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Stoneback v. ArtsQuest

United States District Court, Third Circuit

June 19, 2013

REBECCA STONEBACK, on Behalf of Herself and All Those Similarly Situated; and MICHAEL GRUBE, on Behalf of Himself and All Those Similarly Situated, Plaintiffs
v.
ARTSQUEST; JEFFREY PARKS; WALTER KEIPER, JR.; and TONYA DODDY, Defendants

JUSTIN L. SWIDLER, ESQUIRE On behalf of plaintiffs

PATRICK J. REILLY, ESQUIRE On behalf of defendants

OPINION

JAMES KNOLL GARDNER, United States District Judge

This matter is before the court on plaintiffs’ Notice of Motion for Class Certification filed January 31, 2013.[1]

The Memorandum of Law of Defendants in Opposition to Plaintiffs’ Motion for Class Certification was filed March 8, 2013.[2]

SUMMARY OF DECISION

For the following reasons, plaintiffs’ motion for class certification is denied. Specifically, I conclude that plaintiffs have failed to meet all the requirements for class certification under Federal Rule of Civil Procedure 23(a). More specifically, I conclude that plaintiffs have failed to establish that plaintiff Rebecca Stoneback is a adequate representative of the proposed class.

Moreover, I conclude that plaintiffs have failed to meet the requirements for class certification under Federal Rule of Civil Procedure 23(b) because individual issues, as opposed to issues common to the class, predominate over essential elements of plaintiffs’ claims.

JURISDICTION

Jurisdiction in this case is based upon federal question jurisdiction pursuant to 28 U.S.C. § 1331.

VENUE

Venue is proper pursuant to 28 U.S.C. § 1391(b) because the events giving rise to plaintiffs’ claims allegedly occurred within this judicial district and because defendants reside within this judicial district.

PROCEDURAL HISTORY

This case arises from alleged deceptive business practices and fraudulent conduct of defendant ArtsQuest and its officers in connection with the sale and marketing of memorabilia sold at Musikfest, a music festival hosted by ArtsQuest annually in Bethlehem, Pennsylvania.

Plaintiffs allege that defendants sold commemorative beer steins and mugs at Muskifest, which defendants advertised as being made in Germany, when in reality the steins and mugs were made in China. Plaintiffs assert that defendants knew the true origin of the merchandise since at least 2005.

On June 11, 2012 plaintiff Rebecca Stoneback filed a five-count Civil Action Complaint on behalf of herself and all others similarly situated, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”)[3] against defendants Jeffrey Parks[4], Walter Keiper, Jr.[5], and Tonya Doddy[6](“individual defendants”) (Count I); RICO violations against ArtsQuest (Count II); violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”)[7] against ArtsQuest (Count III); Fraud against ArtsQuest (Count IV); and Piercing the Corporate Veil against the individual defendants (Count V). Plaintiff Stoneback alleged in her Civil Action Complaint that she purchased Musikfest Merchandise from defendant ArtsQuest in and around 2009 and again in 2011.[8]

On July 23, 2012 plaintiffs filed their First Amended Class Action Complaint, which added plaintiff Michael Grube as a named plaintiff. Plaintiff Michael Grube alleged in the First Amended Class Action Complaint that he purchased Musikfest Merchandise from defendant ArtsQuest every year from 1997 through 2011.[9]

On July 26, 2012 defendants filed their answer to plaintiffs’ First Amended Class Action Complaint.

On August 24, 2012 I conducted a Rule 16 Status Conference by telephone conference call in the within matter and set a December 31, 2012 deadline for the parties to complete class discovery and a January 31, 2013 deadline for plaintiffs to file a motion for class certification.

Accordingly, on January 31, 2013 plaintiffs filed the within motion for class certification. On March 8, 2013 defendants responded in opposition. On March 27, 2013 plaintiffs filed a letter reply brief in support of their motion.

On April 2, 2013 I held a hearing and heard argument on plaintiffs’ class certification motion and took matter under advisement. Hence this Opinion.

STANDARD OF REVIEW

Rule 23 of the Federal Rules of Civil Procedure contains the prerequisites for class certification. A class may be certified only if the court is satisfied after a “rigorous analysis” that the prerequisites of Rule 23 have been satisfied. Beck v. Maximus, Inc., 457 F.3d 291, 296 (3d Cir. 2006).

To obtain class certification, plaintiffs must establish that each of the elements of Rule 23(a) are met, together with one of the requirements of Rule 23(b). Baby Neal v. Casey, 43 F.3d 48, 55 (3d Cir. 1994).

Pursuant to Rule 23(a), a class may be certified only if:

(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.

If the requirements of Rule 23(a) are satisfied, Rule 23(b) sets forth the type of class actions which may be maintained.

In this case, plaintiffs move for class certification pursuant to Rule 23(b)(2) and (3).

Rule 23(b)(2) provides that a class action may be maintained if “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole”.

Rule 23(b)(3) provides that a class action may be maintained if:

the court finds that the questions law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating of the controversy. The matters pertinent to the findings include:
(A) the class members’ interests in individually controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.

In deciding whether the requirements of Rule 23 have been met to certify a class, the district court must make whatever factual and legal inquiries necessary and must consider all relevant evidence and arguments. In re: Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305, 307 (3d Cir. 2008).

The requirements set forth in Rule 23 are not “mere pleading rules” and the court must “delve beyond the pleadings to determine whether the requirements for class certification are satisfied.” Id. at 316.

Accordingly, a court must resolve all factual or legal disputes relevant to class certification, even if they overlap with the merits –- including disputes touching on elements of the cause of action. Id. at 307. Factual determinations supporting Rule 23 findings must be made by a preponderance of the evidence. Id.

FACTS

Upon consideration of the pleadings, record papers, exhibits, and declarations, as required by the forgoing standard of review, the pertinent facts are as follows.

Defendant ArtsQuest is a non-profit arts organization based in Bethlehem, Pennsylvania. Defendant Jeffrey Parks was the President of ArtsQuest. Defendant Walter Keiper, Jr. was the ArtsQuest Senior Vice President of Finance and Administration. Defendant Tonya Doddy was a managerial employee at ArtsQuest.[10]

Since 1984, ArtsQuest has hosted an annual music festival known as “Musikfest”. At the festival, ArtsQuest sells merchandise, including souvenir beer steins and souvenir stoneware mugs.[11]

Plaintiff Rebecca Stoneback is an adult individual who purchased beer steins from ArtsQuest in 2009 and 2011. Ms. Stoneback was also employed by ArtsQuest from approximately 2009 through March 2012 as an instructor and a store employee who was responsible for stocking and selling merchandise.[12]

Plaintiff Michael Grube is an adult individual who purchased beer steins from ArtsQuest each year from 2005 until 2011 and mugs from ArtsQuest each year from 2005 through 2012.[13]

Between 2006 and 2012 ArtsQuest sold hundreds of beer steins and mugs to hundreds of customers.[14] In 2007 and 2008 ArtsQuest’s “Stein Reservation Form”, which customers could use to order beer steins and mugs, indicated that the stoneware mugs were “from Ger[]z Stein Co. in Germany”.[15]

Additionally, ArtsQuest’s online purchase order webpage for the 2011 stoneware mug indicated that there were “Only 400 of this German made Stoneware Mug annually”. The purchase order for the 2011 steins indicate that the “Musikfest 2011 Stein is handcrafted in Germany at the Gerz factory”.[16]

ArtsQuest also advertised both beer steins and mugs as “from Gerz Stein Co. in Germany” in various marketing materials. Other marketing materials referred to the beer steins and mugs as “Authentic German Musikfest Stein[s]” and “Authentic German Musikfest Stoneware Mug[s]”. Additionally, at some point, in its souvenir shop, ArtsQuest displayed a sign indicating that Musikfest Steins were “Made in Germany”.[17]

Between 2006 and 2011 the bottom of the steins contain an insignia which states “Design exclusively by Gerz...[, ] GERMANY”. In contrast, the 2012 Musikfest steins’ insignia states “DOMEX[, ] MADE IN GERMANY[, ] Stoneware Body made in China - All other components made in GERMANY”. The 2012 Musikfest mugs have a sticker which states: “Body made in China, decoration Germany”.[18]

However, in each year, the bodies of the mugs were not made in Germany, but rather were manufactured in China. Only the artwork on the mugs was designed and applied in Germany. Likewise the beer steins were also manufactured in China, and only the artwork and lids were completed in Germany.[19]

In general, steins made in China and decorated in Germany cost between $14.58 and $20.00. In contrast, any stein made and decorated in Germany costs $35 to $50, or more.[20]

Between 2009 and 2011 ArtsQuest paid between $14.98 and $17.38 for each beer stein. ArtsQuest charged customers approximately $69.99 for each stein between 2009 and 2011.[21]

The stoneware mugs are less expensive than the beer steins. For example, in 2008 ArtsQuest paid $6.65 for the stoneware mugs. Each year ArtsQuest sold the mugs for $17.99.[22]

As early as 2005 ArtsQuest received information that the Musikfest mugs were manufactured in China. Specifically, on August 19, 2005 defendant Tanya Doddy wrote an email to Manuel M. Wiesbender, who worked for Domex Companies, ArtsQuest’s exporter of the mugs and steins. In the email Ms. Doddy wrote:

On the stoneware mugs for next year can you please not have the “made in china sticker” put on the bottom of them. Many questioned that since in the past thye [sic] were stamped “Made in Germany” with the Domex label.

On August 23, 2005 Mr. Wiesbender responded to Ms. Doddy in an email as follows:

On the Stoneware mugs, we should be able to comply in the future. The mug bodies have always come from China but obviously we decorate them here in Germany for your order. On these low-price items, we can just not be competitive with actual German mug production. Anyway, we have used a different importer this year and they insisted on the original marking. We will see what arrangements we can make in 2006 [in] terms of getting the DOMEX mark put on there again. Make sure you remind me of this again next year[.][23]

In 2011, as it had in the past, ArtsQuest ordered its Musikfest beer steins from M. Cornell Importers, Inc. These steins were to be made in China and decorated in Germany.[24]

However, the factory in China that was making the steins went out of business. Because the deadline by which ArtsQuest needed the steins could not be met if the steins were shipped from China to Germany for decorating, as had been done in prior years, M. Cornell Importers, Inc. arranged for the printed decorations and the ...


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