Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC300591, Carolyn Kuhl, Judge.
Girardi and Keese, Thomas V. Girardi, Thomas J. Johnston and Nicholas M. Hutchinson for Plaintiff and Appellant.
Reed Smith LLP, Margaret M. Grignon, Michael K. Brown, Wendy S. Albers, Kenneth N. Smersfelt and Dorit M. Glockner for Defendants and Respondents.
MANELLA, J.
In appellant Stacey Cain’s action for breach of express warranty, false advertising, unfair business practices and imposition of a constructive trust, the trial court denied her motion for class certification. We affirm.
RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
In August 2003, Cain initiated the underlying class action against respondents Ecoquest Holding Corporation (Ecoquest), Ecoquest International, Inc. (Ecoquest International), Alpine Industries, Inc. (Alpine), Environmental Health Services, Inc. (Environmental), Michael Jackson, William Converse, and Costco Wholesale Corporation (Costco). Her third amended complaint, filed in September 2005, asserts claims for breach of express warranty (Com. Code, § 2313), violations of the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.) and the false advertising law (FAL) (Bus. & Prof. Code, § 17500 et seq.), and imposition of a constructive trust. The complaint concerns a product identified as an “ozone generator[],” which is described as “a machine that circulates room air through an electrically charged plate. The plate converts the oxygen into ozone, which is then recirculated into the room by a fan in the machine.”
The complaint alleges the following facts: Respondents Ecoquest, Ecoquest International, Alpine, and Environmental manufacture, market, and advertise ozone generators. Jackson and Converse control these businesses. Costco markets and advertises ozone generators from Ecoquest, Ecoquest International, Alpine, and Environmental. The ozone generators are sold under many names, including “Living Air Classic,” “Breeze AT,” “Flair by Living Air,” “Zone-It,” and “Pursonic Mister by Ecoquest.”
The complaint further alleges that in 1995, the Federal Trade Commission initiated an action against Alpine and another business controlled by Converse, alleging that they had made unsubstantiated advertising claims that their ozone generators “eliminate[d] or clear[ed] specified chemicals, gasses, mold, mildew, bacteria, viruses, and dust from the environment.” During the proceedings, Alpine spun off its operations to Ecoquest International. In January 2000, a federal district court in Tennessee issued an injunction barring Converse and Alpine from representing that “any Alpine product can eliminate, remove, clear or clean from indoor air any quantity of any pollutant, contaminant, microorganism (including bacteria, viruses, mold and mildew), chemical or particulate, with the exception of ‘tobacco smoke’”; in addition, the court enjoined representations that the products “may prevent or provide[] relief from any health or medical condition of any kind” or control the ozone level in indoor air.
The complaint further alleges that in an attempt to avoid the injunction, Alpine “spun off” its entire marketing organization to Ecoquest International. In April 2001, the district court in Tennessee issued a judgment enjoining Converse and Alpine from representing that “any Alpine product can eliminate, remove, clear or clean from indoor air any quantity of any pollutant, contaminant, microorganism (including bacteria, viruses, mold and mildew), chemical or particulate”; in addition, the judgment enjoined representations that the products “may prevent or provide relief[] from any health or medical condition of any kind” or control the ozone level in indoor air. Notwithstanding the injunctions and judgment, respondents mounted a campaign of misrepresentations and illegal advertising in Southern California. As a result of the misrepresentations, Cain bought one of their ozone generators in August 2003.
Cain filed a motion for class certification, which the trial court denied on January 30, 2008. This appeal followed.
DISCUSSION
Cain contends the trial court erred in denying class certification. We disagree.
A. Standard of Review
“Code of Civil Procedure section 382 authorizes class action suits in California ‘when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court....’ The party seeking certification as a class representative must establish the existence of an ascertainable class and a well-defined community of interest among the class members. [Citation.] The community of interest requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. [Citation.]” (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470.)
Class certification is consigned to the trial court’s discretion. (Richmond v. Dart Industries, Inc., supra, 29 Cal.3d at p. 470.) Nonetheless, “[t]he appeal of an order denying class certification presents an exception to the general rule that a reviewing court will look to the trial court’s result, not its rationale. If the trial court failed to follow the correct legal analysis when deciding whether to certify a class action, ‘an appellate court is required to reverse an order denying class certification..., “even though there may be substantial evidence to support the court’s order.”’ [Citations.] In other words, we review only the reasons given by the trial court for denial of class certification, and ignore any other grounds that might support denial.” (Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 828-829, quoting National Solar Equipment Owners’ Assn., Inc. v. Grumman Corp. (1991) 235 Cal.App.3d 1273, 1281.)
B. Governing Principles
Here, the trial court denied class certification on the ground that common issues of fact and law would not predominate in the litigation of the class claims. Predominance of common issues is “a comparative concept.” (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 334.) Although class certification does not require that all the elements of the claims asserted on behalf of the proposed class members are capable of common proof (Employment Development Dept. v. Superior Court (1981) 30 Cal.3d 256, 266), class certification is properly denied when the individualized aspects of proof cannot be effectively managed (Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 334; Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1105-1106). If the defendants’ potential basis for liability varies so greatly among class members as to require extensive individualized proof, the trial court may reject class certification. (Wilens v. TD Waterhouse Group, Inc. (2003) 120 Cal.App.4th 746, 756; Caro v. Proctor & Gamble Co. (1993) 18 Cal.App.4th 644, 668-669 (Caro).)
Although the trial court ordinarily does not examine the merits of the class members’ claims when addressing the propriety of class certification (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 436-444), it may consider the elements of the claims in determining whether individualized proof of the class members’ claims predominates over common proof (Lockheed Martin Corp. v. Superior Court, supra, 29 Cal.4th at p. 1106). Here, the third amended complaint asserts claims for breach of an express warranty (Com. Code, § 2313), for violations of the UCL and FAL, and for a constructive trust.
We begin with the claim for a constructive trust, which relies on allegations that respondents engaged in misconduct involving fraud. To the extent the complaint asserts the existence of common law fraud, the elements of such a claim are “‘“(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.”’” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 173-174.) In Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1095 (Mirkin), our Supreme Court explained that in class actions involving such fraud claims, the plaintiffs enjoy the benefit of a special inference regarding reliance when the same misrepresentation has been made to the entire class: “[W]hen the same material misrepresentations have actually been communicated to each member of a class, an inference of reliance arises as to the entire class.” Thus, “actual reliance can be proved on a class-wide basis when each class member has read or heard the same misrepresentations.” (Ibid, italics omitted.)
The claim for breach of an express warranty relies on section 2313 of the Commercial Code, which provides that express warranties are created by “[a]ny affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain,” and by “[a]ny description of the goods which is made part of the basis of the bargain” (Com. Code, § 2313, subds. (a), (b)). Damages may be recovered for the violation of an express warranty. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 142.) To establish the existence of an express warranty, the buyer must show that the seller’s statements, promises, or product descriptions were the basis of the agreement with the buyer; accordingly, the claim fails if, in fact, no such representations were made to the buyer. (Pisano v. American Leasing (1983) 146 Cal.App.3d 194, 198.)
As our Supreme Court has noted, there is a division of opinion regarding the full import of the statutory requirement that the representation must be “‘part of the basis of the bargain.’” (Hauter v. Zogarts (1975) 14 Cal.3d 104, 115-116.) The requirement is derived from Uniform Commercial Code section 2313. (Hauter v. Zogarts, supra, at pp. 115-116.) In interpreting that section, some courts have held that the requirement obliges the plaintiff to show reliance upon the representation; other courts have viewed it as shifting the burden to the defendant to show nonreliance; and yet others have concluded that it abrogates the element of reliance. (Id. at pp. 115-116 & fn. 13.) In Keith v. Buchanan (1985) 173 Cal.App.3d 13 (Keith), the sole decision squarely addressing this issue under Commercial Code section 2313, the court concluded that the requirement “modifies both the degree of reliance and the burden of proof in express warranties under the code. The representation need only be part of the basis of the bargain, or merely a factor or consideration inducing the buyer to enter into the bargain. A warranty statement made by a seller is presumptively part of the basis of the bargain, and the burden is on the seller to prove that the resulting bargain does not rest at all on the representation.” (Keith, supra, 173 Cal.App.3d at p. 23.)
We turn to Cain’s claims under the UCL and the FAL. The UCL defines “unfair competition” broadly to include “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by [the FAL].” (Bus. & Prof. Code, § 17200.) The FAL makes it unlawful for any person or corporation “to induce the public to enter into any obligation relating” to a service “or anything of any nature whatsoever” by means of advertising that is “untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading....” (Bus. & Prof. Code, § 17500.) Damages cannot be recovered under the UCL and the FAL, and plaintiffs are generally limited to injunctive relief and restitution. (Buckland v. Threshold Industries, Ltd. (2007) 155 Cal.App.4th 798, 812, 819.)
Cain’s class claims under the UCL and the FAL are subject to the requirements imposed under Proposition 64, which the voters of California approved in November 2004. (Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 227.) Proposition 64 amended Business and Professions Code section 17204 to provide that a private individual has standing to assert a claim under the UCL only if he or she “‘has suffered injury in fact and has lost money or property as a result of such unfair competition.’” (Ibid.; Prop. 64, § 3.) Proposition 64 also amended Business and Professions Code section 17203 to provide that, aside from public officials, a person may pursue “‘representative claims or relief on behalf of others’” only if the person meets the new standing requirement and otherwise complies with Code of Civil Procedure section 382, which governs class actions. (Prop. 64, § 2.) In approving Proposition 64, the voters also amended the FAL to impose the standing requirements and limits placed upon UCL actions. (Prop. 64, § 1, § 5.)
These amendments imposed significant new requirements on claimants under the UCL and the FAL, which formerly permitted individuals to initiate representative actions of behalf of the public without showing injury or damage. (Californians for Disability Rights v. Mervyn’s, LLC, supra, 39 Cal.4th at pp. 227-228.)
In view of the provisions of Proposition 64, each class member in a UCL or FAL class action must satisfy the standing requirements imposed on individuals under Proposition 64. As class actions aggregate individual claims without altering the parties’ underlying substantive rights (Feitelberg v. Credit Suisse First Boston, LLC (2005) 134 Cal.App.4th 997, 1018), a suit’s status as a class action does not modify the substantive elements of the claims asserted in it (Collins v. Safeway Stores, Inc. (1986) 187 Cal.App.3d 62, 72-75). Because Proposition 64 established that no individual may assert a claim under the UCL or the FAL without meeting the standing requirements, the claim of each class member in an UCL or FAL action is subject to the requirements.
As this court has explained, to assert a claim under the UCL and FAL, individuals must show that they suffered “‘injury in fact’” under the standing requirements of the United States Constitution, and a loss of money or property within the meaning of the equitable principles governing restitution. (Buckland v. Threshold Enterprises, Ltd, supra, 155 Cal.App.4th at pp. 818-819.) However, an injury in fact and the loss of money or property are insufficient, by themselves, to establish standing: an individual must also show that he or she has suffered injury in fact and lost money or property “‘as a result of’” a violation of the UCL or FAL. (Daro v. Superior Court (2007) 151 Cal.App.4th 1079, 1098 (Daro).) There is little published authority regarding this additional requirement. In Daro, the court remarked regarding this requirement: “When a UCL action is based on an unlawful business practice,... a party may not premise its standing to sue upon injury caused by a defendant’s lawful activity simply because the lawful activity has some connection to an unlawful practice that does not otherwise affect the party. In short, there must be a causal connection between the harm suffered and the unlawful business activity. That causal connection is broken when a complaining party would suffer the same harm whether or not a defendant complied with the law.” (Daro, supra, 151 Cal.App.4th at p. 1099, italics added.)
Our Supreme Court has granted review in two cases in which the courts held that the phrase “as a result of” imposes a reliance requirement on UCL claims. (Pfizer Inc. v. Superior Court (2006) 141 Cal.App.4th 290, review granted Nov. 1, 2006, S145775; In re Tobacco II Cases (2006) 142 Cal.App.4th 891, review granted Nov. 1, 2006, S147345.)
C. Showings and Ruling
In seeking class certification, Cain stated that she bought an Ecoquest Living Air ozone generator from Costco for $717.49 on August 3, 2003. To establish the propriety of a class action, she pointed to evidence in support of the following version of the underlying facts: Between 2000 and 2004, Ecoquest and Ecoquest International shipped several hundred thousand products to authorized dealers within California. Notwithstanding the injunctions issued by the Tennessee District Court, respondents’ distributors engaged in a “massive radio marketing campaign” for the products. The radio advertisements falsely represented that the Living Air Classic ozone generator -- one of several products marketed by respondents -- reduced the risks of air pollution; killed bacteria; reduced mold, mildew, allergens and pet dander; could purify the air in an entire home; and was superior to other air purifiers. Cain asserted: “Although the advertisements differed in non-material ways, all of the advertisements stated that [respondents’] products cleaned and purified the air.”
Cain has not included the evidentiary showing supporting the certification motion in the record. Our summary of her showing relies on her memorandum of points and authorities.
Respondents opposed class certification on several grounds, including that individualized inquiries would predominate over common issues of law and fact regarding the causation and reliance elements of the class claims. They argued that Cain was not entitled to the class-wide inference of reliance explained in Mirkin, as no uniform representation regarding the products had been made to the class. According to respondents, the advertisements varied greatly in their contents, and not even the terms “clean” or “purify” were present in each advertisement.
In reply, Cain denied that the express warranty claim and claims under the UCL and FAL required a showing of reliance. In addition, she asserted that a uniform representation had been made to the class, arguing that because each product was identified as an “air purifier” in its packaging and in the advertisements, “[t]he only reasonable conclusion is that each class member purchased the product with the intent that it ‘purify,’ or make cleaner, the air in the environment.”
The trial court requested additional briefing on Cain’s theory that respondents uniformly applied the term “air purifier” to the products in their packaging. According to Cain’s and respondents’ showings -- which are not in conflict -- several of respondents’ products were packaged in plain boxes whose markings neither included the term “air purifier” nor made performance representations. The Living Air Classic -- the product Cain had purchased -- was packaged in a plain box whose markings identified its contents solely as a “Living Air,” although the product inside the box displayed a label stating that it was an “air purification system.” The Peak and Bora products were housed in the same boxes as the Living Air Classic; similarly, the Com Air and Eagle products were housed in plain boxes that identified their contents solely as a “Com Air”, and the Flair and Blaster products were housed in plain boxes that described their contents, respectively, as a “Flair” or a “Blaster.” Respondents asserted that they could not locate an example of the packaging for their Zone-it product, which they no longer manufactured, but stated that it would have been housed in a plain box without any performance markings.
Only three products were packaged in boxes displaying performance representations. The boxes housing the Breeze AT and Fresh Air products referred to their contents, respectively, as an “[a]ir [p]urification [s]ystem” and an “air purifier,” and made several performance claims. In contrast, the box housing the Pursonic Mister identified its contents solely as a “[m]ist [h]umidifier” that contained “[o]xidation technology for preventing and repressing the growth of mold, mildew, and bacteria.”
In denying class certification, the trial court stated: “The problem with respect to predominance of common issues of fact in the instant case turns not so much on whether individual reliance must be proved, but rather on the threshold question of whether there are common representations that were made to each purchaser.” Noting that each of the class claims relied on “alleged misrepresentations to consumers,” the trial court reasoned that the variety of representations within respondents’ advertisements dictated the predominance of individualized inquiries: “[T]o establish liability based on [Cain’s] misrepresentation theories, [she] not only would have to offer evidence that each class member heard a radio advertisement, but also would have to prove the content of the particular advertisement in order to establish which performance claims each class member heard.” The trial court also rejected Cain’s contention that respondents uniformly marketed their products “with a common representation as to the[ir] function,” noting that the packaging for the Pursonic Mist identified it as a humidifier that suppressed the growth of mold, mildew, and bacteria, but made no claims about air purification, and that the packaging for several other products made no performance claims whatsoever.
D. Analysis
Cain contends the trial court erred in denying class certification because it misapplied the inference of class-wide reliance explained in Mirkin. According to Cain, to enjoy the inference, she was not obliged to show that respondents’ advertising and packaging made identical claims; her burden was solely to show that the advertising and packaging made a common material misrepresentation. She argues that she carried this burden: notwithstanding the variety in the specific representations found in the advertising and packaging, she asserts, their common content was that respondents’ products were air purifiers. She states: “Respondents’ products were marketed, labeled and advertised as ‘air purifiers,’ so it is logical to assume that the class members purchased the products for a common reason: air purification.” For the reasons explained below, we disagree.
Cain also suggests that the trial court could have resolved individual issues of proof arising from differences among respondents’ products by dividing the class into subclasses. As she failed to present this proposal to the trial court, she has forfeited her contention on appeal. (Block v. Major League Baseball (1998) 65 Cal.App.4th 538, 545.)
In denying class certification, the trial court did not rule that Cain’s express warranty, UCL, and FAL claims required a showing of reliance; instead, it focused on a “threshold question,” viz., whether common representations were made to each purchaser. To the extent Cain’s claims include an element of reliance, the resolution of this question is pertinent to the factual predicates for the inference of class-wide reliance. In our view, she failed to establish the “material misrepresentation[]” needed to trigger the inference in question. (Mirkin v. Wasserman, supra, 5 Cal.4th at p. 1095.)
The inference is traceable to Vasquez v. Superior Court (1971) 4 Cal.3d 800 (Vasquez) and Occidental Land, Inc. v. Superior Court (1976) 18 Cal.3d 355 (Occidental Land). In Vasquez, the plaintiffs asserted that they could demonstrate that the defendant’s salespersons made the same misrepresentations regarding the price and quality of their products to each class member because the salespersons memorized a standardized sales statement. (Vasquez, supra, 4 Cal.3d at pp. 811-812.) Our Supreme Court concluded that the communication of identical misrepresentations to each class member supported a presumption that each class member had relied on them in buying the products. (Id. at pp. 814-815.) Similarly, in Occidental Land, the plaintiffs showed that each member of the class -- purchasers of homes within a development -- received and signed a report prior to the pertinent sale that contained some of the misrepresentations alleged in the complaint. (Occidental Land, supra, 18 Cal.3d at pp. 361-363.) The court concluded that this was sufficient under Vasquez to obviate the need for individualized showings of reliance.
As the court explained in Mirkin, the class-wide inference of reliance is subject to the condition that “the same material misrepresentations have actually been communicated to each member of [the] class,” that is, “each class member has read or heard the same misrepresentations.” (Mirkin, supra, 5 Cal.4th at p. 1095, italics omitted and added.) Thus, in Osborne v. Subaru of America, Inc. (1988) 198 Cal.App.3d 646, 661, the court concluded that the inference was inapplicable when the evidence submitted in connection with class certification established that three of the plaintiffs had not, in fact, been aware of the purported misrepresentations before they purchased the defendant’s product.
Moreover, at least one court has concluded that individual questions of fact predominate when a purportedly material misrepresentation is subject to multiple interpretations by the class members. In Caro, a consumer initiated a class action for fraud, alleging in his complaint that the defendants had misrepresented their product as “‘fresh’” orange juice -- that is, juice from squeezed oranges that had not been frozen or altered -- and as devoid of additives. (Caro, supra,18 Cal.App.4th at pp. 651-652, 668.) In a deposition, the consumer testified that when he bought the product, he knew that the product was not “fresh” orange juice, but had not noticed that the label stated the juice was “from concentrate.”
The court in Caro affirmed the trial court’s determination that individual issues involving the existence and nature of a material representation would predominate. (Caro, supra, 18 Cal.App.4th at pp. 668-669.) The court held that “there was no material misrepresentation [regarding freshness] to [the consumer] because he did not believe defendants’ product to be ‘fresh.’” (Id. at p. 668.) Whether other individuals believed that the juice was “‘fresh’” in the pertinent sense, the court further concluded, “would be a matter of individual proof.” (Ibid.) The court reached the same conclusion regarding the alleged misrepresentation that the product contained no additives, reasoning that the question of materiality mandated an individual inquiry into whether a class member had seen the label and how the member had understood the warning “‘from concentrate.’” (Ibid.)
Here, the evidence before the trial court did not show that each class member saw or heard some representation that the product purchased was an air purifier. As the trial court observed, the packaging for the Pursonic Mister described it as a humidifier that used “oxidation technology for preventing and repressing the growth of mold, mildew, and bacteria,” but made no claims about air purification. Several other products were housed in plain boxes that made no reference to air purification; although some of the products within the boxes had labels identifying them as air purification systems, nothing before us suggests that class members ordinarily opened the boxes and examined the labels before buying the products. Respondents’ radio advertisements mentioned only the Living Air Classic, and varied in their claims and content.
Because Cain has failed to provide the evidence underlying her original motion for class certification, our description of the radio advertisements is limited to her statements about them in her memorandum of points and authorities. (Conservatorship of Rand (1996) 49 Cal.App.4th 835, 841 [“A fundamental rule of appellate review is that ‘“[a] judgment or order of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown.”’ [Citations.]” Italics omitted.].)
In view of this evidence, we agree with the trial court that “this case involves alleged misrepresentations that were not uniform and were not made to every customer.” The trial court thus correctly concluded that an individual inquiry into each class member’s exposure to respondents’ alleged representations was necessary to resolve whether the member actually saw or heard a claim that the product purchased was an air purifier. Accordingly, Cain failed to establish the basis for the class-wide inference of reliance explained in Mirkin.
The trial court’s determinations also established that Cain’s express warranty, UCL, and FAL claims were not suitable for a class action, even if they do not require a showing of reliance. To assert a claim for breach of an express warranty, the plaintiff must prove that the defendant made a statement to the plaintiff that potentially formed the basis of the agreement. (Pisano v. American Leasing, supra, 146 Cal.App.3d at p. 198.) As respondents made no uniform representations to the class members, proof of their liability would require individual inquiries into the representations seen or heard by each class member. Similarly, any claim against respondents under the UCL or FAL requires a showing that the consumer suffered loss “as a result of” respondents’ alleged misrepresentations, that is, that there was “a causal connection between the harm suffered and the [misrepresentations].” (Daro, supra, 151 Cal.App.4th at pp.1098-1099, italics omitted.) Again, the absence of a uniform misrepresentation to the class members necessarily mandates individual inquiries into the existence of the requisite causal connection between each member’s purchase and the alleged misrepresentations. In sum, the trial court properly denied class certification.
DISPOSITION
The order denying class certification is affirmed. Respondents are awarded their costs on appeal.
We concur: WILLHITE, Acting P. J., SUZUKAWA, J.