Florida Court Reverses Class Certification Order Based On Outdated Definition Of Unfair Trade Practice

by Carlton Fields
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Florida’s Third District Court of Appeal reversed an order certifying a class of Porsche vehicle owners who had their high intensity discharge headlights stolen during the class period.  The plaintiffs alleged that the defendant acted unfairly by distributing a product highly susceptible to theft without taking remedial steps such as notifying owners of the potential risk, in violation of Florida’s Deceptive and Unfair Trade Practices Act “(FDUTPA”).

The trial court certified a class and two subclasses using the definition of an “unfair” trade practice derived from a 1964 Federal Trade Commission policy statement.  Under that definition, a practice is “unfair” if it “offends established policy” and “is immoral, unethical, oppressive, unscrupulous or substantially injurious to customers.”  Relying in large part on a Southern District of Florida class certification decision, In re Motions to Certify Classes Against Court Reporting Firms for Charges Relating to Word Indices, 715 F. Supp. 2d 1265 (S.D. Fla. 2010), aff’d sub nom. Webber v. Esquire Deposition Services, LLC, 439 Fed. Appx. 849 (11th Cir. 2011), the Third District held that this was error because in 1980, the FTC updated its definition to establish a three-pronged test for “unfairness,” which requires that the injury to the consumer be substantial, that it not be outweighed by any countervailing benefits to consumers, and that it be one that consumers themselves could not reasonably have avoided, and because Florida adopted that definition specifically with regard to FDUTPA.

Using the old definition, the trial court had ruled that an individual class member’s pre-purchase knowledge of the potential risk of theft was not relevant to the class FDUTPA claims and that common issues would predominate over individual issues because the defendant’s actions would be unfair to all class members or not unfair to any of them.  Applying the correct definition, the Third District held that individual class members’ knowledge of the risk of headlight theft was relevant to whether the defendant’s practice was unfair because it impacted whether the consumer could reasonably avoid the risk.  Consumers who lived in a high crime area could have chosen Porsche models with different, less attractive headlights, taken efforts to park in safe areas, installed car alarms extending to the headlight mounting module, or declined to buy or lease a Porsche with the high intensity discharge headlights.  In these circumstances, where “the individual knowledge and experience of the consumer is an important element of the cause of action” and defenses, “there can be no class-wide proof that injury was not reasonably avoidable.”

This decision has the potential to be an important arrow in a defendant’s quiver when facing a FDUTPA class action in Florida.  It illustrates the importance of exploring whether class members’ individual knowledge and experience is significant to the cause of action or defenses.  If so, as in this case, no class should be certified.

Note:  Carlton Fields Jorden Burt was counsel of record for one of the three defendants in Court Reporting Firms.

Porsche Cars North America, Inc. v. Diamond, No. 3D12-2829 (Fla. 3d DCA June 11, 2014).

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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