Quinn Emanuel recently obtained a major victory for defendant ADT Security Services, securing rulings limiting a putative class action with California, Maryland, and nationwide claims to a small set of individual actions that were settled for a nominal amount.
Plaintiffs alleged that the fees ADT charges customers who prematurely cancel a term contract were both deceptively disclosed and unlawful liquidated damages provisions under California and Maryland law. They further alleged that ADT’s contracts were subject to and did not comply with the federal Truth in Lending Act.
First, at summary judgment, Quinn Emanuel obtained a ruling that ADT’s contract cancellation fees were not subject to California liquidated damages law. On April 7, 2014, the Central District of California ruled that these charges should instead be analyzed as alternative means of performance to fulfilling the full contract term. Under alternative means of performance doctrine, the Court found the cancellation fees presented consumers with a rational choice when viewed from the outset of the contract, and it held ADT’s cancellation fees lawful.
Second, on supplemental summary judgment briefing, Quinn Emanuel obtained a ruling that the cancellation fees were properly disclosed. On June 16, 2014, the Court held that the challenged provisions of ADT’s customer contracts were not likely to confuse reasonable consumers and therefore were lawful under various California consumer protection statutes.
Finally, with the California claims removed from the case, Quinn Emanuel obtained a ruling that the remaining plaintiffs had missed their deadline and therefore forfeited their opportunity to move for class certification. As a result, the putative nationwide class action became a handful of individual claims, and Quinn Emanuel resolved the entire action for a nominal sum.