Berger v. Home Depot United States, Inc.

• Decision Date: 03 February 2014
• Docket Number: No. 11–55592.,11–55592.
• Citation: 741 F.3d 1061
• Parties: Benjamin BERGER, individually and on behalf of all other similarly situated and the general public, Plaintiff–Appellant, v. HOME DEPOT USA, INC., a Delaware Corporation, DBA The Home Depot, Defendant–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

741 F.3d 1061

Benjamin BERGER, individually and on behalf of all other similarly situated and the general public, Plaintiff–Appellant,

v.HOME DEPOT USA, INC., a Delaware Corporation, DBA The Home Depot, Defendant–Appellee.

No. 11–55592.

United States Court of Appeals,Ninth Circuit.

Argued and Submitted Aug. 28, 2013.

Filed Feb. 3, 2014.

Taras P. Kick (argued), The Kick Law Firm, Santa Monica, CA; Thomas A. Segal, The Kick Law Firm, Los Angeles, CA, for Plaintiff–Appellant.

Allan E. Ceran, Burke, Williams & Sorenson, LLP, Los Angeles, CA; Dwight J. Davis, S. Stewart Haskins II (argued), and Jonathan R. Chally, King & Spalding LLP, Atlanta, GA, for Defendant–Appellee.

Appeal from the United States District Court for the Central District of California, S. James Otero, District Judge, Presiding. D.C. No. 8:10–cv–00678–SJO–PLA.

Before: RONALD M. GOULD and JOHNNIE B. RAWLINSON, Circuit Judges, and IVAN L.R. LEMELLE, District Judge.^*

OPINION

GOULD, Circuit Judge:

Benjamin Berger appeals from the stipulated dismissal with prejudice of his putative class-action claims against Home Depot. He alleges that Home Depot automatically imposed a ten percent surcharge for a damage waiver on tool rentals in its California stores, and although that fee was to be optional, Home Depot's failure to inform customers of their ability to decline the surcharge was a violation of California's Unfair Competition Law, the California Consumer Legal Remedies Act, and common-law theories of unjust enrichment and money had and received. Cal. Bus. & Prof.Code § 17200; Cal. Civ.Code § 1770.¹ We have jurisdiction under 28 U.S.C. § 1291 because, in the absence of a settlement, a stipulation that leads to a dismissal with prejudice does not destroy the adversity in that judgment necessary to support an appeal. We affirm the denial of class certification because the district court did not abuse its discretion in holding that the proposed classes that Berger is capable of representing do not meet the requirement that common questions predominate over individual issues under Fed.R.Civ.P. 23(b)(3), and that was the only sub-part of Rule 23(b) on which Berger relied.

I

The District Court denied Berger's motion for class certification, concluding that the proposed class and subclasses were not ascertainable and that Berger did not meet the commonality, typicality, and adequacy of representation requirements of Federal Rule of Civil Procedure (“Rule”) 23(a). Having rejected certification on grounds of ascertainability of the class and on grounds that Rule 23(a) was not satisfied, the District Court at first recited that it declined to reach the requirements of Rule 23(b)(3), but then discussed those requirements and concluded, “Accordingly, because independent issues predominate and it is not clear that class action is a superior means of adjudication, Plaintiff's Motion fails for the additional reason that he cannot satisfy the requirements of Rule 23(b)(3).”

Berger then stipulated with Home Depot to dismiss the action with prejudice, noting his intent to appeal the denial of class certification. In the stipulation, Home Depot contested his ability to appeal. The district court dismissed the action under Rule 41(a)(2), and Berger filed a timely notice of appeal.

The district court had jurisdiction over Berger's complaint under the Class Action Fairness Act, 28 U.S.C. § 1332(d), because the parties met minimal diversity and the amount in controversy exceeded $5 million. We have jurisdiction under 28 U.S.C. § 1291 because a dismissal of an action with prejudice, even when such dismissal is the product of a stipulation, is a sufficiently adverse—and thus appealable—final decision.

Home Depot challenges our jurisdiction, relying on our published order in Seidman v. City of Beverly Hills, 785 F.2d 1447 (9th Cir.1986). In Seidman, we concluded that we had no jurisdiction to hear an appeal from a stipulated dismissal of a putative class action after the lead plaintiff settled his individual claims against the defendant. Id. at 1447–48. However, Seidman does not control here. As Seidman correctly noted, a final judgment must be adverse to a party in order to be appealable. Id. at 1448. While a stipulated dismissal pursuant to a settlement does not have the adversity required for appellate jurisdiction, absent a settlement, a stipulation alone does not destroy that adversity. See Coursen v. A.H. Robins, Co., Inc., 764 F.2d 1329 (9th Cir.1985); Concha v. London, 62 F.3d 1493, 1507 (9th Cir.1995) (distinguishing Seidman and holding that “plaintiffs may appeal from a voluntary dismissal with prejudice, at least where the plaintiff is not acting pursuant to a settlement agreement intended to terminate the litigation.”); Omstead v. Dell, Inc., 594 F.3d 1081,1085 (9th Cir.2010) (concluding that there was appellate jurisdiction in a class action case after a dismissal pursuant to Rule 41(a)(2)); Laczay v. Ross Adhesives, 855 F.2d 351, 354 (6th Cir.1988) (collecting cases from various circuits for the same proposition). A leading procedural treatise also takes the position that finality for appeal purposes can be achieved in this manner. See 7B Charles Allan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice & Procedure § 1802 (3d ed.2005):

The sixth method of obtaining review following a court order eliminating the class-action allegations is tactically risky. If the district court strikes the class-action designation with leave to amend so that the action may proceed on an individual basis, the party seeking class treatment may refuse to do so and allow the court to enter a final judgment dismissing the complaint with prejudice. An appeal then can be taken since the adjudication is final and falls within Section 1291. However, this procedure is a dangerous one. If the district court's order is sustained on appeal, plaintiff may be deemed to have forfeited the right to present the merits of the claims by insisting on a review of the class-action question.

(Internal citations omitted).

Here, there is no allegation that the parties have entered into a settlement. After receiving the district court's denial of class certification, Berger voluntarily stipulated to the dismissal of his complaint with prejudice so as to reach a final judgment. We conclude that this stipulated dismissal is sufficiently adverse to his interests to allow him to appeal. Concluding that we have jurisdiction over this appeal, we next address the merits of the district court's denial of class certification.

II

A

Although Berger filed four distinct legal claims, which are considered separately below, each claim is based on the same set of facts. When Home Depot rents tools to customers, it offers a “damage waiver.” If purchased, the damage waiver allows the customer to avoid liability if a tool is damaged during the period of the rental. Berger alleges that when he rented a tool from Home Depot in April of 2004, he purchased the damage waiver without notice that the waiver was optional. Berger further alleges that Home Depot does not tell customers that this waiver is an optional add-on. He claims that the cost of the waiver is automatically added to the rental price by Home Depot's computer system. Home Depot does not deny that its computers default to adding the damage waiver to a customer's receipt, but says that customers are told of the optional nature of the waiver in three ways: 1) by the sales associate, 2) by signs posted in Home Depot stores, and 3) by the language of the final sales contract. Berger contests this by alleging that as a matter of policy, Home Depot employees are not trained to inform customers of the optional nature of the waiver, and in practice, even if its policy is to make such a disclosure, the disclosures are not made.

A salient fact in our view is that over the span of time covered by this lawsuit, Home Depot has used five different versions of its tool rental agreement (Version 1: 2002–05; Version 2: March 2005—May 2006; Version 3: June 2006—August 2008; Version 4: August 2008—April 2010; and Version 5: April 2010—present), each of which discussed the damage waiver in a different way. To respond to these changes, Berger proposed subdividing his action into three subclasses, with the first to include those who rented tools from July 2002 to February 2005, the second from “March 1, 2005 to June 1, 2006 to the present,” and the third from June 1, 2006 to the present.

B

We review denials of class certification for abuse of discretion. Stearns v. Ticketmaster, 655 F.3d 1013, 1018 (9th Cir.2011) (citing Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1171 (9th Cir.2010)). We review the discretionary determinations that supported that denial under the same standard. Id. (citing Yokoyama v. Midland Nat'l Life Ins. Co., 594 F.3d 1087, 1091 (9th Cir.2010)). Where the denial was supported by factual findings, we review those findings for clear error. Id. A district court abuses its discretion when it “relies upon an improper factor, omits consideration of a factor entitled to substantial weight, or mulls the correct mix of factors but makes a clear error of judgment in assaying them.” Wolin, 617 F.3d at 1171. In addition, “an error of law is an abuse of discretion.” Yokoyama, 594 F.3d at 1091 (emphasis in original). However, “we may sustain the court's ruling [on class certification] on any ground supported by the record.” Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir.1992).

Although it was decided in a different context, that of denial of a motion for a new trial, we think that our circuit's en banc decision in Hinkson sheds light on how we should apply the abuse of discretion standard here. Abdullah v. U.S. Sec. Assoc., Inc., 731 F.3d 952, 956 (9th Cir.2013). Hinkson holds that the “abuse of discretion test requires us first to consider whether the district court identified the correct legal standard for decision of the issue before...