Duane Morris Consumer Fraud Class Action Review – 2024

2. Motions For Class Certification Denied In 2023, many court rulings on consumer fraud claims denied class certification.

For example, the plaintiffs in Birmingham, et al. v. Rofx.Net, 2023 U.S. Dist. LEXIS 83142 (S.D. Fla. May 11, 2023), filed a class action alleging that the defendant engaged in a fraudulent scheme of operating a fake foreign exchange trading website that promised to provide passive income in exchange for sending funds. The plaintiffs filed a motion for class certification of the claims for common law fraud and unjust enrichment pursuant to Rule 23, and the court denied the motion. The plaintiffs specifically alleged that an informal association of Ukrainians operated a phony foreign exchange trading service, claiming to have artificially intelligent software that could conduct foreign exchange trading on behalf of customers in the exchange for funds. The plaintiffs contended that the website was not legitimate, there was never a registered company, customers’ funds were not being invested on their behalf, the online advertising was fictitious, and thus the defendant engaged in an illegitimate enterprise meant to steal the funds of customers for their own benefit. The court found that the plaintiffs did not adequately address the variations in state laws that might apply to the potential class members, which made it impossible to determine if common legal questions predominated over individual issues. The court also noted that the plaintiffs’ argument – that minor variations in the elements of unjust enrichment across states should not preclude class certification – were insufficient. For these reasons, the court denied the motion for class certification. The putative class in Hooker, et al. v. Citadel Salisbury LLC , 2023 U.S. Dist. LEXIS 68861 (M.D.N.C. Apr. 20, 2023), consisted of group home residents and their sponsors. The residents and sponsors filed a class action alleging that the care they received in their group home deteriorated after the home was taken over by new management. The plaintiffs alleged breach of contract claims. The plaintiffs filed a motion for class certification, and the court denied the motion. The plaintiffs specifically alleged that the residence home was consistently staffed inadequately such that it was unable to provide the services required for the safety and well-being of residents as promised. The plaintiffs asserted that common questions for all class members included the use of uniform policies and management systems; whether the law required the facility to maintain staffing at a reasonable level; whether residents had an implied contract; and what damages could be pursued on a class-wide basis. The court determined that the plaintiffs failed to meet their burden under Rule 23(a) to establish commonality. The court opined that commonality requires that the class members have suffered the same injury, and the issue of staffing levels was not enough to establish commonality. The court noted that the breach of contract claim turned on questions of whether the defendant deprived the plaintiffs of the benefit of their bargain, which primarily was about money in exchange for skilled nursing care services, not predetermined staffing levels. In conclusion, the court determined that the plaintiffs failed to meet the commonality requirement for class certification, as it would require individualized determinations for each class member. In McMahon, et al. v. Chipotle Mexican Grill, Inc., 2023 U.S. Dist. LEXIS 60424 (W.D. Pa. Apr. 3, 2023), the plaintiffs filed a class action alleging that Chipotle converted and misappropriated money from class members, and knowingly accepted cash from customers while knowing that they could not provide the correct change in violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL), and breach of contract. The plaintiffs filed a motion for class certification and the court denied the motion. The court found that the plaintiffs failed to establish that the proposed class was ascertainable. The court noted that the defendant did not have a way of keeping track the amount of money that was provided to a customer as change. The plaintiffs argued that cash register video footage could be used to determine whether customers received their due coins back from the cashier. The court rejected this argument. It reasoned that the video footage would not necessarily show that the customer was provided an inaccurate amount. The court opined that a cashier could have provided a higher amount of change or rounded the meal cost down in order to avoid shortchanging the customer. The plaintiffs also asserted that the class members could prepare affidavits swearing to the shortchanging. The court concluded that the

Made with FlippingBook - professional solution for displaying marketing and sales documents online