Federal Court Refuses to Certify Warranty and Consumer Fraud Class Action over Camera's Alleged Battery Defects
Judge Garrett E. Brown, Jr. recently issued an opinion in a consumer product class action that illustrates the typical problems with the types of claims that are presently brought as consumer class actions. In Payne v. Fujifilm U.S.A., Inc., Civ. A. No. 07-385 (GEB), Slip op. (D.N.J. May 28, 2010), plaintiffs sought to bring a nationwide class action against Fujifilm, alleging that its FinePix 3800 camera had a soldering defect on the power board that could cause the camera to lose function intermittently or totally. Plaintiffs brought various breach of contract and breach of warranty theories, as well as a claim under New Jersey's Consumer Fraud Act.
The court didn't even bother analyzing the Rule 23(a) factors, as it was able to conclude that the class was not certifiable under Rule 23(b)(2) or Rule 23(b)(3).
In analyzing whether an equitable relief class was proper under Rule 23(b)(2), the court quickly concluded that "Plaintiffs' main goal is to obtain monetary damages," and thus the monetary damages were not merely incidental to the claim for injunctive relief. Indeed, plaintiffs sought "compensatory damages, statutory damages, punitive damages, and a refund of monies spent purchasing, repairing, and/or disposing of their cameras." Slip op. at 5. The court refused to certify the class under Rule 23(b)(2).
The court just as easily concluded that the proposed class could not meet the predominance standard of Rule 23(b)(3). To begin with, this was not a product with a high failure rate. Rather, the vast majority of putative class members had not experienced a product malfunction. As the court noted, out of the nearly 300,000 cameras sold in a two-year period, the total return rate for any reason whatsoever was only 4%. The number of cameras returned for any kind of power problem was only between 1% and 2%. Thus, the vast majority of the class members had not experienced any product malfunction. Moreover, there are a variety of potential causes for power problems with cameras, including: "impact damage, water, a short circuit, extreme temperatures, blown fuses, tamper damage, normal wear and tear, or simply improper batteries." Slip op. at 9-10. Thus, even the small return rate was not per se evidence of a solder problem.
The court concluded that common factual issues did not predominate because the cases would devolve into individual determinations of whether the class member had experienced a "manifested" defect, since the law generally does not give consumers relief from so-called "unmanifested defects." See id. at 6-8 (citing Chin v. Chrysler Corp., 182 F.R.D. 448 (D.N.J. 1998); In re Ford Motor Co. Ignition Switch Prods. Liab. Litig., 174 F.R.D. 332 (D.N.J. 1997); In re Cannon Cameras Litig., 237 F.R.D. 357 (S.D.N.Y. 2006)).
Plaintiffs had relied on an expert who examined the named plaintiffs' cameras. He testified that the cameras had a joint solder defect that would cause power loss. The court was unpersuaded that this was evidence of a defect in all cameras. To begin with, the expert only examined the named plaintiffs' cameras, not any others. He admitted that he could not determine how the solder fractures occurred or whether they even occurred in joints that were necessary for the camera's functionality. He further admitted that he could not causally connect the fractures to any difficulties the named plaintiffs had experienced with their cameras. And he admitted that "normal wear and tear" can contribute to "accumulating creep fatigue" in all solder joints in any soldered product over time. This was not enough to prove a common defect among all cameras. Slip op. at 10.
Plaintiffs also sought to rely on the fact that the defendant, in its troubleshooting guide, had indicated that a soldering problem might be a cause of power problems experienced with the camera. But the inclusion of that potential cause was based on only one instance, and it was only one of many potential causes listed for power problems. The troubleshooting guide was not enough to establish a common defect -- particularly where most customers used the product for the life of the warranty without experiencing any problem.
The court also concluded that common issues of law did not predominate. Plaintiffs argued that because Fujifilm had its principal place of business in New Jersey, New Jersey law should apply to all plaintiffs' claims. The court -- applying sections 6, 148, and 188 of the Restatement (Second) of Conflict of Laws -- held that the law of the plaintiffs' residences governed each transaction. The court faulted the plaintiffs for not preparing an extensive choice of law analysis, which was their burden once it was clear that multiple states' laws might apply to the claims.
The court held that state consumer fraud laws are too different to have common issues of law predominate:
For example, only thirty-three states have authorized injunctive relief under their consumer fraud statutes, thirty-four states required that a plaintiff plead an "ascertainable loss" with regard to consumer fraud claims, and many states have varying statute of limitations periods applicable to such claims. Plaintiffs have not provided the Court with any method for managing such individualized issues of state law . . .
Slip op. at 16.
Similarly, the court held that the breach of contract/breach of warranty causes of action were too different to be tried together:
State laws regarding breach of express and implied warranty also differ greatly with regard to "(1) whether plaintiffs must demonstrate reliance, (2) whether plaintiffs must provide notice of breach, (3) whether there must be privity of contract, (4) whether plaintiffs may recover for unmanifested . . . defects, (5) whether merchantability may be presumed and (6) whether warranty protections extend to used [goods]."
Slip op. at 17 (citation omitted).
Judge Brown's analysis is spot on. Where, as here, there is no widespread failure of a product, there simply is no reason for a class action. As a practical -- as well as a legal -- matter, people whose product performs as expected throughout the warranty period are not entitled to damages or other relief for so-called breach of warranty or consumer fraud.
