On September 8, 2012, Judge Daniel Crabtree, US District Judge for the District of Kansas, certified a class of consumers who purchased outdoor railing products with defective plastic brackets designed by Barrette Outdoor Living Inc. and sold by Home Depot USA Inc. See Memorandum and Order. The lawsuit alleges that defendants (1) breached the implied warranty of merchantability under K.S.A. 84-2-314; (2) willfully omitted a material fact about the railing in violation of the Kansas Consumer Protection Act (“KCPA”) under KSA 50-626; and (3) committed unconscionable acts in violation of the KCPA under KSA 50-627.
What follows are specific, notable holdings:
- A Defendant May Not Defeat Class Certification Simply by Choosing Not to Keep Records of the People who Purchase its Defective Product.
Defendants argued that the class is not ascertainable because “there is no way to identify the in-store purchasers of the Railing System based on Home Depot’s business records.” Defendants argued that because Home Depot does not keep records of the identities of its customers who purchased the Railing System, the court should deny class certification since it would be difficult to ascertain who the class members are. Judge Crabtree observed in his Order that “[e]ssentially, then, defendants argue that a retailer who sells a defective product could immunize itself from class certification by merely choosing not to keep records of the people who bought the defective product.” (p. 7.) Rejecting defendants’ contention, Judge Crabtree noted that plaintiff had proposed a feasible alternative to determine class membership: “simply requiring that all class members complete a claim form with proof of purchase (i.e., receipt, photos, etc.), which is required by Barrette’s Warranty program and is almost universally done in class action cases.” (p.7.)
- In a Product Defect Case, Plaintiff Need Not Prove the Existence of a Defect as a Prerequisite to Class Certification.
Defendants alleged that Plaintiffs had provided little, if any, evidence that the product was, in fact, defective. They argued that evidence of a defect must be presented as a prerequisite to class certification. The Court disagreed and noted that Defendants “misunderstand the role of the merits of a plaintiff’s claim at the class certification stage.” (p. 11.) Since the existence of a defect was the central issue common to the entire class, the Court need not delve into the merits of the claim to decide whether Plaintiffs satisfied Rule 23.
- The Existence of Personal Injury Claims Does Not Create a Conflict of Interest with Class Members where Plaintiff Seeks Certification of Only Economic Damages Claims.
Defendants asserted that because Plaintiff’s son suffered a personal injury for which a claim was made, he cannot adequately represent the class in his separate claims for economic injury. Home Depot postulated, for example, that Plaintiff might accept an inadequate settlement offer on the class claims in exchange for a larger settlement of the personal injury claim. (p. 14.) The Court held, however, that personal injury claims do not create the type of “fundamental” conflict that renders Plaintiff unable to serve as class representative. (Id.) Moreover, since the Court would review any class settlement for fairness, Defendants’ concern over that Plaintiff might put his own interest above those of the class are unfounded. (p. 15.)
- Proof of Breach of the Implied Warranty of Merchantability May be Made on a Class-Wide Basis.
Defendants claimed that proof of breach of the implied warranty of merchantability would require individualized inquiry because “each purchase’s intended and actual use of the product” bears on the issue. “This argument,” the Court observed, “misapprehends the governing legal standard for merchantability claims.” (p. 16.) “[W]hether the allegedly defective bracket rendered the railing products unfit for their ordinary purpose is judged objectively,” the Court held, “and not on each purchaser’s individual expectations.” (p. 17)(emphasis added.)
- In Kansas, a Defect Need Not Manifest Itself to Give Rise to a Claim for Breach of the Implied Warranty of Merchantability.
Defendant Barrette Outdoor Living argued that an alleged defect must manifest itself before a claim for breach of the implied warranty of merchantability may be made. Since the proposed class consists of members who Railing System has not failed, thus manifesting the defect, Barrette asserted that a class action cannot be certified. The Court disagreed. First, the Court observed that in this case, unlike those relied upon by Barrette, the defect in Plaintiffs’ own product did manifest itself. Second, since K.S.A. § 84-2-725 provides that “[a] cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach,” actual manifestation of the defect is not required to justify certification of a class action. (p. 17.)
- The Notice Requirement in K.S.A. § 84-2-607 Does not Bar Certification of a Class Action Since the Filing of the Class Action Complaint Gave Notice of the Defect on Behalf of All Potential Class Members.
K.S.A. § 84-2-607 requires that a “buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of the breach or be barred from any remedy.” Defendants argued that § 84-2-607 required that notice be provided prior to filing suit and that proof of notice cannot be made with class-wide evidence. The Court held otherwise.
“Plaintiff gave notice about the alleged defect on behalf of all potential class members when he filed his initial complaint on June 5, 2012,” the Court held. (p. 19.) “Taking into account the ‘totality of the circumstances’ —lack of bad faith and prejudice to defendants and the effect of requiring an individual inquiry—the Court concludes that the Kansas Supreme Court would find that the notice given by plaintiff’s Complaint satisfies K.S.A. § 84-2-607. (p. 20.)
- In a Claim for Willful Omission Under K.S.A. § 50-626, Proof of Causation is Necessary, But May be Made on a Class-Wide Basis.
Defendants claimed that under the Kansas Consumer Protection Act, individual inquiry is necessary to prove causation. The Court, however, held that individualized showings are not required in an omission case. (p. 25)(emphasis added).
To prevail on an omission claim, the Court noted, plaintiff must show that the defendant had a duty to disclose a “material” fact. (Id.) A material fact is one “which a reasonable person would attach importance in determining his or her choice of action.” (Id.) Thus, in an omission case, because the focus is on the objective, reasonable person, objective (i.e. class-wide) proof is sufficient.
“Based on a review of § 50-626 of the KCPA and to give effect to the class action provision under § 50-634,” the Court opined, “the Court concludes that the putative class may prove causation by showing that the objective, reasonable person would have been harmed by the omission.” (p. 26.) Thus, individual issues do predominate the causation inquiry. (Id.)
- To Make a Claim of Unconscionability under the KCPA, Plaintiff Need Not Prove that Each Class Member was Unable to Receive Any Material Benefit from the Subject Transaction, Only that the Price of the Product Grossly Exceeded the Price at which Similar Products are Readily Obtainable in a Similar Transaction by Similar Customers.
Defendants argued that to make a claim of unconscionability under the KCPA, Plaintiff would have to prove that every member of the class was unable to receive any benefit from the subject Railing System. This is not so, the Court held.
To prove unconscionability, the Court held, Plaintiff may show that as a result of a defect, the price of the product grossly exceeded what was readily obtainable in a similar transaction. (p. 27.) Moreover, proof that the price of the product grossly exceeded what was readily obtainable in a similar transaction can be made on a class-wide basis, since the inquiry is objective. (Id.)
- A Statute of Limitations Defense that May Require Individualized Inquiry Does Not Render the Case Unsuitable for Class Certification.
Defendants argued that because the KCPA claims have a three-year statute of limitations while the breach of warranty claim has a four-year statute of limitations, individual inquiry is necessary to determine who, among the class, is barred by the three-year statute of limitations. The Court agreed. However, the Court held that while individual inquiry may be necessary, the question is “not difficult to resolve” since it would require that class members simply demonstrate that they purchased their railing products three years prior to the filing of the suit. Such an inquiry “does not mean that individual issues predominate over common issues such that plaintiff cannot satisfy Rule 23(b)(3),” the Court held.
- The Possible Need for Individual Inquiry into Damages does not Bar Certification of All other Issues.
Citing the Supreme Court’s recent decision in Comcast v. Behrend, 133 S. Ct. 1426 (2013), Defendants argued that individualized damage calculations predominate over common issues such that certification cannot be granted. Since the measure of damages will necessary depend, in part, on the price each class member paid for the defective product, the Court agreed that individual inquiry may, indeed, be necessary. (p. 31.) However, the Court that, consistent with Rule 23(c)(4), the issue of damages may be bifurcated from remainder of the issues and reserved for determination at a later date. (Id.) Thus, even where damage calculations may require individual inquiry, all issues apart from damages may be certified and resolved on a class-wide basis.