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In re Emerson Electric Co. Wet/Dry Vac Marketing and Sales Practices Litigation

United States District Court, E.D. Missouri, Eastern Division

December 1, 2017




         This matter is before the court on the named Plaintiffs' motion to certify a class, [Doc. No. 115]. This is an action for violations of the Missouri Merchandising Practices Act, Mo.Rev.Stat. § 1407.010, et seq., breach of express warranty, breach of implied warranty, unjust enrichment, violations of consumer protection laws in various states for subclasses and breach of implied warranty-redhibition on behalf of the Louisiana subclass.

         Facts and Background

         Relevant to the class certification issue are plaintiffs' allegations that defendant misled the public, including plaintiffs, into purchasing or paying more for defendant's product, the RIGID wet/dry vacuum, that it did not perform as expressly and impliedly marketed through a national and uniform advertising campaign. The marketing was based on the stated wet/dry vacuum's “Peak HP.” Plaintiffs allege the vacuum cannot attain the advertised horsepower in a standard, household electrical wall outlet.

         The plaintiffs now seek certification under Missouri law, or alternatively with subclasses for the different home states of the various plaintiffs. This case presents the classic case for treatment as a class action: that is, the commonality linking the class members is the dispositive question in the lawsuit. The issue of liability predominates over whatever individual inquiries will have to be performed to determine damages.


         The Court must initially determine what state's law applies in order to ascertain whether the class certification requirements have been met. “District courts sitting in diversity apply the choice-of-law rules of the state where they sit.” Winter v. Novartis Pharm. Corp., 739 F.3d 405, 410 (8th Cir. 2014). Missouri follows the “most significant relationship” test from the Restatement (Second) of Conflicts of Laws § 145 for resolving choice-of-law questions. Zafer Chiropractic & Sports Injuries, P.A. v. Hermann, 501 S.W.3d 545, 550 (Mo.Ct.App. 2016). The factors to be considered under § 145 are: (1) the place where the injury occurred, (2) the place where the conduct causing the injury occurred, (3) the domicil, residence, nationality, place of incorporation and place of business of the parties, and (4) the place where the relationship, if any, between the parties is centered. Am. Guarantee & Liab. Ins. Co. v. U.S. Fid. & Guar. Co., 668 F.3d 991, 996 (8th Cir. 2012) (citing Thompson by Thompson v. Crawford, 833 S.W.2d 868, 870 (Mo. 1992)). The most important contact is the center of the parties' relationship. See Restatement (Second) of Conflict of Laws § 221 cmt. on subsec. (2).

         Plaintiffs seek to have this action decided pursuant to Missouri Law, except with respect to their redhibition claim under Louisiana statutes, where plaintiffs seek to certify a sub-class. Defendant argues that the law of the states represented by the individual plaintiffs applies.

         The analysis is not complicated here. The Court will consider each of the Restatement factors. With respect to the place where the injury occurred, the Court finds this factor in favor of the laws of the separate states. Plaintiffs claim they have been injured by the representation of peak horsepower. This alleged injury necessarily occurred in the plaintiffs' home states where they purchased the wet/dry vacs. This factor favors application of the various state laws where plaintiffs reside.

         Plaintiffs claim that the conduct causing the injury was defendant's advertising a peak horsepower that was not accurate. The development and implementation of the advertising campaign occurred at defendant's place of business, which is in St. Louis, Missouri. Thus, the conduct causing the injury favors application of Missouri law.

         The domicils, residences, place of incorporation and place of business of the defendant are in different states, thereby rendering this factor essentially neutral.

         Regarding the place where the relationship, if any, between the parties is centered, the most important contact, this factor favors application of Missouri law since the central issue of the case, whether the advertisement campaign is misleading, originated in Missouri.

         Particularly in relation to the Missouri Merchandising Practices Act (MMPA), Defendant argues that Perras v. H & R Block, 789 F.3d 914 (8th Cir. 2015) resolves the issue against application of the MMPA.

The MMPA makes unlawful “any deception, fraud, false pretense, false promise, misrepresentation, [or] unfair practice ... in connection with the sale or advertisement of any merchandise in trade or commerce ... in or from the state of Missouri.” Mo. Stat. § 407.020.1. The law allows a private civil action to be filed by “[a]ny person who purchases or leases merchandise primarily for personal, family or household purposes and thereby suffers an ascertainable loss of money or property ... as a result of the use or employment by another person of a method, act or practice declared unlawful” by the MMPA. Mo. Stat. § 407.025.1. That civil suit may be brought “in either the circuit court of the county in which the seller or lessor resides or in which the transaction complained of took place.” Id. The MMPA also expressly allows for a class-action suit, under which the plaintiffs may recover damages, an injunction, or other equitable relief. Id. § 407.025.2. Section 407.025.3 discusses the methods and requirements for certifying a class action, which mirror those listed in Fed.R.Civ.P. 23.
To decide whether Perras may bring the class-action claims in this case under the MMPA, and thus whether common questions of law predominate over individual questions, we must determine if the tax-return services performed and paid for outside of Missouri nonetheless constitute trade or commerce “in or from the state of Missouri.” Mo. Stat. § 407.020. For the answer to that question of state law, we look to the decisions of the state supreme court. See Ashley County, Ark. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir.2009). If the Supreme Court of Missouri has not decided the issue, we look to analogous state-court decisions and precedent to predict how that Court would decide the issue. Id.
The Supreme Court of Missouri has described the MMPA's language regarding unlawful merchandising as “unrestricted, all-encompassing and exceedingly broad.” Ports Petroleum Co. of Ohio v. Nixon, 37 S.W.3d 237, 240 (Mo. banc 2001). That court, however, has not decided whether the language is broad enough to cover transactions taking place outside of Missouri. The Missouri Court of Appeals has concluded that the MMPA may reach consumers in states other than Missouri who succumb to fraudulent advertising or deceptive practices. State ex rel. Nixon v. Estes, 108 S.W.3d 795, 801 (Mo.Ct.App.2003). In Estes, the fraudulent business misleadingly advertised vending machines and fraudulently promised tens of thousands of dollars in profit. Id. at 796-97. But that business had numerous ties to Missouri: It was in Missouri that the defendant had operated his fraudulent business, received signed sales agreements and wire transfers from the customers, held the ill-gotten gains in Missouri bank accounts, and maintained company offices from which he communicated with customers. Id. at 801. Those facts, the court ruled, showed that Estes had advertised and sold the fraudulent machines “in trade or commerce ... in or from the state of Missouri.” Id. at 800-01 (quoting Mo. Stat. § 407.020.1). Thus, the claims of those out-of-state plaintiffs could be brought under the MMPA. Id. at 801.
In our case, there are no ties between the allegedly fraudulent transactions and Missouri. Though true, as the district court noted, H & R's headquarters are located in Missouri; and there, it designed and implemented the compliance fee. But every part of the transactions-the activity for which the class action seeks relief-occurred in each class member's home state. In those states, each class member contacted and communicated with a local H & R representative at a local H & R office, contracted for tax-return services, and paid the allegedly deceptive compliance fee. And it was in each class member's state that H & R had displayed the purportedly fraudulent “materials” explaining the compliance fee. The evidence each class member would proffer to support her claim, therefore, would be specific to her experience in her state at her local H & R office. There is no other connection between the claims in the class action and Missouri; the acts of commerce that Perras grieves did not occur in, or originate from, the State of Missouri. See Mo. Stat. § 407.020.1.
We do not think this conclusion is inconsistent with the Supreme Court of Missouri's generous description of the MMPA. See Ports Petroleum Co., 37 S.W.3d at 240. Though the statute may cover “every practice imaginable and every unfairness to whatever degree, ” id., that practice still must involve trade or commerce “in or from the state of Missouri.” Estes, 108 S.W.3d at 801; see Mo. Stat. § 407.020.1. This lawsuit does not challenge the mere fact of creating the compliance fee-the only action that actually occurred in Missouri. Perras would have no standing to bring a claim for relief against H & R solely for creating the fee. See Raines v. Byrd, 521 U.S. 811, 819-20, 117 S.Ct. 2312, 138 L.Ed.2d 849 (1997) (noting that, to meet standing requirements of Article III, plaintiff must allege a personal injury redressable by relief requested). Instead, Perras seeks relief for H & R's charging of the fee to consumers, transactions that took place outside of Missouri between representatives of H & R located outside of Missouri and consumers who reside outside of Missouri.
Accordingly, we believe the Supreme Court of Missouri would conclude that the MMPA does not cover the out-of-state transactions in this case. The law applicable to each class member would be the consumer-protection statute of that member's state. Thus, questions of law common to the class members do not predominate over any individual questions of law. See Fed.R.Civ.P. 23(b)(3). The district court did not abuse its discretion in concluding that the class action does not meet the predominance requirement. With that conclusion, we ...

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