Sateriale v. R.J. Reynolds Tobacco Co.

The existence of an offer to enter into a unilateral contract exists where a company promises to provide rewards to customers who purchase the company’s product, save Cash certificates, and redeem their certificates in accordance with the catalog’s terms, and an alleged breach of this unilateral contract is readily discernible when the company refuses to redeem leftover reward points for merchandise in accordance to terms provided. Consumers seeking to recover damages under the Unfair Competition Law and Consumer Legal Remedies Act based on a fraud theory must prove there was actual reliance on the misrepresentation and harm.

R.J. Reynolds Tobacco Company (RJR) ran its Camel Cash customer loyalty program from 1991 to 2007. RJR represented that customers who saved Camel Cash certificates could exchange them for merchandise according to terms provided in a catalog. RJR terminated the program in October 2006, but gave its customers six months to redeem any leftover Camel Cash. Several of the plaintiffs attempted, unsuccessfully, to redeem their Camel Cash certificates or obtain a catalog. They then brought a class action suit for breach of contract, promissory estoppel, and violation of two California consumer protection laws. The Court determined that the plaintiffs adequately alleged the existence of an offer to enter into a unilateral contract, whereby customers would purchase Camel cigarettes, collect Camel Cash, and redeem the Cash certificates for rewards from the catalog. In rejecting RJR’s argument that even if there was an offer it was too indefinite to be enforced, the Court concluded that actions of both parties indicated an intent to contract, there was an existence of a breach, and damages could be rationally assessed. Therefore, the Court found that dismissal for indefiniteness was unwarranted. The Court also concluded that because the plaintiffs’ promissory estoppel claim was subject to the same definiteness requirement as the breach of contract claim, it vacated dismissal of the promissory estoppel claim as well. Consumers seeking to recover damages under the Unfair Competition Law and Consumer Legal Remedies Act based on a fraud theory must prove there was actual reliance on the misrepresentation and harm. Because there was no alleged causal connection between the alleged misrepresentations and the plaintiffs’ injuries, the Court determined that the district court properly dismissed the plaintiffs’ claims under both these acts. AFFIRMED IN PART, REVERSED IN PART AND REMANDED.