In a case sure to encourage more class action filings under Florida’s Unfair and Deceptive Trade Practice Act, the Eleventh Circuit upheld a Florida District Court’s certification of a class of consumers that purchased or leased 2014 Cadillac CTS Sedans in Florida.  Carriulo et. al v. General Motors Company, Doc. No. 15-14442 (11th Cir. May 17, 2016) Opinion.  The consumers alleged General Motors violated Florida’s Unfair and Deceptive Trade Practices Act by affixing window stickers to the CTS Sedans that claimed the vehicles received five-star safety ratings from the National Highway Traffic and Safety Administration (“NHTSA”).  Id. 3-6.  Specifically, the stickers represented each CTS Sedan received perfect five-star ratings in driver frontal crash tests, passenger frontal crash tests, and rollover crash tests. Id.  But, the NHTSA had not yet rated the CTS Sedan. Id. The NHTSA later rated the CTS Sedan as five-star rated in driver frontal crash and rollover, but only awarded a four-star rating in passenger frontal crash tests. Id.

The consumers argued they incurred damages due to the erroneous stickers.  GM argued that the predominance requirement for certifying a class was not met as “the liability question will be highly individualized because the buying and leasing experiences of each proposed class member was not uniform.”  Id. p. 11.  Specifically, some buyers may not have seen the sticker, may not have relied on it, may not have cared about safety, and each proposed class member’s price negotiation would have been different.  Id. The Eleventh Circuit (and the District Court) rejected this argument, noting:

“Because a plaintiff asserting a FDUTPA claim ‘need not show actual reliance on the representation or omission at issue,’ the mental state of each class member is irrelevant. In Davis, the First District Court of Appeal of Florida recognized that the absence of a reliance requirement means ‘the impediment to class litigation that exists for multiple intrinsic fraud claims does not exist’ in FDUTPA cases. Thus, General Motors is incorrect to suggest that the plaintiffs must prove that every class member saw the sticker and was subjectively deceived by it.”

Id. p. 11.

The Eleventh Circuit went on to address damages and causation, holding:

Moreover, because the injury is not determined by the plaintiffs’ subjective reliance on the alleged inaccuracy, causation and damages may also be amenable to class-wide resolution. FDUTPA damages are measured according to ‘the difference in the market value of the product or service in the condition in which it was delivered and its market value in the condition in which it should have been delivered according to the contract of the parties.’” Rollins, Inc. v. Heller, 454 So. 2d 580, 585 (Fla. Dist. Ct. App. 1984) (quotation omitted).

* * *

“The plaintiffs may show that a vehicle presented with three perfect safety ratings is more valuable than a vehicle presented with no safety ratings. General Motors received the same benefit of the bargain from the sale or lease to each class member — even if individual class members negotiated different prices — because a vehicle’s market value can be measured objectively.

As the district court recognized here, a manufacturer’s misrepresentation may allow it to command a price premium and to overcharge customers systematically. Even if an individual class member subjectively valued the vehicle equally with or without the accurate [] sticker, she could have suffered a loss in negotiating leverage if a vehicle with perfect safety ratings is worth more on the open market. As long as a reasonable customer will pay more for a vehicle with perfect safety ratings, the dealer can hold out for a higher price than he would otherwise accept for a vehicle with no safety ratings.”

Id. pp. 13-15.

GM also argued that since two of the three five-star ratings actually turned out to be true, consumers could not maintain claims as to those ratings.  The Eleventh Circuit rejected this argument also, declaring “[a] defendant may not escape FDUTPA liability under Florida law merely because a deceptive or misleading statement later turns out to be true. The injury occurs at the point of sale because the false statement allows the seller to command a premium on the sales price.”

Although this statement begs the question, “if the statement turns out to be true, isn’t a premium price warranted?” the Eleventh Circuit did not address that question– nor did it address the Supreme Court’s Spokeo injury-in-fact requirement.

This decision shows that financial services clients should take FDUPTA class allegations seriously and should brace for the filing of more such claims.