FILED
NOT FOR PUBLICATION SEP 14 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
DIANNE L. KELLEY; KENNETH No. 09-35699
HANSEN; JIM WALTERS; MATT
MORALES; RUSSELL HALL; DON D.C. No. 2:07-cv-00475-MJP
SCHRODER,
Plaintiffs - Appellants, MEMORANDUM *
v.
MICROSOFT CORPORATION, a
Washington Corporation,
Defendant - Appellee.
Appeal from the United States District Court
for the Western District of Washington
Marsha J. Pechman, District Judge, Presiding
Argued and Submitted August 3, 2010
Seattle, Washington
Before: CANBY, THOMPSON and BERZON, Circuit Judges.
This action involves alleged misrepresentations and omissions in Microsoft
Corporation’s (“Microsoft”) pre-release marketing of its Windows Vista operating
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
system. Plaintiffs-Appellants Dianne Kelley, Kenneth Hansen, Jim Walters, Matt
Morales, Russell Hall, and Don Schroder (collectively referred to as “Plaintiffs”)
appeal the denial of their motion for narrowed class certification of two classes
proposed after the district court decertified their original class. The district court
held that the putative classes failed to meet the predominance requirement of
Federal Rule of Civil Procedure 23(b)(3). We review the certification decision for
abuse of discretion. See Yokoyama v. Midland Nat’l Life Ins. Co., 594 F.3d 1087,
1090–91 (9th Cir. 2010); In re Wells Fargo Home Mortg. Overtime Pay Litig., 571
F.3d 953, 957 (9th Cir. 2009). We affirm in part, reverse in part, and remand for
further proceedings.
The district court failed properly to conduct the predominance inquiry under
Rule 23(b)(3). To certify a class under Rule 23(b)(3), a district court must, inter
alia, “determine whether common or individual issues predominate in a given
case.” Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 593 (9th Cir. 2010) (en banc)
(internal quotation marks omitted). “[T]he main concern in the predominance
inquiry . . . [is] the balance between individual and common issues.” In re Wells
Fargo, 571 F.3d at 959. Here, the district court relied exclusively on its conclusion
that claims involving deceptive practices brought under the Washington Consumer
Protection Act (“CPA”), Wash. Rev. Code § 19.86.010 et seq., require
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individualized proof of proximate causation to find that “the predominant
questions [in this putative class action] would relate to Plaintiffs’ subjective
understanding of the Express Upgrade program and their individual belief in
Microsoft’s Vista advertising campaign.” The district court failed to consider, or
to balance against the issues requiring individualized proof, any questions of law or
fact common to the Express Upgrade class members, despite identifying several
such questions in the Rule 23(a)(2) commonality analysis in its February 2008
certification order.1 See In re Wells Fargo, 571 F.3d at 959 (holding that it is
reversible error to “rely[] on [one factor] to the near exclusion of other factors
relevant to the predominance inquiry”).
In addition, contrary to the district court’s supposition, the Express Upgrade
class members’ understanding of the Express Upgrade program and knowledge of
Microsoft’s Vista advertising campaign is amenable to class-wide treatment in
some respects. For instance, common questions exist regarding the extent of the
consumer education efforts that Microsoft allegedly controlled through its
Windows Vista Capable marketing program. Further, this case is unlike instances
1
Cases alleging consumer fraud and involving questions affecting individual
class members are not categorically precluded from class treatment. See Amchem
Prods., Inc. v. Windsor, 521 U.S. 591, 625 (1997); cf. Wolin v. Jaguar Land Rover
N. Am., LLC, No. 09-55104, 09-55105, 2010 WL 3222091, at *4 (9th Cir. Aug. 17,
2010).
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where the alleged misrepresentation goes to only one feature of the product and
there are numerous reasons why a consumer might use the product other than the
feature misrepresented. See Poulos v. Caesars World, Inc., 379 F.3d 654, 665, 667
(9th Cir. 2004). The allegedly fundamental aspects of the product sought through
the Express Upgrade program are largely encompassed within the alleged
misrepresentation—namely, that a computer labeled “Vista Capable” and
upgradeable to Windows Vista Home Basic could run “Vista.” Cf. id. at 665
(noting the “unique nature of gambling transactions” and holding that “gambling is
not a context in which [the court] can assume that potential class members are
always similarly situated”).
Finally, the district court did not consider whether other elements of a CPA
claim present questions of law or fact common or individual to the class members,
and what effect those questions, if any, have on the Rule 23(b)(3) predominance
inquiry. For instance, the district court did not determine whether the allegedly
deceptive practice affects the public interest, which itself involves consideration of
several factors. See, e.g., Panag v. Farmers Ins. Co. of Wash., 204 P.3d 885, 889
(Wash. 2009).
Accordingly, we reverse the district court’s denial of class certification and
remand to the district court for further certification proceedings consistent with this
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disposition. We stress that by doing so, we express no view concerning whether
on a proper analysis, the denial of class certification would be within the district
court’s discretion.
The district court did not err in concluding that the claims asserted by the
proposed Windows Driver Device Model (“WDDM”) class are best characterized
as primarily involving allegations of affirmative misrepresentations, and not
material omissions. Plaintiffs argue that the WDDM class definition’s explicit
reference to persons who purchased a personal computer (“PC”) certified by
Microsoft as “Vista Capable” is to identify WDDM class members only. Even so,
the argument underlying the WDDM class’ claims is that Microsoft affirmatively
marketed certain PCs as Vista Capable even though they could not support
WDDM, a display driver allegedly required to operate Vista. Additionally,
regardless of whether Microsoft’s alleged knowing failure to reveal that pre-launch
Vista Capable PCs could not support WDDM is a deceptive act or practice under
the CPA, the failure to disclose that information is relevant only insofar as
Microsoft also represented that Vista Capable PCs were in fact capable of running
a version of Vista. Plaintiffs’ complaint is instructive on this issue, as it contains
allegations based on both affirmative misrepresentations and omissions. The
WDDM class’ claims are therefore not “base[d] . . . only on what [Microsoft
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allegedly] did not disclose,” but rather “as much on what [was said] as what [wa]s
purportedly [left out].” Poulos, 379 F.3d at 667. Accordingly, we affirm the
district court’s denial of certification of the WDDM class on the theory that the
WDDM class is entitled to a presumption of reliance.
AFFIRMED in part, REVERSED in part, and REMANDED for further
proceedings.
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