Cole v. General Motors Corp

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED JULY 31, 2007
IN THE UNITED STATES COURT OF APPEALS April 10, 2007

FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
Clerk

No. 05-31070

BEVERLY COLE; ANITA S PERKINS; JEWELL P LOWE

Plaintiffs - Appellees

v.

GENERAL MOTORS CORP

Defendant - Appellant

Appeal from the United States District Court
for the Western District of Louisiana, Lafayette

Before KING, GARZA, and OWEN, Circuit Judges.

KING, Circuit Judge:

Defendant-appellant General Motors Corporation appeals the

district court’s certification of a nationwide Rule 23(b)(3)

class of Cadillac DeVille owners who allege breach of express and

implied warranties. For the reasons that follow we REVERSE the

district court’s Ruling and REMAND for entry of an order denying

class certification.

I. FACTUAL AND PROCEDURAL BACKGROUND

General Motors Corporation (“GM”) manufactured and sold over

200,000 1998 and 1999 model year Cadillac DeVilles (“DeVilles”)

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in the United States. The DeVilles feature side-impact Air Bag

Systems and Side Impact Sensing Modules (“SISMs”), the latter of

which trigger inflation of the vehicle’s side impact air bags

under certain conditions. This class action centers on alleged

defects in the SISMs.

In September 2000, GM sent a voluntary recall notice to all

DeVille record owners and lessees explaining that GM

has decided that a defect which relates to
motor vehicle safety exists and may manifest
itself in your 1998 or 1999 model year
Cadillac DeVille. [GM] ha[s] learned of a
condition that can cause the side impact air
bags in your car to deploy unexpectedly,
without a crash, as you start your car or
during normal driving.

GM indicated that it had received 306 reports of inadvertent

deployment out of approximately 224,000 affected vehicles. GM

further explained that it was working to obtain replacement SISMs

and that it would contact DeVille owners again when replacement

SISMs were available so that owners could take their DeVilles to

a dealership for the installation of two new SISMs. GM expected

those replacement SISMs to be available to a first group of

owners in April 2001. GM additionally provided safety

recommendations for the interim and a toll-free phone number for

customers who had questions.

Replacement of the SISMs was delayed because the

manufacturing line for the 1998 and 1999 SISMs had been

dismantled. GM did not have enough replacement parts to

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implement a general recall of all DeVilles until May 2001.

According to GM, it devised a two-part recall plan to overcome

this production problem. Using available components, GM produced

40,000 replacement SISMs by November 2000. GM referred to these

as “service build modules” and offered them to owners who called

the toll-free phone number and expressed particular concerns

about the recall. GM engaged a third-party vendor to manufacture

the remaining replacement systems, which were referred to as

“replacement build modules.”

Among the owners who received GM’s voluntary recall notice

were the named plaintiffs (and now class representatives) Beverly

Cole, Anita S. Perkins, and Jewell P. Lowe (collectively,

“plaintiffs”). Lowe is the mother of one of plaintiffs’ counsel,

Perkins is a paralegal for another of plaintiffs’ counsel, and

Cole is the paralegal’s cousin. Each purchased a 1998 or 1999

DeVille equipped with the SISMs at issue; however, the SISMs in

their vehicles were not among those that had deployed

inadvertently. Nevertheless, after receiving GM’s September 2000

letter, plaintiffs filed a class action suit against GM in

federal court in October 2000. In response, GM contacted

plaintiffs in November 2000 and offered to replace the SISMs in

their DeVilles immediately with replacements from GM’s stock of

service build modules. According to plaintiffs, they rejected

GM’s offer because GM did not extend the offer to all DeVille

owners and GM would not answer questions about the source of the

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parts, the number available, and whether the SISMs had been

properly tested. Plaintiffs later voluntarily dismissed this

first suit.

Plaintiffs filed the present class action suit in Louisiana

state court on December 18, 2000. GM removed the case on the

basis of diversity jurisdiction to the Western District of

Louisiana. On January 26, 2001, plaintiffs moved for class

certification pursuant to Rule 23(b)(3) of the Federal Rules of

Civil Procedure on behalf of “[a]ll persons and legal entities

who have acquired, whether by purchase, lease, donation or

otherwise . . . anywhere in the United States, 1998 or 1999

Cadillac Devilles equipped with side impact air bag systems and

side impact sensing modules.”1 Their motion for class

certification specifically excluded DeVille owners “who sustained

bodily injury or death as the result of the unexpected or

premature deployment of a side impact air bag.”

Briefing and discovery on class certification issues ensued.

Meanwhile, GM began a phased general recall of 1998 and 1999

DeVilles in May 2001 by sending recall letters to DeVille record

owners and lessees.2 Pursuant to this general recall, Lowe’s

1
Plaintiffs filed an Amended Motion for Class
Certification on August 29, 2001. All references to plaintiffs’
“motion for class certification” are to the amended motion.
2
According to GM, letters were sent to the most recent
DeVille purchasers first because the likelihood of inadvertent
deployment decreased significantly over time.

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SISMs were replaced in September 2001, and Perkins’s and Coles’s

SISMs were replaced in October 2001. According to GM, it

completed mailing recall notices to all DeVille record owners and

lessees on December 28, 2001, and the majority of those owners

and lessees have had their SISMs replaced. Plaintiffs do not

dispute that GM’s recall is now complete.

In their First Amended and Restated Class Action Complaint

(“complaint”), plaintiffs allege that GM “promoted side impact

air bags, which included so-called [SISMs], as an added safety

feature” in its 1998 and 1999 DeVilles. Plaintiffs also allege

that GM “has . . . admitted that a defect exists in the 1998 and

the 1999 Cadillac Devilles which can cause the side impact air

bags to deploy unexpectedly, without a crash, when the car is

started or during normal driving.” Plaintiffs further assert

that GM “did not repair or replace the [SISMs] within a

reasonable time after the sale and/or lease of the subject

vehicles.” Based on these allegations, plaintiffs aver that GM

has failed to deliver to plaintiffs and the
class members the thing purchased, has
delivered a thing other than the thing
purchased, has breached express and implied
warranties of sale, has sold and delivered to
plaintiffs and the class members a thing
containing defects under the redhibition laws
of the State of Louisiana and the comparable
provisions of the Uniform Commercial Code,
and/or has breached contracts with plaintiffs
and the class members, and such conduct has
damaged plaintiffs and the class members.

Plaintiffs seek recovery from GM for

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 (1) return of the purchase or lease price, or,
alternatively, for a reduction of the purchase
or lease price, (i.e., the loss of the benefit
of the bargain, or the difference between the
value of the vehicle as delivered and the
value it would have had if it had been
delivered as warranted), and (2) for all other
pecuniary and/or economic damages as permitted
by the redhibition laws of the State of
Louisiana and/or the comparable provisions of
the Uniform Commercial Code, (3) punitive
damages, if permitted, (4) interest at the
legal rate from the date(s) of purchase, or
alternatively, from the date of judicial
demand, until paid, together with (5)
reasonable attorney’s fees, and all costs.

Finally, both the complaint and the motion for class

certification assert that questions of law and fact common to the

class included:

(a) Whether GM breached its contractual or
quasi contractual obligations to the
class, including (without limitation),
the warranty against vices and defects,
the warranty of merchantability, and/or
all express warranties and warranties
implied by law;

(b) Whether the defective [SISMs] with which
the 1998 and 1999 Cadillac Devilles are
equipped diminish the usefulness or value
of the vehicles;

(c) Whether the [SISMs] with which the 1998
and 1999 Cadillac Devilles are equipped
are defective such that plaintiffs have
been deprived of the difference in value
between what they were promised and what
they received;

(d) Whether the 1998 and 1999 Cadillac
Devilles equipped with the aforementioned
side impact airbag system are fit for
their intended use; and

(e) Whether restitution or, alternatively,

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 reduction, of the purchase and/or lease
price, and other pecuniary and/or
economic damages, under the redhibition
laws of the State of Louisiana and/or the
comparable provisions of the Uniform
Commercial Code; punitive damages, if
applicable; and/or attorney’s fees are
available to plaintiffs and the class
members.

For reasons that are not apparent, the district court

appointed a special master to review the motion for class

certification and other related documents.3 On September 27,

2002, the special master concluded that Rule 23's prerequisites

were satisfied and recommended certification of a Rule 23(b)(3)

class. GM objected to the special master’s recommendation in

October 2002, contending that plaintiffs lacked standing and that

plaintiffs failed to satisfy Rule 23's requirements of

predominance, superiority, adequacy, and typicality. Again for

reasons that are not apparent, the district court took nearly

three years to enter its Ruling. On August 4, 2005, the district

court accepted the special master’s recommendation, certified the

class,4 and named Cole, Perkins, and Lowe as class

3
The opinion of the special master indicates that the
parties jointly moved to appoint a special master. No such
motion appears in the record, and counsel stated at oral argument
that the district court appointed the special master sua sponte.
The parties were later ordered to enter into mediation with the
special master serving as mediator. The district court ordered
the parties to split equally the special master’s fees of
$15,584.12. Neither party challenges these orders and therefore
we express no opinion on the propriety of them.
4
The district court’s ruling defines the class as

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representatives.

GM now brings this interlocutory appeal under Rule 23(f),

asserting that the district court abused its discretion in

certifying a nationwide class of plaintiffs bringing claims under

the laws of fifty-one jurisdictions. GM asserts generally the

same arguments it made below.

II. STANDING

Before we reach the questions regarding the class

certification, we must resolve the standing question as a

threshold matter of jurisdiction. Rivera v. Wyeth-Ayerst Labs.,

283 F.3d 315, 319 (5th Cir. 2002). As a jurisdictional matter,

standing is a question of law that we review de novo. Bonds v.

Tandy, 457 F.3d 409, 411 (5th Cir. 2006). Facts expressly or

[a]ll persons and legal entities who have
acquired, whether by purchase, lease, donation
or otherwise (“Acquirers”), anywhere in the
United States, 1998 or 1999 Cadillac DeVilles
equipped with side impact air bag systems and
side impact sensing modules (“Vehicle”).
EXCLUDED from the class are all Acquirers who
sustained bodily injury or death as a result
of the unexpected or premature deployment of a
side impact air bag; all persons who executed,
before October 26, 2000, a release in favor of
General Motors Corporation (“GM”), on account
of an unexpected or premature deployment of a
side impact air bag; commercial lessors and
dealers; any Acquirer who acquired a Vehicle
after the date of the voluntary recall; any
Acquirer who acquired a Vehicle after the
SISM/side impact air bag system had been
repaired; counsel for GM; and counsel for
plaintiffs and the class.

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impliedly found by the district court in the course of

determining jurisdiction are reviewed for clear error. Rivera,

283 F.3d at 319.

At an “irreducible constitutional minimum,” to have

standing, plaintiffs must establish three elements. Lujan v.

Defenders of Wildlife, 504 U.S. 555, 560 (1992). First,

plaintiffs must show that they have suffered “an injury in

fact——an invasion of a legally protected interest which is (a)

concrete and particularized and (b) ‘actual or imminent, not

conjectural or hypothetical.’” Id. (internal quotation marks

omitted) (quoting Whitmore v. Arkansas, 495 U.S. 149, 155

(1990)). Second, plaintiffs must establish “a causal connection

between the injury and the conduct complained of.” Id. Finally,

it must be likely that the injury “will be redressed by a

favorable decision.” Id. (quoting Simon v. E. Ky. Welfare

Rights Org., 426 U.S. 26, 38 (1976)).

GM argues that plaintiffs lack standing because the air bags

in their vehicles never deployed inadvertently, and therefore,

they cannot have suffered an injury in fact. They argue that

without actual deployment, plaintiffs’ injury is speculative

because plaintiffs can only claim that the SISMs in their

vehicles were potentially defective. Because plaintiffs’ air

bags never deployed inadvertently, GM contends that plaintiffs

advance the kind of “no-injury products liability” suit we

dismissed for lack of standing in Rivera, 283 F.3d at 320.

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 In contrast, plaintiffs argue that even though they have not

suffered physical injury, they have suffered economic loss

satisfying the injury-in-fact requirement because the SISMs in

all DeVilles were defective at the moment of purchase.

Plaintiffs allege that they contracted to purchase DeVilles with

side impact air bags that would deploy only under certain

circumstances involving a side impact but that they received

DeVilles with air bags that could “deploy unexpectedly, without a

crash” as the car is started or during normal driving.

Plaintiffs further allege that GM promised to repair “any defect

related to materials or workmanship occurring during the Warranty

Period” within a “reasonable time,” but that after admitting the

defect, GM did not in fact repair or replace their SISMs within a

reasonable time. Plaintiffs claim that all DeVilles contained

defective SISMs at the moment of purchase and that therefore,

their injury was concrete at the moment they purchased their

DeVilles. They assert that their injury is that there is a

difference between what they contracted for and what they

actually received.

In Rivera, purchasers of a prescription drug sought recovery

of economic damages after learning that the manufacturer had

withdrawn the drug from the market because the drug had caused

liver damage to other patients. Rivera, 283 F.3d at 317. We

concluded that the Rivera plaintiffs lacked standing because they

described their claim as emanating from the drug manufacturer’s

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failure to warn and sale of a defective product, but the

plaintiffs did not claim that the drug had caused them any

physical or emotional injury. Id. at 319. Although the

plaintiffs quantified their injury in terms of economic damages,

we concluded that merely asking for economic damages failed to

establish an injury in fact because the plaintiffs never defined

the source of their economic injury. Id. The plaintiffs could

not assert benefit-of-the-bargain damages because they had no

contract with the manufacturer. Id. at 320. Due to these

factors, we determined that the injuries that the plaintiffs

alleged were suffered not by them, but rather, by the non-party

patients suffering liver damage. Id. at 319. And we referred to

the Rivera plaintiffs’ claim as a “no-injury products liability”

suit. Id. at 320.

Rivera is distinguishable from the instant case. In Rivera,

the plaintiffs sought damages for potential physical injuries;

because they never suffered actual physical injuries, they could

only allege injuries that were suffered by non-parties. The

Rivera plaintiffs did not assert economic harm emanating from

anything other than potential physical harm. Here, although

plaintiffs do not assert physical injuries (either their own or

those of other persons), they do assert their own actual economic

injuries. Plaintiffs allege that each plaintiff suffered

economic injury at the moment she purchased a DeVille because

each DeVille was defective. Plaintiffs further allege that each

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plaintiff suffered economic injury arising from GM’s unreasonable

delay in replacing their defective SISMs. Plaintiffs seek

recovery for their actual economic harm (e.g., overpayment, loss

in value, or loss of usefulness) emanating from the loss of their

benefit of the bargain. Notably in this case, plaintiffs may

bring claims under a contract theory based on the express and

implied warranties they allege. Whether recovery for such a

claim is permitted under governing law is a separate question; it

is sufficient for standing purposes that the plaintiffs seek

recovery for an economic harm that they allege they have

suffered. See Parker v. District of Columbia, No. 04-7041, slip

op. at 10 (D.C. Cir. March 9, 2007) (“The Supreme Court has made

clear that when considering whether a plaintiff has Article III

standing, a federal court must assume arguendo the merits of his

or her legal claim.” (citing Warth v. Seldin, 422 U.S. 490, 501-

02 (1975))). We therefore conclude that plaintiffs have

established a concrete injury in fact and have standing to pursue

this class action.

III. Class Certification

A. Background

Rule 23 of the Federal Rules of Civil Procedure requires

that several preliminary conditions be met before a proposed

class of plaintiffs may be certified. First, Rule 23(a) provides

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that certification is proper

only if (1) the class is so numerous that
joinder of all members is impracticable, (2)
there are questions of law or fact common to
the class, (3) the claims or defenses of the
representative parties are typical of the
claims or defenses of the class, and (4) the
representative parties will fairly and
adequately protect the interests of the class.

FED. R. CIV. P. 23(a). If Rule 23(a)’s prerequisites of

numerosity, commonality, typicality, and adequacy are met, then

the proposed class must additionally satisfy one of the three

provisions for certification under Rule 23(b). Plaintiffs here

sought certification of a Rule 23(b)(3) class, which requires

additional showings of predominance and superiority, i.e., that

“questions of law or fact common to the members of the class

predominate over any questions affecting only individual members,

and that a class action is superior to other available methods

for the fair and efficient adjudication of the controversy.”

FED. R. CIV. P. 23(b)(3).

B. Standard of Review

We review a district court’s decision to certify a class for

abuse of discretion. Spence v. Glock, 227 F.3d 308, 310-11 (5th

Cir. 2000); Castano v. Am. Tobacco Co., 85 F.3d 734, 740 (5th

Cir. 1996). Notwithstanding the district court’s broad

discretion to certify a class, it must do so within the bounds of

Rule 23. Spence, 227 F.3d at 310. The district court must

“rigorously analyze Rule 23's prerequisites before certifying a

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class.” Id. Failure to do so or the commission of a legal error

while doing so may be the basis of reversal. See, e.g., id. at

311 (concluding that because district court erred in its choice

of law analysis, it therefore abused its discretion); Castano, 84

F.3d at 740 (concluding that because district court erred in

predominance inquiry, it therefore abused its discretion).

Although “the strength of a plaintiff’s claim should not affect

the certification decision,” it is necessary for the district

court to go beyond the pleadings to determine whether the

requirements of Rule 23 have been met: “a court must understand

the claims, defenses, relevant facts, and applicable substantive

law in order to make a meaningful determination of the

certification issues.” Castano, 84 F.3d at 745. The court must

also consider “how a trial on the merits would be conducted” if

the class were certified. Id. at 740. The party seeking

certification has the burden of proof on Rule 23's prerequisites.

McManus v. Fleetwood Enters., Inc., 320 F.3d 545, 548 (5th Cir.

2003).

C. Analysis

GM argues that the district court abused its discretion in

concluding that plaintiffs satisfied the requirements of adequacy

and typicality under Rule 23(a) and predominance and superiority

under Rule 23(b)(3). Because we conclude that the district court

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abused its discretion in determining that the predominance

requirement was satisfied, we find it unnecessary to address all

of GM’s challenges.

To satisfy the predominance requirement, plaintiffs must

demonstrate that “questions of law or fact common to the members

of the class predominate over any questions affecting only

individual members.” FED. R. CIV. P. 23(b)(3). In a diversity

class action, as is the case here, inherent in the predominance

inquiry is a determination of which states’ substantive laws will

apply to the claims. This is because if multiple states’ laws

apply and those laws vary, the variations may impact whether

common issues of law and fact predominate among the class

members. The Rule 23(b)(3) certification inquiry must therefore

consider how “variations in state law affect predominance.”

Castano, 84 F.3d at 740.

Federal courts must apply the choice of law rules of the

forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487,

496 (1941). Plaintiffs argued and the district court agreed that

under Louisiana’s choice of law rules, the laws governing

plaintiffs’ claims are “the laws of the state where the vehicle

is used by its owner or lessee and in where [sic] the contract of

repair is to be performed.” Thus, the laws of all fifty-one

jurisdictions (all fifty states plus the District of Columbia)

apply to this class action.

We have recognized that in a class action governed by the

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laws of multiple states, such as this one, “variations in state

law may swamp any common issues and defeat predominance.”

Castano, 84 F.3d at 741; accord Georgine v. Amchem Prods., Inc.,

83 F.3d 610, 627 (3d Cir. 1996) (holding that predominance was

defeated, in part, by the number of differing state legal

standards applicable to the controversy), aff’d, 521 U.S. 591,

624 (1997). The party seeking certification of a nationwide

class must therefore “provide an ‘extensive analysis’ of state

law variations to reveal whether these pose ‘insuperable

obstacles.’” Spence, 227 F.3d at 313 (quoting Walsh v. Ford

Motor Co., 807 F.2d 1000, 1017 (D.C. Cir. 1986)). And the

district court must then “consider how those variations affect

predominance.” Castano, 84 F.3d at 740. Failure to engage in an

analysis of state law variations is grounds for decertification.

See Castano, 84 F.3d at 741-44 (concluding that court abused its

discretion in certifying class where plaintiffs had failed to

properly address variations in state law such that conclusion of

predominance was based on speculation); Spence, 227 F.3d at 316

(concluding that court abused its discretion in certifying class

where plaintiffs had failed to carry their burden of providing an

extensive analysis of applicable law).

Plaintiffs assert that they have analyzed the applicable

laws of the fifty-one jurisdictions and they are “virtually the

same.” They conclude that predominance is unfettered in this

case because any variations in the substantive law applicable to

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this case are “not significant and would not affect the result.”

They further conclude that “neither complex jury instructions nor

multiple separate trials will be required to try the common

issues in this proceeding under the laws of the 51

jurisdictions.”

As support for their argument, plaintiffs provided the

district court with an extensive catalog of the statutory text of

the warranty and redhibition laws of the fifty-one jurisdictions

implicated in this suit; included in this catalog is the text of

the relevant provisions of the Louisiana Civil Code5 and the UCC

provisions of forty-nine states and the District of Columbia.6

Plaintiffs additionally provided an overview of textual

variations in the relevant UCC provisions as adopted by the fifty

jurisdictions. Finally, plaintiffs submitted a report from an

expert on contract law who opined, after analyzing some

variations, that “the few variations in the provisions of UCC

Article 2 relevant to this case are such that they do not affect

the result” and that Louisiana law “does not differ from Article

2 in a manner that would affect the result.”

GM, on the other hand, provided the district court with

5
Plaintiffs provide the statutory text, with commentary
and case notes, for each of sections 2475, 2520, 2522, 2524,
2541, 2545, and 2548 of the Louisiana Civil Code.
6
Plaintiffs provide the statutory text, with commentary
and case notes, for each of sections 313, 314, 316, and 714 of
Article 2 of the UCC for each jurisdiction.

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extensive charts of authority concerning express and implied

warranty actions from the fifty-one jurisdictions showing, inter

alia, variations among the states in regard to reliance, notice

of breach, vertical privity, and presumptions of merchantability.

Despite GM’s showing, the district court concluded that applying

the laws of fifty-one jurisdictions would not make the class

unmanageable or cause individual issues to overcome common ones

because Louisiana law and the relevant UCC provisions adopted by

“virtually every other jurisdiction” provided similar protections

for express and implied warranties. The district court adopted

plaintiffs’ assertion that common issues predominated over

individual ones because all members of the class asserted the

same “benefit of the bargain” warranty claim based on the fact

that “they contracted for a vehicle that did not have a

potentially defective side airbag system, but instead received a

vehicle with a side airbag system that had the potential to

deploy inadvertently.”

We conclude that plaintiffs did not sufficiently demonstrate

the predominance requirement because they failed both to

undertake the required “extensive analysis” of variations in

state law concerning their claims and to consider how those

variations impact predominance. Cf. Spence, 227 F.3d at 313

(quoting Walsh, 807 F.2d at 1017). Plaintiffs’ assertion of

predominance relied primarily on the textual similarities of each

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jurisdiction’s applicable law and on the general availability of

legal protection in each jurisdiction for express and implied

warranties. Plaintiffs’ largely textual presentation of legal

authority oversimplified the required analysis and glossed over

the glaring substantive legal conflicts among the applicable laws

of each jurisdiction.

As we explain below, there are numerous variations in the

substantive laws of express and implied warranty among the fifty-

one jurisdictions that the plaintiffs failed to “extensively

analyze” for their impact on predominance. Although plaintiffs

assert that the laws of the fifty-one jurisdictions are

“virtually the same,” such that “no complex jury instructions” or

“multiple separate trials” would be necessary, we note that many

of the variations in state law raise the potential for the

application of multiple and diverse legal standards and a related

need for multiple jury instructions. For some issues, variations

in state law also multiply the individualized factual

determinations that the court would be required to undertake in

individualized hearings. Specifically, the laws of the

jurisdictions vary with regards to (1) whether plaintiffs must

demonstrate reliance, (2) whether plaintiffs must provide notice

of breach, (3) whether there must be privity of contract,

(4) whether plaintiffs may recover for unmanifested vehicle

defects, (5) whether merchantability may be presumed and

(6) whether warranty protections extend to used vehicles.

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Plaintiffs failed to articulate adequately how these variations

in state law would not preclude predominance in this case.

1. Reliance

To create an express warranty under UCC § 2-313, an

“affirmation of fact or promise” or a “description of the goods”

by the seller must be part of the “basis of the bargain.” UCC

§ 2-313. There is a clear split of authority among the

jurisdictions as to whether a buyer must show reliance on a

statement or representation for it to be considered part of the

“basis of the bargain.” See generally BARKLEY CLARK & CHRISTOPHER

SMITH, THE LAW OF PRODUCT WARRANTIES § 4:16 (2d ed. 2002) (identifying

three distinct approaches and collecting cases). Some

jurisdictions require a strict showing of reliance. See, e.g.,

Hendricks v. Callahan, 972 F.2d 190, 193 (8th Cir. 1992)

(applying Minnesota law); Overstreet v. Norden Labs., Inc., 669

F.2d 1286, 1289-91 (6th Cir. 1982) (applying Kentucky law); Speed

Fastners, Inc., v. Newsom, 382 F.2d 395, 397 (10th Cir. 1967)

(applying Oklahoma law); Hagenbuch v. Snap-On Tools Corp., 339 F.

Supp. 676, 680 (D.N.H. 1972) (applying New Hampshire law);

Coryell v. Lombard Lincoln-Mercury Merkur, Inc., 544 N.E.2d 1154,

1158 (Ill. App. Ct. 1989) (applying Illinois law). Other

jurisdictions have no reliance requirement. See, e.g., Winston

Indus., Inc. v. Stuyvesant Ins. Co., 317 So. 2d 493, 497 (Ala.

Civ. App. 1975) (applying Alabama law); Young & Cooper, Inc. v.

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Vestring, 521 P.2d 281, 291 (Kan. 1974) (applying Kansas law);

Villalon v. Vollmering, 676 S.W.2d 220, 222 & n.1 (Tex. App.

1984) (applying Texas law); Interco Inc. v. Randustrial Corp.,

533 S.W.2d 257, 261 (Mo. Ct. App. 1976) (applying Missouri law).

And still other jurisdictions have applied a rebuttable

presumption of reliance. See, e.g., Royal Bus. Machs., Inc. v.

Lorraine Corp., 633 F.2d 34, 44 (7th Cir. 1980) (applying Indiana

law); Sessa v. Riegle, 427 F.Supp. 760, 766 (E.D. Pa. 1977)

(applying Pennsylvania law), aff'd 568 F.2d 770 (3d Cir. 1978).

But plaintiffs ignored these differences. Although plaintiffs’

expert noted that some courts require reliance, instead of

analyzing the variations among the jurisdictions for their effect

on predominance, plaintiffs’ expert dismissed the variations,

contending that the promise of repair would always be relied upon

by a buyer because it “always accompanies the purchase or rental

of a new automobile.” Without any supporting legal authority,

plaintiffs’ expert opined: “Never was a presumption of reliance,

if reliance is necessary, more justified.” The district court

similarly concluded that it was reasonable to presume reliance on

the part of all purchasers in this case. In doing so, the court

distinguished law to the contrary from only one jurisdiction and

cited no authority to support the validity of this presumption

for the other jurisdictions.

Moreover, certain jurisdictions’ requirement that plaintiffs

show reliance as a condition for recovery greatly impacts the

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predominance inquiry: “the economies ordinarily associated with

the class action device” are defeated where plaintiffs are

required to bring forth individual proof of reliance. Patterson

v. Mobil Oil Co., 241 F.3d 417, 419 (5th Cir. 2001) (“Claims for

money damages where individual reliance is an element are poor

candidates for class treatment, at best.”). In this class of

more than 200,000 individuals, class members governed by the laws

of states requiring strict reliance would be required to bring

forth evidence of individualized reliance. This would require

the court to undertake an inquiry that would turn on facts

particular to each of those class members and raises the

potential that the trial would break down into multiple

individual hearings.

2. Notice of Breach

Section 2-607 of the UCC requires consumers wishing to bring

a breach of warranty claim to notify the seller of an alleged

breach “within a reasonable time.” U.C.C. § 2-607(3)(2).

Plaintiffs, however, did not address the UCC’s notice

requirement. In a fashion similar to its analysis of reliance,

the district court presumed, without analyzing the law of any

jurisdiction, that no jurisdiction would require that members of

the class give GM notice of the alleged breach because GM had

already acknowledged the problem.

We are not convinced, however, that all jurisdictions would

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adopt this presumption. We previously rejected the notion that

notice is useless where a breach is apparent to both parties,

observing that the notice required

is not of the facts, which the seller
presumably knows quite as well as, if not
better than, the buyer, but of buyer's claim
that they constitute a breach. The purpose of
the notice is to advise the seller that he
must meet a claim for damages, as to which,
rightly or wrongly, the law requires that he
shall have early warning.

E. Air Lines, Inc. v. McDonnell Douglas Corp., 532 F.2d 957, 972

(5th Cir. 1976). State law varies on what constitutes reasonable

notice and to whom notice should be given, and other courts

considering the issue in the class certification context have

noted that these variations impact predominance. See, e.g.,

Compaq Computer v. Lapray, 135 S.W.3d 657, 673-75 (Tex. 2004)

(collecting cases and noting that variation in state law

regarding notice was among factors defeating predominance); Walsh

v. Ford Motor Co., 130 F.R.D. 260, 276 (D.D.C. 1990) (noting that

states vary in regard to the notice requirement). Given the

variations among the states regarding the notice requirement,

plaintiffs failed to adequately analyze the impact of these

variations on predominance.

3. Privity of Contract

Plaintiffs similarly failed to “extensively analyze” the

variations in the law of the fifty-one jurisdictions concerning

the requirement of privity of contract. There is a “sharp split

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of authority” as to whether a purchaser may recover economic loss

from a remote manufacturer when there is no privity of contract

between the parties. BARKLEY CLARK & CHRISTOPHER SMITH, THE LAW OF

PRODUCT WARRANTIES § 10:20 (2d ed. 2002) (“Many cases hold that [the

absence of] vertical privity is a bar to recovery of primary

economic loss against the remote manufacturer.”). The

requirement of privity is more strictly enforced in claims

involving implied warranties than those involving express

warranties. Id.

Plaintiffs’ expert briefly addressed the privity requirement

for express warranties in four states, concluding that any

variations among the jurisdictions were “minor” and opining that

regardless of variation, the privity requirement was inapplicable

to the facts of this case. Plaintiffs’ expert, however, entirely

failed to address the privity requirement for implied warranties.

The district court did not analyze the laws of any jurisdictions

regarding privity and instead “note[d] that there may be some

variations in the state laws with respect to this issue” but that

those differences “could be addressed through subclasses and the

normal course of individual trials that take place in large

litigations.” This is hardly the type of “extensive analysis” of

variations in law that is required prior to certification. Cf.

Castano, 84 F.3d at 742.

GM has provided its own catalog of state law variations

regarding privity, which indicates that a significant number of

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jurisdictions require vertical privity in an implied warranty

action for direct economic loss. See, e.g., Rhodes v. Gen.

Motors, 621 So. 2d 945, 947 (Ala. 1993); Rocky Mountain Fire &

Cas. Co. v. Biddulph Oldsmobile, 640 P.2d 851, 856 (Ariz. 1982);

Hauter v. Zogarts, 534 P.2d 377, 383 n.8 (Cal. 1975); Spolski

Gen. Contractor, Inc. v. Jett-Aire Corp. Aviation Mgmt. of Cent.

Fla., Inc., 637 So. 2d 968, 970 (Fla. Dist. Ct. App. 1994);

Bodymasters Sports Indus. v. Wimberley, 501 S.E.2d 556, 561 (Ga.

Ct. App. 1998); Puckett v. Oakfabco, Inc., 979 P.2d 1174, 1183

(Idaho 1999); Connick v. Suzuki Motor Co., Ltd., 656 N.E.2d 170,

180 (Ill. App. Ct. 1995), aff’d in part on other grounds, rev’d

in part on other grounds, 675 N.E.2d 584 (Ill. 1996). Other

jurisdictions, however, have eliminated the privity of contract

requirement and allow recovery of economic loss from remote

manufacturers. See, e.g., Morrow v. New Moon Homes, Inc., 548

P.2d 279, 289 (Alaska 1976); Nobility Homes of Tex., Inc. v.

Shivers, 557 S.W. 2d 77, 81 (Tex. 1977); Cova v. Harley Davidson

Motor Co., 182 N.W. 2d 800, 802 (Mich. Ct. App. 1970).

These state law variations are important, in part because

they would require separate jury instructions. Additionally, for

states that have a strict privity requirement for implied

warranty claims, each class member would be required to prove

individually that she purchased her DeVille from GM or its agent,

as opposed to an independent dealer or another individual.

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Therefore, the privity of contract inquiry would turn on facts

particular to each class member and thus would require

individualized hearings. Other courts have declined class

certification, at least in part because of variations in state

law regarding privity of contract. See, e.g., Chin v. Chrysler

Corp., 182 F.R.D. 448, 460 (D.N.J. 1998) (noting that plaintiffs

failed to show that state law differences regarding vertical

privity did not pose manageability problems); Walsh v. Ford Motor

Co., 130 F.R.D. at 272 (“Along with the various implied warranty

standards and other subsidiary issues . . . the numerous vertical

privity rules convince this Court that a predominance of common

issues are not present in this case.”).

4. Recovery for Unmanifested Vehicle Defects

Plaintiffs additionally failed to demonstrate predominance

because they did not address variations in state law regarding

recovery for an unmanifested product defect. The vast majority

of the members of this class never experienced any manifestation

of the alleged defect.7 But many jurisdictions do not permit the

recovery of economic loss in vehicle defect cases where the

vehicle has performed satisfactorily and has never manifested the

7
GM’s voluntary recall letter indicated that there were
306 reports of inadvertent deployment out of approximately
224,000 DeVilles. The class specifically excludes individuals
who sustained bodily injury or death resulting from the
inadvertent deployment of their air bags. It is conceivable that
some individuals experienced inadvertent deployment but were not
physically injured as a result. Therefore, they remain eligible
for class membership.

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alleged defect. See, e.g., Briehl v. Gen. Motors Corp., 172 F.3d

623, 627-28 (8th Cir. 1999) (collecting cases and dismissing

claims brought under any theory for allegedly defective anti-lock

braking systems where plaintiffs’ brakes never malfunctioned or

failed).

Plaintiffs attempt to sidestep this glaring obstacle by

distinguishing their claim as one brought under a contract theory

(for breach of warranty) instead of products liability. This

maneuver does not escape the reality that some jurisdictions

require that the alleged defect manifest itself regardless of

whether the claim is brought under contract or tort. For

example, in Breihl, the plaintiffs alleged defective anti-lock

braking systems and sought recovery for overpayment of their

vehicles. The Eighth Circuit held that the plaintiffs had no

cognizable claims for breach of express and implied

warranties——or under any other theory——where the braking systems

had never malfunctioned or failed. 172 F.3d at 628 (citing to

decisions under New York, Texas, and South Carolina law).

Likewise, the Fourth Circuit, looking specifically at recovery of

diminished resale value, held that there is no recovery for

breach of implied warranties under South Carolina law where a

vehicle had never manifested the alleged defect. Carlson v. Gen.

Motors Corp., 883 F.2d 287, 297 (4th Cir. 1989). Other

jurisdictions have similarly held that actual manifestation of a

vehicle defect is a prerequisite to recovery under warranty

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theories. See In re Air Bag Prods. Liab. Lit., 7 F. Supp. 2d

792, 805 (E.D. La. 1998) (dismissing warranty claim based on

defective air bags brought under Texas law where plaintiffs never

alleged that the air bags functioned improperly); Weaver v.

Chrysler Corp., 172 F.R.D. 96, 100 (S.D.N.Y. 1997) (dismissing

warranty claim based on defective integrated child safety seats

brought under New York law where plaintiff had experienced no

problem with the child seat in his vehicle); Yost v. Gen. Motors

Corp., 651 F. Supp. 656, 658 (D.N.J. 1986) (dismissing claim for

breach of implied warranty of merchantability brought under New

Jersey law where plaintiff did not allege any actual mechanical

difficulties with his vehicle); Feinstein v. Firestone Tire &

Rubber Co., 535 F. Supp. 595, 603 (S.D.N.Y. 1982) (dismissing

warranty claims based on defective tires brought under New York

law where defect never manifested); Am. Suzuki Motor Corp. v.

Superior Court, 44 Cal. Rptr. 2d 526, 531 (Cal. Ct. App. 1995)

(dismissing warranty claim brought under California law where

defect never manifested).

Yet it is not clear that the actual manifestation of a

vehicle defect is a common prerequisite for recovery under

warranty law in all jurisdictions. See In re

Bridgestone/Firestone, Inc., 155 F. Supp. 2d 1069, 1099-1101

(S.D. Ind. 2001) (holding that manifestation of vehicle defect is

not required under Tennessee and Michigan law for recovery under

express and implied warranty theories), rev’d on other grounds,

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288 F.3d 1012 (7th Cir. 2002); see also In re

Bridgestone/Firestone, Inc., 288 F.3d 1012, 1017 (7th Cir. 2002)

(contemplating that it is not clear whether bringing a defect-

based claim under contract law rather than tort avoids the

requirement that the product defect manifest itself but

commenting that “most states would not entertain” recovery under

a warranty theory where plaintiffs’ product had not failed).

Such variations, which are likely to preclude recovery for some

class members, further show that plaintiffs failed to carry their

burden of showing that common issues of law predominate.

5. Presumptions of Merchantability

Even among those jurisdictions that might allow recovery for

an unmanifested vehicle defect, there are variations in their

laws. In some jurisdictions, use of a vehicle for a certain

period of time without experiencing a defect gives rise to a

presumption that the vehicle is merchantable. See, e.g., Walsh,

130 F.R.D. at 273 (noting that prolonged use of a product raised

a presumption of merchantability in four states, which would

require an individualized inquiry into each state’s requirements

and each plaintiff’s circumstances). Plaintiffs failed to

address these presumptions, how they vary, and the potential

individualized legal questions they present.

6. Warranty Protections for Used Vehicles

Finally, jurisdictions vary in regard to whether an implied

warranty extends from a remote manufacturer to a purchaser of

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used goods. Compare Gen. Motors Corp. v. Halco Instruments,

Inc., 185 S.E.2d 619, 622 (Ga. Ct. App. 1971) (holding that

purchaser of used goods has no implied warranty claim against

manufacturer), with Int’l Petroleum Servs., Inc. v. S & N Well

Serv., Inc., 639 P.2d 29, 34 (Kan. 1982) (stating that the extent

of the implied warranty obligation in transactions involving used

goods depends on the circumstances of the transactions). The

class of plaintiffs here is composed of purchasers of both new

and used cars. Plaintiffs again failed to analyze the impact of

these variations in state law on the legal standards class

members would be held to, the jury instructions, and trial

management, (i.e., how the trial would be affected by the

possible need to conduct individualized inquiries into whether

class members bought used versus new cars).

IV. CONCLUSION

Plaintiffs have failed to adequately address, much less

“extensively analyze,” the variations in state law we discussed

above and the obstacles they present to predominance. The

district court was not in a position to determine that “questions

of law and fact common to the members of the class predominate”

in the vacuum created by plaintiffs’ omission. See Castano, 84

F.3d at 742-43 & n.15; Spence, 227 F.3d at 313. Given these

significant variations in state law and the multiple

individualized legal and factual questions they present, we

conclude that plaintiffs have failed to carry their burden in

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establishing predominance and that the district court abused its

discretion in certifying the class action.

Accordingly, the district court’s Ruling granting class

certification is REVERSED and the case is REMANDED for entry of

an order denying class certification. Costs shall be borne by

plaintiffs.

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