Lee v. Samsung Elecs. Am.

• Decision Date: 21 September 2022
• Docket Number: 4:21-cv-1321
• Parties: ADAM LEE, et al., Plaintiffs, v. SAMSUNG ELECTRONICS AMERICA, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

ADAM LEE, et al., Plaintiffs,
v.
SAMSUNG ELECTRONICS AMERICA, INC., Defendant.

No. 4:21-cv-1321

United States District Court, S.D. Texas, Houston Division

September 21, 2022

MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION ON DEFENDANT'S MOTION TO STRIKE

DENA HANOVICE PALERMO, MAGISTRATE JUDGE

Before the Court is Samsung Electronics America, Inc.'s (“Defendant” or “Samsung”) motion to strike class allegations. Mot. Strike, ECF No. 24.^[1] Plaintiffs filed this purported nationwide class action with four state sub-classes based on their purchases of Defendant's black stainless steel kitchen appliances, asserting claims under state consumer protection laws, common law fraudulent concealment, unjust enrichment, and breach of implied warranty of merchantability. Pl.'s First Am. Compl., ECF No. 13 (“complaint”). Defendant asserts that the class claims are

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facially deficient and cannot meet Rule 23's requirements such that there is no reason to postpone deciding these issues. ECF No. 24 at 10. In response, Plaintiffs contend that their complaint is sufficient to show that class treatment of their claims is appropriate, and that Defendant's motion is premature. Pls.' Resp., ECF No. 30. Based on a careful review of the complaint, the filings, and the law, the Court concludes that the motion to strike has merit as to the nationwide class and the fraud based claims.^[2] Therefore, the Court recommends that the motion should be granted.

I. BACKGROUND

Four plaintiffs, Adam Lee (“Lee”), Kimberly Einiger (“Einiger”), Howard Roscoe (“Roscoe”), and Anastasia Danilova (“Danilova”) (collectively “Plaintiffs”), bring this class action on behalf of themselves and all others similarly situated who purchased Samsung kitchen appliances with a “black stainless steel” finish. ECF No. 13 at ¶¶ 1-4. The gravamen of Plaintiffs' complaint is that they purchased their appliances at higher prices based on Defendant's representation that they were

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premium products made of black stainless steel. Id. ¶¶ 4, 24, 25. In fact, Plaintiffs claim, the appliances are not black stainless steel, but stainless steel coated with a thin plastic finish. Id. Furthermore, Plaintiffs allege that Samsung's black stainless steel finish is defective because it peeled, chipped, flaked, discolored, and prematurely degraded. Id. ¶¶ 4, 6. In contrast, Samsung's appliances with either plain stainless steel, white, or black finishes do not encounter the same consumer complaints regarding peeling, chipping, etc. Id. ¶ 5. Besides the “aesthetic ramifications,” the appliances shed small pieces of the plastic coating, which Plaintiffs contend creates a potential health danger. Id. at ¶ 8.

Plaintiffs define the national class as “[a]ll persons and entities throughout the United States who purchased one or more Samsung-branded appliance featuring a ‘black stainless steel' finish.” ECF No 13. ¶¶ 88-91. Plaintiffs assert claims based on fraudulent concealment, MMWA breach of warranty, and unjust enrichment on behalf of the national class. Id. ¶¶ 125, 140, 156. Plaintiffs define the Texas Class, Nevada Class, South Carolina Class, and Massachusetts Class (collectively, “State Classes”) as “[a]ll persons and entities throughout [the respective state] who purchased one or more Samsung-branded appliance featuring a ‘black stainless steel' finish.” Id. ¶¶ 88-92. For the state classes, Plaintiffs asserts claims for fraudulent concealment and unjust enrichment, breach of implied warranty, as well as misrepresentation, unconscionability, and unfair practices under the consumer

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protection laws of the respective states. Id. ¶¶ 125 (fraudulent concealment), 156 (unjust enrichment), 172, 211, 244, 278 (implied warranty), 183 (Texas Deceptive Trade Practices Act), 222 (Nevada Deceptive Trade Practices Act), 255 (South Carolina Unfair Trade Practices Act), 289 (Massachusetts Regulation of Business Practices for Consumer Protection).

In its motion to strike, Defendant makes three main arguments: (1) individualized factual issues preclude all the putative classes; (2) variations in applicable state laws preclude the putative national class; and (3) South Carolina Unfair Trade Practices Act (“SCUTPA”) claims cannot be brought as a class action.

II. THE LEGAL STANDARD FOR A MOTION TO STRIKE CLASS ALLEGATIONS.

Defendant argues that Plaintiffs' class allegations should be stricken under Rule 23(c), ECF No. 24 at 13-14, which provides:

At an early practicable time after a person sues or is sued as a class representative, the court must determine by order whether to certify the action as a class action

FED. R. CIV. P. 23(c)(1)(A). Either plaintiff or defendant may seek a ruling on the class claims; plaintiff may file a motion for class certification, and defendant may file a motion to dismiss or strike. The Fifth Circuit has stated that “[w]here it is facially apparent from the pleadings that there is no ascertainable class, a district court may dismiss the class allegation on the pleadings.” John v. Nat'l Sec. Fire & Cas. Co., 501 F.3d 443, 445 (5th Cir. 2007). “A defendant may move to strike class

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allegations prior to discovery in rare cases where the complaint itself demonstrates that the requirements for maintaining a class action cannot be met.” Delarue v. State Farm Lloyds, No. 1:09-CV-237, 2010 WL 11530499, at *2 (E.D. Tex. Mar. 10, 2010). In response, Plaintiffs argue that Rule 12(f) applies, and under that standard, the motion should be denied. ECF No 30 at 11-12.^[3]

Defendant is correct that federal courts, including in this division, have stricken or dismissed class allegations on the pleadings, analyzing Rule 23's requirements for commonality and predominance. See, e.g., Gordon v. Sig Sauer, Inc., No. H-19-585, 2019 WL 4572799, at *22 (S.D. Tex. Sept. 20, 2019) (Rosenthal, C.J.) (motion to strike, court struck common law fraud, breach of warranty, consumer protection based on warranty breach, and unjust enrichment as to nationwide class, as well as common law fraud and consumer protection claims based on false and misleading statements as to Texas class); Reedy v. Phillips 66 Co., No. H-17-2914, 2018 WL 1413087, at *13 (S.D. Tex. Mar. 20, 2018) (Lake, J.) (motion to strike, court struck national class claims after analyzing predominance of product liability and warranty laws of fifty states and Kansas state class of consumer fraud claims); Rosa v. Am. Water Heater Co., 177 F.Supp.3d 1025, 1045 (S.D. Tex. 2016) (Lake, J.) (motion to strike, court struck national and Texas class breach of warranty claims);

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Richardson v. Am. Home Shield of Texas, Inc., No. H-05-4029, 2006 WL 903721, at *7 (S.D. Tex. Apr. 7, 2006) (Lake, J.) (dismissing fraud claims under Rule 9(b), and finding plaintiffs failed to allege facts justifying class action treatment of fraud claims under Texas law).

On the other hand, as Plaintiffs argue, some federal courts have denied motions to strike as premature because neither discovery had commenced nor a motion for class certification been filed; however, those cases are distinguishable because they presented a more limited class definition making class certification less unlikely on the pleadings. See, e.g., Shields v. Metro. Prop. & Cas. Ins. Co., No. 1:19-CV-00222-GHD-RP, 2020 WL 7338065, at *6 (N.D. Miss. Dec. 14, 2020) (in putative four-state class action insurance dispute, finding the defendant's arguments to strike non-Mississippi class claims based on differences in each state's law and limitations period was premature as courts disfavor early motions to strike except in rare circumstances the court found without elaborating were not present); Randy Rosenberg, D.C., P.A. v. GEICO Gen. Ins. Co., No. 19-CV-61422, 2019 WL 6828150, at *7 (S.D. Fla. Dec. 13, 2019) (in a breach of contract class action apparently limited to Florida, court concluded motion to dismiss was premature as to typicality and predominance of the damages individual class members sustained, finding dismissal on complaint is rare and reserved for when class certification would be impossible); Casso's Wellness Store & Gym, L.L.C. v. Spectrum Lab'y Prod., Inc.,

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No. CV 17-2161, 2018 WL 1377608, at *6 (E.D. La. Mar. 19, 2018) (in a nationwide class action under federal law, although questioning whether plaintiff would be able to satisfy class certification requirements in light of recent case law, the court found defendant's motion to strike premature because on the record as it existed the court could not adequately ascertain whether the class claims were appropriate); Delarue, 2010 WL 11530499, at *2-4 (concluding that a motion to strike class allegations is premature in a bad faith insurance case limited to a Texas class).

A district court has broad discretion whether to certify a class; however, in exercising that discretion, it must rigorously analyze Rule 23's prerequisites. Prantil v. Arkema Inc., 986 F.3d 570, 574 (5th Cir. 2021). On a motion for class certification, the court's analysis may require it to go beyond the pleadings to understand the claims, defenses, relevant facts, and applicable substantive law. Id. at 574 (quoting Cole, 484 F.3d at 724). In contrast, when ruling on a motion to strike class allegations, the court examines but does not go beyond the pleadings in analyzing Rule 23's requirements. John, 501 F.3d at 445.

III. DEFENDANT'S MOTION TO STRIKE SHOULD BE GRANTED.

Defendant raises four issues: (1) the defect, manifestation, and causation issues are inherently individualized; (2) fraud reliance issues are highly individualized; (3) variations in applicable state laws preclude the putative national

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class; and (4) SCUTPA claims cannot be brought on a representative basis. ECF No. 24 at 2. Plaintiffs counter that Defendant has not established that individual factual issues make certifying the classes impossible, variations in state laws do not demonstrate that...