Blakemore v. Superior Court, B174825.
| Decision Date | 06 May 2005 |
| Docket Number | No. B174825.,No. B175973.,No. B176780.,B174825.,B175973.,B176780. |
| Parties | Raven BLAKEMORE, et al., Petitioners, v. The SUPERIOR COURT of Los Angeles County, Respondent; Avon Products, Inc., Real Party in Interest. Raven Blakemore, et al., Plaintiffs and Appellants, v. Avon Products, Inc., Defendant and Respondent. |
| Court | California Court of Appeals Court of Appeals |
Huron Maki & Johnson, Jeffrey Huron, Ann S. Lee and Brenda Barton-LeMay, Los Angeles, for Petitioners and for Plaintiffs and Appellants.
No appearance for respondent Superior Court.
Paul, Hastings, Janofsky & Walker, Alan K. Steinbrecher, Dennis S. Ellis and Joshua G. Hamilton, Los Angeles, for Real Party in Interest and for Defendant and Respondent.
This is a class action lawsuit filed against Avon Products, Inc. by women who sell or sold beauty products for Avon as independent sales representatives. The sales representatives allege that Avon shipped them products they did not order and, when they returned and paid for the unordered products, Avon refused to credit their accounts and engaged in various other practices to dissuade them from returning unordered products. They allege causes of action for fraudulent concealment, breach of contract and unfair business practices, among others. Avon successfully demurred to several causes of action and successfully moved to strike the class action allegations of the complaint, resulting in two writ petitions and an appeal by the sales representatives.
We conclude that both the writ petitions and the appeal have merit. In the unpublished portion of this opinion, we find:
(1) The plaintiffs stated facts sufficient to support an action for fraudulent concealment;
(2) The plaintiffs stated facts sufficient to support an action for breach of contract; and
(3) The trial court erred in eliminating plaintiffs Blakemore, Smith and Lane from the case on the ground their second amended complaint was inconsistent with averments in earlier versions of the complaint.
In the published portion, we conclude:
(4) The third amended complaint properly stated a claim for violation of the unfair and fraudulent prongs, but not the unlawful prong, of the unfair competition law, Business and Professions Code section 17200;
(5) The trial court erred in striking the plaintiffs' class action allegations; and
(6) No basis exists for plaintiffs' request to remand the case to a different trial judge.
Raven Blakemore and several other women (collectively, Blakemore plaintiffs) who sell or sold beauty products as independent sales representatives for Avon Products, Inc. brought a class action lawsuit against Avon. The crux of their complaint is that Avon engages in a practice they characterize as "channel stuffing," in which Avon forces or "stuffs" products onto its sales representatives — Avon's "channels of distribution" — by deliberately shipping them products they did not order, or products far in excess of the quantities they ordered. When the sales representatives return the unordered products for credit, Avon refuses to grant the credit, in violation of its own return policy. Blakemore's complaint alleges Avon falsely denies receiving the returned products; coerces the representatives to accept and pay for unordered products rather than return them for credit; unfairly requires the representatives to pay the return shipping costs; revokes its policy of "instant credit" and requires the representatives to pay for unordered products until Avon completes its lengthy return process; refuses to ship any further products until the representatives pay for their entire orders in advance, which most cannot afford to do; threatens to terminate the representatives' businesses if they persist in returning unordered products for credit; and, when representatives quit or are terminated, submits claims to collection agencies based on unordered products that were returned to Avon in order to harass the representatives into paying monies they do not owe. Blakemore's complaint describes a nationwide class, and a California subclass, consisting of all Avon sales representatives "who, since March 24, 1999, received products from Avon they did not order, thereafter returned the unordered products to Avon, and did not receive credit for those returned products...."
Blakemore alleges several causes of action in several iterations of the complaint, and Avon filed demurrers and motions to strike in each case. We first describe the pleadings and the trial court's rulings which precipitated the writ petitions and appeal now under review.
In the first amended complaint — the ruling on which is not at issue — Blakemore was the only named plaintiff. She specifically alleged that Avon shipped her products she never ordered and, when she tried to return them under Avon's policies and her contract, Avon either failed to acknowledge the return or failed to credit her for the returns, and thereafter demanded payment for products she never ordered. When Blakemore refused to pay money to Avon for products she did not order, her alleged past due account was sent to collections by Avon, and Avon continued to claim that Blakemore owed Avon money for the unordered and returned products. Blakemore asserted causes of action for violation of the unfair competition law (Bus. & Prof.Code, § 17200 et seq.), breach of contract, unjust enrichment, and money had and received.
The trial court sustained Avon's demurrer to the first amended complaint on the ground Blakemore had failed to plead any cognizable pecuniary damages, and gave Blakemore 30 days' leave to amend to bring in one or more plaintiffs who suffered actual pecuniary damages.
The second amended complaint added three named plaintiffs — Robin Smith, Lupe Lane and Elda Garcia — and added a cause of action for fraudulent concealment.1 Blakemore added allegations that, in August 2002, she returned unordered products to Avon and paid the return shipping costs, and also paid for the returned products in the sum of $83.79, with the expectation that she would receive credit for that amount in future account statements she received. Avon failed to give any credit to Blakemore for those products. Thereafter, Blakemore received other unordered products for which she was charged, and promptly returned them and paid the shipping costs. Avon denied receiving the returned products and refused to grant any credit. When Blakemore refused to pay any further amounts for unordered products that she returned to Avon, Avon sent a false claim to a collection agency, which threatened to sue her and take other adverse actions to collect monies she does not owe. Smith, Lane and Garcia likewise allege the details concerning their return of unordered products, payment of shipping costs, and payment for unordered products "with the expectation that [they] would receive credit for that amount in [their] future account statements pursuant to Avon's Return Policy."2
Incorporating the allegations described, the Blakemore plaintiffs assert causes of action for fraudulent concealment, breach of contract, unjust enrichment, and violation of the unfair competition law (UCL). The second amended complaint includes the following allegations:
• Fraudulent concealment. Avon's conduct constituted the fraudulent concealment of material facts regarding its ordering, shipping, and return policies and practices. Avon represented to its sales representatives that (a) the company would ship and charge only for products that were ordered by the representatives; (b) representatives could return products they did not order for full credit; (c) the company would immediately grant credit to the representatives' accounts for unordered products that they return to Avon; and (d) the representatives would not receive certain "preferred preview" products if they contacted Avon to decline receipt.3 Avon failed to disclose, however, (a) that it deliberately ships and charges for unordered products; (b) that the sales representatives must pay the return shipping costs; (c) that Avon does not honor its return policy and refuses to grant credit for unordered products that are returned; (d) that Avon deliberately ships "preferred preview" products whether or not the sales representative contacts Avon to decline receipt; (e) that Avon denies credit for unordered products by falsely claiming the returns were not received; (f) Avon seeks payment for unordered products that are returned by submitting false claims to collection agencies; (g) that Avon initially grants credit and later reverses the credit in future account statements; and so on. These undisclosed policies were material facts which Avon had a duty to disclose to the representatives, because (1) they materially qualified the representations Avon made, or rendered those representations "likely to mislead" the representatives, and (2) because the facts were known or accessible only to Avon. Avon concealed these material facts with the intent to defraud the representatives into enlisting or remaining active sales representatives, accepting unordered products, returning them, and paying Avon for unordered products they returned. The Blakemore plaintiffs were unaware of the material facts concealed, "and would not have enlisted or remained active Sales Representatives, ordered products from Avon, accepted unordered products from Avon, returned unordered products to Avon, or paid Avon for unordered products."
• Breach of contract. Plaintiffs entered into substantially identical written contracts with Avon, "which Avon from time to time has amended and modified both orally and in writing, including but not limited to in its training guides, sales brochures, marketing pamphlets, and...
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