Trying consumer fraud claims as a class action may pose difficulties, but there is no per se rule that they can never be certified.
The Seventh Circuit acknowledged on May 20 that it had never before affirmed certification in a consumer fraud action. But the court explained, “those cases did not opine that class certification was never appropriate in consumer fraud case, only that it was inappropriate in the circumstances before it.”
Pella Corporation was sued in a class action, alleging that it sold windows containing a defect that permits water to seep and cause the wood to rot at an accelerated rate.
Pella has a program to compensate affected consumers, but according to the complaint, Pella has never informed consumers of the defect.
The district court approved certification of two classes: those whose windows have been replaced; and those whose windows have not, whether or not the windows have yet manifested the defect.
However, the court limited the class certification to the question of liability, leaving questions of causation and damages to be decided on an individual basis.
The Seventh Circuit granted Pella’s petition for leave to appeal, but affirmed in a per curiam opinion.
The court noted several opinions holding class certification was inappropriate in a consumer fraud case. Thorogood v. Sears, Roebuck and Co., 547 F.3d 742, 748 (7th Cir. 2008); Oshana v. Coca-Cola Co., 472 F.3d 506, 514 (7th Cir. 2006); and In re Bridgestone/Firestone, Inc., 288 F.3d 1012, 1018-19 (7th Cir. 2002).
But it added that, in Thorogood, it recognized that there are times when class certification would be a “sensible and legally permissible alternative” to individual suits by consumers.
Reasserting that proposition, the court found this case to fit into that category.
The court wrote, “The district court reasonably determined that the individual issues that necessarily arise in a consumer fraud action would not prevent class treatment of the narrow liability issues here.”
Although proximate cause and damages are complex issues in consumer fraud cases, the district court held that class members still must prove those elements individually.
The court approved the district court’s limiting the issues that the class action jury would decide to the following: if there was an inherent design defect present in the windows when they left the factory; whether Pella had a duty to disclose the defect; and whether Pella attempted to modify its warranty.
David Ziemer can be reached at firstname.lastname@example.org
What the court held
Issues: Can consumer fraud cases be heard as a class action?
Holdings: Yes. Although such actions may present problems, there is no rule that they can never be certified.