Downey v. Pub. Storage, Inc.

• Citation: 44 Cal.App.5th 1103,258 Cal.Rptr.3d 290
• Decision Date: 06 February 2020
• Docket Number: B291662
• Court: California Court of Appeals
• Parties: Cheryl DOWNEY et al., Plaintiffs and Appellants, v. PUBLIC STORAGE, INC., Defendant and Respondent.

44 Cal.App.5th 1103

258 Cal.Rptr.3d 290

Cheryl DOWNEY et al., Plaintiffs and Appellants,

v.PUBLIC STORAGE, INC., Defendant and Respondent.

B291662

Court of Appeal, Second District, Division 2, California.

Filed February 6, 2020

Baker, Burton & Lundy, Brad Baker and Albro Lundy, Hermosa Beach; Dale E. Washington ; and Raymond Zakari, Glendora, for Plaintiffs and Appellants.

Keker, Van Nest & Peters, John W. Keker, Erin E. Meyer, Eduardo E. Santacana, Christopher S. Sun, San Francisco; Willkie Farr & Gallagher and Simona A. Agnolucci, San Francisco, for Defendant and Respondent.

HOFFSTADT, J.

A trial court may certify a class in a proposed class action lawsuit only if, among other things, the court finds a " ‘community of interest’ " among the proposed class members ( Duran v. U.S. Bank National Assn. (2014) 59 Cal.4th 1, 28, 172 Cal.Rptr.3d 371, 325 P.3d 916 ( Duran )), which in part means that " " ‘common questions of law or fact’ " " " " ‘predominate’ " " because "the elements necessary to establish liability are susceptible of common proof" ( Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1021, 1024, 139 Cal.Rptr.3d 315, 273 P.3d 513 ( Brinker )). Where, as here, a proposed class action lawsuit seeks restitution for violations of the Unfair Competition Law ( Bus. & Prof. Code, § 17200 et seq. ) and false advertising law (id. , § 17500 et seq.) based on a series of allegedly deceptive advertisements offering a special promotional rate but defines the class as everyone who received the special promotional rate, must the plaintiffs establish that the following "elements" are "susceptible of common proof"—namely, (1) that the class members were exposed to the advertisements, and (2) that the various permutations of the advertisements were deceptive? We conclude that the answer is "yes," and that language in In re Tobacco II Cases (2009) 46 Cal.4th 298, 93 Cal.Rptr.3d 559, 207 P.3d 20 ( Tobacco II ) is not to the contrary. Because the trial court’s finding that the issues of exposure and deceptiveness were not susceptible of common proof is supported by substantial evidence, we affirm its order denying class certification.

FACTS AND PROCEDURAL BACKGROUND

I. Facts

A. Public Storage and its procedures for renting space

Defendant Public Storage, Inc. (Public Storage) rents storage units to the public, and has more than 400 storage facilities throughout California.

A person who rents a unit from Public Storage must pay (1) a monthly rent, and (2) a one-time "New Account Administration Fee" of $22 or $24 (new account fee). The renter must also (1) supply his or her own lock for the space, and (2) have insurance that covers the items to be stored. Rather than supplying their own locks or insurance, renters have the option of purchasing a lock or an insurance policy from Public Storage. Between 2011 and 2016, Public Storage used four different insurance rider forms: The form used from 2011 through March 2012 stated that renters could "elect[ ] to obtain" an insurance policy from Public Storage; the form used from March 2012 through July 2013 clarified that any policy obtained from Public Storage might be duplicative of homeowner’s or renter’s insurance; the form used from July 2013 through January 2016 further clarified that the insurance requirement could be met by "[an]other applicable insurance" policy; and the form used from January 2016 onward even further clarified that a policy from Public Storage was "not required in order to store ... goods."

B. Public Storage’s $1 first month’s rent promotion

From 1983 to the present, Public Storage has offered the public a promotional rate of $1 for the "First Month" or "First Month[’s] Rent" of a storage unit.

The $1 promotional rate has appeared in a variety of different media: Public Storage advertised the $1 promotional rate "sporadic[ally]" on commercials on local television in 2011 and 2012 and on select weeks on national cable channels from 2013 through 2017; on banners affixed to some of the storage facilities; on various Internet-based outlets, including Google, Yahoo and similar search engines as paid responses to certain search queries, Facebook and other social media sites, and YouTube—all of which referred the viewer to Public Storage’s website; on some webpages of Public Storage’s own website; briefly on radio commercials on Los Angeles Dodgers Radio in 2010 and 2011; and sometimes in conjunction with other businesses, such as Budget Rental Trucks and Six Flags amusement parks.

The "wording" of the advertisements "has varied over time and in [this] different media." Some of the television ads stated that the $1 promotional rate "does not include applicable deposits or fees"; some of the YouTube ads stated that "Other restrictions, taxes and fees apply"; and many of the banners, any of the Internet ads on platforms that allows for asterisked text, and Public Storage’s website itself (to which all Internet ads funneled a viewer), placed an asterisk next to many $1 promotional rate advertisements with a second asterisk at the bottom of the website explaining that rate was subject to "fees," "taxes" or "restrictions."

The $1 promotional rate is automatically applied to certain storage units regardless of whether the renter invokes (or otherwise knows about) the rate. A renter who reserves a unit online will (1) see a webpage that displays the $1 rate for the remainder of the calendar month as well as pro-rated into the next month as well as the $22 or $24 new account fee, and (2) receive a confirmatory email setting forth the $1 rate and the new account fee. A renter who reserves a unit by calling Public Storage and who provides an email address will receive a confirmatory email setting forth the $1 rate and the new account fee. And all renters—whether they reserve online, reserve by phone, or simply walk in and rent a space—are told, before they sign any rental contract, that they will be charged the new account fee. Public storage also mandates that its employees follow a script that tells renters, before they sign a rental contract, that they must have a lock and insurance, but they have the option of using their own locks and insurance or buying a lock or insurance policy from Public Storage.

C. Implementation of the $1 Promotional Rate

Between March 6, 2011 and February 8, 2016, Public Storage applied the $1 promotional rate to units rented by 650,296 customers. Of these customers, 40 percent made an online reservation for a storage unit and 33.4 percent simply "walked in" without any existing reservation. A total of 57 percent of the 650,296 customers received a confirmatory email detailing the $1 promotional rate and the new account fee. Although four customers (three of whom, as described below, became the plaintiffs pertinent to the claim at issue in this appeal) reported that Public Storage employees told them that they had to buy a Public Storage lock, only 69 percent of the 650,296 customers during the five-year window bought a lock from Public Storage; the remaining 31 percent used their own locks. And although the same four customers reported that Public Storage employees told them that they had to purchase a Public Storage insurance policy, only 86.7 percent of the 650,296 customers during the five-year window purchased a Public Storage policy; the remaining 13.3 percent, including one of the customers himself on one of the three occasions he rented a storage unit, relied upon another insurance policy.

II. Procedural Background

A. Operative complaint

In March 2015, a handful of Public Storage customers brought a lawsuit alleging that Public Storage’s $1 promotional rate was deceptive. In the operative fourth amended complaint, named plaintiffs Roderick Goff II (Goff), Heather Granado (Granado) and Scott Mueller (Mueller) (collectively, plaintiffs) allege, among other things, that the $1 promotional rate violates the Unfair Competition Law ( Bus. & Prof. Code, § 17200 et seq. ) and constitutes a false advertisement (id. , § 17500 et seq).¹ Specifically, plaintiffs allege that Public Storage’s $1 promotional rate advertisements constitute a deceptive "bait and switch" because customers were promised a $1 rate but ultimately had to pay more than $1 for their first month due to (1) having to pay the new account fee, (2) being charged a second month’s rent on the first day of the next calendar month, even if the first 28 to 31 days (at the $1 promotional rate) were not yet over, (3) having to buy a lock, and (4) having to provide insurance coverage for the items in the storage unit. Plaintiffs sought to bring a class action.

B. Class certification motion

In December 2017, plaintiffs moved to certify a class defined as "all California tenants who rented storage units from a California Public Storage facility under the $1 Special [P]romotion from March 6, 2011 through February 8, 2016 and paid over and above the $1 advertised for the $1 Special" by paying (1) "an extra ‘administrative fee;’ " (2) "purchas[ing] locks;" (3) "purchas[ing] insurance;" and/or (4) "not receiv[ing] a full month’s rent (a full month being 28-31 consecutive days depending on the month) without further charges."

After Public Storage filed an opposition and plaintiffs filed their reply, the trial court held a hearing to entertain argument. At that hearing, plaintiffs clarified that they were seeking to certify a class only for purposes of obtaining restitutionary relief, not injunctive relief.

In a 10-page order, the trial court denied plaintiff’s motion for class certification. The court found that plaintiffs had not "show[n] that common issues of fact and law predominate" in two respects. First, plaintiffs "ha[d] not shown that all class members were exposed to" the $1 promotional rate advertisements. Those advertisements, the court found, were "frequently disconnected from the rental process" because customers could "walk in" and rent a space without seeing a banner on the...