Consumer Fraud Class Action Review – 2025

For example, in Jama, et al. v. State Farm Mutual Automotive Insurance Co ., 113 F.4th 924 (9th Cir. 2024), the plaintiffs, a class of drivers in Washington whose cars were deemed “totaled” after accidents, filed a class action alleging that their insurers, State Farm Mutual Automobile Insurance Co. and State Farm Fire and Casualty Co., failed to pay the “actual cash value” of their vehicles, as required by Washington law. Id. at 926. The plaintiffs argued that State Farm improperly applied two discounts when calculating two discounts, including: (i) a “negotiation” discount value, which reduced the amount based on expected negotiation outcomes; and (ii) a “condition” discount, which accounted for the car’s condition compared to similar vehicles. Id. The district court previously had certified two classes based on the negotiation and condition discounts. However, after a related case was decided, the district court decertified both classes on the grounds that the plaintiffs could not demonstrate injury on a class-wide basis as the mere existence of illegal discounts did not guarantee that all class members were underpa Id. On appeal, the Ninth Circuit reversed the decertification of the negotiation discount class. It held that those class members could potentially prove injury on a class-wide basis by simply adding back an unlawful negotiation adjustment to the value each class member should have received. The negotiation class had a clear basis for calculating injury because Washington law prohibited negotiation adjustments, and therefore, all members of the negotiation class received less than they were owed due to the unlawful negotiation discount. However, the Ninth Circuit held that the condition class would still require individual assessments into each class members’ injury, so it affirmed the district court’s decertification of that class. Furthermore, the Ninth Circuit opined that some plaintiffs may have received equal or greater payouts due to condition adjustments, and therefore those plaintiffs may have incurred no injury at all. For these reasons, the Ninth Circuit affirmed the district court’s decision to decertify the condition class and reversed the district court’s decision to decertify the negotiation class. The court also granted the defendant’s motion for decertification in Ortiz, et al. v. Saba University School Of Medicine , 2024 U.S. Dist. LEXIS 215521 (D. Mass. Nov. 26, 2024). The plaintiff brought claims for false and deceptive advertising against the defendant, Saba University, and argued that Saba misled prospective students by overstating its USMLE Step 1 pass rates. The plaintiff sought class certification, and the court granted the motion and certified a class of former Saba students who had enrolled between September 2017 and the present, were no longer enrolled, and had not taken the USMLE Step 1 exam. Saba, in response, filed a petition for interlocutory review with the First Circuit. While awaiting the appeal’s outcome, the court reviewed its decision and concluded that class certification was granted in error. The court explained that jurisdiction over the class certification order remained with the court because the First Circuit had not yet accepted the petition. As a result, the court issued a subsequent order decertifying the class. The court determined that the plaintiff’s class met all the requirements of Rule 23(a). However, the court stated that common issues did not predominate. The court noted that the application of multiple state laws to the claims of class members posed significant challenges to handling the case on a class- wide basis. Saba argued that state consumer protection laws, including those that require proof of reliance, varied materially, particularly between Massachusetts and other states. The plaintiff attempted to apply Massachusetts law uniformly to the entire class, but the court rejected this approach, stating that each state’s laws should govern its residents’ claims. The court conducted a choice-of-law analysis and found that the laws of each class member’s home state would apply because the misrepresentations were made in Massachusetts but received and relied upon in the respective home states of the putative class members. Thus, the court concluded that the differences in state laws, including variations in consumer protection standards, outweighed the common issues in the case, thereby making class certification inappropriate. Saba also argued that the plaintiff’s proposed damages model, which relied on a full refund of tuition and fees, was unworkable. The court agreed. It opined that under Massachusetts law, damages should compensate for the actual harm suffered and not provide a windfall. The court reasoned that the full refund model ignored the value that students may have derived from the education they received. While the plaintiff claimed that the education was worthless due to the misrepresentations, the court noted that the educational services provided might still have conferred some benefit to students. For these reasons, the court decertified the class, ruling that the differences in state laws related to consumer fraud claims prevented the proposed class from satisfying the predominance requirement. application of multiple state laws to the claims of class members posed significant challenges. Saba argued that

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