Picture Dims on Consumer Fraud Claims Against Panasonic

Judge Wigenton of the District of New Jersey dismissed consumer fraud claims against Panasonic finding that the allegations did not meet the heightened pleading standards of IqbalThe putative class action involved Panasonic Viera plasma televisions purchased in 2008-2009 which it was alleged contained a defect that caused a “rapid deterioration in the TV’s picture quality.”  This was the second bite at the apple for the plaintiffs who had their first complaint dismissed last July by the same judge. 

The elements of a claim under the New Jersey Consumer Fraud Act (CFA) are unlawful conduct by defendants, an ascertainable loss by the plaintiffs and a causal connection between them.  Ultimately, the Plaintiffs could not sufficiently plead either the unlawful conduct or ascertainable loss elements of a consumer fraud. 

Only affirmative acts, omissions or regulatory violations constitute ‘unlawful conduct’ under the CFA.  The plaintiffs essentially alleged that Panasonic’s marketing of the product through materials that the described the “industry leading black levels and contrast ratios,” its exhibitions in stores, independent reviews and technical representations available on its website regarding the picture quality were affirmative misrepresentations that constituted unlawful conduct.  The court however found them to be mere puffery.

The plaintiffs also alleged that Panasonic knew or should have known of the defect and that its failure to divulge this information was an unlawful omission.  In support of this allegation The plaintiffs pointed to a CNET article dated on February 4, 2010, reporting on the defect and another CNET article in which a Senior VP at Panasonic responded to questions about the defect.  The court however found that the plaintiffs’ position that one could conclude from these articles that Panasonic intentionally concealed the defect when it began selling the TVs was a leap in logic and that the plaintiffs still fell afoul of the heightened pleading standard because they could not state when the omissions occurred and how Panasonic had knowledge of the defect.

Because the plaintiffs could not sufficiently plead unlawful conduct it followed that they could not sufficiently plead ascertainable loss or causation.  Nonetheless the court opined that the “plaintiffs’ allegations were also deficient because [they] had failed allege how much of a premium they claimed to have paid for their Panasonic televisions.”

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