Opinion ID: 1154737
Heading Depth: 4
Heading Rank: 2

Heading: Decisions Permitting a Class-wide Inference of Reliance.

Text: In two cases involving consumer class actions we held that it would be appropriate to infer that each member of a class had actually relied on the defendant's alleged misrepresentations. ( Vasquez v. Superior Court (1971) 4 Cal.3d 800, 814-815 [94 Cal. Rptr. 796, 484 P.2d 964] [ Vasquez ]; Occidental Land, Inc. v. Superior Court (1976) 18 Cal.3d 355, 362-363 [134 Cal. Rptr. 388, 556 P.2d 750] [ Occidental Land ].) The plaintiffs in each case specifically pled that the defendants had made identical representations to each class member. Accordingly, these decisions do not support an argument for presuming reliance on the part of persons who never read or heard the alleged misrepresentations, such as plaintiffs in the case before us. The plaintiffs in Vasquez, supra, 4 Cal.3d 800, who had purchased frozen food and freezers on installment contracts, alleged that the sellers had misrepresented the price and value of the merchandise. We held that the plaintiffs had adequately pled actual reliance and that the action could properly be maintained as a class action. We reached these conclusions because plaintiffs had pled actual reliance on an individual basis and because reliance, under the peculiar facts of the case, was truly a common issue. This was because plaintiffs asserted that they [could] demonstrate [that the] misrepresentations were in fact made to each class member without individual testimony because the salesmen employed by [the defendant seller] memorized a standard statement containing the representations (which in turn were based on a printed narrative and sales manual) and that this statement was recited by rote to every member of the class. ( Id. at pp. 811-812.) The facts of Occidental Land, supra, 18 Cal.3d 355, are similar. The plaintiffs, who had purchased houses in a subdivision developed and sold by the defendant, alleged that the defendant had misrepresented the future cost of maintaining certain common areas. Relying on Vasquez, supra, 4 Cal.3d 800, we held that actual reliance was a common issue and that the trial court thus did not abuse its discretion by certifying the action as a class action. We reached this conclusion because, as in Vasquez, plaintiffs alleged that the defendant's misrepresentations had actually been made to each member of the class. Indeed, the misrepresentations were contained in a public report, and [e]ach purchaser was obligated to read the report and state in writing that he had done so. ( Occidental Land, supra, 18 Cal.3d p. 358; see also id. at pp. 359, 363.) Plaintiffs, who rely heavily on Vasquez and Occidental Land, misinterpret those decisions. Plaintiffs argue that we held that pleading and proof of direct reliance by each victim of a fraud are not required where material misrepresentations are alleged and that, in the absence of actual reliance, reliance may be pled by the equivalent of the fraud-on-the-market doctrine, i.e., material misrepresentations to the class, plus action consistent with reliance thereon. In fact, we held no such thing. (2c) What we did hold was that, when the same material misrepresentations have actually been communicated to each member of a class, an inference of reliance arises as to the entire class. ( Vasquez, supra, 4 Cal.3d at p. 814 & fn. 9; Occidental Land, supra, 18 Cal.3d at pp. 358, 359, 363.) While this does mean that actual reliance can be proved on a class-wide basis when each class member has read or heard the same misrepresentations, nothing in either case so much as hints that a plaintiff may plead a cause of action for deceit without alleging actual reliance.