Court Opinion

ID: 4664561
Source: CourtListenerOpinion
Date Created: 2021-03-03 18:00:39.017222+00
Date Added: 2024-06-11T08:02:36.933826
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

 AARON LEIGH-PINK; TANA                      No. 19-17556
 EMERSON,
      Plaintiffs-Appellants,                  D.C. No.
                                        2:17-cv-02910-GMN-
                v.                              VCF

 RIO PROPERTIES, LLC,
       Defendant-Appellee.             ORDER CERTIFYING
                                        QUESTION TO THE
                                       SUPREME COURT OF
                                           NEVADA

        Appeal from the United States District Court
                 for the District of Nevada
        Gloria M. Navarro, District Judge, Presiding

         Argued and Submitted December 10, 2020
                   Pasadena, California

                      Filed March 3, 2021

  Before: Ronald M. Gould and Ryan D. Nelson, Circuit
      Judges, and Brian M. Cogan, * District Judge.

                               Order

     *
       The Honorable Brian M. Cogan, United States District Judge for
the Eastern District of New York, sitting by designation.
2                LEIGH-PINK V. RIO PROPERTIES

                          SUMMARY **

          Certification to Nevada Supreme Court

    The panel certified to the Nevada Supreme Court the
following question:

        For purposes of a fraudulent concealment
        claim, and for purposes of a consumer fraud
        claim under NRS § 41.600, has a plaintiff
        suffered damages if the defendant’s
        fraudulent actions caused the plaintiff to
        purchase a product or service that the plaintiff
        would not otherwise have purchased, even if
        the product or service was not worth less than
        what the plaintiff paid?

                              ORDER

    Under Rule 5 of the Nevada Rules of Appellate
Procedure, we respectfully certify to the Supreme Court of
Nevada the questions of law set forth in Section III of this
order. These questions will be determinative of claims
pending before this court, and it appears to us that there is no
controlling precedent in the decisions of the Supreme Court
or Court of Appeals of Nevada. Nev. R. App. P. 5(a).

    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
              LEIGH-PINK V. RIO PROPERTIES                  3

                              I.

    This suit arose after plaintiffs Aaron Leigh-Pink and
Tana Emerson stayed at the Rio All-Suite Hotel and Casino
(the “Rio”) in Las Vegas. The rooms were complimentary,
so the only charge that plaintiffs incurred was a $34.01 per
day “resort fee” that covered access to the internet,
telephones, and use of the fitness room. At first, the stays
seemed uneventful. But unbeknownst to plaintiffs, the Rio’s
water system had been contaminated with legionella, the
bacteria that cause Legionnaires’ disease.

    Plaintiffs allege that the Rio knew of that contamination
based on the following allegations. Before plaintiffs visited
the hotel, the Rio had received a letter from the Southern
Nevada Health District (“SNHD”) stating that two guests
had contracted Legionnaires’ disease. SNHD investigators
met with both the Rio’s Vice President and its Facilities
Senior Manager. The investigators stated that they planned
to conduct an “environmental assessment,” and at a follow-
up meeting, they gave a PowerPoint presentation on the
dangers of the bacteria. Yet that same day, plaintiffs allege,
the Rio refused to remove “at least one guest” from a room
that the SNHD wanted to test for legionella.

    A few months later, the Rio sent a letter notifying
previous guests of the contamination. It reported that two
guests had contracted Legionnaires’ disease and that “recent
testing indicated the presence of the Legionella bacteria in
water systems at the Rio.” The hotel claimed to have taken
“aggressive remediation action to ensure the safety of the
water,” but it admitted that “[u]ntil the system was fully
treated, taking a shower or bath with the jets running may
have put [guests] at risk by breathing water in the air.” The
Rio did not share that same information with any incoming
guests.
4              LEIGH-PINK V. RIO PROPERTIES

    A guest soon commenced this putative class action in
Clark County District Court. After removal, Leigh-Pink and
Emerson became the named plaintiffs. They had not
contracted Legionnaires’ disease, but based on the Rio’s
alleged failure to disclose the legionella, they sought to
recover the resort fee. Their operative complaint asserted
claims for (1) fraudulent concealment, (2) negligence,
(3) unjust enrichment, (4) “declaratory relief,” and (5) two
consumer fraud claims under Nevada Revised Statutes
(“NRS”) § 41.600. These two consumer fraud claims derive
from NRS § 205.377(1), which prohibits “fraud or deceit
upon a person by means of a false representation or omission
of a material fact,” and NRS § 598.0923(2), which prohibits
failures “to disclose a material fact in connection with the
sale or lease of goods or services.” The district court
dismissed for failure to state a claim, and this appeal
followed.

    In a separate memorandum filed concurrently with this
opinion, we reverse the dismissal of the claim for unjust
enrichment and affirm the dismissal of the claims for
negligence, declaratory relief, and violations of
NRS § 205.377(1). We also reject all but one of the Rio’s
arguments regarding the claims for fraudulent concealment
and violations of NRS § 598.0923(2). The memorandum
leaves one remaining issue that is addressed here: whether
plaintiffs have suffered damages for purposes of their claims
for fraudulent concealment and violations of
NRS § 598.0923(2).

                              II.

    The district court concluded that plaintiffs did not suffer
any damages. The court noted that plaintiffs did not allege
personal injury or property damage, which meant that the
damages, if any, “were economic in nature.” The resort fee
               LEIGH-PINK V. RIO PROPERTIES                  5

could not fall within that category, the court continued, since
plaintiffs received access to the amenities that the fee
covered. Thus, plaintiffs received the “benefit of the
bargain” and suffered no damages.

    The Rio echoes that analysis on this appeal. It contends
that the only appropriate measures of damages are (1) “the
out-of-pocket measure, which, in the misrepresentation
context, is comprised of ‘the difference between what the
defrauded party gave and what he actually received’”; and
(2) “[t]he benefit-of-the-bargain measure, which consists of
‘the value of what the defrauded party would have received
had the representations been true, less what he actually
received.’” Davis v. Beling, 278 P.3d 501, 512 (Nev. 2012)
(alterations adopted) (quoting Collins v. Burns, 741 P.2d
819, 822 (Nev. 1987) (per curiam)). Under either measure,
the Rio argues, plaintiffs cannot recover because they never
alleged that access to the internet, telephones, and fitness
room was worth less than the $34.01 they paid. In short,
plaintiffs did not suffer damages because they “received
exactly what they paid for.”

     Plaintiffs respond with a simple but untested theory.
They point to their allegation that they would not have stayed
at the Rio – and would not have paid the resort fee – had the
Rio disclosed the legionella contamination. Thus, say
plaintiffs, they “have alleged recoverable damages in the
form of the money they paid to the Hotel which they would
not otherwise have paid.”

    We do not understand Nevada courts to have addressed
this issue of damages – i.e., whether a plaintiff suffers
damages when, due to the defendant’s misrepresentation, the
plaintiff purchases a product or service that the plaintiff
would not otherwise have purchased, even though the
6             LEIGH-PINK V. RIO PROPERTIES

product or service was not worth less than what the plaintiff
paid.

    In other cases, this court has observed that “[w]here
Nevada law is lacking, its courts have looked to the law of
other jurisdictions, particularly California, for guidance.”
Eichacker v. Paul Revere Life Ins. Co., 354 F.3d 1142, 1145
(9th Cir. 2004) (quoting Mort v. United States, 86 F.3d 890,
893 (9th Cir. 1996)). This court, too, has looked to
California “to inform [its] analysis” of Nevada law. Id.
Here, the most instructive California case is Kwikset Corp.
v. Superior Court, 246 P.3d 877 (Cal. 2011). It concerned a
defendant that labeled its products as “Made in U.S.A.” even
though they “contained foreign-made parts or involved
foreign manufacture.” Id. at 881. The plaintiffs did not
allege that the products were overpriced or defective; they
instead relied on their “patriotic desire to buy fully
American-made products.” Id. at 883. The court held that
“plaintiffs who can truthfully allege they were deceived by a
product’s label into spending money to purchase the product,
and would not have purchased it otherwise, have ‘lost money
or property’ within the meaning of” California’s Unfair
Competition Law. Id. at 881.

     The federal district court in Nevada has followed this
lead. In Cruz v. Kate Spade & Co., LLC, No. 2:19-cv-952,
2020 WL 5848095, at *1 (D. Nev. Sept. 30, 2020), the court
addressed allegations that the defendant had “indicat[ed] the
items [it sold] were significantly discounted from the prices
listed on the tags” when, in fact, the items were “never
actually sold at the reference price marked on the tags.” The
plaintiff did not allege that the items were worth less than
what she paid. Id. at *5. Yet she insisted “that she did not
get the deal she thought she was getting,” and she alleged
that she would not have purchased the items “had she known
               LEIGH-PINK V. RIO PROPERTIES                  7

their true market value.” Id. at *1. The district court
concluded that the plaintiff had adequately pleaded damages
for purposes of a consumer fraud claim under NRS § 41.600.
See id. at *5; see also Hinojos v. Kohl’s Corp., 718 F.3d
1098, 1104–05 (9th Cir. 2013) (holding that similar
allegations were sufficient to establish that a plaintiff “lost
money or property” under California’s Unfair Competition
Law).

    These authorities do not reflect a consensus, for courts in
other jurisdictions have rejected plaintiffs’ theory. See Small
v. Lorillard Tobacco Co., 720 N.E.2d 892, 898 (N.Y. 1999)
(rejecting the idea that, without more, “consumers who buy
a product that they would not have purchased, absent a
manufacturer’s deceptive commercial practices” have
suffered an injury under the state’s consumer fraud statute);
see also Benson v. Fannie May Confections Brands, Inc.,
944 F.3d 639, 648 (7th Cir. 2019) (reaching the same
conclusion under Illinois law); In re Avandia Mktg. Sales
Pracs. & Prod. Liab. Litig., 639 F. App’x 866, 869 (3d Cir.
2016) (reaching the same conclusion under Missouri law).

   We thus face a question that involves matters of state law
and policy that have not been addressed by the Supreme
Court or Court of Appeals of Nevada, and that have divided
courts in other jurisdictions. Because we believe that these
questions are best resolved by the highest court in Nevada,
we conclude that certification is appropriate.

                             III.

   The question of law we certify is:

       For purposes of a fraudulent concealment
       claim, and for purposes of a consumer fraud
       claim under NRS § 41.600, has a plaintiff
8              LEIGH-PINK V. RIO PROPERTIES

        suffered damages if the defendant’s
        fraudulent actions caused the plaintiff to
        purchase a product or service that the plaintiff
        would not otherwise have purchased, even if
        the product or service was not worth less than
        what the plaintiff paid?

    We do not intend this framing to restrict the Supreme
Court’s discretion. Should it accept certification, it may
reformulate the question and consider any other issues it
deems relevant. See, e.g., United States v. Figueroa-Beltran,
892 F.3d 997, 1004 (9th Cir. 2018).

                              IV.

    We respectfully request that the Supreme Court of
Nevada accept and decide the question certified herein. The
clerk of this court shall forward a copy of this order, under
official seal, to the Supreme Court of Nevada, along with
copies of all briefs and excerpts of the record that have been
filed in this court. We recognize that, should the Supreme
Court of Nevada accept certification, “[t]he written opinion
of the Supreme Court stating the law governing the questions
certified . . . shall be res judicata as to the parties.” Nev. R.
App. P. 5(h).

    Further proceedings in our court are stayed pending
resolution of the Supreme Court’s decision whether to accept
the certified question and, if so, the receipt of the answer to
the certified question.         The clerk is directed to
administratively close this docket, pending further order.
The panel will resume control and jurisdiction on the
certified question upon receiving an answer to the certified
question or upon the decision to decline to answer the
question.
               LEIGH-PINK V. RIO PROPERTIES                    9

     The parties shall notify the clerk of this court within
14 days of any decision by the Supreme Court of Nevada to
accept or decline certification. If the Supreme Court accepts
certification, the parties shall file a joint status report every
six months after the date of acceptance, or more frequently
if the circumstances warrant. As required by Rules 5(c)(4)
and 5(c)(5) of the Nevada Rules of Appellate Procedure, we
have provided in the appendix the names and addresses of
counsel and have designated which party will serve as the
appellant and the respondent should the Supreme Court of
Nevada accept certification.

    IT IS SO ORDERED.

                               /s/ Brian M. Cogan

                               Brian M. Cogan, District Judge
10             LEIGH-PINK V. RIO PROPERTIES

                       APPENDIX

For Appellants Aaron Leigh-Pink and Tana Emerson:

     Robert A. Waller, Jr., Law Office of Robert A. Waller,
     Jr., P.O. Box 999, Cardiff-by-the-Sea, CA 92007.

For Respondent Rio Properties, LLC:

     Richard Fama, Cozen O’Connor P.C., 45 Broadway
     Atrium, Suite 1600, New York, NY 10006.

     F. Brenden Coller, Cozen O’Connor P.C., 1650 Market
     Street, Suite 2800, Philadelphia, PA 19103.