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Porsche Cars North Am., Inc. et al. v. Peter Diamond, et al., Case No. 3D12-2829 (3rdDCA)

In Diamond, the Third DCA reversed a trial order certifying a class action against Porsche Cars North America, Inc., finding that the trial court used an outdated definition of unfair trade practices. This class action suit focuses on Porsche’s High Intensity Discharge Headlights, which the plaintiffs argued are highly susceptible to theft. The plaintiffs asserted unfair trade practices and unjust enrichment claims against the defendant, arguing the defendant acted unfairly by profiting from distributing a product highly susceptible to theft without taking remedial steps.

The Third DCA noted that the trial court had certified the case as a rule 1.220(b)(3) class action, meaning not all issues of fact and law are common, but common issues predominate over individual issues. Common issues predominate when, considering both the rights and duties of the class members, the proof offered by the class representatives will necessarily prove or disprove the cases of the absent class members. In determining this question, the trial court used what the Third DCA found to be an outdated definition of unfair trade practices. The trial judge defined unfair trade practices as one that “offends established policy” and “is immoral, unethical, oppressive, unscrupulous or substantially injurious to customers.” This definition derives from a 1964 Federal Trade Commission policy statement.

The Third DCA, however, noted that in 1980 the Federal Trade Commission updated its definition of unfair trade practices. The new definition established a three-pronged test for “unfairness,” which requires that the injury to the consumer: (1) must be substantial; (2) must not be outweighed by any countervailing benefits to consumers or competition that the practice produces; and (3) must be an injury that consumers themselves could not reasonably have avoided. In a thorough analysis, the Third DCA ruled that Florida law has adopted the new definition of unfairness contained in the 1980 Policy Statement.

Applying the new definition of unfairness, the Third DCA found that common issues of law and fact would not predominate. The trial court had adopted the premise that the defendant’s actions can be found to be an unfair trade practice regardless of whether class members knew and could have avoided the risk of the headlight thefts. Under the new definition of unfairness, however, the Third DCA found that the individual class member’s knowledge of the risk of headlight theft bears on whether the defendant’s practice was unfair because it impacts whether the consumer could reasonably have avoided the risk. To prove an unfair trade practice, the class must prove that the injury caused by the allegedly unfair trade practice could not have been reasonably avoided by consumers. Accordingly, the Third DCA noted that consumer information is central to the third prong of the unfairness inquiry.

The court added, though, that the individual knowledge is not always to be considered when determining whether a trade practice is unfair. “The individual consumer’s knowledge may not be a relevant factor where, for example, the legal theory of the claim posts that ‘consumers do not have a free and informed choice that would have enabled them to avoid the unfair practice.’”

The Third DCA concluded that when the individual knowledge and experience of the consumer is an important element of the cause of action and its defense, there can be no class-wide proof that injury was not reasonably avoidable. The class representatives were found to be unable to show that the injury was not “reasonably avoidable” on a class-wide basis. The court likewise found that common issues of fact and law would not predominate relative to the unjust enrichment claim, based on similar grounds.

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