Walmart’s allegedly secret customer return blacklist could be misleading, unfair

Maestas v. Wal-Mart Stores, Inc., No. 16-cv-02597-KJM-KJN, 2018
WL 1518762 (E.D. Cal. Mar. 28, 2018)
Maestas allegedly bought a car battery from Wal-Mart that
purportedly came with a replacement and refund warranty. When the battery
malfunctioned and he tried to return it, Wal-Mart allegedly refused to give
plaintiff a replacement or refund because his name appeared on an internal
fraud database (based on allegations that he tried to use a bad check at a
Colorado Wal-Mart in 2000, thirteen years before his purchase).  Because he wasn’t warned of his ineligibility
for the warranty, he sued under the usual California statutory claims on behalf
of two putative classes of California consumers whose names also appear in
Wal-Mart’s fraud database. The court denied a motion to dismiss. 
Maestas adequately alleged an unfair business practice under
Rule 8(a). He explained how the alleged unlawful business act or conduct was
“immoral, unethical, oppressive, unscrupulous, or substantially injurious to
consumers.” The applicable test asks whether “the consumer injury is
substantial, is not outweighed by any countervailing benefits to consumers or
to competition, and is not an injury the consumers themselves could reasonably
have avoided.”  Maestas clearly
identified the practice at issue: Consumers on the fraud database buy products
in reliance on express replacement and refund warranties without any warning
that the policies do not apply to them, then Wal-Mart refuses to honor the agreements
when the consumers try to use those policies. He alleged that this practice of
profiting from false promises didn’t benefit consumers, and that consumers
cannot reasonably discover and avoid the injury because only Wal-Mart knows the
information that will lead it to reject warranty claims.
For alleged fraudulent practices, Maestas also satisfied
Rule 9(b). The question was whether the public was likely to be deceived.
Maestas identified what specific misrepresentations and omissions allegedly
deceived him: his ineligibility for the warranties was omitted from all
receipts and contracts, and he bought in reliance on the warranties.  When he tried to return the battery, a
Wal-Mart employee allegedly told him his ineligibility covered “any products” for
as long as he remained in the fraud database.
Wal-Mart also argued that, because the proposed class
entitled to refunds included consumers who bought products other than the battery
Maestas purchased, he hadn’t suffered an injury similar enough to his proposed
class members to confer class standing. The court disagreed: the injury wasn’t
based on the battery, it was based on the list and allegedly covered all
product lines. Nor would the court strike class allegations; the certification
stage was the more appropriate time to do that if appropriate.

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