Opinion
NOT TO BE PUBLISHED
Santa Clara County Super. Ct. Nos. CV026091, CV031220)
Mihara, Acting P.J.
Plaintiffs William Eichorn, 1STOP4GOLF, LLC, Pamela Pulner, and Walter Diercks proposed a class action under the Consumers Legal Remedies Act (CLRA) and the Unfair Competition Law (UCL). Plaintiffs alleged that defendant PalmOne, Inc. (Palm) misled consumers by failing to disclose, at the time it sold the Palm VII, VIIx, and i705, that the wireless function of these devices would be permanently disabled upon termination of the Palm.Net service. The trial court denied their motion for class certification. We find no error and affirm the order.
Civ. Code, § 1750 et seq.
Bus. & Prof. Code, § 17200 et seq.
PalmOne, Inc. is now known as Palm, Inc.
I. Factual and Procedural Background
A personal digital assistant (PDA) is a handheld computer on which users can keep their contacts, calendar, and other personal information. In 1999, Palm introduced the first PDA, the Palm VII, which allowed users to wirelessly access email and the Internet through the exclusive use of the Palm.Net service. During the next few years, Palm introduced the Palm VIIx and i705 models, which offered the same wireless function but were faster and had more memory capacity. However, the primary function for most users of these PDA’s was the same as Palm’s non-wireless PDA’s.
Palm’s marketing and advertising of the Palm VII, VIIx, and i705 (Palm Devices) featured their wireless Internet function. These materials did not expressly state that the wireless capability of the Palm Devices was compatible only with the Palm.Net network. However, the VII and VIIx packages stated that users could receive access to the Internet and email “[w]hen [they] subscribe to the Palm.Net service.” The i705 packages stated: “Requires a Palm.Net wireless service account.”
Palm sold the Palm.Net service separately from the Palm Devices. A user could activate his or her subscription to Palm.Net only after purchasing the Palm Devices and consenting to the terms of the Palm.Net Service Agreement. This agreement stated that Palm had the right to terminate the Palm.Net service at any time it wished for any reason upon 30 days’ prior written notice.
Palm notified users of the Palm Devices that it was terminating Palm.Net effective August 31, 2004. Palm also stated: “Unfortunately, your handheld’s wireless capability is only compatible with the Palm.Net network so you can’t transfer it to another network.” Therefore, users of the Palm Devices would be unable to wirelessly access email and the Internet after that date.
On August 30, 2004, Eichorn and 1STOP4Golf (Eichorn plaintiffs) filed their complaint for damages and equitable relief. Before Palm responded, the Eichorn plaintiffs filed their first amended complaint on October 4, 2004. They alleged causes of action for breach of express and implied warranty, and violations of the UCL and the CLRA. One of their theories was that the termination of Palm.Net was improper. However, they also alleged that Palm’s advertising failed to advise consumers that “they would not be able to continue to take advantage of the functionalities of the Palm handhelds because their wireless services through Palm.Net would be discontinued in the future. . . .” They sought various remedies, including damages, restitution, and injunctive relief “on their own behalves and on behalf of all other persons similarly situated who have purchased” Palm Devices and “subscribed to the Palm.Net wireless services.”
On October 4, 2004, Pulner and Diercks (the Pulner plaintiffs) filed their complaint against Palm in San Francisco Superior Court. They alleged causes of action for violations of the UCL, breach of implied warranty, and declaratory relief. They alleged, among other things, that Palm engaged in “false and misleading advertising by failing to prominently disclose” that Palm had “reserved the unilateral right to discontinue the Palm.Net service at any time thus rendering the wireless functionality useless.” They sought restitution of the money that they paid for the Palm Devices and any accessories, or alternatively, any profit realized by Palm from the sale of the Palm Devices and accessories. The Pulner plaintiffs subsequently dismissed the action in San Francisco and filed their complaint in Santa Clara County Superior Court on November 23, 2004. On December 30, 2004, the actions were consolidated pursuant to the parties’ stipulation.
On January 25, 2005, the trial court sustained Palm’s demurrer to the breach of express and implied warranty causes of action in the Eichorn plaintiffs’ first amended complaint. Shortly thereafter, the Pulner plaintiffs voluntarily dismissed their breach of implied warranty cause of action.
On February 25, 2005, Palm filed a cross-complaint that alleged a single cause of action for declaratory relief with respect to the validity and construction of the Palm.Net Service Agreement. Plaintiffs brought a motion for judgment on the pleadings and argued that the cross-complaint failed to state facts sufficient to state a cause of action, because they did “not dispute that the express terms of the Agreement allowed Palm to terminate the service with 30 days notice.” The trial court granted the motion for judgment on the pleadings.
Plaintiffs then filed a motion seeking class certification. Given plaintiffs’ concession that the breach of warranty causes of action were no longer viable, they defined the classes as “[a]ll persons or entities who, since four years prior to the filing of the Complaint until resolution of this action, either (a) purchased a Palm VII, VIIx, or i705 device and/or accessories for a Palm VII, VIIx or i705 device and subscribed to the Palm.Net service at the time of Palm.Net’s termination, or (b) purchased a Palm VII, VIIx, or i705 device and/or accessories for a Palm VII, VIIx or i705 device and gave it to someone who subscribed to the Palm.Net service at the time of Palm.Net’s termination.” Plaintiffs also filed a declaration by their counsel that attached various exhibits, including internal documents provided by Palm, packaging materials for the Palm Devices, Palm’s responses to interrogatories and requests for admissions, and excerpts from the deposition testimony of Palm employees.
On May 12, 2006, Palm filed its opposition to the motion for class certification. Palm also filed a declaration by their counsel and employees that attached various exhibits, including excerpts from the deposition testimony of Palm employees and each of the named plaintiffs as well as packaging materials for Palm Devices.
In their deposition testimony, plaintiffs admitted that they knew that the Palm Devices were compatible only with the Palm.Net service. Thomas Ciesielka, chief executive officer of 1STOP4GOLF, stated that he purchased 76 Palm VIIx’s to use in his business. He preferred “that it be a proprietary Palm service being provided rather than [a] third party,” because he believed that “doing it that way provided them the opportunity to provide a lower cost wireless charge for the same quality of service.” Though Ciesielka was aware that RIM “provided a third-party hardware, [it] provided the software, and [it] provided third-party wireless,” he understood that he did not have a “choice” of wireless service providers with his Palm VIIx. When Ciesielka was asked if he thought about “whether there was some other way [he] could [use a third-party] or [whether he had] to use Palm.Net,” he replied that he thought Palm.Net was “part of the package.”
Eichorn stated that when he purchased his Palm VIIx, he did not “know of any [other Internet service providers] and didn’t think there were” any that would work with his device.
When Pulner was asked whether she thought she “would be wedded to [Palm’s] service for a particular time,” she replied that “[i]t never occurred to [her] because [she] didn’t have anything else that could make it go.” Pulner “assumed Palm.Net was the only choice” for wireless service for her Palm VIIx.
Diercks received an i705 from Pulner as a gift. Diercks “didn’t care” whether there were other wireless services for his device, “because there was a service being provided by Palm.” He viewed it as “one-stop shopping,” and did not ask about other services. When Diercks was asked whether Palm offered “any other [Internet service providers],” he replied that the “only one [he] remember[ed was] the Palm.Net service.”
In their reply memorandum, plaintiffs submitted supplemental declarations that contradicted their deposition testimony.
In his declaration, Ciesielka stated: “I did not know when I purchased the handhelds on behalf of 1Stop4Golf that if Palm discontinued its wireless service, Palm.Net, that the hardware would not be able to perform the functions for which it was purchased. Neither the packaging nor the advertising alerted me to this possibility. Had Palm made this disclosure, I would not have bought the hardware.”
On June 7, 2006, the trial court denied the motion for class certification. The trial court gave several reasons for its order. It found that individual issues of reliance, causation, materiality, entitlement to recovery, and amount of recovery predominated over any common issues. The trial court also found that the named plaintiffs were atypical and inadequate, and that plaintiffs failed to show how state law differences would be handled.
II. Discussion
A. Standard of Review
“Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification.” (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435 (Linder).) “‘The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason. When two or more inferences can reasonably be deduced from the facts, the reviewing court has no authority to substitute its decision for that of the trial court. [Citations.]’” (Caro v. Procter & Gamble Co. (1993) 18 Cal.App.4th 644, 655, fn. 6 (Caro), quoting Shamblin v. Brattain (1988) 44 Cal.3d 474, 478-479.) Thus, a trial court’s class certification order that is supported by substantial evidence will not be disturbed “unless (1) improper criteria were used; or (2) erroneous legal assumptions were made.” (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470, citations omitted.) Where the order does not meet this standard, it will be reversed “even though there may be substantial evidence to support the court’s order.” (Linder, supra, 23 Cal.4th at p. 435, internal citations and quotation marks omitted.) This court examines whether the trial court has stated “‘[a]ny valid pertinent reason to uphold the order.’” (Ibid.)
B. Requirements for a Class Action
“Generally, a class suit is appropriate ‘when numerous parties suffer injury of insufficient size to warrant individual action and when denial of class relief would result in unjust advantage to the wrongdoer.’ [Citations.] But because group action also has the potential to create injustice, trial courts are required to ‘“carefully weigh respective benefits and burdens and to allow maintenance of the class action only where substantial benefits accrue both to litigants and the courts.”’ [Citations.]” (Linder, supra, 23 Cal.4th at p. 435.)
“Code of Civil Procedure section 382 authorizes class actions ‘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 ‘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 representative who can adequately represent the class. [Citation.] [¶] The certification question is ‘essentially a procedural one that does not ask whether an action is legally or factually meritorious.’ [Citation.] A trial court ruling on a certification motion determines ‘whether . . . the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.’ [Citations.]” (Sav-on Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326 (Sav-on).) In considering a motion seeking class certification, the trial court should not determine the merits of the claim. (Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 829.) “But when the merits of the claim are enmeshed with class action requirements, the trial court must consider evidence bearing on the factual elements necessary to determine whether to certify the class.” (Ibid.)
Civil Code section 1781, subdivision (b) governs class actions under the CLRA. It provides: “The court shall permit the suit to be maintained on behalf of all members of the represented class if all of the following conditions exist: [¶] (1) It is impracticable to bring all members of the class before the court. [¶] (2) The questions of law or fact common to the class are substantially similar and predominate over the questions affecting the individual members. [¶] (3) The claims or defenses of the representative plaintiffs are typical of the claims or defenses of the class. [¶] (4) The representative plaintiffs will fairly and adequately protect the interests of the class.”
The party seeking class certification has the burden to establish the existence of a defined class and a community of interest among the proposed members of the class. (Norwest Mortgage, Inc. v. Superior Court (1999) 72 Cal.App.4th 214, 221.) In determining whether the class has the requisite community of interest, we examine the allegations of the complaint, the declarations of the attorneys, and the evidence introduced at the certification hearing. (Ibid.)
1. Liability Issues
Plaintiffs contend that common liability issues predominate over issues facing individual members of the proposed class. They argue that the trial court erred in finding that each class member was required to establish his or her own individual reliance on Palm’s material concealment or omission, that is, that had the alleged concealment or omission been disclosed, plaintiffs would have been aware of it and acted differently. They claim that the proper inquiry was whether Palm’s failure to disclose a material fact about the Palm Devices was “‘likely to deceive’ the reasonable consumer,” and that this issue was common to all class members. (See e.g., McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1471; Aron v. U-Haul Co. of California (2006) 143 Cal.App.4th 796, 806.) We conclude that the trial court correctly found that plaintiffs failed to carry their burden of establishing that common issues of reliance, causation, or materiality predominate.
Here, the trial court stated: “Individualized issues predominate over common liability issues. No class-wide inference of reliance, causation or materiality is warranted, because there is no showing that consumers had any expectation that other wireless services were available. In fact, such an inference would be contrary to plaintiffs’ admitted knowledge that Palm.Net was the only choice.” Thus, the trial court found that plaintiffs were not deceived by any alleged omission by Palm, and consequently suffered no injury. Based on this factual finding and the evidence presented by the parties, the trial court concluded that it could not infer that consumers had been deceived or injured by Palm’s allegedly fraudulent conduct, and consequently each member of the proposed class would be required to litigate the liability issues individually.
a. CLRA
The purposes of the CLRA are “to protect consumers against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection.” (Civ. Code, § 1760.) Thus, the CLRA provides that a defendant may be liable for “unfair methods of competition and unfair or deceptive acts or practices” in the “sale . . . of goods” including: “[r]epresenting that goods . . . have . . . characteristics . . . which they do not have . . .” or “[r]epresenting that goods . . . are of a particular standard, quality, or grade . . . .” (Civ. Code, § 1770, subds. (a)(5), (7).) A defendant who engages in conduct that is “‘likely to mislead a reasonable consumer’” violates the CLRA. (Colgan v. Leatherman Tool Group, Inc. (2006) 135 Cal.App.4th 663, 680, quoting Nagel v. Twin Laboratories, Inc. (2003) 109 Cal.App.4th 39, 54.)
However, the CLRA also provides that “[a]ny consumer who suffers any damage as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770 may bring an action against that person to recover or obtain” damages or restitution. (Civ. Code, § 1780, subd. (a)(1), (3).) Thus, the plaintiff in a CLRA action must show “not only that a defendant’s conduct was deceptive but that the deception caused them harm.” (Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 97 Cal.App.4th 1282, 1292 (Massachusetts Mutual).) In a class action, “‘[c]ausation as to each class member is commonly proved more likely than not by materiality. That showing will undoubtedly be conclusive as to most of the class. The fact a defendant may be able to defeat the showing of causation as to a few individual class members does not transform the common question into a multitude of individual ones; plaintiffs satisfy their burden of showing causation as to each by showing materiality as to all.’” (Ibid., quoting Blackie v. Barrack (9th Cir. 1975) 524 F.2d 891, 906, fn. 22.) Where reasonable minds cannot differ on the question, “materiality” can be determined as a matter of law. (Caro, supra, 18 Cal.App.4th at p. 667, fn. 18.)
Plaintiffs do not discuss whether reliance or causation is required under the CLRA in their opening brief. However, plaintiffs concede in their reply brief that reliance is an element of any violation of the CLRA. (Civ. Code, § 1780, subd. (a); Massachusetts Mutual, supra, 97 Cal.App.4th at p.1292.) They claim that this element may be presumed on a class-wide basis in this case, since Palm made material omissions in its advertising. We disagree.
Here, the VII and VIIx packages stated that users could access the Internet and email “[w]hen [they] subscribe to the Palm.Net service.” The i705 packages stated: “Requires a Palm.Net service wireless account.” Even assuming that consumers were misled by this advertising to believe that their Palm Devices would operate with other Internet service providers, the record established that consumers did not believe this information was material to their decision to purchase the product. The wireless capability was only one of the many functions that the Palm Devices provided. A significant number of purchasers never subscribed to the Palm.Net service. The majority of the subscribers in any given month did not use the wireless feature. When Palm terminated the Palm.Net service, only a small percentage of subscribers remained. Of these subscribers, almost 50 percent had not accessed the Palm.Net service in the six months prior to termination. Moreover, a statistically insignificant number of subscribers complained to Palm when it terminated the Palm.Net service. This record establishes, as a matter of law, that even if Palm had disclosed the allegedly omitted information and consumers had been aware of it, they would not have acted differently. This was not a case in which the defendant was able to show that a few individuals in the proposed class did not use the wireless function. Instead, the record establishes that the compatibility of the Palm Devices with other Internet service providers was simply not material to a consumer’s decision to purchase a device. Since plaintiffs made an insufficient showing of materiality, causation as to each class member cannot be inferred. Accordingly, the trial court correctly found that there could be no inference of common reliance, causation or materiality under the CLRA, and that the issue of liability would have to be tried individually for each proposed class member.
Plaintiffs contend that Palm did not inform consumers of the wireless capability of the Palm Devices until it decided to terminate the Palm.Net service, thus establishing that Palm’s alleged deceptive conduct was material to consumers. However, this evidence does not show what consumers believed was material to their decision to purchase the Palm Devices.
b. UCL
The purpose of the UCL “is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services.” (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949.) The UCL defines “unfair competition” as “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by [section 17500, the false advertising law].” (Bus. & Prof. Code, § 17200.) Relevant to the present inquiry is the “fraud” prong of the UCL. Under the former provisions of the UCL, a private plaintiff had standing to bring an action for “‘the interests of itself’” even when the plaintiff had not suffered injury. (Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 561.) Thus, courts held that “‘[t]he “fraud” prong of [the UCL was] unlike common law fraud or deception. A violation [could] be shown even if no one was actually deceived, relied upon the fraudulent practice, or sustained any damage. Instead, it [was] only necessary to show that members of the public [were] likely to be deceived.’” (Bardin v. Daimlerchrysler Corp. (2006) 136 Cal.App.4th 1255, 1274, quoting Schnall v. Hertz Corp. (2000) 78 Cal.App.4th 1144, 1167.)
However, the UCL was amended by Proposition 64 in 2004. This amendment was designed “to prohibit private attorneys from filing lawsuits for unfair competition where they ha[d] no client who has been injured in fact . . . .” (Prop. 64, § 1, subd. (e).) Accordingly, the UCL currently provides that a private plaintiff who brings an action must show that he or she “has suffered injury in fact and has lost money or property as a result of such unfair competition.” (Bus. & Prof. Code, § 17204.)
The UCL also presently contemplates class actions. A private plaintiff may “pursue representative claims or relief on behalf of others only if the claimant meets the standing requirements of Section 17204 and complies with Section 382 of the Code of Civil Procedure [which specifies class action requirements].” (Bus. & Prof. Code, § 17203.) Thus, the clear language of Business and Professions Code sections 17203 and 17204 requires that a named plaintiff in a class action brought under the UCL must have suffered injury as a result of any alleged material omissions by the defendant. Moreover, “‘[t]he definition of a class cannot be so broad as to include individuals who are without standing to maintain the action on their own behalf. Each class member must have standing to bring the suit in his own right.’” (Collins v. Safeway Stores, Inc. (1986) 187 Cal.App.3d 62, 73, quoting McElhaney v. Eli Lilly & Co. (D.S.D. 1982) 93 F.R.D. 875, 878; Feitelberg v. Credit Suisse First Boston, LLC (2005) 134 Cal.App.4th 997, 1018.)
The California Supreme Court is presently considering: (1) whether each member of a proposed class, or only the class representative, must have suffered “injury in fact” in order to bring a class action under the UCL; and whether each member of a proposed class must have relied on a manufacturer’s representation in order to bring a class action based on the manufacturer’s alleged misrepresentation of a product. (In re Tobacco II Cases, review granted Nov. 1, 2006, S147345; Pfizer, Inc. v. Superior Court, review granted Nov. 1, 2006, S145775; McAdams v. Monier, Inc., review granted Sept. 19, 2007, S154088.)
Here, the trial court found that plaintiffs knew Palm.Net was the only Internet service provider for their Palm Devices, and consequently they did not rely on any allegedly fraudulent practice by Palm that caused them to suffer injury in fact. Plaintiffs contend, however, that there was insufficient evidence to support this finding. They claim that the record established that they knew Palm Devices “could wirelessly connect with Palm.Net, but significantly, they did not know if Palm terminated the service, the hardware would permanently cease to operate wirelessly.”
We disagree with plaintiffs’ characterization of the record. Though Ciesielka was aware that RIM “provided a third-party hardware, they provided the software, and they provided third-party wireless,” he understood that he did not have a “choice” of wireless service providers with his Palm VIIx. When Ciesielka was asked if he thought about “whether there was some other way [he] could [use a third-party] or [whether he had] to use Palm.Net,” he replied that he thought Palm.Net was “part of the package.” Eichorn stated that when he purchased his Palm VIIx, he did not “know of any [other Internet service providers] and didn’t think there were” any that would work with his device. Pulner was asked whether she thought she “would be wedded to [Palm’s] service for a particular time,” she replied that “[i]t never occurred to [her] because [she] didn’t have anything else that could make it go.” Pulner “assumed Palm.Net was the only choice” for wireless service for her Palm VIIx. Diercks did not purchase an i705, but received one from Pulner as a gift. In failing to purchase one of the Palm Devices, Diercks clearly had not relied on any of Palm’s allegedly deceptive advertising. In any event, Diercks “didn’t care” whether there were other wireless services for his device. He viewed it as “one-stop shopping”. When Diercks was asked whether Palm offered “any other [Internet service providers],” he replied that the “only one [he] remember[ed was] the Palm.Net service.” This testimony established that plaintiffs either knew or did not care that Palm.Net was the only wireless service that could be used with their Palm Devices, and thus even if the alleged omission had been disclosed by Palm, plaintiffs would not have acted differently. Accordingly, there was substantial evidence to support the trial court’s finding that plaintiffs had not “suffered injury in fact and ha[d] lost money or property as a result of such unfair competition.” (Bus. & Prof. Code, § 17204.)
While plaintiffs rely on their declarations that were made after they abandoned their breach of warranty claims, this court has no authority to reject the trial court’s determination that plaintiffs’ deposition testimony was more credible than their subsequent declarations. (Sav-on, supra, 34 Cal.4th at p. 328; see also Caro, supra, 18 Cal.App.4th 655, fn. 6.)
We next consider whether the trial court’s refusal to infer class-wide reliance, causation or materiality under the UCL was erroneous. Here, the trial court concluded that plaintiffs failed to make any showing that “consumers had any expectation that other wireless services were available.” In other words, the trial court found that no inference could be drawn that consumers suffered injury as a result of Palm’s alleged deception, because plaintiffs knew that their only option for an Internet service provider was Palm.Net service.
Since the present standing requirements for private plaintiffs under the UCL are analogous to those under the CLRA, we turn to the case of Massachusetts Mutual, supra, 97 Cal.App.4th 1282 for guidance. In that case, the court concluded that the plaintiff in a CLRA action must show that a defendant’s deceptive conduct caused him or her harm. (Id. at p. 1292.) Similarly, relief for private plaintiffs under the UCL is limited to those who have “suffered injury in fact and [have] lost money or property as a result of such unfair competition.” (Bus. & Prof. Code, § 17204.) Thus, plaintiffs who bring a fraud-based UCL action must make the same showing as do those in a CLRA action. However, imposition of this requirement under the CLRA did not make the “plaintiffs’ claims unsuitable for class treatment.” (Massachusetts Mutual, supra,97 Cal.App.4th at p. 1292 .) The Massachusetts Mutual court concluded that elements of a CLRA cause of action could be inferred for each class member. (Id. at pp. 1292-1295.)
Based on the similar language in the CLRA and UCL statutes, we conclude that the elements of a UCL claim may be inferred for each member of the proposed class under certain circumstances. Here, however, plaintiffs failed to make an adequate showing. The named plaintiffs were not misled by Palm’s alleged omission of material facts, thus supporting the trial court’s conclusion that no inference could be drawn that other consumers had been deceived by Palm. As previously discussed, the record also established that the overwhelming majority of the subscribers were not even using the wireless feature of their Palm Devices when the Palm.Net service was terminated, and consequently any alleged omission by Palm was simply not material to a consumer’s decision to purchase a Palm Device. Thus, the trial court did not err in concluding that liability issues under the UCL could not be tried on a class-wide basis.
2. Issues relating to Recovery
Even assuming that the trial court erred in its analysis of the liability issue, its finding that each class member would be required to make an individualized showing of either his or her entitlement to recovery or the amount of recovery is a valid reason to affirm the order denying class certification.
Here, the trial court stated that “[i]ndividualized issues of entitlement to monetary relief predominate over class-wide damage entitlement issues. Proposed class members who never subscribed to Palm.Net do not qualify for recovery, and subscribers’ individualized issues prevent class-wide entitlement determinations. [¶] Issues relating to complex monetary recovery valuation render the proposed class action unmanageable and not a superior method of adjudicating the controversy. Such issues also are so individualized as to predominate over any issues common to the class.”
“It is settled that ‘a class action is not inappropriate simply because each member of the class may at some point be required to make an individual showing as to his or her eligibility for recovery or as to the amount of his or her damages.’” In re Cipro Cases I and II (2004) 121 Cal.App.4th 402, 414, quoting Employment Development Dept. v. Superior Court (1981) 30 Cal.3d 256, 266.) Nevertheless, entitlement to recovery is “one factor to be considered in determining whether a class action is proper.” (Vasquez v. Superior Court (1971) 4 Cal.3d 800, 809.) As the California Supreme Court has observed, “[p]redominance is a comparative concept, and the necessity for class members to individually establish eligibility and damages does not mean individual fact questions predominate. Individual issues do not render class certification inappropriate so long as such issues may effectively be managed.” (Sav-on, supra, 34 Cal.4th at p. 334, internal quotations marks and citations omitted.) The Sav-on court further noted that “the maintenance of the suit as a class action is not precluded so long as the issues which may be jointly tried, when compared to those requiring separate adjudication, justify the maintenance of the suit as a class action.” (Id. at p. 335, internal quotation marks omitted.)
Plaintiffs claim that since “all members of the class have been subject to the same advertising, the same omissions, and the same termination of the wireless service, common issues predominate over any individualized issues concerning entitlement and amount of damages.” They argue that the trial court could create subclasses to manage issues relating to individual entitlement. We disagree. The members of the proposed class who gave Palm Devices to others could not have suffered injury by the termination of the recipients’ subscriptions to Palm.Net. While this subclass could have been removed from the class action, a substantial number of the remaining proposed class members would have been required to individually litigate their entitlement to recovery. The subscribers, who replaced their Palm.Net service, would be required to prove that their new service was more expensive than that provided by Palm. More importantly, a substantial number of the Palm.Net subscribers were not using the wireless service at all within six months of its termination. Thus, these subscribers would be required to submit individual proof that they planned on using the wireless service in the future, that is, they would have to disprove the reasonable assumption that they had abandoned Palm.Net before its termination. The resolution of these individual issues of entitlement to recovery would consume far greater judicial resources than issues relating to Palm’s standardized advertising and marketing plan.
Plaintiffs also argue that the calculation of damages involves “simple accounting questions, such as how many Palm devices were purchased by class members and how much the class members paid for the devices they purchased.” They point out that since “[r]estitution under the UCL focuses on defendant’s unjust enrichment - returning property acquired unlawfully - rather than compensation for actual loss,” the issue of the amount of recovery would be common to all class members. Though plaintiffs are limited to injunctive relief or restitution under the UCL (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 179), here they are also seeking damages under the CLRA (Civ. Code, § 1780, subd. (a)(1)). Thus, their CLRA claim would require individual findings of the amount of loss to a substantial number of class members.
The calculation of the amount of damages for each individual class member would also require the resolution of several legal and factual findings. Under plaintiffs’ theory, they suffered harm when Palm terminated the Palm.Net service. Since the personal information management functions of the Palm Devices continued to function after Palm.Net’s termination, a determination as to what portion of the Palm Device each class member was using for wireless functions would be required. Some class members used the wireless function a great deal and others almost not at all. Thus, each class member would be required to establish what portion of time he or she accessed the Palm.Net service. Moreover, given that technological advances would render the Palm Devices obsolete, there would be an issue as to how long each class member expected to use the device and its wireless functions. Consequently, the creation of subclasses would not have resolved the necessity of calculating the amount of damages for each individual class member.
Plaintiffs claim that the trial court “failed to consider any procedural devices, or indeed, take any proactive or creative measure to simplify complex litigation.” They point out that they requested that the trial court “bifurcate issues of class liability and individual relief.” However, as previously discussed, the issue of liability could not be inferred on a class-wide basis.
3. Class Representatives
Plaintiffs next contend that there is insufficient evidence to support the trial court’s finding that they are atypical and inadequate class representatives.
The trial court found that “[t]he named plaintiffs are atypical and inadequate. They all admit they knew that Palm.Net was the only wireless service available (or did not care), and thus are not typical of any consumer who would seek to assert such a claim. They also cannot represent a putative class of those who allegedly were deceived by Palm’s failure to disclose that fact.”
“The class representative must be situated similarly to class members. [Citation.] ‘It is the fact that the class plaintiff’s claims are typical and his representation of the class adequate which gives legitimacy to permitting him to bind class members who have notice of the action.’ [Citation.] Further, ‘there can be no class certification unless it is determined by the trial court that similarly situated persons have sustained damage. There can be no cognizable class unless it is first determined that members who make up the class have sustained the same or similar damage.’ [Citations.]” (Caro, supra, 18 Cal.App.4th at pp. 663-664.)
According to the operative complaint, Palm’s deceptive advertising induced plaintiffs to purchase the Palm Devices by failing to inform them that the wireless capability of the Palm Device would not operate after the termination of Palm.Net service. Though plaintiffs’ deposition testimony established that they knew or did not care that Palm.Net was the only wireless service available for their Palm Devices, plaintiffs rely on their declarations. However, as previously stated, plaintiffs have ignored the appropriate standard of review that requires this court to draw all inferences in favor of the trial court’s order. (Sav-on, supra, 34 Cal.4th at p. 328.) Because plaintiffs were not deceived by Palm’s alleged omissions, they were atypical and inadequate to represent the proposed class.
Plaintiffs reliance on Aguiar v. Cintas Corp. No. 2 (2006) 144 Cal.App.4th 121 is misplaced. In that case, the reviewing court held that inconsistencies in the named plaintiffs’ deposition testimony could be resolved by the creation of a subclass in which these plaintiffs could adequately represent the subclass. In contrast, here the named plaintiffs cannot establish that they were deceived when they purchased their Palm Devices.
Assuming that they were no longer suitable representatives, plaintiffs claim that the trial court erred in failing to grant their request for leave to substitute in other plaintiffs. Generally, courts allow the amendment of complaints to substitute plaintiffs who meet standing requirements. (Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 239.) Here, however, plaintiffs failed to carry their burden of establishing a reasonable possibility that the defects in their first amended complaint were curable by amendment. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.) Since a substantial percentage of subscribers were not using the wireless feature of their Palm Devices at the time of Palm.Net’s termination and the named plaintiffs admitted that they did not rely on any alleged omissions by Palm, causation could not be inferred for all proposed class members even if plaintiffs amended their complaint. Accordingly, the trial court did not abuse its discretion by denying plaintiffs’ request.
C. Conclusion
In conclusion, we find that there was substantial evidence to support the trial court’s findings that individual class members would be required to litigate liability issues, entitlement to recovery, and the amount of recovery. Evidence relating to these issues affecting individual members far surpassed common issues relating to Palm’s advertising and marketing practices. We also find that there was substantial evidence to the trial court’s findings that plaintiffs’ claims were not typical and their representation of the class was inadequate. Since plaintiffs failed to carry their burden to establish the existence of a community of interest among the class members, the trial court did not abuse its discretion in denying the motion for class certification.
Plaintiffs also argue that the trial court erred in finding that they were required to provide an analysis of state law variations. We need not consider this argument, because the trial court stated valid reasons for denying the class certification motion. (Linder, supra, 23 Cal.4th at p. 435.)
III. Disposition
The order denying class certification is affirmed.
WE CONCUR: McAdams, J., Duffy, J.
In his declaration, Eichorn stated: “During my deposition, I testified that I did not know if there were other internet service providers that worked with the Palm VIIx device at the time that I bought it, and that although I didn’t think that there were, I now wish I would have known at the time that there weren’t. Although Palm’s attorneys did not follow up to ask me directly, it is important for me to say that I did not think about the possibility of other internet service providers at the time I bought the hardware because I did not know that Palm would later put me in a position where I could no longer use Palm.[N]et. In other words, at the time of my purchase, the advertising and pack[ag]ing did not inform me of the possibility that, if Palm stopped providing Palm.Net, I would not be able to use the Palm handheld for the reasons that I had bought it. Had this been disclosed, I would not have bought the hardware.”
In her declaration, Pulner stated: “Because I was buying a Palm product and because I had previously been a very loyal Palm customer and was confident that Palm, a well-established company, would be around for a long time, . . . I did not even think about another service provider. This is why I told Palm’s attorney in deposition that I assumed Palm was the only choice. . . . [¶] My ‘assumption’ occurred because Palm concealed important information from me at the time I bought the hardware. What I mean by this is that I did not think about the possibility of other internet service providers at the time I bought the hardware because I did not have any reason to know that others might be necessary. On the other hand, if Palm had disclosed on the box or in any of its in-store advertising that, if it terminated Palm.Net which it [had] the right to do for any reason, the hardware would not be able to perform the functions I bought it for, I would not have bought the hardware for myself or as gifts and I would not have recommended to my friends and colleagues that they buy the hardware.”
In his declaration, Diercks stated: “I answered that I ‘did not care’ [whether there was a choice of Internet service providers] because Palm was already providing the service at what appeared to be an appropriate price and thus there was no reason for me to consider hardware from one company and service from another (this is what I meant by ‘one-stop’ shopping). [¶] Because I was very familiar with, and confident in, Palm as a company that had been and would be around for a long time, I never even considered that Palm would abandon the service which would thereby render the wireless functionality of my i705 useless. If Palm had disclosed in any of its print materials that if it terminated the Palm.Net service I would permanently lose all wireless functionality because there would be no alternatives other than buying a new piece of hardware, I never would have purchased the accessories I did.”