In re First American Home Buyers Protection Corp.
313 F.R.D. 578
S.D. Cal.2016Background
- First American sold ~3.22 million home-warranty plans (2003–2011) via three main channels: real-estate sales (~50%), renewals (~46%), and direct-to-consumer (~4%). Contracts and marketing materials varied by state and over time.
- Plaintiffs (Carrera, Hershey, Diaz, Morrison, Jullien) allege uniform misrepresentations in First American’s brochures, renewal mailings, and sales practices and claim systemic practices of denying or delaying legitimate claims.
- Plaintiffs sought certification of a nationwide class (all purchasers/named insureds on First American contracts from March 6, 2003 to present) for fraud, negligent misrepresentation, concealment, promissory fraud, UCL (unlawful/unfair/fraudulent), and false advertising; breach of contract claims were pursued only individually.
- The district court conducted a rigorous Rule 23 analysis and found major factual variation in marketing exposure (different brochures, scripts, agent discretion, renewal inserts) and state-law differences across jurisdictions.
- The court denied class certification under Rule 23(b)(3) (predominance/superiority) and denied alternative certification under Rule 23(b)(2); it also denied plaintiffs’ motion for sanctions relating to late-produced expert reports.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of California law to a nationwide class | California has sufficient contacts (HQ, call centers, marketing) so California law should govern class claims | Foreign states have material consumer-law differences; the place of the wrong is where representations were received | Denied nationwide certification; each member’s claim should be governed by law of the state where the transaction/communication occurred |
| Predominance for fraud/omission claims | Common misrepresentations were communicated company-wide (brochures, renewal letters, website), so reliance and materiality can be inferred classwide | Marketing and contracts varied by channel, region, time; many class members never saw alleged statements; reliance is individualized | Predominance not met — no common evidence that uniform material misrepresentations were actually communicated; reliance cannot be inferred classwide |
| Predominance and cohesion for UCL/FAL claims (California class) | UCL/FAL liability can be shown by common advertising and company-wide practices | Exposure to alleged advertising varied (different channels/inserts/agents), so class members were not uniformly exposed | Plaintiffs failed to show cohesion or common exposure; FAL/UCL certification denied |
| Manageability / Superiority / Rule 23(b)(2) injunctive relief | Class action is superior and injunctive relief is appropriate; monetary relief could be incidental | Individualized issues (who purchased, varied exposure, individualized damages, contractor records) make class unmanageable; plaintiffs lack standing for injunctive relief (no imminent injury) | Class action is not superior or manageable; Rule 23(b)(2) denied because primary relief sought is monetary and named plaintiffs lack imminent injury for injunctive relief |
Key Cases Cited
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (Rule 23 rigorous-commonality analysis and limits on class certification)
- Comcast Corp. v. Behrend, 569 U.S. 27 (2013) (plaintiff bears burden to demonstrate Rule 23 requirements through admissible evidence)
- Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581 (9th Cir. 2012) (California choice-of-law analysis in nationwide consumer class actions)
- In re Tobacco II Cases, 46 Cal.4th 298 (Cal. 2009) (materiality and the reasonable-consumer standard for UCL/FAL false advertising claims)
- Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) (Rule 23 factors and class cohesion)
- Cel‑Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163 (Cal. 1999) (definition of "unfair" under the UCL)