The U.S. District Court for the Southern District of California denied Plaintiff’s request to certify a class action against FCA US LLC (“Defendant”) based on alleged clutch system defects with the Dodge Dart, because Plaintiff failed to satisfy the requirements of Rule 23(b).  In particular, Plaintiff failed to meet “the initial burden of demonstrating that due process is satisfied for purposes of a nationwide class” and “cannot demonstrate that common issues predominate over the different questions posed by each state’s law.”

The Complaint

Plaintiff’s lawsuit asserts various violations of the California’s Consumer Legal Remedies Act (“CLRA”), California’s unfair competition law (“UCL”), Song-Beverly Consumer Warranty Act (“Song-Beverly”), and Magnuson-Moss Warranty Act (“Magnuson-Moss”).  The Court partially granted Defendant’s motion for summary judgment, but Plaintiff’s warranty claims under Song-Beverly, Magnuson-Moss, and UCL remained.

Motion for Class Certification

Plaintiff’s class certification motion sought to certify a (1) Nationwide Implied Warranty Class, which includes all persons who purchased or leased a Dodge Dart from an authorized dealership; (2) California Implied Warranty Class, which includes all persons who purchased or leased a Dodge Dart in California from an authorized dealership; and (3) Injunctive Relief Class, which includes all persons in California who purchased or leased a Dodge Dart from an authorized dealership.  As summarized below, although the Court found that Plaintiff met the Federal Rules of Civil Procedure 23(a) requirements, the Court denied Plaintiff’s motion for failure to satisfy the burdens under Rule 23(b).    

            Rule 23(a) Requirements       

The Court found that Plaintiff satisfied the numerosity, commonality, typicality, and adequacy, requirements of Rule 23(a).  Specifically, the Court found that the facts that over 2,000 vehicles were sold in California and that the vehicles contain alleged common design defects met the numerosity and commonality requirement.  The Court also found that Plaintiff’s claims of defective clutch system and for breach of implied warranty damages were “reasonably co-extensive with those of absent class members” and met the requirement of typicality.  Notably, the Court noted that Plaintiff did not have to demonstrate “a manifestation of a current defect on a breach of implied warranty claim” for purposes of a class certification.

            Rule 23(b) Requirements

Plaintiff, however, could not overcome the hurdles of Rule 23(b)(2) to demonstrate “predominance” to certify a damages class for his breach of implied warranty claims.  First, as to the Nationwide Implied Warranty Class, Defendant argued that Plaintiff could not maintain a nationwide class because he has failed to meet his burden of demonstrating that due process would not be violated by applying Song-Beverly to a nationwide class.  The Court indicated that Plaintiff failed to sufficiently demonstrate that due process would not be violated by the application of California law.  In fact, the Court indicated that Plaintiff failed to conduct any due process analysis and “misapplies and misunderstands” the “expectation of the parties” element (to ensure that the choice of the forum state’s law is not arbitrary or unfair) of the due process analysis.  

Second, as to the California Implied Warranty Class, Defendant argued that certain component parts of the class vehicles were manufactured differently, and only 16% of the class vehicles were affected by the purported defective condition.  The Court disagreed and concluded that Plaintiff “does not have to demonstrate a manifestation of a current defect or that there is a substantial certainty of manifestation in the future.”  Predominance of common issues is sufficient based on Plaintiff’s claim that a common defect existed at the time of purchase and the likelihood that the defect will eventually manifest. 

Third, the Court found that the class definition, which includes purchasers of used vehicles, to be overbroad, as Plaintiff failed to demonstrate that Song-Beverly imposes liability upon automotive manufacturers for class members’ purchase of used vehicles from authorized dealerships. 

Fourth, the Court discussed, at length, that the proper measure of breach of warranty is the difference between the value of the purchasers actually received and the value represented.  In application, however, Plaintiff’s damages theory translates to a full refund of the purchase price of the component parts and overcompensates Plaintiff, as Plaintiff’s formula presupposes that there was $0 value to the clutch system.  Because the full refund model is not available as damages for breach of implied warranty, the Court concluded that predominance has not been met on the issue of damages. 

Lastly, Plaintiff’s attempt to certify a class for injunctive relief under Rule 23(b)(2) could not succeed as Song-Beverly provides for adequate remedy at law in the form of monetary damages, and class members who purchased and then sold their vehicles as well as those who have already had their vehicles repaired would not benefit from any injunctive relief. 

Following the denial of class certification, Plaintiff filed a Petition for Permission to Appeal to the Ninth Circuit on June 28, 2018.  We will continue to follow this case as it develops.