Hudock v. LG Electronics U.S.A., Inc.

Background

Breann Hudock, Ivan Villa Lara, Eugene Mannacio, and Brian Fleishman brought a proposed class action against LG Electronics U.S.A., Inc., Best Buy Co., Inc., Best Buy Stores, L.P., and BestBuy.com, LLC. They alleged that the defendants marketed and sold LG LED televisions labeled with refresh rates twice the televisions’ native refresh rates—for example, labeling a television with an actual 60 Hz or 120 Hz refresh rate as 120 Hz or 240 Hz.

The plaintiffs asserted claims under Minnesota and New Jersey consumer-protection laws, breach of express and implied warranties, breach of contract against Best Buy, and unjust enrichment. They proposed a nationwide class of people who purchased qualifying LG televisions between May 9, 2010, and the present, plus a subclass of people who purchased those televisions from Best Buy.

Class-certification standards

Under Federal Rule of Civil Procedure 23, plaintiffs seeking class certification must show numerosity, commonality, typicality, and adequate representation. They must also satisfy a requirement under Rule 23(b). For a damages class under Rule 23(b)(3), common questions must predominate over individual questions, and a class action must be the superior method of resolving the dispute.

The court found that the proposed class satisfied numerosity, commonality, and adequacy. The common question was whether the defendants’ representations about television refresh rates were likely to mislead or deceive consumers. The court also concluded that individual reliance issues did not prevent certification of the Minnesota consumer-protection claims or the New Jersey Consumer Fraud Act claim at this stage.

Ivan Villa Lara

The court concluded that Villa Lara was not a typical class representative. His grandmother purchased his television, he agreed to reimburse her, and he later received store credit equal to the purchase price after Best Buy repaired an unrelated problem under a service plan. The court found that the purchase arrangement and damages issues created differences from the other plaintiffs, including a possible lack of contractual relationship. It therefore dismissed Villa Lara without prejudice.

Choice of law and certified claims

The court found material differences among the laws of the states connected to the proposed class members’ claims. It nevertheless concluded that applying New Jersey law to LG and Minnesota law to Best Buy was consistent with due process for the consumer-protection and unjust-enrichment claims. New Jersey had substantial connections to LG because LG was incorporated and headquartered there and the alleged labeling decisions largely came from New Jersey. Minnesota had substantial connections to Best Buy because Best Buy was a Minnesota company and many of the relevant corporate activities occurred there.

After applying Minnesota’s choice-of-law factors, the court selected New Jersey law for the consumer-protection and unjust-enrichment claims against LG. It selected Minnesota law for the consumer-protection and unjust-enrichment claims against Best Buy. The court concluded that applying the laws of the states where individual purchases occurred would make the warranty and contract claims unmanageable as class claims.

The court also found that common questions predominated for the consumer-protection and unjust-enrichment claims. It accepted the plaintiffs’ damages theory, which used conjoint analysis to estimate the televisions’ reduced market value, for purposes of class certification. Because the individual alleged overpayments were small and the proposed class action had been pending for several years, the court found that a class action was the superior method for resolving the certified claims.

Rule 23(b)(2) request

The plaintiffs also sought certification under Rule 23(b)(2), which concerns classwide injunctive relief. The court declined to certify such a class because the case primarily sought monetary damages, and those damages were not merely incidental to injunctive relief.

Order and disposition

The court’s order states that the motion for preliminary class certification was granted in part as to claims against LG under Counts IV and XIII and as to claims against Best Buy under Counts I, III, and XIII. It states that the motion was denied in part as to Counts II and IV through XII. The order also states that Ivan Villa Lara was dismissed without prejudice.

The opinion’s narrative explains the ruling as certification of the consumer-protection and unjust-enrichment claims, with certification denied for the warranty and contract claims. However, the written order appears internally inconsistent because it lists Count IV among the claims granted for LG and also lists Count IV among the claims denied. This summary does not resolve that inconsistency.