Litigation: The precarious relationship between class actions and small claims courts

Companies seeking to defeat class certification may learn the principle of unintended consequences

Within a month, the 9th Circuit denied class certification when it refused to presume that an entire class relied on a product’s advertisements, but a small claims court awarded an individual plaintiff nearly $10,000 after she opted out of a similar class action. The two outcomes illustrate the effect of companies’ pleas for case-by-case relief: Consumers may heed recent decisions in Mazza and Wal-Mart and seek individual adjudication, but if they keep winning awards that are faster and more lucrative than a class action coupon, class settlement hearings may see more pushback from courts and objections by attorneys general.

In Mazza v. American Honda Motor Company, Inc., No. 09-55376 (9th Cir. Jan. 12, 2012), the 9th Circuit resisted recent trends when it refused to presume class-wide reliance. Though the California Supreme Court’s much-discussed holding in Tobacco II allowed a presumption that unnamed class members relied on misleading advertisements in making their purchases, the 9th Circuit found Mazza’s class overbroad because it was “unreasonable to assume that all class members” viewed Honda’s limited advertising campaign.

Perhaps signaling a way forward amidst California’s ever-changing “reliance” landscape, the 9th Circuit noted that “[i]n the absence of the kind of massive advertising campaign at issue in Tobacco II, the relevant class must be defined in such a way as to include only members who were exposed to advertising that is alleged to be materially misleading.” Class members who learned of the alleged CMBS limitations before purchase, the court said, also should have been excluded.

While Mazza garnered headlines, a Torrance, Calif., small claims judge awarded nearly $10,000 to the owner of a Civic Hybrid for Honda’s misrepresentations of the car’s gas mileage capabilities. The owner, Heather Peters, had opted out of a class that is suing Honda in California on the same grounds. An attorney, Peters simply claimed that Honda “fraudulently” represented gas mileage, hybrid performance and the need for a software update. Since a small claims ruling is not limited to the plaintiff’s pleadings, the judge identified seven potential theories of relief, including claims under the CLRA, FAL and UCL.

author image

Donna Wilson

Donna L. Wilson is a partner in the Los Angeles office of BuckleySandler LLP where she leads the firm’s West Coast litigation practice, with a...

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.