Berger v. Home Depot USA, Inc., No. 11-55592 (9th Cir. Feb. 3, 2014) is a great decision for retailers and consumer products companies.  The court affirmed a decision denying class certification, recognizing that variability in consumer experience when entering into a retail transaction makes a case inappropriate for class treatment.

In Berger, plaintiff challenged the defendant’s “damage waiver surcharge,” which allows the customer to avoid liability if a tool is damaged during the period of rental.  Plaintiff claimed the waiver was deceptive because it was automatically added to all transactions and the defendant (allegedly) failed to disclose that it was optional.  The trial court denied class certification and the Ninth Circuit affirmed.

The Ninth Circuit’s opinion is important for at least two reasons:

First, the court recognized that the defendant’s rental agreements varied over time and discussed the damage waiver in different ways.  Berger attempted to address this variability by seeking subclasses for each type of agreement, but the court rejected this “fix” because he had entered into only one of the agreements and thus was not a member of the other proposed subclasses.  ”Because he is not a member of those subclasses, Berger cannot prosecute claims on their behalf.”  This left Berger with only one (smaller) subclass of consumers who had entered into the same agreement he had.

Second, the court recognized that variability in what was disclosed to consumers about whether the waiver was “optional” precluded class certification.  The defendant presented evidence showing that signs at certain locations disclosed that the waiver was optional and employees sometimes gave oral notice that the waiver was optional.  ”This variance over time and among different Home Depot locations throughout California is a crucial issue, which the district court reasonably held must be resolved on an individual rather than a class-wide basis.”

What is the practical takeaway from this case? 

• When defending against class certification, marshall evidence showing how consumers received or otherwise had different information about the transaction at issue;

• Consumer products companies may want to consider varying their consumer contracts over time, particularly on issues like fees or other charges that may be ripe for challenge in an consumer class action.  Doing so could help limit the scope of any future class action.