Todd et al v. Tempur-Sealy International, Inc. et al, No. 3:2013cv04984 - Document 308 (N.D. Cal. 2017)

Court Description: ORDER DENYING MOTION FOR RECONSIDERATION by Judge Jon S. Tigar denying 300 Motion for Reconsideration. (wsn, COURT STAFF) (Filed on 6/30/2017)
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Todd et al v. Tempur-Sealy International, Inc. et al Doc. 308 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ALVIN TODD, ET AL., Plaintiffs, 8 ORDER DENYING MOTION FOR RECONSIDERATION v. 9 10 TEMPUR-SEALY INTERNATIONAL, INC., et al., 11 United States District Court Northern District of California Case No.13-cv-04984-JST Re: ECF No. 300 Defendants. 12 Before the Court is Plaintiffs’ motion for reconsideration. ECF No. 300. The Court will 13 14 deny the motion. 15 I. BACKGROUND 16 Plaintiffs bring this action on their own behalf and on behalf of a putative class of 17 purchasers of Tempur products against Tempur-Sealy International, Inc. and Tempur-Pedic North 18 America, LLC (collectively “Defendants”) for claims arising out of Defendants’ marketing and 19 sale of mattresses, pillows, and other bedding products containing Tempur material. Specifically, 20 Plaintiffs allege that Defendants’ representations of their Tempur products as “formaldehyde free,” 21 “free of harmful VOCs,” “allergen and dustmite resistant,” “hypoallergenic,” and with a 22 23 24 25 “completely harmless” odor, are false and misleading. ECF No. 156 (“TAC”) ¶¶ 3(h), 3(m), 3(n), 4. Plaintiffs allege that Defendants knew their products did not conform to these representations because internal testing revealed that Defendants’ products off-gassed many VOCs, including formaldehyde, which can cause allergic reactions. Id. ¶ 4. Further, Plaintiffs claim that Defendants were aware of customer complaints about the odor and corresponding physical 26 symptoms such as headache, nausea, asthma, eye and throat irritation, and allergic reactions. Id. 27 On September 30, 2016, the Court denied Plaintiffs’ motion for class certification. ECF 28 1 No. 284. The Court concluded that Plaintiffs had satisfied the numerosity, typicality, and 2 adequacy prongs of Federal Rule of Civil Procedure 23(a), but found that Plaintiffs had failed to 3 demonstrate commonality, predominance,1 and superiority. In their class certification motion, Plaintiffs argued that class-wide exposure to 4 5 Defendants’ misrepresentations could be inferred from the “massive advertising and brandbuilding 6 program” and a “tightly controlled” marketing campaign conducted by Defendants. ECF. No. 269 7 see also Transcript of August 18, 2016 Oral Argument (“Transcript”), ECF No. 282, at 42:16-19. 8 After “review[ing] the complete body of evidence offered by Plaintiffs in support of class 9 10 United States District Court Northern District of California 11 12 13 14 15 16 certification, [however,] the Court [found] they ha[d] failed to demonstrate the marketing at issue was sufficiently extensive such that one can infer exposure on a class-wide basis.” ECF No. 284 at 18. The Court identified various evidentiary and theoretical problems with Plaintiffs’ argument of class-wide exposure. For example, Plaintiffs’ most-touted statistic – that Defendants’ advertising generated “4.3 billion consumer impressions per month” – in actuality offered little evidentiary support because Plaintiffs did not explain (1) what the definition of an “impression” is; (2) how “impressions” are measured; or (3) whether the period of time that these “impressions” were calculated overlaps with the applicable time period for the class. Id. at 18. Nor did Plaintiffs 17 identify which “impressions” were based on Defendants’ alleged health-related 18 misrepresentations, versus its other claims. Id. The Court identified similar flaws with Plaintiffs’ 19 contention that Defendants produced “300 million pages” of “targeted content (direct mail).” Id. 20 Moreover, Plaintiffs’ mass exposure argument suffered from two theoretical flaws. First, 21 the Court determined that it was wrong to “assume[] that mattress customers buy a product based 22 on any particular marketing representation that they viewed or heard prior to their purchase. 23 Indeed, many mattress consumers – including, potentially, some of the named Plaintiffs – likely 24 entered a store with no specific idea of the brand or product they wish to buy, and make their 25 purchase based simply on their impressions while shopping.” Id. at 20. Second, because more 26 27 28 1 To certify a Rule 23(b)(3) class, a plaintiff must show, in addition to commonality under Rule 23(a), that these common questions “predominate over any questions affecting only individual members.” 2 1 than 90% of Defendants’ products are sold by “over 10,000” third party retailers, ECF No. 220 at 2 33, Plaintiffs’ needed to “demonstrate that third party retailers actually implemented [Defendant’s 3 advertising] campaign by showing Defendants’ materials to class members.” ECF No. 284 at 20. 4 Yet Plaintiffs’ provided “virtually no evidence” about the conduct of these third parties. Id. Due to these flaws, the Court concluded that Plaintiffs had failed to “put forth evidence 5 6 7 8 9 10 that would allow an inference of class-wide reliance.” Id. at 21. And without such an inference, “the need to individually decide whether class members had been exposed to the alleged misrepresentations would dominate over other commonly shared issues of law or fact.” Id. The Court also noted that “Plaintiffs premise[d] their misrepresentation by omission and unjust enrichment claims on the same alleged marketing campaign, and ma[d]e the same arguments in relation to class certification.” Id. Therefore, the Court concluded that common issues of fact did United States District Court Northern District of California 11 12 13 14 15 not predominate for those claims for the same reason. Id. Finally, because resolving Plaintiffs’ claims would require a highly individualized inquiry into each class member’s exposure to Defendant’s advertising, the Court determined that a “class action would not be a superior mechanism for resolving this dispute.” Id. at 22. The Court then denied Plaintiffs’ class certification motion. 16 On April 12, 2017, Plaintiffs filed a motion for reconsideration of the Court’s order 17 denying class certification. ECF No. 300.2 Plaintiffs claim the Court erred in its commonality, 18 predominance, and superiority findings. 19 II. 20 21 LEGAL STANDARD Local Rule 7–9 provides that a party moving for leave to file a motion for reconsideration must show: 22 (1) That at the time of the motion for leave, a material difference in fact or law exists from that which was presented to the Court before entry of the interlocutory order for which reconsideration is sought. The party also must show that in the exercise of reasonable diligence the party applying for reconsideration did not know such fact or law at the time of the interlocutory order; or 23 24 25 (2) The emergence of new material facts or a change of law occurring after the 26 27 2 28 The motion was originally filed on April 3, 2017, ECF No. 292, but was re-filed to comply with Local Rule 7-9(a). 3 time of such order; or 1 (3) A manifest failure by the Court to consider material facts or dispositive legal arguments which were presented to the Court before such interlocutory order. 2 3 4 5 6 Civil L.R. 7–9(b). III. ANALYSIS A. Commonality and Predominance Plaintiffs argue the Court erred in its commonality and predominance finding when it 7 concluded that Plaintiffs “failed to demonstrate the marketing at issue was sufficiently extensive 8 such that one can infer exposure on a class-wide basis.” ECF No. 284 at 18. 9 First, Plaintiffs claim this finding is inconsistent with the Ninth Circuit’s recent decision in Briseno v. ConAgra Foods, Inc., 844 F.3d 1121 (9th Cir. 2017). In Briseno, the defendant 11 United States District Court Northern District of California 10 “opposed class certification on the ground that there would be no administratively feasible way to 12 identify members of the proposed classes because consumers would not be able to reliably identify 13 themselves as class members.” Id. at 1124. The Ninth Circuit rejected this argument, holding that 14 a “separate administrative feasibility prerequisite to class certification is not compatible with the 15 language of Rule 23.” Id. at 1123. According to Plaintiffs, this Court’s conclusion that “the need 16 to individually decide whether class members had been exposed to the alleged misrepresentation 17 would dominate over other commonly shared issues of law or fact,” ECF No. 284 at 21, 18 “essentially injects an administrative feasibility requirement” into the case, ECF No. 300 at 11. 19 Plaintiffs therefore claim the Court’s Order contravenes Briseno. 20 The Court disagrees that its commonality analysis conflicts with Briseno’s rejection of the 21 administrative feasibility requirement. The Court found that individualized showings of reliance 22 would be necessary only after it concluded that Plaintiffs had failed to demonstrate class-wide 23 exposure. The Court’s holding does not impose a freestanding administrative feasibility 24 requirement; it simply follows naturally from Plaintiffs’ failure to provide sufficient evidence of a 25 widespread and extensive advertising campaign to obtain a presumption of class-wide reliance. 26 Indeed, the Ninth Circuit made almost an identical finding in Mazza v. American Honda Motor 27 Co., 666 F.3d 581, 596 (9th Cir. 2012). There, because the plaintiffs failed to sufficiently 28 demonstrate a “massive advertising campaign,” the court concluded that common questions of fact 4 1 would not predominate because “an individualized case must be made for each member showing 2 reliance.” Id. at 596. The Briseno court emphasized that its opinion was limited to whether the 3 Ninth Circuit imposed an “ascertainability” requirement, and did not reach questions like 4 predominance. 844 F.3d at 1125 n.4 (“Although the parties here use the word “ascertainability,” 5 they dispute only whether a class proponent must proffer an administratively feasible way to 6 identify class members. That is therefore the only issue we decide.” (emphasis added)). Briseno 7 did not address Mazza, much less overrule it, and the Court therefore rejects this basis for 8 Plaintiffs’ motion. Second, Plaintiffs argue that the Court misapplied Berger v. Home Depot USA, Inc., 741 10 F.3d 1061 (9th Cir. 2014), when it explained that Plaintiffs needed to show that “class members 11 United States District Court Northern District of California 9 were exposed to the alleged misrepresentations in the first place.” ECF No. 284 at 13. 12 Specifically, Plaintiffs emphasize Berger’s statement that “the victim’s reliance on the false 13 statements . . . [is] not required to show a violation of California’s UCL.” Id. at 1068. But 14 Plaintiffs’ quote from Berger is selective and misleading. The Ninth Circuit went on to state that 15 “the question of likely deception does not automatically translate into a class-wide question” 16 because, for example, “it might well be that there was no cohesion among the members because 17 they were exposed to quite disparate information from various representatives of the defendant.” 18 Id. (citing Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1020–21 (9th Cir. 2011). The court then 19 concluded that the Berger had not made the requisite showing to warrant a presumption of class- 20 wide reliance. Id. at 1169. Berger supports, rather than undermines, the Court’s Order. 21 Third, Plaintiffs claim that, in analyzing commonality and predominance, the Court 22 focused exclusively on exposure to Defendants’ affirmative misrepresentations, neglecting 23 “Defendants’ omissions and the effect of Defendants’ misleading ‘health and wellness efforts.’” 24 ECF No. 292 at 12-23.3 As the Court stated in its Order, however, Plaintiffs’ failure to 25 demonstrate class-wide exposure to the misrepresentations also doom these alternatives theories. 26 Plaintiffs also claim that the Court improperly “cross[ed] into weighing evidence, determining fact issues and analyzing expert testimony, and determining the merits of the underlying class claims” but do not explain how the Court did so. ECF No. 300 at 9. Accordingly, the Court focuses on Plaintiffs’ related argument that the Order did not consider other modes of exposure. 5 3 27 28 1 Even if Defendants’ health and wellness branding efforts were deceptive, for example, Plaintiffs 2 did not demonstrate how many of its “customer impressions” were health related. Likewise, there 3 is no reason that Plaintiffs’ failure to show that Defendants’ 10,000 third party retailers actually 4 implemented the marketing campaign would not apply equally to any health and wellness 5 branding efforts. Finally, even if Defendants had included a “disclosure to consumers that 6 Defendants’ products contained harmful chemicals,” Plaintiffs still cannot show that those 7 disclosures would have reached consumers.4 Therefore, the fact that the Court did not separately 8 the reliance question for these two alternative “modes of ‘exposure’” is not grounds for 9 reconsidering the Order.5 Plaintiffs’ reliance on Daniel v. Ford Motor Co., 806 F.3d 1217 (9th Cir. 2015), is 11 United States District Court Northern District of California 10 unavailing. In that case, the plaintiffs sued over certain “rear suspension defects” in Ford Focus 12 vehicles, which they alleged Ford should have disclosed. Id. at 1220. The Ninth Circuit reversed 13 a grant of summary judgment in favor of Ford in part because the “[p]laintiffs presented evidence 14 that they interacted with and received information from sales representatives at authorized Ford 15 16 17 18 19 dealerships prior to purchasing their Focuses.” Id. at 1225. This was sufficient, according to the court, “to sustain a factual finding that Plaintiffs would have been aware of the disclosure if it had been made through Ford’s authorized dealerships.” Id. Here, by contrast, the Court explicitly 4 In any event, as Defendants note in their opposition, Plaintiffs confirmed at the hearing on the certification motion that any omissions were relevant only if Defendants also made affirmative misrepresentations: 20 [MR. SHIPMAN:] If the representations were true, they would have no duty to speak the truth. We think the record is replete with evidence that they didn’t speak the truth, that— 21 22 THE COURT: Can we agree the same thing I just said is true with regard to the omission claims, because it’s affirmative representations that give rise to a duty to speak? So either the—so if the same analysis would apply. Either a uniformity of representation, or the benefit of the Tobacco II cases, that’s equally true for the omission claims, too, isn’t it? 23 24 25 26 27 28 MR. SHIPMAN: I would think so, Your Honor. ECF No. 303-2 at 6 (emphasis added). 5 Nor did the Court hold, as Plaintiffs suggest, that an omissions claim can never succeed absent evidence that the omissions were tied to affirmative misrepresentations. ECF No. 304 at 14-15. 6 1 found that Plaintiffs had “provide[d] virtually no evidence” that Defendants’ third party retailers 2 were disseminating Defendants’ marketing campaign. ECF No. 284 at 20. Unlike in Daniel, there 3 is no reason to think that “Plaintiffs would have been aware of [a] disclosure” about harmful 4 materials in its products, even if that disclosure were part of its advertising plan.6 See also Butler 5 v. Porsche Cars North America, Inc., No. 16-CV-2042-LHK, 2017 WL 1398316, at *10-11 (N.D. 6 Cal. Apr. 19, 2017) (denying certification partly because plaintiffs gave the court “no basis to find 7 8 9 10 that all class members were exposed to a Porsche representation with omissions, or that class members would have been aware of a disclosure about the defect from Porsche in a common way had a disclosure been made.”) (internal quotation marks omitted). In sum, the Court continues to conclude that Plaintiffs failed to demonstrate commonality and predominance.7 B. United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 Superiority Finally, Plaintiffs argue that the Court should reconsider its superiority finding. ECF No. 300 at 23. Plaintiffs first argue that “because individual recoveries in this litigation would likely be too small to justify litigation, class treatment is the only option.” ECF No. 300 at 25. They cite Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234–35 (9th Cir. 1996), for the proposition that “[w]here classwide litigation of common issues will reduce litigation costs and promote greater efficiency, a class action may be superior to other methods of litigation,” but ignore the fact that the court found plaintiffs had failed to show “why the class mechanism is superior to alternative methods of adjudication.” Like in Valentino, Plaintiffs did not demonstrate that class treatment would be superior given the predominance of individualized inquiries at the liability stage Next, Plaintiffs argue that the Court improperly based its superiority finding on the need 21 22 Plaintiffs’ arguments that they presented substantial evidence of (1) the harmful chemicals in Defendants’ products and (2) the fact that customers would have adversely reaction to disclosures about those chemicals are beside the point absent evidence of class-wide exposure. 6 23 24 7 25 26 27 28 In reply, Plaintiffs argue that their claims for injunctive relief mean the commonality and predominance requirements are satisfied and that the Court erred in finding otherwise. ECF No. 304 at 16. But the closest Plaintiffs came to making this argument in their motion was to state in a footnote that “[i]t is also important to recognize this case seeks injunctive relief against Defendants’ deceptive business practices.” ECF No. 300 at 15 n.4. The Court does not consider new facts or argument made for the first time in a reply brief. “It is inappropriate to consider arguments raised for the first time in a reply brief.” Ass’n of Irritated Residents v. C & R Vanderham Dairy, 435 F.Supp.2d 1078, 1089 (E.D. Cal. 2006). 7 1 for an individualized inquiry into each class member’s exposure to Defendants’ advertising. ECF 2 No. 300 at 25. As support, Plaintiffs point to the well-established proposition that the need for 3 individualized “damage calculations alone cannot defeat certification.” Leyva v. Medline Indus. 4 Inc., 716 F.3d 510, 513 (9th Cir. 2013). Yet in this case, as Plaintiffs concede, the individualized 5 inquiry relates to liability, not damages. This Court is not aware of any precedent that prohibits a 6 Court from considering the need for individualized liability determinations when determining if a 7 class action is the superior method of adjudication, and Plaintiffs have not identified any. The 8 Court will not reconsider its superiority finding. 9 10 C. Sub-Classes Should the Court not reconsider its denial of class certification, Plaintiffs seek leave to United States District Court Northern District of California 11 “submit a proposal for division of the proposed class into subclasses.” ECF No. 300 at 26. 12 Plaintiffs offer little information about how they intend to define the subclasses except to say that 13 one subclass could be created for class members misled by an omission and another subclass for 14 those class members directly exposed to affirmative misrepresentations. Id. But that division 15 would not solve the problem of Plaintiffs’ failure to show class-wide exposure to Defendants’ 16 marketing scheme, which pervades its various modes of exposure theories. The Court denies this 17 request. CONCLUSION 18 19 The motion for reconsideration is denied. 20 IT IS SO ORDERED. 21 22 23 Dated: June 30, 2017 ______________________________________ JON S. TIGAR United States District Judge 24 25 26 27 28 8