LAW WEEK COLORADO
DENVER — Colorado’s appellate courts refuse to apply a presumption of causation available in securities law to consumer class actions. To bring a consumer class action, a plaintiff must prove that each of the class members suffered an actual injury.
The most recent decision came today in Garcia v. Medved Chevrolet.
A new car buyer, Trina Garcia, claimed she was charged $548 for two car dealer-added “aftermarket” products that she claimed were never installed. She sued the dealer and nine other related dealers, claiming violations of the Colorado Consumer Protection Act.
Based on the claim, Jefferson County District Court Judge Jane A. Tidball created two classes: new-car purchasers who were charged for products that were never installed, and similar purchasers for whom products were installed but allegedly not adequately disclosed.
However, a three judge panel of the Colorado Court of Appeals today rejected those classes.
For the panel, Judge Dennis A. Graham wrote that the plaintiff did not have a method to prove that each supposed member of the class was caused actual injury. Plaintiff argued that the trial court was correct in applying a presumption that all supposed class members were actually injured, without direct proof that they were. That theory has only been applied in Securities law cases and had never been adopted by the Colorado general assembly or any Colorado appellate case for CCPA claims. “We conclude that such ruling was error because there is no precedent for the theory in Colorado,” Graham wrote.
The plaintiff can still individually pursue her case against the dealer.
The prevailing attorneys in today’s case were Daniel M. Reilly, Larry Pozner, Anthony L. Giacomini, Molly H. Ferrer of the Denver law firm Reilly & Pozner and Dennis B. Polk of Holley, Albertson & Polk of Golden. The case is 09CA1465.
“Ms. Garcia’s situation was unique,” Reilly said. “In order to have a class action, there must be other people in the same situation. The plaintiff did not present any evidence to show that there were other people in her situation. The Court of Appeals found that this was not the type of case that would justify an assumption that there were others like Trina Garcia and, therefore, this case is not a class action.”
Today’s decision follows a Colorado Supreme Court ruling earlier this year in Farmers Insurance Exchange v. Benzing where plaintiffs who claimed they purchased redundant car insurance tried to use a “fraud-on-the-market theory” to avoid proving each relied on misleading information. The effort failed.
