Nowhere To Run For Treadmill Company On Class Certification

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Earlier this year, a federal judge in Illinois granted certification to a class of consumers on the issue of liability for allegations arising out of claims that Precor, Inc. sold treadmills featuring heart rate monitoring technology that Plaintiffs claim did not provide accurate heart rate readings. Mednick v. Precor Inc., No. 14-C-3624 (N.D. Ill. Mar. 16, 2017). The Court denied class certification on the issue of damages. Id. Since that time, however, the parties continued to litigate the issue of class certification, engaging in substantial motion practice in response to Precor’s attempts to have Judge Leinenweber reconsider his class certification decision. Ultimately, this summer, the Judge declined Precor’s request for reconsideration. Below, we provide a summary of the Court’s decision regarding certification as well as its reasoning in denying the motion for reconsideration.

Motion for Class Certification

The Plaintiffs allege that Precor engaged in unfair and deceptive business practices when it marketed and sold touch sensor heart rate monitoring technology. Id. at 3. Specifically, Plaintiffs claim that Precor “continues to tout the benefits of the technology and fails to inform consumers of its shortcomings,” despite knowing that the technology does not provide accurate results. Id. Based upon these allegations that Precor made false representations about the high performance of the heart rate monitors, Plaintiffs brought claims under the Illinois Consumer Fraud and Deceptive Practices Act (“ICFA”) and the equivalent consumer protection statutes of the other four states in which the proposed class members reside – California, Missouri, New Jersey, and New York. Id. at 4. In their Renewed Motion for Class Certification, Plaintiffs defined the proposed class as those residents of the five states who purchased certain Precor treadmills within the statute of limitations period for each of the five states. Id. at 4. (narrowing the scope of the class as compared to their initial Motion for Class Certification).

The Court recounted the legal standard to certify a class under Federal Rule of Civil Procedure Rule 23, under which a proposed class must satisfy requirements of numerosity, commonality, typicality, and adequacy under Rule 23(a), as well as the predominance and superiority requirements under Rule 23(b)(3). Since Precor did not contest the numerosity, superiority, or adequacy of class counsel, the remaining requirements were evaluated by the Court and are discussed below:

Commonality – “To show commonality, Plaintiffs must affirmatively demonstrate that there is at least one question ‘of law or fact common to the class.’” Id. at 19 (citing Fed. R. Civ. P. 23(a)(2); Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 359 (2011)). The Court warned, however, that merely raising a common question is “not enough,” as Plaintiffs must instead raise questions that “generate common answers apt to drive the resolution of the litigation.” Id. Nevertheless, the Court agreed that “whether Precor engaged in representations or omissions that were likely to deceive a reasonable consumer is a question capable of classwide proof” since the question could be answered with evidence that is common to the class.  Id. at 19-20 (citing Wal-Mart, 564 U.S. at 350).

Although the Court rejected Plaintiffs’ argument that Precor’s brochures and statements on its website served as the common misrepresentations to the class, the Court held that certification was nonetheless appropriate given the graphics on the Precor treadmills themselves and any material omissions by Precor. Id. at 29 (explaining that all treadmill purchasers saw the graphics on the machine and that Precor either told its customers that the touch sensor heart rate monitors do not accurately measure the heart rate or it did not – an alleged omission that is common to the class).

With respect to questions related to Plaintiffs’ alleged damages, however, the Court found that the issues were not common to all class members.  Because Plaintiffs were seeking recovery beyond actual damages – treble, multiple, disgorgement, and other damages – the Court observed that the different states, from which the proposed class members reside, differ in what they allow an individual to recover under their consumer fraud statutes. Id. at 34. Thus, the Court held that the “certification of a single class is inappropriate as to the issue of damages.” Id. (citing Butler v. Sears, Roebuck & Co., 727 F.3d 796, 800 (7th Cir. 2013) (“[A] class action limited to determining liability on a class-wide basis, with separate hearings to determine — if liability is established — the damages of individual class members, or homogeneous groups of class members, is permitted by Rule 23(c)(4) and will often be the sensible way to proceed.”); Pella Corp. v. Saltzman, 606 F.3d 391, 394 (7th Cir. 2010) (“A district court has the discretion to split a case by certifying a class . . . for liability alone where damages or causation may require individualized assessments.”)).

Typicality – Rule 23(a)(3) requires Plaintiffs to show that “the claims or defenses of the representative parties are typical of the claims or defenses of the class.” Id. at 35. The Court explained that “[b]ecause ‘the commonality and typicality requirements of Rule 23(a) tend to merge,’ many of the arguments Precor raised under the typicality heading are already addressed as part of the Court’s commonality analysis.” Id. (citing Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 157 (1982); Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir. 1992) (“The question of typicality in Rule 23(a)(3) is closely related to the preceding question of commonality.”).

The Court rejected Defendant’s remaining argument that the Plaintiffs were not typical in light of the fact that they had not ever run on their Precor machines since the record showed “that the performance of the touch sensor heart rate monitors is most compromised when users run on the machines.” Id. at 36. The Court held that the record was unclear that the named Plaintiffs had not run on the treadmill given the discrepancy on what speed constitutes running. Id. The Court also observed that even if the named Plaintiffs – or any other class members – did not run on their treadmill, “this does not mean that they could not have been deceived or injured by Precor’s deceptive advertising.” Id. Finally, the Court held that there was nothing in the record to suggest that the Plaintiffs were atypical for having not run above 6 mph.  Id. at 40. The Court explained that so long as the Plaintiffs were “not unique in only walking on their machines, the Court will not withhold class certification even if class members who only walk fail to sustain a claim under the ICFA.”  Id. (explaining that “[i]f very few members of the class were harmed, that is an argument not for refusing to certify the class but for certifying it and then entering a judgment that would largely exonerate.”).

Predominance – Under Rule 23(b)(3), Plaintiffs must show that “questions of law or fact common to the class members predominate over any questions affecting only individual members.” Id. at 40 (quoting Fed. R. Civ. P. 23(b)(3)). Having identified “questions of law or fact common to the class members,” the Court then examined whether there were “questions affecting only individual members” that would overwhelm issues common to the class. Id. 40-41. The Court identified two potential obstacles to class certification in this regard: “(1) whether in submitting an old report on damages, Plaintiffs have carried their burden of showing that damages are measurable across the entire class; and (2) whether in seeking certification of a class that spans five states, Plaintiffs have strayed into territory where class treatment is inappropriate because ‘recovery depends on law that varies materially from state to state.’” Id. at 41 (citing In re Mex. Money Transfer Litig., 267 F.3d 743, 746-47 (7th Cir. 2001)).

With respect to whether damages are susceptible to measurement across the entire class, the Court examined whether Plaintiffs’ model for damages is consistent with their theory of liability. Id. Plaintiffs’ damages expert opined that damages could be calculated on a classwide basis by identifying “a product comparable to the Precor class products but that does not feature a touch sensor heart rate monitor” and computing “the fraction of the price difference between the Precor products and the comparable product that is attributable to the touch sensor.” Id. at 42. The Court rejected the Plaintiffs’ expert’s model for a number of reasons, including the fact that the model was based on the “problematic” assumption that the touch sensor did not have any value. Id. The Court recommended that “Plaintiffs simply need to make some adjustments to their current damages model” to either “adjust the product that is identified as comparable to the class products or attribute a smaller portion of the price difference to class members’ damages as caused by Precor’s alleged misrepresentations.” Id. at 44.

With respect to whether individual issues predominate where the proposed class members hail from five states with five different consumer fraud statutes, the Court found that the Plaintiffs had provided adequate information for the Court to determine that “the consumer fraud statutes are largely uniform across the remaining states of California, Illinois, Missouri, New York, and New Jersey.” Id. at 44-47 (“Overall, the consumer protection statutes of California, Illinois, Missouri, New York, and New Jersey share sufficient common characteristics that class certification as to the issue of liability is appropriate in this case.”).

Motion for Reconsideration

In its motion for reconsideration, Precor argued that the Court made “manifest errors of law” but did not assert that any new evidence had been discovered. See Mednick v. Precor, Inc., No. 14-cv-3624 (N.D. Ill. June 16 2017). Accordingly, the Court explained that Precor had to have shown that the Court committed a manifest error of law “by establishing that the Court engaged in ‘wholesale disregard, misapplication, or failure to recognize controlling precedent.’” Id. at 7 (quoting Oto v. Metro. Life Ins. Co., 224 F.3d 601, 606 (7th Cir. 2000)).

Precor argued that the proposed class members were not similar enough to be certified as one class, given that the touch sensors on its treadmills operate differently for different individuals depending on their “individual physiology.” However, the Court again rejected this argument – reiterating that “neither the physiological differences nor the variations between the touch sensor systems defeat the class claims.” Id. at 9 (finding “that the heart rate monitor performance is not uniform across the class is not by itself a reason to deny certification”).  Indeed, the Court warned that Precor “cannot raise the same argument yet again and hope for a different result.” Id. at 10.

In addition, Precor argued that “because class members’ reasons for purchasing their treadmills varied widely, it was manifest error to certify the class.” Id. at 14 (internal quotation omitted). As it stated in its prior decision, the Court found that “the evidence shows that the named Plaintiffs are not atypical in claiming that they were misled by Precor’s representations into buying treadmills with sporadically malfunctioning heart rate monitors.” Id. at 18. Accordingly, the Court found no error and instead criticized Precor for suggesting that the plaintiffs were somehow required to plead actual reliance, which is not an element of the relevant consumer fraud statutes. Id. at 22.

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In sum, the Court found, and reaffirmed, that the Plaintiffs met the requirements of Rule 23 and therefore class certification on common issues of liability was appropriate and merited. The Court, however, refused to certify the class on issues of damages. This case serves as a helpful reminder of the Rule 23 factors that courts consider in deciding whether to certify a class. It also highlights the “rigorous analysis” courts conduct in considering whether damages are susceptible to class-wide measurement and the requirements for a court to certify damages in a consumer fraud class. Finally, the Court’s decision on reconsideration stresses the heavy burden that a litigant carries in seeking to reverse a court’s prior ruling. Indeed, the Court admonished that “motions to reconsider are not appropriate vehicles to advance arguments already rejected by the Court.” We will continue to monitor and report on this case as it moves into the discovery phase.