, and cochairs the Section of Litigation’s Consumer Litigation Committee’s Marketing & Advertising Subcommittee.  

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