Summary
denying a motion to strike class allegations based on the need to apply the law of "nearly all the states" because "the existence of variation in the applicable state law does not necessarily mean that common issues of fact and law will not predominate, especially if the state laws treat the most important issues in the case in essentially identical fashion"
Summary of this case from Wagner v. Gen. Nutrition Corp.Opinion
05 Civ. 7233 (JSR).
June 21, 2006
MEMORANDUM
The plaintiffs in these consolidated cases (and proposed class action) are purchasers of various models of digital cameras manufactured by defendant. They allege, in essence, that these cameras suffer from various technological and physical defects and that the defendant, despite having knowledge of these defects, failed to inform the public of their existence. In their second consolidated amended class action complaint, plaintiffs bring claims for unjust enrichment, breach of the implied warranty of merchantability, and violations of New York General Business Law § 349 and Florida Deceptive and Unfair Trade Practices Act. The defendant moved to dismiss the unjust enrichment claims for failure to state a claim, to strike the class action allegations in the complaint, and upon striking the class action allegations, to dismiss the complaint in its entirety for lack of subject matter jurisdiction. By Order dated February 6, 2006, the Court denied defendant's motion in its entirety. This Memorandum serves to state briefly the reasons that warranted that result at that time.
It should be noted, however, that plaintiffs' counsel subsequently conceded that, in light of discovery, many of the allegations in the complaint are no longer supportable and several of the counts must be dismissed.
As to defendant's motion to strike the class action allegations from the complaint, the action may be maintained as a class action only if, inter alia, "questions of law or fact common to the members of the class predominate over any questions affecting only individual members." Fed.R.Civ.P. 23(b) (3). Defendant argues, in essence, that common issues do not predominate here because certification of plaintiffs' proposed class would require application of the laws of nearly all the states. However, the existence of variation in the applicable state law does not necessarily mean that common issues of fact and law will not predominate, especially if the state laws treat the most important issues in the case in essentially identical fashion. Cf. In re "Agent Orange" Prod. Liab. Litig., 818 F.2d 145, 165-66 (2d Cir. 1987). At the stage of the litigation when this motion was made and decided, it was plainly too early to determine this issue. Accordingly, defendant's motion to strike the class action allegations was denied, without prejudice.
Having denied defendant's motion to strike the complaint's class action allegations, the Court also denied defendant's concomitant motion to dismiss the complaint for lack of subject matter jurisdiction.
As to defendant's motion to dismiss plaintiff's unjust enrichment claims for failure to state a claim, the governing laws of the relevant states all require, in essence, that a plaintiff show that "(1) defendant was enriched (2) at plaintiff's expense, and (3) that it is against equity and good conscience to permit . . . defendant to retain what is sought to be recovered." See, e.g., Clark v. Daby, 751 N.Y.S.2d 622, 623 (App.Div. 2002) (internal quotation marks omitted); see also HPI Health Care Servs., Inc. v. Mt. Vernon Hospital, Inc., 545 N.E.2d 672, 679 (Ill. 1989) ("To state a cause of action based on a theory of unjust enrichment, a plaintiff must allege that the defendant has unjustly retained a benefit to the plaintiff's detriment, and that defendant's retention of the benefit violates the fundamental principles of justice, equity, and good conscience."); Fasching v. Kallinger, 510 A.2d 694, 699 (N.J. App. Div. 1986) ("Plaintiff must prove that defendant received a benefit, retention of which would be unjust."); Watts v. Watts, 405 N.W.2d 303, 313 (Wisc. 1987) ("[A]n action for unjust enrichment . . . is based upon proof of three elements: (1) a benefit conferred on the defendant by the plaintiff, (2) appreciation or knowledge by the defendant of the benefit, and (3) acceptance or retention of the benefit by the defendant under circumstances making it inequitable for the defendant to retain the benefit."); Va. Mun. Group Self-Insurance Ass'n v. Crawford, 66 Va. Cir. 236, 242 (Va. Circ. 2004) ("[T]he moving party must typically demonstrate the existence of: (1) a benefit conferred on the defendant by the plaintiff; (2) knowledge on the part of the defendant of the conferring of the benefit; and (3) acceptance or retention of the benefit by the defendant in circumstances that render it inequitable for the defendant to retain the benefit without paying for its value.") (internal quotation marks omitted).
The parties agree that under New York choice of law rules, the state in which each plaintiff resides provides the governing law for unjust enrichment claims. Accordingly, plaintiffs' unjust enrichment claims, as they stood at the time this motion was considered, were governed by the laws of New York, New Jersey, Wisconsin, Illinois, and Virginia.
Defendant argues that under the governing law plaintiffs must confer a "direct benefit" on the defendant to recover under the doctrine of unjust enrichment and that here it was third-party retailers, not the defendant, that were enriched. However, whether defendant received any benefit from plaintiffs' camera purchases is a question of fact not properly resolved on a motion to dismiss. Further, the laws of the relevant states do not require either a direct relationship between the parties or that a direct benefit be conferred on the defendant. The cases on which defendant relies suggest, at most, only that some relationships may be too attenuated to support an unjust enrichment claim. Here, however, there is sufficient connection between the parties to support a claim for unjust enrichment. Defendant also argues that plaintiffs cannot state a claim for unjust enrichment because they have adequate remedies at law. However, although plaintiffs may not ultimately recover under both their legal and equitable theories, they may plead both claims in the alternative. See Fed.R.Civ.P. 8(e)(2).
The Court considered the defendant's other arguments and found them without merit. Accordingly, for the foregoing reasons, the defendant's motion was denied in its entirety.