Tuesday, October 26, 2010

Online Retailer Faces Class Action for Allegedly Negligent Rebate Ad

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

An online purchaser established that class certification should have been granted on claims that online retailer Buy.com misleadingly advertised a $30 Connect 3D memory card with a $30 rebate, which Connect 3D failed to pay, a California appellate court has ruled.

The purchaser alleged negligent misrepresentation and violations of the California Unfair Competition Law and the California Consumers Legal Remedies Act (CLRA).

The class was defined in the purchaser's memorandum of points and authorities as all persons in the United States who purchased a Connect 3D product from Buy.com, Inc. that included a rebate offer and whose rebate submissions were approved for payment, excluding anyone who was paid a rebate by Buy.com.

The trial court erred by holding that the class was not ascertainable because of an inconsistency with the class definition in a proposed order, the appellate court held.

While relief under the CLRA was limited to proposed class members who bought products for consumer use, the class could be certified even though some members of the class were not consumers, according to the court.

Nationwide Class, California Law

Even though the proposed class was nationwide, common issues of law predominated, the court found. A California choice-of-law provision in Buy.com’s terms of use agreement was applicable. Buy.com was headquartered in California. The allegedly misleading rebate information on Buy.com’s website originated from California. The due diligence Buy.com allegedly failed to perform would have been performed in California.

Buy.com unsuccessfully contended that the purchaser's claims were vague. The purchaser alleged that every member of the class must have seen and relied on Buy.com's negligent misrepresentations that the rebate was available.

The decision is Kershenbaum v. Buy.com, Inc., CCH Advertising Law Guide ¶64,005.

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