Martinelli v. Petland, Inc.

274 F.R.D. 658, 79 Fed. R. Serv. 3d 586, 2011 U.S. Dist. LEXIS 41384, 2011 WL 1375248
CourtDistrict Court, D. Arizona
DecidedApril 12, 2011
DocketNo. CV-09-529-PHX-DGC
StatusPublished

This text of 274 F.R.D. 658 (Martinelli v. Petland, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Martinelli v. Petland, Inc., 274 F.R.D. 658, 79 Fed. R. Serv. 3d 586, 2011 U.S. Dist. LEXIS 41384, 2011 WL 1375248 (D. Ariz. 2011).

Opinion

ORDER

DAVID G. CAMPBELL, District Judge.

Plaintiffs have filed a motion for class certification pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure. Docs. 129 (sealed), 137 (redacted). The motion is fully briefed. Docs. 152,162,164,166. Oral argument was heard on April 7, 2011. For reasons stated below, the Court will deny the motion.

I. Background.

Petland, Inc. is a large retailer of pets. Through company-owned stores and franchisees, Petland sells puppies at more than 100 locations throughout the United States. The puppies are supplied directly by individual breeders and through various brokers.

[660]*660In March 2009, six purchasers of Petland puppies filed this action against Petland and one of its suppliers, The Hunte Corporation. Plaintiffs claimed that they bought Petland puppies with the understanding that they were bred under safe and humane conditions by a reputable breeder, but the puppies actually were bred at “puppy mills.” A puppy mill, according to Plaintiffs, is a dog breeding operation in which the health of the dogs is disregarded in order to maintain a low overhead and maximize profits. Plaintiffs alleged that their puppies were sick at the time of purchase or became ill shortly thereafter. The complaint asserted claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962, predicated on alleged violations of the federal mail and wire fraud statutes, 18 U.S.C. §§ 1341 and 1343 (counts one and two), claims for violations of consumer protection laws from many states (counts three and five), and a claim for unjust enrichment (count four). Doc. 1.

On August 7, 2009, the Court granted Defendants’ motions to dismiss because the complaint failed adequately to plead fraud and causation. Doc. 49. An amended complaint filed one month later asserted the same claims as the original complaint, but added 25 new plaintiffs. Doc. 54. In an order dated January 26, 2010, the Court dismissed the claims of all but two plaintiffs, Elliot Moskow and Karen Galatis, on the ground that only those individuals sufficiently alleged damages proximately caused by Petland. Doc. 68. The Hunte Corporation was dismissed because it did not supply the puppies purchased by Moskow and Galatis. Id. at 10.

The claims that remain in this case are (1) Plaintiffs Moskow and Galatis’ count-one RICO claim, (2) Plaintiffs Moskow and Galatis’ unjust enrichment claim based on fraud, and (3) Plaintiff Moskow’s claim under the Maine Unfair Trade Practices Act. Doc. 68 at 17. These are the claims for which Plaintiffs seek class certification.

II. Rule 23 Requirements.

Plaintiffs bear the burden of showing that the four Rule 23(a) requirements are met and, under Rule 23(b)(3), that questions of law or fact common to all class members predominate over issues affecting only individual members. Zinser v. Accufix Research Inst, Inc., 253 F.3d 1180,1186 (9th Cir.2001). This Court must “rigorously analyze” the proposed class to ensure that it comports with the requirements of Rule 23. Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982). This analysis often will “require looking behind the pleadings, even to issues overlapping with the merits of the underlying claims.” Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 581 (9th Cir.2010). “Falcon’s central command requires district courts to ensure that Rule 23 requirements are actually met, not simply presumed from the pleadings.” Id. at 582.

Plaintiffs seek certification of a class defined as all persons who purchased a puppy from a Petland store since November 20, 2004, supplied by a Class B licensee who acquired the puppy from a breeder not previously inspected by Petland. Class certification should be denied, Petland argues, because the class definition is overbroad, common questions do not predominate over individual issues, and the need for individual trials makes the class unmanageable. Because the proposed class clearly fails the predominance requirement of Rule 23(b)(3), the Court need not address Petland’s other challenges to class certification.

III. Causation.

The RICO statute makes it unlawful for any person associated with an enterprise to participate in the conduct of such enterprise’s affairs through a pattern of racketeering. 18 U.S.C. § 1962(c). The alleged pattern of racketeering in this case is mail and wire fraud under 18 U.S.C. §§ 1341 and 1343. Doc. 54 ¶ 135. To plead a violation of those statutes, Plaintiffs must allege that Defendants formed a scheme to defraud, used the United States mails and wires in furtherance of that scheme, and did so with the specific intent to defraud. See Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1400-01 (9th Cir.1986). Plaintiffs also must allege facts showing that the fraudulent scheme proximately caused Plaintiffs’ [661]*661injuries. See Poulos v. Caesars World, Inc., 379 F.3d 654, 664 (9th Cir.2004).

Plaintiffs’ motion for class certification addresses only their RICO claim. See Doc. 129. Plaintiffs agree that the claim requires proof of proximate cause. Id. at 13-19.1

The Court previously found that this is a case where proof of reliance is “ ‘a mile post on the road to causation.’” Doc. 49 at 7 (quoting Poulos, 379 F.3d at 664). Stated differently, “individualized reliance issues related to [Pjlaintiffs’ knowledge, motivations, and expectations bear heavily on the causation analysis.” Poulos, 379 F.3d at 665. The “complete absence of reliance [will] prevent [Plaintiffs] from establishing proximate cause.” Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 658-59, 128 S.Ct. 2131, 170 L.Ed.2d 1012 (2008).

Plaintiffs do not dispute that reliance constitutes a component of causation in this case; they do not contend that causation can be established by some other means. Plaintiffs argue instead that reliance can be established by both first-party and third-party reliance, and that common questions will predominate over individual questions for both types of rebanee if the class is certified.

A. First-Party Reliance.

First-party reliance, as used by the parties in this motion, refers to direct reliance by the class members on Petland’s allegedly false representations.

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Bluebook (online)
274 F.R.D. 658, 79 Fed. R. Serv. 3d 586, 2011 U.S. Dist. LEXIS 41384, 2011 WL 1375248, Counsel Stack Legal Research, https://law.counselstack.com/opinion/martinelli-v-petland-inc-azd-2011.