Breann Hudock v. LG Electronics U.S.A., Inc.; Best Buy Co., Inc.; Best Buy Stores, L.P.; BestBuy.com, LLC

United States Court of Appeals
For the Eighth Circuit
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No. 20-2317
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Breann Hudock; Eugene Mannacio; Brian Fleishman, individually and on behalf of
all others similarly situated
lllllllllllllllllllllPlaintiffs - Appellees
v.
LG Electronics U.S.A., Inc.; Best Buy Co., Inc.; Best Buy Stores, L.P.;
BestBuy.com, LLC
lllllllllllllllllllllDefendants - Appellants
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Retail Litigation Center, Inc.; Consumer Technology Association; Association of
Home Appliance Manufacturers; U.S. Chamber Litigation Center; The Product
Liability Advisory Council
lllllllllllllllllllllAmici on Behalf of Appellant(s)
State of Minnesota
lllllllllllllllllllllAmicus on Behalf of Appellee(s)
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Appeal from United States District Court
for the District of Minnesota
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Submitted: May 13, 2021
Filed: August 25, 2021
[Published]
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Before COLLOTON, WOLLMAN, and KOBES, Circuit Judges.
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COLLOTON, Circuit Judge.
Breann Hudock, Eugene Mannacio, and Brian Fleishman sued LG Electronics
U.S.A., Inc., Best Buy Co., and two Best Buy subsidiaries for allegedly
misrepresenting the features of certain televisions that they sold. The named plaintiffs
sought certification of two proposed classes, under Federal Rule of Civil Procedure
23(b)(3), to litigate claims of unjust enrichment and violations of consumer protection
statutes from Minnesota and New Jersey. The district court granted the consumers’
motion to certify the classes, and the defendants appeal. We conclude that the classes
were not properly certified, and we therefore reverse the certification order.
I.
Each of the named consumers alleged that he or she purchased an LG LED
(Light-Emitting Diode) television “labeled as having a ‘Hz’ rating twice as high as its
actual refresh rate.” A television’s “refresh rate” is the number of times per second
that the screen displays an image; this value is expressed in terms of Hertz (Hz). A
television with a refresh rate of 60 Hz, for example, displays 60 images per second.
Higher refresh rates reduce blurring in fast-moving scenes and produce clearer images.
The consumers alleged that LG and Best Buy sold televisions with refresh rates
of 60 Hz and 120 Hz, but labeled them as having refresh rates of 120 Hz and 240 Hz,
respectively. This information is sometimes displayed for consumers on a “fact
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tag”—a product label that Best Buy uses to show information about product features.
The consumers claimed that they relied on the allegedly false refresh rate labels, and
would not have purchased, or would have paid less for, their televisions. They sought
to represent two classes: a “National Class” of consumers who purchased LG
televisions “labeled as having . . . ‘Hz’ rating[s] twice as high as” their actual refresh
rates, and a “Best Buy Purchaser Subclass” of consumers who purchased such
televisions from Best Buy’s stores or its website.
The district court certified the proposed classes to adjudicate common-law
claims of unjust enrichment and claims under three consumer protection statutes—the
Minnesota Consumer Fraud Act, Minn. Stat. § 325F.69, subd. 1; the Minnesota
Unlawful Trade Practices Act, id. § 325D.13; and the New Jersey Consumer Fraud
Act, N.J. Stat. Ann. § 56:8-2. The court concluded that the Due Process Clause
permits, and Minnesota’s choice-of-law rules require, the application of New Jersey
law for claims against LG, and the application of Minnesota law for claims against
Best Buy. Reasoning that questions common to all consumers in the classes would
predominate, the court concluded that the proposed classes satisfied the requirements
of Federal Rule of Civil Procedure 23(b)(3). LG and Best Buy argue on appeal that the
court abused its discretion by certifying the classes under Rule 23. Alternatively, they
maintain that the court erred in its analysis of the constitutional and choice-of-law
issues as applied to the nationwide classes.
II.
A party seeking class certification “must affirmatively demonstrate his
compliance” with Rule 23. Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013)
(quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011)). The movant
must, among other things, satisfy “through evidentiary proof at least one of the
provisions of Rule 23(b).” Id. For certification under Rule 23(b)(3), the party must
show that “questions of law or fact common to class members predominate over any
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questions affecting only individual members.” The predominance requirement is
“demanding”; a court considering certification pursuant to Rule 23(b)(3) must take a
“close look at whether common questions predominate over individual ones.” Comcast
Corp., 569 U.S. at 34 (internal quotation omitted).
LG and Best Buy argue that the district court abused its discretion by concluding
that common questions of law and fact predominate over questions affecting only
individual consumers. Citing In re St. Jude Medical, Inc., 522 F.3d 836 (8th Cir.
2008), the companies contend that the court erred by ignoring individualized evidence
that some consumers did not see, or did not rely on, the alleged misrepresentations
regarding the Hz ratings of their LG televisions.
In St. Jude, we said that fraud cases often are unsuitable for class treatment,
because proof often varies among individuals concerning what representations were
received, and the degree to which particular persons relied on the representations. 522
F.3d at 838. A group of plaintiffs who were implanted with faulty artificial heart
valves sought certification to bring claims under three Minnesota consumer protection
statutes, including the Consumer Fraud Act, against the manufacturer of the valves.
Id. at 837. In opposing certification, the manufacturer presented evidence that some
plaintiffs received no material representations about their heart valves, and some
physicians who prescribed the valves had not received representations directly from the
manufacturer. See id. at 838-39.
Although we noted that the Minnesota legislature has “relaxed” the traditional
requirement of proving reliance on a fraudulent statement as an element of consumer
fraud claims, see Grp. Health Plan, Inc. v. Philip Morris Inc., 621 N.W.2d 2, 13-14
(Minn. 2001), we explained that “causation is still a necessary element of a damages
action” under Minnesota’s consumer protection laws. St. Jude, 522 F.3d at 839-40.
And because the defendant could present evidence “negating a plaintiff’s direct or
circumstantial showing of causation and reliance,” we concluded that the case would
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be “dominated by individual issues,” so the case was unsuitable for class treatment.
Id. at 840.
Since St. Jude, the Minnesota Supreme Court has “reiterate[d]” its holding in
Group Health: “direct proof of reliance is not required to establish a causal nexus” in
cases alleging violations of the State’s consumer protection statutes. State v. Minn.
Sch. of Bus., Inc., 935 N.W.2d 124, 137 (Minn. 2019). The court also reiterated,
however, that defendants “retain the right to assert” that their “misrepresentations did
not cause” an individual plaintiff’s injuries. Id. at 140; see St. Jude, 522 F.3d at 839-
40.
The New Jersey Consumer Fraud Act has similar standards for proving a causal
nexus between misrepresentation and harm. Like Minnesota, New Jersey has replaced
the requirement that plaintiffs prove reliance on a defendant’s misrepresentations “with
the requirement that plaintiff[s] prove ascertainable loss.” Int’l Union of Operating
Eng’rs Loc. No. 68 Welfare Fund v. Merck & Co., 929 A.2d 1076, 1086 (N.J. 2007)
(per curiam). But as in Minnesota, claims under the New Jersey statute still require
“proof of a causal nexus between [a] defendant’s acts and the claimed damages.” Id.
at 1088; see id. at 1086. And defendants may offer individualized proof that class
members did not “react[] in a uniform or even similar manner” to the defendant’s
misrepresentations. Id. at 1087; cf. Dugan v. TGI Fridays, Inc., 171 A.3d 620, 637,
642-43 (N.J. 2017).
Like the defendant in St. Jude, LG and Best Buy have presented evidence that
some consumers did not see, or did not rely on, the allegedly false
representations—here, assertions about refresh rates for their televisions. Plaintiff
Mannacio testified that he was “quite certain” that the fact tag he viewed when
purchasing his television said “240 Hz.” But the companies presented evidence
creating a genuine dispute about whether Best Buy’s contemporaneous fact tag for the
relevant model of television, and store displays for different sizes of the same model,
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read “TruMotion 240,” without any mention of “Hz” or “refresh rate.” Plaintiff
Hudock testified that she wanted a 120 Hz television for her basement; but when
purchasing a television for her bedroom, she cared only about getting a “decent price”
for a television that suited “the area or the size” of the room. A television’s advertised
refresh rate would not have influenced her purchasing decision for the bedroom
television.
Other evidence supports the conclusion that refresh rate was immaterial in some
purchases, or to some consumers. One survey indicates that consumers cared less
about the “120 Hz” feature when purchasing televisions for bedrooms than for “public
rooms.” In another survey of LG customers, some described the “TruMotion”
enhanced refresh rate feature as “enjoyable” and “relevant” to their television usage,
but others described it as a “[w]aste of money,” and explained that they could not
detect a difference between TruMotion and non-TruMotion televisions.
Questions of which television features—such as size, resolution, refresh rate,
internet connectivity, and compatibility with other devices—motivated individual
consumers to purchase particular LG televisions are the kind of “plaintiff-by-plaintiff
determinations” that made certification inappropriate in St. Jude. 522 F.3d at 840.
The Minnesota and New Jersey consumer protection statutes do not prohibit LG and
Best Buy “from presenting direct evidence that an individual plaintiff . . . did not rely
on” the companies’ representations about the refresh rates of their televisions. Id.
Such evidence is relevant and important to the question of a causal nexus between the
alleged misrepresentations and any financial injury related to the television purchases.
Because determination of the companies’ liability would require individual
determinations on causation and reliance, “common issues will not predominate” in the
case. Id. Insofar as the particular fact tag displayed for a consumer like Mannacio
determines whether he is even part of the class, see R. Doc. 175, ¶ 143, the need for
individualized inquiries on that matter creates further “difficulties in managing a class
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action.” See Fed. R. Civ. P. 23(b)(3)(D). We therefore conclude that the certification
of the classes under Rule 23(b)(3) was inappropriate.
* * *
For these reasons, we reverse the class certification order and remand for further
proceedings.
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