Elson v. Black
Unspecified in text (2023)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A class action cannot be maintained under Federal Rule of Civil Procedure 23(b)(3) if differences in state law or individual factual issues, such as reliance on diverse misrepresentations, would predominate over common questions; furthermore, claims premised entirely on fraudulent conduct, even if not explicitly common-law fraud, must satisfy the heightened pleading standards of Federal Rule of Civil Procedure 9(b).
Facts:
- Ashley Black and her companies sold a product called the FasciaBlaster, registered with the Food and Drug Administration as a massager.
- Purchasers were instructed to use the FasciaBlaster by pressing its prongs into their skin to achieve a wide variety of health benefits.
- Defendants allegedly advertised that the FasciaBlaster could "virtually eliminate cellulite," help with weight loss, and relieve pain.
- Defendants also allegedly made false claims that the product’s effects were supported by scientific studies.
- Fourteen women from Arizona, California, Florida, Louisiana, Nevada, New York, and Ohio purchased the FasciaBlaster.
- The women found that the FasciaBlaster did not deliver the advertised benefits and felt they were misled by Defendants' marketing practices.
Procedural Posture:
- Two separate lawsuits were filed: one in the Superior Court of Los Angeles County, California, and one in the United States District Court for the Central District of California.
- The two lawsuits were consolidated in the Central District of California in February 2018.
- In September 2019, the Central District of California court found it lacked personal jurisdiction over some defendants and transferred the consolidated case to the Southern District of Texas.
- In the Southern District of Texas, the plaintiffs filed a putative class action, asserting claims under the Magnuson-Moss Warranty Act, multiple state consumer protection statutes, and for unjust enrichment.
- Defendants moved to strike the class allegations and to dismiss the complaint for failure to state a claim.
- The district court granted the motion to strike the class allegations, citing the individualized nature of reliance.
- Plaintiffs sought interlocutory review of the order striking class allegations from the United States Court of Appeals for the Fifth Circuit, which a split panel denied.
- The district court then dismissed the remainder of Plaintiffs’ individual claims in their entirety.
- Plaintiffs appealed the order striking the class allegations and the dismissal of individual claims to the United States Court of Appeals for the Fifth Circuit, where they were the Appellants and Ashley Black and her companies were the Appellees.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
1. Does a district court abuse its discretion by striking class allegations when proposed class members' claims are governed by the laws of multiple states with varying reliance requirements, and when the alleged misrepresentations leading to individual reliance are diverse? 2. Must state consumer protection law claims, which are premised entirely on fraudulent conduct, satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9(b), even if fraud is not an essential element of the state statute?
Opinions:
Majority - Edith H. Jones
No, a district court does not abuse its discretion by striking class allegations when proposed class members' claims involve significant variations in applicable state laws and diverse individual reliance on alleged misrepresentations, thus failing the predominance requirement of Rule 23(b)(3). Yes, state consumer protection law claims, which are premised entirely on fraudulent conduct, must satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9(b) because Rule 9(b) applies to all averments of fraud, regardless of whether fraud is an essential element of the underlying claim. The Fifth Circuit, in an opinion authored by Judge Edith H. Jones, affirmed the district court's decision to strike class allegations, finding that the district court's conclusion was sound despite its brief analysis. The court emphasized that Rule 23(b)(3)'s predominance requirement, which is more stringent than commonality, was not met. First, Plaintiffs failed to conduct the necessary "extensive analysis of state law variations" to show that differences in state notice, pre-suit, and reliance requirements would not predominate. The court noted that these variations "swamp any common issues." Second, individual factual differences among plaintiffs regarding the specific misrepresentations they relied upon (e.g., cellulite reduction, pain relief, weight loss) defeated any coherent class. The court cited precedent that "a fraud class action cannot be certified when individual reliance will be an issue." Regarding the individual claims, the court affirmed the dismissal of state consumer protection fraud claims, including those under New York General Business Law §§ 349 and 350. It held that Federal Rule of Civil Procedure 9(b) applies to "all averments of fraud," even when fraud is not an explicit element of the underlying claim, if the claim is "premised entirely upon a course of fraudulent conduct." The court found that Plaintiffs' claims relied entirely on alleged misrepresentations made "willfully, wantonly, and with reckless disregard for the truth," thus triggering Rule 9(b)'s heightened pleading standard. Plaintiffs' allegations failed to specify "the who, what, when, and where" of the alleged misrepresentations, such as the exact time they viewed ads or the precise location on websites/social media. However, the court reversed the dismissal of Plaintiffs Dalton and Smith's breach of express warranty claims, remanding them to the district court. The district court had dismissed these claims as "puffery" without applying the law of a specific jurisdiction. The Fifth Circuit instructed the district court to reconsider the motion to dismiss these claims in light of applicable state law.
Analysis:
This case reinforces the stringent requirements for class certification, particularly concerning the Rule 23(b)(3) predominance standard in multi-state consumer fraud actions. It highlights the plaintiff's burden to conduct a thorough choice-of-law analysis to demonstrate that state law variations will not defeat predominance. Furthermore, the ruling clarifies that any claim "premised entirely upon a course of fraudulent conduct" will be subject to Rule 9(b)'s heightened pleading standards, requiring specific details of "who, what, when, and where," even if the statutory claim itself does not list fraud as an essential element. This sets a high bar for plaintiffs bringing consumer protection claims rooted in alleged misrepresentations.
