The Sixth Circuit closed the class-action doors on classes based on violations of various state consumer protection laws yesterday. In Pilgrim v. Universal Health Card, LLC, Case No. 10-3211/3475, the Sixth Circuit affirmed the Northern District of Ohio’s decision to strike the class allegations in the plaintiffs’ complaint. Plaintiffs alleged that Universal Health Card, LLC (“Universal”) and Coverdell & Company engaged in deceptive practices in the advertisement of their healthcare discount membership program and sought to represent a nationwide class of all people who had joined the program. Universal filed a motion to strike the class allegations, which the district court granted. The district court reasoned that under Ohio’s choice of law rules, each class member’s claim would have to be analyzed under the law of their home state. Because the differences in state consumer protection laws would outweigh any common issues of fact Plaintiffs may establish, the court held that the class failed to meet the predominance requirement under Rule 23(b)(3).
The Sixth Circuit found no abuse of discretion in the district court’s holding for three reasons. First, Ohio’s choice of law rules are clear that the consumer protection laws of the state where each injury took place would govern the claims and because the consumer protection laws of the affected states varied in material ways, “no common legal issues favor a class-action approach to resolving” the dispute. Second, even if a class could overcome varied legal standards with “considerable factual overlap,” that was not the case with plaintiffs’ alleged class. Since the defendants’ program operated differently in different states, the facts would vary from place to place. Third, the decision was consistent with decisions from the Sixth Circuit and other courts that refused to permit a nationwide class that would be analyzed under the laws of different states.
Finally, the Sixth Circuit addressed the timing of the district court’s ruling on the defendants’ motion to strike class allegations, which came before plaintiffs’ had filed a motion to certify the class. The Sixth Circuit held that Rule 23(c)(1)(A) says nothing about waiting for the plaintiffs’ motion: “[t]hat the motion to strike came before the plaintiffs had filed a motion to certify the class does not by itself make the court’s decision reversibly premature.” The Sixth Circuit further held that plaintiffs’ desire for more discovery or time would have done nothing to change their conclusion.