White v. Hollister















Filed 1/3/13
White v. Hollister CA2/4

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>NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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California Rules of Court, rule
8.1115(a), prohibits courts and parties from citing or relying on opinions not
certified for publication or ordered published, except as specified by rule
8.1115(b). This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115>.







IN THE COURT OF APPEAL OF THE
STATE OF CALIFORNIA



SECOND APPELLATE DISTRICT



DIVISION FOUR












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KERRY WHITE, Plaintiff and Appellant, v. HOLLISTER CO., Defendant and Respondent.

B239119 (Los Angeles County Super. Ct. No. BC444368)

APPEAL from
an order of the Superior Court of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Los Angeles
County, David L. Minning, Judge. Reversed with directions.

Law Offices
of Melvin Neal and Melvin Neal for Plaintiff and Appellant.

Jones Day,
Christopher Lovrien, and Peter Davids for Defendant and Respondent.

>

Plaintiff Kerry White appeals the trial court’s denial of his motion
to certify a class made up of all consumers who received $25 gift cards from
defendant Hollister Company as part of a 2009 holiday promotion, but did not
redeem the gift cards before the cards expired on January 30, 2010. Plaintiff contends that
because the gift cards did not say that they expired, defendant’s failure to
honor them after January 30, 2010, violated Civil Code section 1749.5 and the href="http://www.mcmillanlaw.com/">Consumers Legal Remedies Act (Civ. Code,
§ 1770 et seq.; CLRA).href="#_ftn1"
name="_ftnref1" title="">[1] Plaintiff further contends that the case is
appropriate for class treatment and, therefore, the trial court abused its
discretion by denying his motion for class certification. We agree with plaintiff in part, and thus we
reverse with directions to the trial court to certify a subset of the proposed
plaintiff class.



FACTUAL AND PROCEDURAL BACKGROUND



I. The Present Action

Plaintiff
Kerry White filed the present action on August 25, 2010,
and filed the operative first amended class action complaint (complaint) on March 24, 2011. The complaint alleges that
plaintiff is a California consumer and defendant is an Ohio corporation
that conducts business in California.href="#_ftn2" name="_ftnref2"
title="">[2] In December 2009, defendant ran a promotion
pursuant to which it issued a $25 gift card to any customer who made a purchase
of $75 or more. On about December 14, 2009, plaintiff received a $25 gift card as a promotion for purchasing
$84.82 worth of defendant’s merchandise.
The gift card did not indicate an expiration date. Plaintiff gave the gift card to his daughter,
who attempted to use it on February 7, 2010. The cashier refused to honor the gift card,
saying it had expired on February 1, 2010.

The
complaint alleges that defendant’s failure to indicate an expiration date on
the gift card’s face violated section 1749.5, which provides that a gift
certificate may not expire unless it is distributed pursuant to a promotional
program and states the expiration
date on the front of the gift certificate in capital letters in at least
10-point type. The complaint also
alleges that defendant’s issuance of the gift cards violated the CLRA, section
1770, subdivision (a)(5) (declaring unlawful “[r]epresenting that goods or
services have . . . uses, benefits, or quantities which they do
not have . . .”) and (a)(14) (declaring unlawful “[r]epresenting
that a transaction confers or involves rights, remedies, or obligations which
it does not have or involve, or which are prohibited by law”). The complaint seeks a declaration of the
rights and obligations of the parties—“(a) that the unspecified expiration date
imposed on the consumers who have purchased or received DEFENDANT’S gift cards
is unlawful and void; and (b) that Plaintiff and the class have the right to
redeem all such gift cards”—an injunction, and href="http://www.fearnotlaw.com/">compensatory and punitive damages.



II. Motion for Class Certification

Plaintiff
filed a motion for class certification on August 25, 2011, seeking to certify a
class defined as: “[Any] person[] who
received or is a holder of a promotional gift card with an unspecified
expiration date, in violation of California Civil Code Section 1749.5, which
was issued by the DEFENDANT pursuant to a transaction occurring in the State of
California on or after August 25, 2007, and which expired without use, in whole
or in part, due to having reached the unexpressed expiration date. Excluded from the class is DEFENDANT, [its]
agents, any entity in which any DEFENDANT has or had a controlling interest,
its predecessors in interest or assigns.”


The
motion asserted that common questions of law or fact predominated over
questions affecting individual class members because none of the gift cards
contained an expiration date, each card entitled the bearer to $25 off his or
her next purchase, and defendant denied each class member use of the card. Further, “[t]he central and dispositive
issues in this case related to the conduct and liability of Defendant;
specifically, whether the law was violated with regards to Defendant’s
distribution of promotional gift cards subject to an expiration date, but
without indicating the expiration date on the face of the card as required by
statute. [¶] In this case, the questions of law appl[y]
commonly and equally to all class members.
Each class member received a gift card according to the terms of the
promotion. All members were treated
uniformly in that they were denied use of the promotional gift card because of
an expiration date of which they were unaware because it was not indicated on
the face of the card. Class treatment is
proper and efficient because the court would be able to determine in a single
litigation Defendant’s liability to the numerous class members regarding the
same conduct.” Plaintiff also alleged
that the number of class members was in the thousands, plaintiff’s claims were
typical of the claims of the class, plaintiff would fairly and adequately
protect the interests of the class, and a class action was a superior procedure
for the fair and efficient litigation of the claims.

In
support of his motion, plaintiff submitted defendant’s responses to
interrogatories, which represented that during its December 2009 promotional
event, defendant issued 72,062 gift cards through its California stores,
and 957 gift cards to California residents through its website.
Of the 72,062 gift cards issued by defendant’s California stores, 9,469
were rejected because the promotion had expired, 6,732 cards were partially
unredeemed, and 23,896 cards were fully unredeemed. Of the 957 gift cards issued to California
residents through defendant’s website, 79 cards were partially unredeemed, and
440 cards were fully unredeemed.

Defendant
opposed the motion. Among other things,
it contended that individual issues of “reliance, causation, and damages, all
of which require a consumer-by-consumer analysis, are insurmountable obstacles
to certification of Plaintiff’s proposed class.” Defendant asserted that “the individual
factual issues that predominate over common issues include the manner in which
each putative class member learned of the promotion, including through in-store
signs, Card sleeves, e-mails, or conversations with in-store personnel, whether
each putative class member learned of the expiration date, whether and how each
putative class member was induced to spend additional money because of the
promotion, whether and how the existence of an expiration date for the
Promotion Card influenced each putative class member’s decision to spend
additional money, and why putative class members failed to redeem Promotion
Cards before they expired (i.e., were they unaware of the expiration date >or did they choose not to use the Card,
misplace it, or forget about it?). These
individual factual issues bear directly on reliance, causation, and
injury-in-fact and preclude class certification.”

In
support of its opposition, defendant submitted the declaration of its marketing
production manager, which stated that during the 2009 holiday promotion, each
of defendant’s stores received signs indicating that the 2009 holiday
promotional gift cards expired January 30, 2010, and the declaration of
defendant’s regional manager for central California, which stated that during
the 2009 holiday promotion, signs indicating the gift cards’ expiration date
“were prominently located throughout the stores.” Defendant also submitted the declaration of
its sales audit department manager, which attached (1) an email sent to
recipients of electronic gift cards, which stated that the gift cards were
redeemable “through 1/30/2010”; (2) an informational packet sent to defendant’s
store managers, which stated that all employees should be told that each gift
card must be placed in a promotional sleeve that indicated the expiration date;
(3) a copy of the gift card sleeve, which stated that “$25 gift card expires
1/30/10”; (4) an email to store managers, indicating that they were to notify
the company if they were running out of sleeves; (5) an informational sheet
provided to store managers, indicating that if they had fewer than 50 sleeves,
they were required to contact their district manager, take down all promotional
marketing, and contact headquarters to disable the promotion at the register;
(6) copies of in-store signage advertising the holiday 2009 promotion, which
stated “$25 gift card expires 1/30/2010”; (7) marketing emails indicating the
gift cards’ expiration date; and (8) reminder email sent to customers who had subscribed
to defendant’s email distribution list.

The
trial court issued an order denying plaintiff’s motion for class certification
on December 15, 2011. The court found
that the proposed class was ascertainable and numerous, plaintiff White was
typical of the class, and proposed class counsel would adequately represent the
interests of the class. However, the
court found that common questions did not predominate. It noted that under section 1749.5,
subdivision (d), if a gift card expires, it must indicate the expiration date
in 10-point font on the face of the card.
There was no dispute in the present case that the gift cards did not
state an expiration date. However, to
prevail under the CLRA, “a consumer must have suffered damage as a result of an
unfair or deceptive practice. Cal. Civil
Code § 1780(a). In other words, the
consumer had to have relied on the unfair or deceptive act or representation to
their detriment.” Thus, to certify a
class, the plaintiff would have to demonstrate that the representations made to
each class member were material and uniform.
Here, the court said plaintiff could not do so:

“In
order to certify a class under CLRA, the plaintiff must demonstrate that the
representations made to each class member were material and uniform in order to
allow the court to infer class wide reliance.
[Mass Mutual Life Ins. Co. v.
Superior Court (2002) 97 Cal.App.4th 1282, 1293.] Here, the evidence is that the representation
(or lack thereof) of the expiration date was not uniform to the class members
given that it was indicated through a variety of promotional materials that the
class members may or may not have seen.

“Plaintiff
argues that the representations through other promotional materials are
irrelevant because this case is brought solely on the failure to indicate the
expiration date on the gift card itself.
However, the issue of liability must be answered by the question of
whether the failure to indicate the expiration date on the gift card amounts to
a violation of the CLRA. Since the CLRA
demands a showing of causation for liability to attach, this element cannot be
ignored. Nor can it be considered in a
vacuum. Plaintiff would have the Court
determine causation solely by looking at a single, specific failure to disclose
and by deliberately ignoring other representations made by Defendant, which are
highly relevant to causation. This would
require the Court to ignore the reality of the circumstances under which the
gift cards were disseminated, in order to allow Plaintiff to make his
case. Plaintiff wants to bring the class
claims through the CLRA without having to meet one of its basic
requirements. There is no support for
this in the law.

“Defendant
has demonstrated that the representations made to the class members were not
uniform, and were made through a variety of mediums that may or may not have
reached every consumer. For example,
while all the in-store signs stated the January 30, 2010 expiration date, a
consumer may not have noticed that language on the signs. Similarly, some of the gift card sleeves may
have indicated the expiration date, which Defendant argues it expressly
instructed its sales associates to use, but other sleeves did not if the sales
associates ignored this instruction.
[Internal record reference omitted.]
Given this lack of uniformity, it cannot be inferred on a classwide
basis that the class member relied on the lack of an expiration date on the
gift cards themselves. Without an
inference of reliance, Plaintiff cannot show that all the class members failed
to use the gift cards by the expiration date as a result of the lack of an
expiration date on the face of the gift cards.
Each class member would have to be questioned regarding the information
they saw about the expiration date and the degree to which the lack of an
expiration date on the card face influenced their decision not to use the gift
card by January 30, 2010.”

Plaintiff
timely appealed from the order denying class certification.



>DISCUSSION



It
is undisputed that none of the gift cards distributed to potential class
members stated an expiration date, as section 1749.5 requires. There was, however, substantial evidence that
the January 30, 2010 expiration date “was indicated through a variety of
promotional materials” that class members may or may not have seen. The relevant question on appeal, therefore,
is whether under these circumstances the trial court was correct that
individual questions of reliance and damages predominate over common ones—or
whether, as plaintiff urges, the common questions of law and fact are
sufficiently significant to make class treatment appropriate.

Plaintiff
contends that the trial court erred in concluding that common issues of fact do
not predominate. He urges that the
question relevant to determining commonality under the CLRA is whether a
common, material misrepresentation was made to class members; if so, an
inference of reliance arises as to the entire class. In this case, by omitting the expiration date
from the gift cards, defendant implicitly misrepresented to each member of the
proposed class that the cards did not expire.
Because this misrepresentation was material, class members are presumed
to have relied on it, and the trial court should have found that common questions
predominate.

Defendant
disagrees. It contends that even if a
material omission is made to a class representative, a court cannot infer
classwide reliance unless all members of the class were similarly deprived of
material information. Here, “most class
members were informed of the expiration date through a myriad of disclosures,
including disclosures found on the card sleeve in which consumers received
their Promotion Cards, in-store signs, conversations with store clerks, and
emails.” Thus, reliance “is an
individual issue in this case.”

We
consider these issues below.



I. Statutory Framework



A. Section
1749.5

Section
1749.5 states that it is unlawful to sell a gift certificate that contains an
expiration date. (Subd. (a)(1).) Expressly omitted from this prohibition are
gift certificates distributed “pursuant to [a] . . . promotional program
without any money or other thing of value being given in exchange for the gift
certificate by the consumer,” so long as the expiration date “appears in capital
letters in at least 10-point font on the front of the gift certificate.” (§ 1749.5, subd. (d)(1).)



B. CLRA

Section
1770, subdivision (a) of the CLRA declares unlawful “unfair methods of
competition and unfair or deceptive acts or practices undertaken by any person
in a transaction intended to result or which results in the sale or lease of
goods or services to any consumer.” Such
unlawful practices include the following:

(a)(5): “Representing that goods or services have
sponsorship, approval, characteristics, ingredients, uses, benefits, or
quantities which they do not have.”

(a)(14): “Representing that a transaction confers or
involves rights, remedies, or obligations which it does not have or involve, or
which are prohibited by law.”

Courts
have held that the CLRA does not require an affirmative misrepresentation;
rather, among the practices proscribed by the CLRA are “the >concealment or suppression of material
facts.” (McAdams v. Monier, Inc. (2010) 182 Cal.App.4th 174, 185 (>McAdams), italics added; see also >Collins v. eMachines, Inc. (2011) 202
Cal.App.4th 249, 255 [“deceptive practices proscribed in the CLRA include the
concealment or suppression of material facts”].) Thus, “a CLRA claim may be predicated on ‘an
alleged failure to disclose a material fact that is misleading in light of
other facts . . . that [the defendant] did disclose.’ (McAdams,
supra, 182 Cal.App.4th at p. 185; see
also Daugherty [v. American Honda Motor Co., Inc. (2006)] 144 Cal.App.4th [824,]
835 [‘to be actionable the omission must be contrary to a representation
actually made by the defendant’].)” (>Klein v. Chevron U.S.A., Inc. (2012) 202
Cal.App.4th 1342, 1382.)



C. CLRA
Class Action Requirements

A
CLRA claim brought as a class action is governed by section 1781, which sets
out four conditions that, if met, mandate certification of a class: “(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.” (§ 1781, subd.
(b); see Steroid Hormone Product Cases
(2010) 181 Cal.App.4th 145, 153 (Steroid
Cases).)

“‘The
predominance factor requires a showing “that questions of law or fact common to
the class predominate over the questions affecting the individual
members.”’ (In re Cipro Cases I & II (2004) 121 Cal.App.4th 402, 410.) To determine whether the questions of fact
and law at issue in the litigation are common or individual, it is necessary to
consider the individual causes of action pleaded, and the issues raised
thereby.” (In re Vioxx Class Cases (2009) 180 Cal.App.4th 116, 128.) “Common issues are predominant when they
would be ‘the principal issues in any individual action, both in terms of time
to be expended in their proof and of their importance
. . . .’ (>Vasquez v. Superior Court [(1971)] 4
Cal.3d [800,] 810.)” (>Caro v. Procter & Gamble Co. (1993)
18 Cal.App.4th 644, 667-668 (Caro).)



D. Standard
of Review

We
review a ruling on certification for abuse of discretion. (Sav-On
Drug Stores, Inc. v. Superior Court
(2004) 34 Cal.4th 319, 326.) “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.
The denial of certification to an entire class is an appealable order
[citations], but in the absence of other error, a trial court ruling supported
by substantial evidence generally will not be disturbed ‘unless (1) improper
criteria were used [citation]; or (2) erroneous legal assumptions were made
[citation]’ [citation]. Under this
standard, an order based upon improper criteria or incorrect assumptions calls
for reversal ‘“even though there may be substantial evidence to support the court’s
order.”’ [Citations.]” (Linder
v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435-436.)

Thus,
“[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, superseded by
statute on another point, as stated in Weinstat
v. Dentsply Internat., Inc. (2010) 180 Cal.App.4th 1213, 1224.)



II. Reliance and Damages Under the CLRA

Pursuant
to the CRLA, a 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
to recover actual or punitive damages, an injunction, attorney fees, and any
other relief that the court deems proper.
(§ 1780, subd. (a), italics added.)
Courts have interpreted the italicized language to require that
plaintiffs in a CLRA action must show not only that a defendant’s conduct was
deceptive, but also that the deception caused them harm. (See Massachusetts
Mutual Life Ins. Co. v. Superior Court, supra,
97 Cal.App.4th 1282, 1292 (Massachusetts
Mutual), superseded by statute on another point as stated in >Steroid Hormone Product Cases (2010) 181
Cal.App.4th 145, 154.)

The
causation required by section 1780 does not necessarily make a plaintiff’s
claims unsuitable for class treatment.
“Causation, on a classwide basis, may be established by >materiality. If the trial court finds that material
misrepresentations have been made to the entire class, an inference of reliance
arises as to the class. [>Massachusetts Mutual, >supra, 97 Cal.App.4th at
p. 1292.] This is so because a
representation is considered material if it induced the consumer to alter his
position to his detriment. ([>Caro], supra, 18 Cal.App.4th at p. 668.)
That the defendant can establish a lack of causation as to a handful of
class members does not necessarily render the issue of causation an individual,
rather than a common, one.
‘“[P]laintiffs [may] satisfy their burden of showing causation as to
each by showing materiality as to all.”’
([Massachusetts Mutual], >supra, 97 Cal.App.4th at p. 1292.) In contrast, however, if the issue of
materiality or reliance is a matter that would vary from consumer to consumer,
the issue is not subject to common proof, and the action is properly not
certified as a class action. ([>Caro], supra, 18 Cal.App.4th at p. 668.)”
(In re Vioxx Class Cases, >supra, 180 Cal.App.4th at p. 129.)

The
issues of common reliance and damages have been discussed extensively in CLRA
cases in which class certification was sought.
We discuss several of those cases below.



>A. Cases Holding Inference of Common Reliance Supported Class
Certification

In
Massachusetts Mutual, >supra, 97 Cal.App.4th 1282, the
plaintiffs purchased from defendant Massachusetts Mutual Life Insurance Company
(Mass Mutual) a form of life insurance (the “N-Pay premium payment plan”) that
not only provided coverage and a guaranteed return on accumulated premiums, but
also permitted policyholders to share in discretionary dividends. Plaintiffs alleged that although Mass Mutual
intended to reduce its discretionary dividend rate, its agents represented
during sales presentations that over time the accumulated premiums and
discretionary dividends would be large enough to pay the annual premiums. Plaintiffs further alleged that the company’s
failure to disclose its plans to lower its discretionary dividends gave rise to
liability for violations of the CLRA, and that Mass Mutual’s representations
were sufficiently uniform to make class treatment appropriate. The trial court agreed and certified a
plaintiff class of 33,000 people who had purchased “N Pay” insurance from Mass
Mutual. Mass Mutual appealed. (Id.
at p. 1286.)

The
Court of Appeal affirmed, holding that the record permitted an inference of
common reliance. It noted that the
operative complaint alleged that Mass Mutual “failed to disclose its own
concerns about the premiums it was paying” and that “those concerns would have
been material to any reasonable person contemplating the purchase of an N‑Pay
premium payment plan.” (>Massachusetts Mutual, >supra, 97 Cal.App.4th at
p. 1293.) Thus, “[i]f plaintiffs
are successful in proving these facts, the purchases common to each class
member would in turn be sufficient to give rise to the inference of common
reliance on representations which were materially deficient.” (Ibid.)

The
court noted that in determining whether an inference of reliance arose, the
trial court would have to consider whether other information that Mass Mutual
disclosed provided buyers with all the material information they needed, and
“should it develop that class members were provided such a variety of
information that a single determination as to materiality is not possible, the
trial court has the flexibility to order creation of subclasses or to decertify
the class altogether.” (>Massachusetts Mutual, >supra, 97 Cal.App.4th at p. 1294 &
fn. 5.) Based on the information before
it, however, it appeared that “the information Mass Mutual provided to
prospective purchasers appears to have been broadly disseminated” and “there is
no evidence any significant part of the class had access to all the information
plaintiffs believe they needed before purchasing N-Pay premium payment plans.” (Id.
at pp. 1294-1295.) Thus, the trial court
“could have reasonably concluded that the ultimate question of whether the
undisclosed information was material was a common question of fact suitable for
treatment in a class action.” (>Id. at p. 1294.)

The
court reached a similar result in McAdams,
supra, 182 Cal.App.4th 174. There, the plaintiff alleged that Monier, a
manufacturer and marketer of roof tiles, represented to class members that its
tiles would remain structurally sound for 50 years and had a permanent color
glaze that would require no resurfacing.
This was false; Monier knew but failed to disclose that the color
composition of its tiles would erode well before the end of the tiles’
warranted 50-year life. (>Id. at pp. 179-180.) Plaintiff moved to certify a CLRA class
comprised of all California residents who owned homes with coated roof tiles
sold by Monier or who paid to replace or repair such tiles. (Id.
at p. 180.) The trial court denied
the class certification motion, reasoning that each class member individually
would have to prove the particular misrepresentation on which he or she relied
and the resulting damage, and that the named plaintiff, who bought his roof
tiles from an independent distributor, was not typical of those who bought roof
tiles from the manufacturer, a home builder, or a prior homeowner. (Id.
at p. 180.) Plaintiff appealed.

The
Court of Appeal reversed. It noted that
the class action “is based on a single, specific, alleged material
misrepresentation: Monier knew but
failed to disclose that its color roof tiles would erode to bare concrete long
before the lifespan of the tiles was up.”
(McAdams, supra, 182 Cal.App.4th at p. 182.)
The court redefined the class—to include only those persons who “prior
to purchasing or obtaining their Monier roof tile product, [were] exposed to a
statement along the lines that the roof tile would last 50 years, or would have
a permanent color, or would be maintenance-free” (id. at p. 179)—and held that, with the class thus defined, class
treatment was appropriate. It
explained: “Plaintiff alleges that
Monier made a single material misrepresentation to class members that consisted
of a failure to disclose a particular fact regarding its roof tiles. Plaintiff has tendered evidence that Monier
knew but failed to disclose to class members that the color composition of its
roof tiles would erode to bare concrete well before the end of the tiles’
represented 50-year life; and that this failure to disclose would have been
material to any reasonable person who purchased tiles in light of the
50-year/lifetime representation, or the permanent color representation, or the
maintenance-free representation. If
plaintiff is successful in proving these facts, the purchases common to each class
member—that is, purchases pursuant to this alleged failure to disclose in light
of the 50-year life, permanent color, or maintenance-free representations—would
be sufficient to permit an inference of common reliance among the class on the
material misrepresentation comprising the alleged failure to disclose.” (Id.
at p. 184.) Further, the court said, its
analysis “dispenses with the trial court’s concern that plaintiff McAdams’s
claim is typical of only one of the four kinds of roof tile purchasers in the
proposed class—those who bought from an independent distributor and relied on
Monier literature (the other three kinds of purchasers involved purchases from
Monier, from home builders, or from individuals selling their homes). As we have seen, the alleged material
misrepresentation in this case, properly viewed, does not encompass an array of
varying transactions and misrepresentations, but a single failure to disclose a
particular known fact. In this milieu, plaintiff
McAdams presents a typical claim based on that single, specific failure to
disclose.” (Id. at p. 186, fn. omitted.)

The
court then addressed the issue of individual
damages. “‘A class action can be
maintained even if each class member must at some point individually show his
or her eligibility for recovery or the amount of his or her damages, so long as
each class member would not be required to litigate substantial and numerous
factually unique questions to determine his or her individual right to
recover.’ (Acree v. General Motors Acceptance Corp. (2001) 92 Cal.App.4th 385,
397.) Here, the claims of all class
members ‘“stem from the same source”’—Monier’s failure to disclose that the
color composition of its roof tiles may erode to bare concrete
prematurely. (See Chamberlan v. Ford Motor Co. (N.D.Cal. 2004) 223 F.R.D. 524,
526.) To obtain damages, each class
member will have to show the representation made to him or her that accompanied
this failure to disclose (e.g., 50-year/lifetime, permanent color,
maintenance-free, or the like), and will have to show the amount of his or her
damages. But these two showings do not
invoke ‘substantial and numerous factually unique questions to determine [the] individual
right to recover’ damages, and therefore are not a proper basis on which to
deny class certification. (>Acree, supra, at p. 397; accord, Wilens
[v. TD Waterhouse Group, Inc. (2003)]
120 Cal.App.4th [746,] 756.)” (>McAdams, supra, 182 Cal.App.4th at pp. 186-187.)



B. Cases
Affirming Denial of Class Certification

The
court addressed a different set of facts and reached a contrary result in >Knapp v. AT&T Wireless Services, Inc.
(2011) 195 Cal.App.4th 932 (Knapp). There, the plaintiff was an AT&T Wireless
(AWS) customer who claimed that defendant did not fully disclose how it
computed airtime usage—i.e., that it “‘billed in full minute increments with
partial minutes rounded up to the next full minute’”—until after she had signed
a wireless service agreement. (>Id. at p. 937.) She sought to represent a class composed of
“‘[a]ll persons who have ever been subscribers under a term contract to
[defendant’s] wireless telephone service in California of [AWS] from and after
January 1, 1999 until October 1, 2004.’”
(Id. at p. 936.) The trial court denied the certification
motion, and the Court of Appeal affirmed, explaining that there had been no
showing that all members of the proposed plaintiff class had been exposed to
the alleged misrepresentation. It said:

“The
evidence produced in connection with the motion for class certification
confirmed the lack of commonality in representations (or omissions) by AWS to
members of the proposed class regarding its service plans. Substantial evidence showed AWS used several
different channels to market its service plans.
AWS used print advertisements in newspapers and magazines. Online promotions were advertised on AWS’s
Web site. AWS advertised on television
and the radio, sent out direct mailings, and maintained kiosks in malls and
other locations. Prospective customers
could begin their service at an AWS store, a third party’s store, a national
retail chain store, online, or over the telephone. Retailers had their own sales processes and
the documents that they provided to the customers were specific to the
retailer. [¶] Consequently, the proposed class here would
include subscribers who solely spoke with a representative on the telephone,
those who only considered certain advertisements, and those who only viewed
AWS’s Web site and began their service online; an individual inquiry would be
required to determine whether the representations received by each proposed
class member constituted misrepresentations, omissions, or nondisclosures. Thus, what business practices were allegedly
unfair, unlawful, or fraudulent necessarily turns on an individualized
assessment of which representations were made to each proposed class member.

“To
further complicate matters, the record contains several versions of AWS’s rate
plan guides and six welcome guides provided to new subscribers. All but one of those materials contain the
express disclosure to the effect that airtime for each call ‘is billed in full
minute increments with partial minutes rounded up to the next full
minute.’ Knapp stated in her deposition
that she did not read the welcome guide that accompanied her handset upon
delivery and took the position she was unaware of AWS’s multiple disclosures
regarding the rounding up policy. But
other members of the proposed class may very well have seen this express
disclosure or discussed the rounding up policy with a sales representative in
person or on the telephone, which constitutes facts that would affect the
determination whether a misrepresentation or omission had occurred. [¶]
. . . [¶] Thus, the trial court did not abuse its
discretion by finding a lack of commonality of issues and accordingly denying
the motion for class certification.” (>Knapp, supra, 195 Cal.App.4th at pp. 943-944.)

The
court also affirmed a denial of class certification in Caro, supra, 18
Cal.App.4th 644. There, defendant
manufactured and sold orange juice that was reconstituted from frozen
concentrate and contained additives, including water and flavor enhancers. (Id.
at pp. 651, 668.) The orange juice
carton accurately listed the product’s ingredients and stated “‘from
concentrate’” on three sides of the package, but also falsely represented that
the orange juice was “‘fresh’” and contained “‘no additives.’” (Id.
at p. 668.) Plaintiff filed a class
action complaint, asserting that defendant’s misrepresentations violated the
CLRA. (Id. at p. 651.) The trial
court denied plaintiff’s motion for class certification. (Ibid.)

The
Court of Appeal affirmed. Noting that
the orange juice carton contained both accurate and misleading information, the
court concluded that consumers would have been misled by the packaging only if
they, like plaintiff, read only a portion of the carton—i.e., that portion
stating that the orange juice was “fresh.”
Plaintiff “did not show other consumers failed to read the entire label”
and “did not show actual damages for consumers who bought and received the
juice knowing it was ‘from concentrate.’”
(Id. at p. 666.) Further, although plaintiff’s deposition
testimony “might be construed as suggesting he personally was misled into
believing the juice contained ‘no additives,’ it would be a matter of
individualized proof whether the claim of ‘no additives’ constituted a material
misrepresentation to class members who—unlike Caro—read the portions of the
label stating ‘from concentrate.’” (>Id. at p. 668.) Thus, the court concluded, “the record
indicated that consumers—who thought they were buying different products such
as ‘premium,’ ‘fresh,’ or ‘from concentrate’ orange juice based upon their
personal assumptions about the nature of the products they wanted to buy and
upon reading various portions of the labels—would be required individually to
prove liability and damages. Since class
members would have to prove individually the existence of liability and
damages, the community of interest requirement was not satisfied
. . . .” (>Id. at pp. 668-669.)



>III. The Trial Court Erred in Denying the
Motion for Class Certification as to a Subset of the Proposed Class

As
indicated above, pursuant to section 1749.5, a promotional gift certificate “is
valid until redeemed or replaced” if an expiration date does not appear on the
front of the gift certificate. (Subd.
(c).) Accordingly, a gift certificate
that does not state an expiration date implicitly represents that it does >not expire and can be used at any
time. In the present case, it is
undisputed that none of defendant’s promotional gift cards stated an expiration
date, although each expired on January 30, 2010. Thus, as in Massachusetts Mutual and McAdams—and
unlike Knapp, where “[t]he face of
the complaint itself reveals that AWS’s alleged misrepresentations were not
uniformly made to proposed class members” (195 Cal.App.4th at p. 943)href="#_ftn3" name="_ftnref3" title="">[3]—each member of the
proposed plaintiff class was exposed to the identical misrepresentation.

Moreover,
as in Massachusetts Mutual and >McAdams, the misrepresentation was
material. As we have said, the
materiality of an alleged misrepresentation “generally is judged by a
‘reasonable man’ standard. In other words,
a misrepresentation is deemed material ‘if “a reasonable man would attach
importance to its existence or nonexistence in determining his choice of action
in the transaction in question” [citations], and as such materiality is
generally a question of fact unless the “fact misrepresented is so obviously
unimportant that the jury could not reasonably find that a reasonable man would
have been influenced by it.”’ (>Engalla v. Permanente Medical Group, Inc.
(1997) 15 Cal.4th 951, 977; accord, [In
re Tobacco II Cases (2009)] 46 Cal.4th [298,] 327.)” (Steroid
Cases, supra, 181 Cal.App.4th at
p. 157.) Thus, the question that must be
answered in this case is whether a reasonable person would find it important
when determining when to redeem a $25 gift card that the gift card would become
valueless after a particular date. It
“requires no stretch to conclude that the proper answer is ‘yes’” (>ibid.)—we assume that a reasonable
person would prefer to redeem a gift card before
it expires, rather than to allow the gift card to expire and lose all value.

What
complicates the analysis in the present case is that although all potential
plaintiffs received gift cards that on their face appeared to have no
expiration date, some potential plaintiffs also were exposed to other
information that told them that the gift cards would expire. In other
words, while all members of the proposed class were exposed to the same
implicit misrepresentation, some presumably were also exposed to other
information that corrected the misrepresentation. The present case therefore is unlike >Massachusetts Mutual, where there was no
evidence that any significant part of the class had access to all relevant
information. Under those circumstances,
the court was willing to assume that representations to class members were
uniform, and thus concluded that class treatment was appropriate.href="#_ftn4" name="_ftnref4" title="">[4] A similar assumption would not be appropriate
in the present case because there was evidence before the trial court that
signage in defendant’s southern California stores, as well as the “sleeves”
into which some gift cards were placed, stated that the “$25 gift card expires
1/30/10.” Some of defendant’s customers
undoubtedly saw this information and thus were aware that their gift cards
would expire.

The
present case also is unlike Caro,
however, where the plaintiff had not demonstrated the existence of >any other consumers who had read only
part of the orange juice label, as he claimed to have done. In view of that lack of evidence, the >Caro court was unwilling to assume that
consumer beliefs about defendant’s orange juice were sufficiently uniform to
justify class treatment. In the present
case, in contrast, the undisputed evidence before the trial court is that as of
the date defendant served discovery responses, consumers had attempted to
redeem 9,469 gift cards—more than 13 percent of the 72,062 gift cards
issued by defendant’s California stores—after
the cards had expired. As to these
consumers, we do not believe it reasonable to infer knowledge that defendant’s
gift cards would expire. Stated
differently, at least as to the subset of the proposed class made up of people
who attempted to redeem their gift cards after January 30, 2010, we believe the
trial court abused its discretion in concluding that it could not infer a
common misrepresentation and, thus, common reliance on the lack of an
expiration date on the gift cards themselves.

Having
said that, a question still remains as to the approximately 21,000 holders of
defendant’s gift cards who neither fully redeemed the gift cards before they
expired nor attempted to redeem them after they expired. Although plaintiff is correct that an
inference of reliance arises as to an entire class if the trial court finds
that uniform misrepresentations were made to the entire class (>Massachusetts Mutual, >supra, 97 Cal.App.4th at p. 1292), here
the trial court found that the representations made to the class members were >not uniform. That finding is supported by substantial
evidence, and thus we do not disturb it.href="#_ftn5" name="_ftnref5" title="">[5] However, the trial court did not find that
individual issues predominated solely because representations to class members
varied. Rather, the trial court
concluded that individual issues predominated because “[e]ach class member
would have to be questioned regarding the information they saw about the
expiration date and the degree to which the lack of an expiration date on the
card face influenced their decision not to use the gift card by January 30,
2010.” In so stating, the trial court
appears to have assumed that certifying the proposed class would require
examining each potential plaintiff about both
“the information they saw about the expiration date” and “the degree to which the lack of an expiration date on the card
face influenced their decision not to use the gift card by January 30,
2010.” That was error. Because an inference of classwide reliance
arises if material misrepresentations have been made to an entire class, the >only question relevant for present
purposes is whether potential plaintiffs were aware, through any source, that
the gift cards would expire on January 30, 2010. As to any potential plaintiff who was not
aware of the expiration date, reliance should be inferred pursuant to the cases
cited above.

The
McAdams court addressed facts similar
to ours by redefining the class as limited to those persons who were exposed to
the relevant misrepresentation. Although
we have the option to follow that path in this case, we are mindful that
“‘trial courts are ideally situated to evaluate the efficiencies and
practicalities of permitting group action’” and thus should be afforded “‘great
discretion’” in granting or denying certification. (Hernandez
v. Chipotle Mexican Grill, Inc.,
supra, 208 Cal.App.4th at p. 1495.)
We thus decline to order the trial court to certify a class made up of
all holders of defendant’s promotional gift cards who were unaware that the
cards would expire. Instead, we remand
this matter for the trial court to determine whether, as in >McAdams, the class of such persons can
be identified without individual questions predominating over common
questions—or whether, instead, the class should be limited to the 9,500 or so
persons who attempted to redeem defendant’s gift cards after they expired on
January 30, 2010.



>DISPOSITION

>

The order denying class
certification is reversed. The matter is
remanded with directions to the trial court to reconsider the motion for class
certification in light of this opinion.
Plaintiff is awarded his costs on appeal.

>

>NOT TO BE PUBLISHED IN THE
OFFICIAL REPORTS





SUZUKAWA,
J.

We concur:





EPSTEIN, P. J.





WILLHITE, J.