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Schellenbach v. Godaddy Inc.

United States District Court, D. Arizona

August 29, 2017

Mark Schellenbach, et al., Plaintiffs,
Godaddy Incorporated, a Delaware corporation. Defendants.


          David G. Campbell, United States District Judge.

         Plaintiffs ask the Court to reconsider its order denying their motion for class certification. Doc. 134. Defendants oppose the motion. Doc. 140. For the reasons that follow, the Court will deny the motion for reconsideration.

         I. Legal Standard.

         Courts in this district have identified four circumstances where a motion for reconsideration will be granted: (1) the moving party has discovered material differences in fact or law from those presented to the Court at the time of its initial decision, and the party could not previously have known of the factual or legal differences through the exercise of reasonable diligence; (2) material factual events have occurred since the Court's initial decision; (3) there has been a material change in the law since the Court's initial decision; or (4) the moving party makes a convincing showing that the Court failed to consider material facts that were presented to the Court at the time of its initial decision. See, e.g., Motorola, Inc. v. J.B. Rodgers Mech. Contractors, Inc., 215 F.R.D. 581, 586 (D. Ariz. 2003). Motions for reconsideration are disfavored, and are not the place for parties to make new arguments not raised in their original briefs. See Northwest Acceptance Corp. v. Lynnwood Equip., Inc., 841 F.2d 918, 925-26 (9th Cir. 1988).

         II. Discussion.

         The Court denied Plaintiffs' motion to certify a proposed class and a California subclass under Rule 23(b)(2) and (3) of the Federal Rules of Civil Procedure. The primary focus of the parties' briefing and argument was Rule 23(b)(3). The Court found that individual issues would predominate over common issues in the class and subclass, making certification inappropriate under Rule 23(b)(3). Doc. 130 at 2-21. The Court denied certification under Rule 23(b)(2) because the class was not suitable for injunctive relief. Id. at 21-22.

         A. Plaintiffs' First Objection.

         Plaintiffs' first argument focuses on the following sentence from section III.B of the Court's order: “Given this target market, it is likely that the class includes sophisticated computer users, and an individualized inquiry would be required to determine whether class members had the sophistication to understand that VM meant virtualized machine even if they did not visit the /servers webpage.” Doc. 130 at 7. Plaintiffs argue that this language “sets forth the wrong standard for determining if an advertisement was likely to deceive” under the Arizona Consumer Fraud Act (“ACFA”). Doc. 134 at 4. Plaintiffs argue that Arizona law requires a much lower standard, one looking to “whether the ‘least sophisticated consumer' would be misled [by the advertising in question] - not the most sophisticated or target consumer.” Id. at 5 (citing Madsen v. W. Am. Mort. Co., 694 P.2d 1228, 1232 (Ariz.Ct.App. 1985)).

         The Court first notes that Plaintiffs did not make this argument in their motion for class certification or their reply memorandum. Docs. 109, 123. They never cited the Madsen case and never argued that the “least sophisticated consumer” standard applied to their ACFA claim. Id. As noted above, a motion for reconsideration is not the place for parties to make arguments not raised in their original briefs. This is a sufficient basis for denying Plaintiffs' first ground for relief.

         But the Court also concludes that it would have denied this ground for relief even if it was timely raised. It is true that some Arizona cases have said that the ACFA employs a “least sophisticated consumer” test for determining whether a communication has a tendency to deceive. Madsen, the primary case relied on by Plaintiffs, cited a Second Circuit case as support for this standard. 694 P.2d at 1232 (citing Exposition Press, Inc. v. FTC, 295 F.2d 869 (2d Cir. 1961)). Exposition Press, in turn, was an enforcement action brought by the FTC alleging deceptive advertising. In such an action, the FTC must show that an advertisement has a “tendency to deceive” the public. 295 F.2d at 872. And in making such a showing, the FTC “should look not to the most sophisticated readers but rather to the least.” Id.

         The ACFA has the same public protection purpose. The statute expressly authorizes the Arizona Attorney General to bring enforcement actions against deceptive advertisers. A.R.S. § 44-1524. The ACFA has been used in this manner. See, e.g., State ex rel. Horne v. Autozone, Inc., 258 P.3d 289 (Ariz.Ct.App. 2011), opinion vacated in part, 275 P.3d 1278 (Ariz. 2012).

         When an agency such as the FTC or the Arizona Attorney General brings an enforcement action alleging deceptive advertising, it makes no sense to require that the agency prove it was misled by the advertising. The action is brought on behalf of consumers generally, not the agency itself. As a result, the agency must show only that the advertising had a “tendency” to mislead the public. Exposition Press, 295 F.2d at 872 (FTC must show that the advertising had “the tendency and capacity to deceive a substantial portion of the purchasing public”). Indeed, enforcement agencies need not present evidence from consumers. Id. (“Actual consumer testimony is in fact not needed to support an inference of deceptiveness by the [FTC].”).

         The language relied on by Plaintiffs' motion for reconsideration concerns the tendency of an advertisement to mislead. This is the key language from Madsen:

The term “deceptive” has been interpreted to include representations that have a “tendency and capacity” to convey misleading impressions to consumers even though interpretations that would not be misleading also are possible. Chrysler Corp. v. FTC, 561 F.2d 357, 363 (D.C. Cir. 1977); Goodman v. FTC, 244 F.2d 584 (9th Cir.1957), reaffirmed in Simeon Management Corp. v. FTC, 579 F.2d 1137 (9th Cir.1978). The meaning and impression are to be taken from all that is reasonably implied, not just from what is said, Spiegel, Inc. v. FTC, 411 F.2d 481 (7th Cir.1969), and in evaluating the representations, the test is whether the least ...

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