                                                                           FILED
                            NOT FOR PUBLICATION                             SEP 14 2010

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS




                            FOR THE NINTH CIRCUIT



DIANNE L. KELLEY; KENNETH                        No. 09-35699
HANSEN; JIM WALTERS; MATT
MORALES; RUSSELL HALL; DON                       D.C. No. 2:07-cv-00475-MJP
SCHRODER,

              Plaintiffs - Appellants,           MEMORANDUM *

  v.

MICROSOFT CORPORATION, a
Washington Corporation,

              Defendant - Appellee.



                   Appeal from the United States District Court
                     for the Western District of Washington
                   Marsha J. Pechman, District Judge, Presiding

                       Argued and Submitted August 3, 2010
                               Seattle, Washington

Before: CANBY, THOMPSON and BERZON, Circuit Judges.

       This action involves alleged misrepresentations and omissions in Microsoft

Corporation’s (“Microsoft”) pre-release marketing of its Windows Vista operating



        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
system. Plaintiffs-Appellants Dianne Kelley, Kenneth Hansen, Jim Walters, Matt

Morales, Russell Hall, and Don Schroder (collectively referred to as “Plaintiffs”)

appeal the denial of their motion for narrowed class certification of two classes

proposed after the district court decertified their original class. The district court

held that the putative classes failed to meet the predominance requirement of

Federal Rule of Civil Procedure 23(b)(3). We review the certification decision for

abuse of discretion. See Yokoyama v. Midland Nat’l Life Ins. Co., 594 F.3d 1087,

1090–91 (9th Cir. 2010); In re Wells Fargo Home Mortg. Overtime Pay Litig., 571

F.3d 953, 957 (9th Cir. 2009). We affirm in part, reverse in part, and remand for

further proceedings.

      The district court failed properly to conduct the predominance inquiry under

Rule 23(b)(3). To certify a class under Rule 23(b)(3), a district court must, inter

alia, “determine whether common or individual issues predominate in a given

case.” Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 593 (9th Cir. 2010) (en banc)

(internal quotation marks omitted). “[T]he main concern in the predominance

inquiry . . . [is] the balance between individual and common issues.” In re Wells

Fargo, 571 F.3d at 959. Here, the district court relied exclusively on its conclusion

that claims involving deceptive practices brought under the Washington Consumer

Protection Act (“CPA”), Wash. Rev. Code § 19.86.010 et seq., require


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individualized proof of proximate causation to find that “the predominant

questions [in this putative class action] would relate to Plaintiffs’ subjective

understanding of the Express Upgrade program and their individual belief in

Microsoft’s Vista advertising campaign.” The district court failed to consider, or

to balance against the issues requiring individualized proof, any questions of law or

fact common to the Express Upgrade class members, despite identifying several

such questions in the Rule 23(a)(2) commonality analysis in its February 2008

certification order.1 See In re Wells Fargo, 571 F.3d at 959 (holding that it is

reversible error to “rely[] on [one factor] to the near exclusion of other factors

relevant to the predominance inquiry”).

      In addition, contrary to the district court’s supposition, the Express Upgrade

class members’ understanding of the Express Upgrade program and knowledge of

Microsoft’s Vista advertising campaign is amenable to class-wide treatment in

some respects. For instance, common questions exist regarding the extent of the

consumer education efforts that Microsoft allegedly controlled through its

Windows Vista Capable marketing program. Further, this case is unlike instances


      1
       Cases alleging consumer fraud and involving questions affecting individual
class members are not categorically precluded from class treatment. See Amchem
Prods., Inc. v. Windsor, 521 U.S. 591, 625 (1997); cf. Wolin v. Jaguar Land Rover
N. Am., LLC, No. 09-55104, 09-55105, 2010 WL 3222091, at *4 (9th Cir. Aug. 17,
2010).

                                          -3-
where the alleged misrepresentation goes to only one feature of the product and

there are numerous reasons why a consumer might use the product other than the

feature misrepresented. See Poulos v. Caesars World, Inc., 379 F.3d 654, 665, 667

(9th Cir. 2004). The allegedly fundamental aspects of the product sought through

the Express Upgrade program are largely encompassed within the alleged

misrepresentation—namely, that a computer labeled “Vista Capable” and

upgradeable to Windows Vista Home Basic could run “Vista.” Cf. id. at 665

(noting the “unique nature of gambling transactions” and holding that “gambling is

not a context in which [the court] can assume that potential class members are

always similarly situated”).

      Finally, the district court did not consider whether other elements of a CPA

claim present questions of law or fact common or individual to the class members,

and what effect those questions, if any, have on the Rule 23(b)(3) predominance

inquiry. For instance, the district court did not determine whether the allegedly

deceptive practice affects the public interest, which itself involves consideration of

several factors. See, e.g., Panag v. Farmers Ins. Co. of Wash., 204 P.3d 885, 889

(Wash. 2009).

      Accordingly, we reverse the district court’s denial of class certification and

remand to the district court for further certification proceedings consistent with this


                                         -4-
disposition. We stress that by doing so, we express no view concerning whether

on a proper analysis, the denial of class certification would be within the district

court’s discretion.

      The district court did not err in concluding that the claims asserted by the

proposed Windows Driver Device Model (“WDDM”) class are best characterized

as primarily involving allegations of affirmative misrepresentations, and not

material omissions. Plaintiffs argue that the WDDM class definition’s explicit

reference to persons who purchased a personal computer (“PC”) certified by

Microsoft as “Vista Capable” is to identify WDDM class members only. Even so,

the argument underlying the WDDM class’ claims is that Microsoft affirmatively

marketed certain PCs as Vista Capable even though they could not support

WDDM, a display driver allegedly required to operate Vista. Additionally,

regardless of whether Microsoft’s alleged knowing failure to reveal that pre-launch

Vista Capable PCs could not support WDDM is a deceptive act or practice under

the CPA, the failure to disclose that information is relevant only insofar as

Microsoft also represented that Vista Capable PCs were in fact capable of running

a version of Vista. Plaintiffs’ complaint is instructive on this issue, as it contains

allegations based on both affirmative misrepresentations and omissions. The

WDDM class’ claims are therefore not “base[d] . . . only on what [Microsoft


                                          -5-
allegedly] did not disclose,” but rather “as much on what [was said] as what [wa]s

purportedly [left out].” Poulos, 379 F.3d at 667. Accordingly, we affirm the

district court’s denial of certification of the WDDM class on the theory that the

WDDM class is entitled to a presumption of reliance.

      AFFIRMED in part, REVERSED in part, and REMANDED for further

proceedings.




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