Martin v. Dahlberg, Inc.

156 F.R.D. 207, 30 Fed. R. Serv. 3d 340, 1994 U.S. Dist. LEXIS 10056, 1994 WL 383148
CourtDistrict Court, N.D. California
DecidedApril 7, 1994
DocketNo. C 93 2850-FMS
StatusPublished
Cited by24 cases

This text of 156 F.R.D. 207 (Martin v. Dahlberg, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Martin v. Dahlberg, Inc., 156 F.R.D. 207, 30 Fed. R. Serv. 3d 340, 1994 U.S. Dist. LEXIS 10056, 1994 WL 383148 (N.D. Cal. 1994).

Opinion

ORDER DENYING PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION; SETTING STATUS CONFERENCE

FERN M. SMITH, District Judge.

Introduction

The individual and representative plaintiffs (“Plaintiffs”) seek certification, under Federal Rule of Civil Procedure 23(a)(l)-(4) and 23(b)(3), of the following plaintiff class (the “Class”):

All persons who purchased between May 1, 1989 and May 1, 1993 (the “Class Period”) Miracle-Ear hearing aids, including but not limited to those equipped with the “Clarifier,” represented by Dahlberg, Inc. (“Dahlberg”) and its authorized agents to reduce background noise and allow persons with hearing loss to distinguish and understand speech in noisy or group situations. (Consolidated Amended Class Action Complaint [“Compl.”], ¶24.)

In their reply brief, plaintiffs have also proposed a subclass to be defined as follows:

All persons who purchased Miracle-Ear hearing aids equipped with the Clarifier between May 1, 1989 and May 1, 1993.

The claims of the class arise out of an allegedly common course of fraudulent conduct, characterized by allegedly uniform misrepresentations and omissions to class members that the Miracle-Ear hearing aid equipped with the Clarifier circuit (“Clarifier”) 1 “automatically reduces background noise” and “boosts speech” so that one can better hear and understand speech in noisy or group situations. The plaintiff class seeks recovery on several legal theories including Civil RICO and various supplemental common law claims sounding in fraud, negligent misrepresentation and negligence. The Class also seeks recovery under sections 17200, et seq. and 17500, et seq. of the California Business and Professions Code (Compl., ¶¶ 102-107).

While there are substantial common questions of law and fact which could be resolved collectively, class certification is not warranted because there are individual questions of fact concerning reliance and causation which predominate. Plaintiffs’ motion for class certification is therefore DENIED.

Background

A. Advertisement of Miracle-Ear Clarifier Generated Directly by Dahlberg

The allegations of the complaint, taken together with the supplementary evidentiary submissions of the parties, form the basis of the Court’s analysis of plaintiffs’ class certification motion.

During the class period, Dahlberg manufactured and marketed hearing aids, including the Miracle-Clarifier, through approximately 1000 franchised and company-owned Miracle-Ear retail stores located in all fifty [211]*211states. Miracle-Ear hearing aids were sold in the retail locations and in customers’ homes.

Dahlberg promoted Miracle-Ear products, including the Miracle-Ear Clarifier, through an advertising program targeted to the over-55 age group and which used national and regional print publications, television, radio and direct mail and package inserts. Although the precise language used in the advertisements varies, the essential message conveyed concerning the qualities and performance of the Miracle-Ear Clarifier was the same throughout the class period, ie., that the Miracle-Ear Clarifier reduces background noise, or that Miracle-Ear Clarifier boosts speech. Dahlberg advertised other hearing aids during the class period, but did not represent that those products could reduce background noise.

Some of Dahlberg’s advertisements were “direct response” advertisements which provided potential customers with a business reply card or toll-free telephone number with which the potential customer could contact the company. After a potential customer contacted Dahlberg, the company typically sold the customer’s name and telephone number, or “lead,” to a local franchisee. The record does not indicate what percentage of Dahlberg’s leads were generated by direct response advertising that contained representations concerning the Clarifier.

B. Representations Generated By Retail Centers and Franchisees

During some or all of the class period, Dahlberg’s franchise agreements required franchisees to purchase from Dahlberg sales leads which were generated by Dahlberg’s direct response advertising program. As a result, plaintiffs allege that after being introduced to Miracle-Ear through Dahlberg’s advertising, customers typically dealt with their local Miracle-Ear center.

Miracle-Ear retail stores were required by Dahlberg to operate under certain uniform “standards and procedures.” Although no nationally prepared script dictated what a retailer or franchisee must say when he or she sold hearing aids, Dahlberg did design advertisements and promotional materials for use by its franchisees, and each franchisee agreed that its advertising “shall conform to the standards and requirements established by Dahlberg.” The record does not indicate, however, what these “standards and requirements” were, nor does it indicate the substance of the advertising material Dahlberg designed for its franchisees. Dahlberg also required pre-approval of all materials prepared by franchisees utilizing any trademark name, symbol, product or slogan but, again, the record does not indicate what criteria Dahlberg used in reviewing such materials.

Plaintiffs allege that some of Dahlberg’s Clarifier advertising was repeated orally by Miracle-Ear salespeople when promoting and selling the Clarifier in Miracle-Ear retail centers and in customers’ homes. The declarations of the four salespeople of “hearing consultants” who sold Miracle-Ear hearing aids to the four named representative plaintiffs, however, indicate that each salesperson made somewhat different representations concerning the Clarifier and its capabilities.

C. Hearing Consultants and Hearing Tests

Plaintiffs allege that franchisees employ salespeople called “hearing consultants” who purport to perform “complete hearing evaluations” and “fit hearing aids” and who sell Miracle-Ear products to the public in the store and in their homes. Dahlberg represented in its promotional materials that Miracle-Ear centers provide “professional service by fully-trained personnel,” and that customers can be “assured” of “knowledgeable service.” Plaintiffs allege, however, that the hearing consultants typically have no special training or expertise in the treatment of hearing loss. Plaintiffs also allege that the hearing consultants are typically commissioned salespeople who are expected to meet sales quotas established by their employer-franchisee and who engage in “hard-sell” sales tactics.

Plaintiffs further allege that Dahlberg and its agents advertised and provided “free” hearing examinations to all potential customers for the purpose of inducing customers to visit a Miracle-Ear retail store. After the [212]*212hearing test (performed by the “hearing consultant”), and after securing the customer’s agreement to purchase a Miracle-Ear hearing aid, the hearing consultants obtained the customer’s signature on a purchase agreement or other document which waived the protections of a federal law requiring that hearing aid dealers inform customers that they should see a doctor before purchasing a hearing aid and that a person be given proper medical evaluation before being sold a hearing aid.

D.

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Bluebook (online)
156 F.R.D. 207, 30 Fed. R. Serv. 3d 340, 1994 U.S. Dist. LEXIS 10056, 1994 WL 383148, Counsel Stack Legal Research, https://law.counselstack.com/opinion/martin-v-dahlberg-inc-cand-1994.