Class action suits alleging violations of state consumer protection laws are being filed with increasing frequency, even though many members of the purported class of plaintiffs suffer no injuries and do not rely on the challenged marketing statements in making their purchasing decisions. These no-injury, no-reliance class actions expand liability beyond traditional limits and threaten to undo the benefits of the federal Class Action Fairness Act of 2005.
The NAM joined with the Association of Home Appliance Manufacturers in an amicus brief urging the Seventh Circuit to overturn a district court order that certified a class of plaintiffs from 29 states alleging that Kenmore dryers were not completely stainless steel as advertised. Our brief argued that courts should not undermine state consumer protection laws by lumping together claims under different state laws and glossing over the substantive differences between the applicable statutes.
"By reading reliance and causation requirements out of the relevant state statutes so as to create the appearance of commonality and facilitate class certification, the trial court effectively appropriated the authority to modify state laws, altered the legal landscape on which manufacturers had depended in developing and marketing their products, and fundamentally altered the substantive rights of all parties involved,” the NAM brief contended.
Improper certifications bestow new litigation power on individuals who have not suffered injury to person or property and converts legitimate product development activities into potential grounds for economic theories of damages from states that do not recognize them. This in turn would make Seventh Circuit courts magnets that will unfairly expose manufacturers to extortion by consumer class action litigation.
On 10/28/2008, the Seventh Circuit reversed, and instructed the district court to decertify the class. Its decision provides a comprehensive summary of class actions and the incentives they create for plaintiffs' and defense lawyers to "forge a community of interest" that can be detrimental to members of the class. The court found that this case did not meet the essential requirement that common issues of law or facts predominate over individual ones. Each member of the class will have a different opinion of what the advertising meant and what their damages, if any, might be.