FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MICHAEL MAZZA; JANET MAZZA;
DEEP KALSI, No. 09-55376
Plaintiffs-Appellees, D.C. No.
v. 2:07-cv-07857-VBF-
AMERICAN HONDA MOTOR JTL
COMPANY, INC., OPINION
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of California
Valerie Baker Fairbank, District Judge, Presiding
Argued and Submitted June 9, 2010
Submission deferred December 7, 2010
Resubmitted June 22, 2011
Pasadena, California
Filed January 12, 2012
Before: Dorothy W. Nelson and Ronald M. Gould,
Circuit Judges, and James S. Gwin, District Judge.*
Opinion by Judge Gould;
Dissent by Judge D.W. Nelson
*The Honorable James S. Gwin, District Judge for the U.S. District
Court for Northern Ohio, Cleveland, sitting by designation.
185
MAZZA v. AMERICAN HONDA 189
COUNSEL
Roy Morse Brisbois, Eric Y. Kizirian, Lewis Brisbois Bis-
gaard & Smith LLP, Los Angeles, California, for the
defendant-appellant.
Donald Manwell Falk, Mayer Brown, LLP, Palo Alto, Cali-
fornia for the defendant-appellant.
Robert Ebert Byrnes, Payam Shahian, Glenn A. Danas, Marc
Primo, Initiative Legal Group APC, Los Angeles, California,
for the plaintiff-appellees.
Michael Francis Ram, Ram, Olson, Cereghino & Kopczynski,
LLP, San Francisco, California, for the plaintiff-appellees.
190 MAZZA v. AMERICAN HONDA
OPINION
GOULD, Circuit Judge:
Honda appeals the district court’s decision to certify a
nationwide class of all consumers who purchased or leased
Acura RLs equipped with a Collision Mitigation Braking Sys-
tem (“CMBS”) during a 3 year period under Federal Rule of
Civil Procedure 23(b)(3). Plaintiffs allege that certain adver-
tisements misrepresented the characteristics of the CMBS and
omitted material information on its limitations. The complaint
states four claims under California Law. Honda contends: (1)
that Plaintiffs failed to satisfy Rule 23(a)(2)’s commonality
requirement; (2) that common issues of law do not predomi-
nate because there are material differences between California
law and the consumer protection laws of the 43 other jurisdic-
tions in which class members purchased or leased their Acura
RLs; (3) that common issues of fact do not predominate
because resolution of these claims requires an individualized
inquiry into whether consumers were exposed to, and actually
relied on, various advertisements; and (4) that some members
of the proposed class lack Article III standing because they
were not injured.
We have jurisdiction pursuant to 28 U.S.C. § 1292, and we
vacate the class certification order. We hold that the district
court erred because it erroneously concluded that California
law could be applied to the entire nationwide class, and
because it erroneously concluded that all consumers who pur-
chased or lease the Acura RL can be presumed to have relied
on defendant’s advertisements, which allegedly were mislead-
ing and omitted material information.
I
The CMBS was part of an optional technology package for
Honda’s Acura RL vehicles released in 2005. Honda said that
the CMBS detects the proximity of other vehicles, assesses
MAZZA v. AMERICAN HONDA 191
the equipped car’s speed, and implements a three-stage pro-
cess of warning, braking, and stopping to minimize the dam-
age from rear-end collisions. At Stage 1, the system sounds a
tone and flashes a “BRAKE” warning sign on the dashboard.
At Stage 2, the system also brakes lightly and tightens the
driver’s seat belt. At Stage 3, while continuing the other warn-
ings, the system increases the braking force and tightens both
the driver’s and the front-end passenger’s seat belts. Honda
promoted the CMBS as a way to make rear-end collisions less
common and to minimize the consequences of collision. The
CMBS was sold as part of a technology package that also
included adaptive cruise control and run-flat tires, and added
$4,000 to the price of the car. To advertise the CMBS, Honda
prepared marketing materials describing the system’s func-
tionality.
In 2006, Honda released a product brochure stating that the
CMBS “is designed to help alert the driver of a pending colli-
sion or — if it’s unavoidable — to reduce the severity of
impact by automatically applying the brakes if an impending
collision is detected.” The brochure described the CMBS sys-
tem’s three-step process of alerting, lightly braking, and
strongly braking if a crash is imminent:
If the system senses a vehicle, it determines the dis-
tance and closing speed. If the closing speed goes
above a programmed threshold, the system will
immediately alert the driver with an audible alarm
and a flashing indicator on the instrument panel. If
the driver takes no action to reduce speed, the system
will automatically tug at the driver’s seat belt and
lightly apply the brakes. When the system senses
that a frontal collision is unavoidable and the driver
still takes no action, the front seat belts are retracted
tightly and strong braking is applied automatically to
lower impact speed and help reduce damage and the
severity of injury.
192 MAZZA v. AMERICAN HONDA
The brochure showed a picture of an Acura behind a truck
with three labels. Stage 1 was farthest from the truck and
stated “RECOGNITION OF POSSIBLE COLLISION.” Stage
2 was in the middle and stated “BELTS TIGHTEN AND
LIGHT BRAKING.” and Stage 3 was nearest the truck and
stated “STRONG BRAKING.” The 2007 and 2008 product
brochures were similar and were available at dealerships.
Honda also released television commercials describing the
system’s operation. One ran for a week in November 2005
and another ran from February to September 2006. In the
2005 commercial, a voice states, “The driver is warned, and
warned again. If necessary, the system even applies the brakes
to lessen the potential impact.” A voice in the 2006 commer-
cial states, “The driver is warned so he can react. If necessary,
the system would have even applied the brakes to lessen a
potential impact.”
From March to September 2006, Honda released a “What
Might Happen” advertisement in some magazines. This
advertisement said that “the system can react. It can give you
auditory and visual warnings, a tug on the seat belt, and when
necessary, even initiate strong braking.” Honda ceased mass
advertising for the CMBS in 2006.
However, Honda still pursued smaller-scale marketing
efforts. Honda posted on its intranet two commercials stating
that the CMBS’s “various alert stages can overlap depending
on the rate of closure of your vehicle and the vehicle ahead
. . . . The system does have limitations, and will not detect all
possible accident causing situations.” These videos were
viewable on kiosks at Acura dealerships, and dealers were
encouraged to show them to potential customers. The parties
have not indicated how many people saw these videos, and
Honda discontinued the use of intranet kiosks in March 2008.
Honda also operated an “Owner Link” website that contained
video clips describing the CMBS. Although this site was
developed for car owners, the site was available to any cus-
MAZZA v. AMERICAN HONDA 193
tomer via www.ahm-ownerlink.com until 2008 and via
www.myacura.com thereafter. Also, Acura Style magazine, a
periodical sent to Acura dealerships, subscribing Acura own-
ers, and interested consumers twice each year, reported in a
summer 2007 article that the CMBS responds “with any or all
of three increasingly dramatic imperatives.”
Finally, the Acura RL owner’s manual explained that the
CMBS might shut off in certain conditions, including bad
weather conditions, mountainous driving, driving with the
parking brake applied, and when an abnormal tire condition
is detected. The owner’s manual stated that when this auto-
matic shut off is triggered, a “CHECK CMBS SYSTEM”
message appears in the instrument panel for five seconds to
alert the driver that the system has turned off.
In 2007, Michael and Janet Mazza purchased a 2007 Acura
RL from an authorized Acura dealership in Orlando, Florida.
That same year, Deep Kalsi bought a 2007 Acura RL from an
authorized Acura dealership in Gaithersburg, Maryland. Both
vehicles were equipped with the CMBS System. In December
2007, the Mazzas and Kalsi filed a class action complaint
against American Honda Motor Co., Inc. (“Honda”) alleging
that Honda misrepresented and concealed material informa-
tion in connection with the marketing and sale of Acura RL
vehicles equipped with the CMBS.
According to Plaintiffs, Honda did not warn consumers (1)
that its CMBS collision avoidance system’s three separate
stages may overlap, (2) that the system may not warn drivers
in time to avoid an accident, and (3) that it shuts off in bad
weather. Appellees brought claims under California Law, spe-
cifically the California Unfair Competition Law (UCL), Cal.
Bus. & Prof. Code § 17200 et seq., False Advertising Law
(FAL), Cal. Bus. & Prof. Code § 17500 et seq., the Consumer
Legal Remedies Act (CLRA), Cal. Civil Code § 1750 et seq.,
and a claim for unjust enrichment.
194 MAZZA v. AMERICAN HONDA
On September 24, 2008, the district court denied Plaintiffs’
motion for class certification without prejudice. The district
court requested that the Plaintiffs provide clearer notice of the
proposed class and subclasses, that Honda provide more
detailed information regarding the propriety of applying out-
of-state law, and that Plaintiffs clearly identify the alleged
omissions and/or misrepresentations. On December 16, 2008,
the district court granted Plaintiffs’ renewed motion for class
certification, finding that they met the requirements of Federal
Rules of Civil Procedure 23(a) and 23(b)(3). The district court
certified a nationwide class of people in the United States
who, between August 17, 2005 and the date of class certifica-
tion, purchased or leased new or used Acura RL vehicles
equipped with the CMBS.1
The district court held that the following common questions
of law and fact satisfied Rule 23(a):
(1) whether Honda had a duty to Plaintiffs and the
prospective class members to disclose that: the three
stages of the CMBS System overlap; the CMBS will
not warn drivers in time to avoid an accident; and
that the CMBS shuts off in bad weather;
(2) whether Honda had exclusive knowledge of
material facts regarding the CMBS System, facts not
known to the Plaintiffs and the prospective class
members before they purchased the RL equipped
with the CMBS System;
(3) whether a reasonable consumer would find the
omitted facts material; and
1
These class members purchased or leased their cars in 44 different
states. Twelve states account for roughly 76% of class members: Califor-
nia accounts for 20%, Florida for 10%, and New York, Virginia, New Jer-
sey, Texas, Pennsylvania, Washington, Illinois, Maryland, Massachusetts,
and Ohio account for 3-6% each.
MAZZA v. AMERICAN HONDA 195
(4) whether Honda’s omissions were likely to
deceive the public.
The district court also held that common issues predomi-
nate and that California “as the forum state, has enough sig-
nificant contact or aggregation of contacts to the claims
asserted, given Defendants’ contacts with the state, to ensure
that the choice of California law is not arbitrary or unfair to
nonresident class members.” (citations omitted).
The district court concluded that California Law can be
applied to all class members because Honda did not show
how the differences in the laws of the various states are mate-
rial, how other states have an interest in applying their laws
in this case, and how these interests are implicated in this liti-
gation. It also held that class members were entitled to an
inference of reliance under California Law. It is these rulings
that form the crux of the decisions material to class certifica-
tion that are challenged on this appeal.
Honda sought permission to appeal immediately after the
decision granting class certification. That request was granted.
This case was initially argued and submitted for decision on
June 9, 2010, but submission was deferred on December 7,
2010 pending the Supreme Court’s decision in Wal-Mart
Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). Following the
Supreme Court’s Wal-Mart decision, this appeal was resub-
mitted on June 22, 2011, and our decision follows.
II
“Before certifying a class, the trial court must conduct a
‘rigorous analysis’ to determine whether the party seeking
certification has met the prerequisites of Rule 23.” Zinser v.
Accufix Research Inst., Inc., 253 F.3d 1180, 1186, amended
273 F.3d 1266 (9th Cir. 2001). The trial court’s factual deter-
minations will be reviewed for abuse of discretion so long as
it remains within the framework of Rule 23. Id. When the trial
196 MAZZA v. AMERICAN HONDA
court’s application of the facts to the law “requires reference
to the values that animate legal principles” we review that
application de novo. US v. Hinkson, 585 F.3d 1247, 1259 (9th
Cir. 2009) (en banc).
The party seeking class certification has the burden of affir-
matively demonstrating that the class meets the requirements
of Federal Rule of Civil Procedure 23. Wal-Mart, 131 S. Ct.
at 2551. Rule 23(a) requires that plaintiffs demonstrate
numerosity, commonality, typicality and adequacy of repre-
sentation in order to maintain a class action. The district court
concluded that Plaintiffs met their burden as to all four
requirements. Honda only challenges the district court’s find-
ing of commonality under 23(a)(2).
[1] The Supreme Court has recently emphasized that com-
monality requires that the class members’ claims “depend
upon a common contention” such that “determination of its
truth or falsity will resolve an issue that is central to the valid-
ity of each [claim] in one stroke.” Id. The plaintiff must dem-
onstrate “the capacity of classwide proceedings to generate
common answers” to common questions of law or fact that
are “apt to drive the resolution of the litigation.” Id. (quoting
Nagareda, Class Certification in the Age of Aggregate Proof,
84 N.Y.U.L.Rev. 97, 131-132 (2009)).
[2] Honda contends that the Plaintiffs did not meet their
burden under Wal-Mart affirmatively to demonstrate that
there is a common question of fact or law that can resolve
important issues “in one stroke.” Honda argues that the “cru-
cial question” of “which buyers saw or heard which advertise-
ments” is not susceptible to common resolution. It also asserts
that a showing of a “greater propensity to purchase” is “the
same type of abstract question of potential peripheral signifi-
cance that the Court in Dukes held was not common” under
Rule 23(a)(2). But commonality only requires a single signifi-
cant question of law or fact. Id. at 2556. Even assuming
arguendo that we were to agree with Honda’s “crucial ques-
MAZZA v. AMERICAN HONDA 197
tion” contention, the individualized issues raised go to pre-
ponderance under Rule 23(b)(3), not to whether there are
common issues under Rule 23(a)(2). Honda does not chal-
lenge the district court’s findings that common questions exist
as to whether Honda had a duty to disclose or whether the
allegedly omitted facts were material and misleading to the
public. We hold that the Plaintiffs satisfied their limited bur-
den under Rule 23(a)(2) to show that there are “questions of
law or fact common to the class.”
III
[3] Under Rule 23(b)(3), a plaintiff must demonstrate the
superiority of maintaining a class action and show “that the
questions of law or fact common to class members predomi-
nate over any questions affecting only individual members.”
Fed. R. Civ. Pro. 23(b)(3). We have held that “there is clear
justification for handling the dispute on a representative rather
than an individual basis” if “common questions present a sig-
nificant aspect of the case and they can be resolved for all
members of the class in a single adjudication . . . .” Hanlon
v. Chrysler Corp., 150 F.3d 1011, 1022 (9th Cir. 1998) (quot-
ing 7A Charles Alan Wright, Arthur R. Miller & Mary Kay
Kane, Fed. Prac. & Proc. § 1778 (2d ed. 1986)).
Honda contends that common issues of law do not predom-
inate because California’s consumer protection statutes may
not be applied to a nationwide class with members in 44 juris-
dictions. It further contends that common issues of fact do not
predominate because the court impermissibly relies on pre-
sumptions that all class members were exposed to the alleg-
edly misleading advertising, that they relied on misleading
information in making their purchasing decision, and that they
were damaged as a result. We consider each argument in turn.
A. Choice of Law
[4] Honda first argues that the district court erred by mis-
applying California’s choice of law rules and certifying a
198 MAZZA v. AMERICAN HONDA
nationwide class under California’s consumer protection and
unjust enrichment laws. “A federal court sitting in diversity
must look to the forum state’s choice of law rules to deter-
mine the controlling substantive law.” Zinser, 253 F.3d at
1187. We review the district court’s choice of law determina-
tion de novo, but “review factual findings underlying a choice
of law determination pursuant to the ‘clearly erroneous’ stan-
dard.” Id.
Under California’s choice of law rules, the class action pro-
ponent bears the initial burden to show that California has
“significant contact or significant aggregation of contacts” to
the claims of each class member. Wash. Mut. Bank v. Supe-
rior Court, 24 Cal. 4th 906, 921 (Cal. 2001) (citations omit-
ted). Such a showing is necessary to ensure that application
of California law is constitutional. See Allstate Ins. Co. v.
Hauge, 449 U.S. 302, 310-11 (1981). Once the class action
proponent makes this showing, the burden shifts to the other
side to demonstrate “that foreign law, rather than California
law, should apply to class claims.” Wash. Mut. Bank, 24 Cal.
4th at 921.
[5] California law may only be used on a classwide basis
if “the interests of other states are not found to outweigh Cali-
fornia’s interest in having its law applied.” Id. (citations omit-
ted). To determine whether the interests of other states
outweigh California’s interest, the court looks to a three-step
governmental interest test:
First, the court determines whether the relevant law
of each of the potentially affected jurisdictions with
regard to the particular issue in question is the same
or different.
Second, if there is a difference, the court examines
each jurisdiction’s interest in the application of its
own law under the circumstances of the particular
case to determine whether a true conflict exists.
MAZZA v. AMERICAN HONDA 199
Third, if the court finds that there is a true conflict,
it carefully evaluates and compares the nature and
strength of the interest of each jurisdiction in the
application of its own law to determine which state’s
interest would be more impaired if its policy were
subordinated to the policy of the other state, and then
ultimately applies the law of the state whose interest
would be more impaired if its law were not applied.
McCann v. Foster Wheeler LLC, 48 Cal. 4th 68, 81-82 (Cal.
2010) (citations and quotations omitted).
[6] California has a constitutionally sufficient aggregation
of contacts to the claims of each putative class member in this
case because Honda’s corporate headquarters, the advertising
agency that produced the allegedly fraudulent misrepresenta-
tions, and one fifth of the proposed class members are located
in California. See Clothesrigger, Inc. v. GTE Corp., 236 Cal.
Rptr. 605, 612-13 (Cal. Ct. App. 1987). Honda does not dis-
pute that there are sufficient contacts in this sense, but con-
tends that the district court misapplied the three-step
governmental interest test and erroneously concluded that
California law could be applied to the whole class.2 We agree,
and hold that the district court abused its discretion in certify-
ing a class under California law that contained class members
who purchased or leased their car in different jurisdictions
with materially different consumer protection laws.
2
Plaintiffs contend that Honda’s argument is precluded by their actions
in Browne v. American Honda Motor Corp., Inc. (C.D. Cal. No. CV 2:09-
6750), where Honda settled with plaintiffs bringing an unrelated nation-
wide class action which alleged CLRA and UCL claims under California
law. This contention lacks merit. Honda settled with plaintiffs in that case
before an answer had been filed, and without addressing whether the
application of California law to a nationwide class is appropriate.
200 MAZZA v. AMERICAN HONDA
1) Conflict of Laws
[7] “The fact that two or more states are involved does not
itself indicate that there is a conflict of law problem.” See
Wash. Mut. Bank, 24 Cal. 4th at 919 (2001). A problem only
arises if differences in state law are material, that is, if they
make a difference in this litigation. Id. at 919-20; See In re
Complaint of Bankers Trust Co., 752 F.2d 874, 882 (3d Cir.
1984) (“Any differences in [the states’] laws must have a sig-
nificant effect on the outcome of the trial in order to present
an actual conflict in terms of choice of law.”). In its briefing,
Honda exhaustively detailed the ways in which California law
differs from the laws of the 43 other jurisdictions in which
class members reside. The district court acknowledged that
differences existed, but it found that Honda had not met its
burden of demonstrating that any of these differences were
material.
[8] With respect for the district court’s judgment, we are
persuaded that at least some differences that Honda identifies
are material. For example, the California laws at issue here
have no scienter requirement, whereas many other states’ con-
sumer protection statutes do require scienter. See, e.g., Colo.
Rev. Stat. 6-1-105(1)(e), (g), (u) (knowingly); N.J. Stat. Ann.
§ 56:8-2 (knowledge and intent for omissions); Debbs v.
Chrysler Corp., 810 A.2d 137, 155 (Pa. Super. 2002) (knowl-
edge or reckless disregard).3 California also requires named
class plaintiffs to demonstrate reliance, while some other
states’ consumer protection statutes do not. See, e.g., Egwuatu
v. South Lubes, Inc., 976 So.2d 50, 53 (Fla. App. 2008);
DaBosh v. Mercedes Benz USA, Inc., 874 A.2d 1110, 1121
(N.J. Super. App. 2005); Stutman v. Chem. Bank, 731 N.E.2d
608, 611-12 (N.Y. 2000).
3
Appellees do not contest these differences in scienter and instead rely
on California’s permissive recovery for consumers to conclude, errone-
ously, that these differences are not relevant to this litigation.
MAZZA v. AMERICAN HONDA 201
[9] We conclude that these are not trivial or wholly imma-
terial differences. In cases where a defendant acted without
scienter, a scienter requirement will spell the difference
between the success and failure of a claim. In cases where a
plaintiff did not rely on an alleged misrepresentation, the reli-
ance requirement will spell the difference between the success
and failure of the claim. Consumer protection laws are a crea-
ture of the state in which they are fashioned. They may
impose or not impose liability depending on policy choices
made by state legislatures or, if legislators left a gap or
ambiguity, by state supreme courts.
Moreover, even once violation is established, there are also
material differences in the remedies given by state laws.
Under the CLRA, a plaintiff can recover actual damages (at
least $1000), an injunction, restitution, punitive damages and
“any other relief that the court deems proper,” Cal Civ Code
§ 1780(a)(1)-(5), while a plaintiff can only recover restitution
and injunctive relief under the UCL, Cal. Bus. & Prof. Code
§ 17203. The remedies permitted by other states vary and may
depend on the wilfulness of the defendant’s conduct. E.g.,
Mich. Comp. Laws Ann. § 445.911(6) (limiting recovery to
actual damages if the violation was a result of bona fide
error); N.J. Stat. Ann. § 56:8-19 (requiring treble damages
and attorney’s fees). The elements necessary to establish a
claim for unjust enrichment also vary materially from state to
state. See Candace S. Kovacic, A Proposal to Simplify Quan-
tum Meruit Litigation, 35 Am. U. L. Rev. 547, 558-60 (1986).
Because some of the above differences are material we now
move on to the test’s second step.
2) Interests of Foreign Jurisdictions
[10] It is a principle of federalism that “each State may
make its own reasoned judgment about what conduct is per-
mitted or proscribed within its borders.” State Farm Mut.
Auto Ins. Co. v. Campbell, 538 U.S. 408, 422 (2003).
“[E]very state has an interest in having its law applied to its
202 MAZZA v. AMERICAN HONDA
resident claimants.” Zinser, 253 F.3d at 1187. California law
also acknowledges that “a jurisdiction ordinarily has “the pre-
dominant interest” in regulating conduct that occurs within its
borders . . . .” McCann, 48 Cal. 4th at 97 (citations omitted).
The automobile sales at issue in this case took place within 44
different jurisdictions, and each state has a strong interest in
applying its own consumer protection laws to those transac-
tions.
[11] In our federal system, states may permissibly differ on
the extent to which they will tolerate a degree of lessened pro-
tection for consumers to create a more favorable business cli-
mate for the companies that the state seeks to attract to do
business in the state. In concluding that no foreign state has
“an interest in denying its citizens recovery under California’s
potentially more comprehensive consumer protection laws,”
the district court erred by discounting or not recognizing each
state’s valid interest in shielding out-of-state businesses from
what the state may consider to be excessive litigation. As the
California’s Supreme Court recently re-iterated, each state has
an interest in setting the appropriate level of liability for com-
panies conducting business within its territory. McCann, 48
Cal. 4th at 91.
Maximizing consumer and business welfare, and achieving
the correct balance for society, does not inexorably favor
greater consumer protection; instead, setting a baseline of cor-
porate liability for consumer harm requires balancing the
competing interests. Cf. Holloway v. Bristol-Myers Corp., 485
F.2d 986, 997 (D.C. Cir. 1973) (holding, in consumer false
advertising class action, that there is no private right of action
under the Federal Trade Commission Act, and rejecting pro-
tests that private enforcement was needed to achieve “mean-
ingful consumer protection” because the Act is “the product
of a legislative balance which took into account not only con-
sumer protection but also interests of the businesses affect-
ed”).
MAZZA v. AMERICAN HONDA 203
Getting the optimal balance between protecting consumers
and attracting foreign businesses, with resulting increase in
commerce and jobs, is not so much a policy decision commit-
ted to our federal appellate court, or to particular district
courts within our circuit, as it is a decision properly to be
made by the legislatures and courts of each state. More expan-
sive consumer protection measures may mean more or greater
commercial liability, which in turn may result in higher prices
for consumers or a decrease in product availability. See White
v. Ford Motor Co., 312 F.3d 998, 1017-18 (9th Cir. 2002) (“A
national company sometimes limits its sales according to vari-
ations in risk”); Amy J. Schmitz, Embracing Unconsciona-
bility’s Safety Net Function, 58 Ala. L. Rev. 73, 109 (2006)
(arguing that broad consumer protection statutes may increase
prices and decrease overall consumer welfare). As it is the
various states of our union that may feel the impact of such
effects, it is the policy makers within those states, within their
legislatures and, at least in exceptional or occasional cases
where there are gaps in legislation, within their state supreme
courts, who are entitled to set the proper balance and bounda-
ries between maintaining consumer protection, on the one
hand, and encouraging an attractive business climate, on the
other hand.
Each of our states has an interest in balancing the range of
products and prices offered to consumers with the legal pro-
tections afforded to them. Each of our states also has an inter-
est in “being able to assure individuals and commercial
entities operating within its territory that applicable limita-
tions on liability set forth in the jurisdiction’s law will be
available to those individuals and businesses in the event they
are faced with litigation in the future.” McCann, 48 Cal. 4th
at 97-98. These interests are squarely implicated in this case.
3) Which State Interest is Most Impaired
California’s governmental interest test is designed to “[ac-
commodate] conflicting state policies, as a problem of allocat-
204 MAZZA v. AMERICAN HONDA
ing domains of law-making power in multi-state contexts.
. . .” McCann, 48 Cal. 4th at 97. It is not intended to “ ‘weigh’
the conflicting governmental interests in the sense of deter-
mining which conflicting law manifested the ‘better’ or the
‘worthier’ social policy on the specific issue. . . .” Id. The test
recognizes the importance of our most basic concepts of fed-
eralism, emphasizing the “the appropriate scope of conflicting
state policies,” not evaluating their underlying wisdom. Id.
The importance of federalism when applying choice of law
principles to class action certification is reinforced by the
Class Action Fairness Act of 2005. Pub. L. 109-2, 119 Stat.
4. A key purpose of the Act was to correct what former Act-
ing Solicitor General Walter Dellinger labeled a wave of
“false federalism.” “[T]he problem is that many state courts
faced with interstate class actions have undertaken to dictate
the substantive laws of other states by applying their own
laws to other states, resulting in a breach of federalism princi-
ples.” S. Rep. No. 109-14, at 61 (2005) (quotation marks and
ellipses omitted). Accordingly, “courts should not attempt to
apply the laws of one state to behaviors that occurred in other
jurisdictions.” Id. at 62-63 (summarizing Supreme Court
cases).
The district court did not adequately recognize that each
foreign state has an interest in applying its law to transactions
within its borders and that, if California law were applied to
the entire class, foreign states would be impaired in their abil-
ity to calibrate liability to foster commerce. That this concept
was missed or given inadequate weight was error. The district
court’s reasoning elevated all states’ interests in consumer
protection to a superordinate level, while ignoring or giving
too little attention to each state’s interest in promoting busi-
ness. This presents a mode of analysis that the Class Action
Fairness Act was aimed at stopping. See Findings, Class
Action Fairness Act § 2(a)(4), Pub. L. No. 109-2, 119 Stat. 4,
5 (2005) (categorizing as an “abuse[ ]” of the class action sys-
tem the practice of state courts “making judgments that
MAZZA v. AMERICAN HONDA 205
impose their view of the law on other States and bind the
rights of the residents of those States”).
[12] California recognizes that “with respect to regulating
or affecting conduct within its borders, the place of the wrong
has the predominant interest.” See Hernandez v. Burger, 102
Cal. App. 3d 795, 902 (1980), cited with approval by Aboga-
dos v. AT&T, Inc., 223 F.3d 932, 935 (9th Cir. 2000). Califor-
nia considers the “place of the wrong” to be the state where
the last event necessary to make the actor liable occurred. See
McCann, 48 Cal. 4th at 94 n.12 (pointing out that the geo-
graphic location of an omission is the place of the transaction
where it should have been disclosed); Zinn v. Ex-Cell-O
Corp., 148 Cal. App. 2d 56, 80 n.6 (1957) (concluding in
fraud case that the place of the wrong was the state where the
misrepresentations were communicated to the plaintiffs, not
the state where the intention to misrepresent was formed or
where the misrepresented acts took place). Here, the last
events necessary for liability as to the foreign class members
—communication of the advertisements to the claimants and
their reliance thereon in purchasing vehicles—took place in
the various foreign states, not in California. These foreign
states have a strong interest in the application of their laws to
transactions between their citizens and corporations doing
business within their state.
Conversely, California’s interest in applying its law to resi-
dents of foreign states is attenuated. See Edgar v. MITE Corp,
457 U.S. 624, 644 (1982) (“While protecting local investors
is plainly a legitimate state objective, the State has no legiti-
mate interest in protecting nonresident shareholders.” (empha-
sis added)). Plaintiffs contend that California “is connected to
both sides of the dispute,” with interests both in protecting it
citizens and in regulating Honda, a California corporation. We
recognize that California has an interest in regulating those
who do business within its state boundaries, and foreign com-
panies located there, but we disagree with the dissent that
applying California law to the claims of foreign residents con-
206 MAZZA v. AMERICAN HONDA
cerning acts that took place in other states where cars were
purchased or leased is necessary to achieve that interest in this
case. We also note that Plaintiffs’ argument that California
law is the best choice for this nationwide class is based on a
false premise that one state’s law must be chosen to apply to
all 44 jurisdictions.
[13] Under the facts and circumstances of this case, we
hold that each class member’s consumer protection claim
should be governed by the consumer protection laws of the
jurisdiction in which the transaction took place. Accordingly,
we vacate the district court’s class certification order and
remand for further proceedings consistent with this opinion.
We express no view whether on remand it would be correct
to certify a smaller class containing only those who purchased
or leased Acura RLs in California, or to certify a class with
members more broadly but with subclasses for class members
in different states, with different jury instruction for materi-
ally different bodies of state law. See, e.g., In re Computer
Memories Sec. Litig., 111 F.R.D. 675, 685-86 (N.D. Cal.
1986).
B) Predominance of Common Factual Questions
Honda contends that common issues of fact do not predom-
inate because this case necessarily involves an individualized
determination as to whether class members were exposed to
misleading advertisements and whether they relied on those
advertisements in purchasing or leasing cars with a CMBS.
Honda further argues that presuming common exposure and
reliance sweep in class members who did not suffer an injury
in fact, and thus do not meet Article III standing requirements.
We hold that California class members have Article III stand-
ing but that the district court abused its discretion in finding
that common issues of fact predominate because the small
scale of the advertising campaign does not support a presump-
tion of reliance.
MAZZA v. AMERICAN HONDA 207
1) Standing
[14] “[N]o class may be certified that contains members
lacking Article III standing.” Denney v. Deutsche Bank AG,
443 F.3d 253, 264 (2d Cir. 2006). “[S]tanding requires that
(1) the plaintiff suffered an injury in fact . . . (2) the injury is
fairly traceable to the challenged conduct, and (3) the injury
is likely to be redressed by a favorable decision.” Bates v.
United Parcel Svc., Inc., 511 F.3d 974, 985 (9th Cir. 2007)
(quotations omitted). Under California’s UCL, restitution is
available to absent class members without individualized
proof of deception, reliance, or injury. In re Tobacco II Cases,
46 Cal. 4th 298, 320 (Cal. 2009). Honda contends that this
means the class includes individuals who have no injury in
fact, and therefore no Article III standing.
[15] Plaintiffs contend that class members paid more for
the CMBS than they otherwise would have paid, or bought it
when they otherwise would not have done so, because Honda
made deceptive claims and failed to disclose the system’s lim-
itations. To the extent that class members were relieved of
their money by Honda’s deceptive conduct—as Plaintiffs
allege—they have suffered an “injury in fact.” Stearns v.
Ticketmaster Corp., 655 F.3d 1013, 1021 (9th Cir. 2011).
Although it is not a simple or a clear cut matter, we conclude,
in the light of our prior precedent, that Honda’s objection
“that state law gives a right to ‘monetary relief to a citizen
suing under it’ without a more particularized proof of injury
and causation . . . is not enough to preclude class standing
here.” Id. (quoting Cantrell v. City of Long Beach, 241 F.3d
674, 684 (9th Cir. 2001)).
2) Reliance
[16] While we reject Honda’s contention that Tobacco II
impermissibly allows a class to “include members who suf-
fered no injury in fact” in violation of Article III, we agree
with Honda’s contention that the misrepresentations at issue
208 MAZZA v. AMERICAN HONDA
here do not justify a presumption of reliance. This is so pri-
marily because it is likely that many class members were
never exposed to the allegedly misleading advertisements,
insofar as advertising of the challenged system was very lim-
ited. Davis-Miller v. Automobile Club of Southern California,
201 Cal. App. 4th 106, 125 (2011) (“An inference of clas-
swide reliance cannot be made where there is no evidence that
the allegedly false representations were uniformly made to all
members of the proposed class.”); Cohen v. DirecTV, Inc.,
178 Cal. App. 4th 966, 980 (2009) (“[California law does not]
authorize an award . . . on behalf of a consumer who was
never exposed in any way to an allegedly wrongful business
practice.”). The district court found that an inference of reli-
ance was appropriate, relying on Massachusetts Mutual Life
Insurance Co. v. Superior Court, 97 Cal. App. 4th 1282 (Cal.
App. 4th. 2002). In doing so, the court found it significant that
Honda’s advertisements were allegedly misleading because of
the information they omitted, rather than the information they
claimed, and that while the omitted information may have
been available, there was no evidence that customers received
it.
In Mass. Mutual, plaintiffs were allegedly induced to buy
“vanishing premium” life insurance policies through sales
presentations that misrepresented the extent to which premi-
ums would decrease over time by failing to disclose that Mass
Mutual intended to “ratchet down” the discretionary divi-
dends it paid to offset premium costs. Id. at 1286. The Cali-
fornia Court of Appeals found that an inference of reliance
was proper under these facts, in part because the information
“provided to prospective purchasers appears to have been
broadly disseminated.” Id. at 1294. After the district court’s
decision, the California Supreme court reconfirmed that class
members do not need to demonstrate individualized reliance,
and that Proposition 64 imposes its reliance requirements only
on the named plaintiff, not unnamed class members. Tobacco
II, 46 Cal. 4th at 324-27. But Tobacco II’s holding was in the
context of a “decades-long” tobacco advertising campaign
MAZZA v. AMERICAN HONDA 209
where there was little doubt that almost every class member
had been exposed to defendants’ misleading statements, and
defendants were not just denying the truth but representing
the opposite.
Honda’s product brochures and TV commercials fall short
of the “extensive and long-term [fraudulent] advertising cam-
paign” at issue in Tobacco II, 46 Cal. 4th at 328, and this dif-
ference is meaningful. And while Honda might have been
more elaborate and diligent in disclosing the limitations of the
CMBS system, its advertising materials do not deny that limi-
tations exist. A presumption of reliance does not arise when
class members “were exposed to quite disparate information
from various representatives of the defendant.” See Stearns,
655 F.3d at 1020 (9th Cir. 2011). California courts have rec-
ognized that Tobacco II does not allow “a consumer who was
never exposed to an alleged false or misleading advertising
. . . campaign” to recover damages under California’s UCL.
Pfizer Inc. v. Superior Court, 182 Cal. App. 4th 622, 632
(Cal. Ct. App. 2010); Davis-Miller, 201 Cal. App. 4th at
124-25. For everyone in the class to have been exposed to the
omissions, as the dissent claims, it is necessary for everyone
in the class to have viewed the allegedly misleading advertis-
ing. Here the limited scope of that advertising makes it unrea-
sonable to assume that all class members viewed it. Pfizer Inc.
182 Cal. App. 4th at 633-34.
[17] In the absence of the kind of massive advertising cam-
paign at issue in Tobacco II, the relevant class must be
defined in such a way as to include only members who were
exposed to advertising that is alleged to be materially mis-
leading. The relevant class must also exclude those members
who learned of the CMBS’s allegedly omitted limitations
before they purchased or leased the CMBS system. The dis-
trict court certified a class that included all persons who pur-
chased or leased an Acura RL with the CMBS between
August 2005 and class certification. This class is overbroad.
We vacate the class certification decision on this ground
210 MAZZA v. AMERICAN HONDA
because common questions of fact do not predominate where
an individualized case must be made for each member show-
ing reliance.
IV
[18] Because the law of multiple jurisdictions applies here
to any nationwide class of purchasers or lessees of Acuras
including a CMBS system, variances in state law overwhelm
common issues and preclude predominance for a single
nationwide class. And even if the class was restricted only to
those who purchased or leased their car in California, com-
mon issues of fact would not predominate in the class as cur-
rently defined because it almost certainly includes members
who were not exposed to, and therefore could not have relied
on, Honda’s allegedly misleading advertising material. We
vacate the district court’s class certification and remand for
further proceedings consistent with this opinion. As we make
clear above, we express no opinion whether a differently
defined class may meet the requirements of Federal Rule of
Civil Procedure 23(b)(3).4
The Order Granting Plaintiffs’ Renewed Motion for
Class Certification is VACATED and the matter is
remanded for further proceedings consistent with this
opinion.
4
A crucial difference between our views and those of the dissent con-
cerns the importance of the individualized questions of law or fact over
which any common questions must predominate. On reliance, the dissent
gives inadequate weight to the fact that the Honda advertisements of the
CMBS were limited in nature such that many class members were likely
never exposed to them. On choice of law, the dissent gives inadequate
weight to the differences in state consumer protection laws and the inter-
ests of each of our states in a federal system being able to have its own
laws apply to purchases made by consumers within its borders. Finally,
our opinion does not foreclose in an appropriate case the use of smaller
statewide classes of those purchasing in a particular state, or the use of
subclasses within a larger class.
MAZZA v. AMERICAN HONDA 211
D.W. NELSON, Senior Circuit Judge, dissenting:
I respectfully dissent. Because common factual and legal
issues predominate, I would affirm the district court.
First, the majority holds that the facts do not justify a pre-
sumption of reliance. Majority Opinion at 207-210. I disagree.
Both California’s Consumer Legal Remedies Act and its
Unfair Competition Law allow for a presumption of reliance.
Vasquez v. Superior Court, 484 P.2d 964, 973 n.9 (Cal. 1971);
In re Tobacco II Cases, 207 P.3d 20, 39-41 (Cal. 2009). The
district court concluded correctly that the focus of the inquiry
should not be on which class members saw the advertisements
and relied on them. Rather, the broadly disseminated adver-
tisements omitted potentially material information about the
limitations of the CMBS system. Mass. Mut. Life Ins. v. Supe-
rior Court, 119 Cal. Rptr. 2d 190, 198 (2002). Appellees
allege that everyone in the class was exposed to those omis-
sions. While the omitted information may have been available
to consumers from other sources, Honda has not shown that
consumers actually received the information prior to pur-
chase. Mass. Mut., 119 Cal. Rptr. 2d at 198-99 (2002); see
also Occidental Land, Inc. v. Sup. Ct., 556 P.2d 750, 754
(Cal. 1976) (“[A]n inference of reliance arises if a material
false representation was made to persons whose acts thereaf-
ter were consistent with reliance upon the representation.”).
Plaintiffs have alleged that the named plaintiffs and class
members would not have paid for the CMBS system had
Honda disclosed the omitted information. The district court
correctly imputed reliance to the class.
Next, I concur with the majority that Honda has sufficient
contacts with California to satisfy constitutional concerns. All-
state Ins. Co. v. Hague, 449 U.S. 302, 310-11 (1981); Wer-
shba v. Apple Computer, Inc., 110 Cal. Rptr. 2d 145, 159
(Cal. Ct. App. 2001). Honda, a California corporation, has
made Torrance, California its principal place of business and
its corporate headquarters for sales, marketing, research and
212 MAZZA v. AMERICAN HONDA
development. Honda hired an advertising agency in Santa
Monica, California to create print, radio and television ads for
the CMBS system and an advertising agency in Culver City,
California for its internet-based ads.
I disagree, however, with the majority’s choice of law anal-
ysis pursuant to California’s three-step governmental interest
test. McCann v. Foster Wheeler LLC, 225 P.3d 516, 527 (Cal.
2010). First, the majority concludes that material differences
exist between California law and that of the 43 jurisdictions
in which class members reside. Majority Opinion at 201-202.
I find only one potentially material difference: Louisiana,
Georgia, Mississippi, Kentucky, Virginia and Alabama pro-
hibit class actions that allege unfair trade practices under state
law. La. Rev. Stat. Ann. § 51:1409(A) (2008); Ga. Code Ann.
§ 10-1-399(a); Miss. Code Ann. § 75-24-15(4) (West 2007);
Arnold v. Microsoft Corp., No. 00 Cv. 123, 2001 WL 193765,
at *6 (Ky. Cir. Ct. July 21, 2000); Va. Code Ann. § 59.1-204;
Ala. Code § 8-19-10(f) (1981). Because California contem-
plates such class actions, I must consider next whether each
of these states has an interest in applying its laws to this litiga-
tion. McCann, 225 P.3d at 527. They do not.
The majority holds that applying California law to a nation-
wide class would discount each state’s interest in achieving an
optimal balance between consumer protection and business
friendliness. Majority Opinion at 202-204. But pro-business
legislation does not speak to the specific interest states have
in imposing their laws on this litigation. Honda has not shown
how a state’s general interest in prohibiting class actions
brought under its own consumer protection laws translates
into an interest in having its laws apply to this litigation.
Unmistakably, California has a keen interest in deterring Cali-
fornia corporations, with their principal places of business in
California, from engaging in tortious conduct within the state.
Clothesrigger, Inc. v. GTE Corp., 236 Cal. Rptr. 605, 609
(Cal. Ct. App. 1987) (“California’s interest in deterring fraud-
ulent conduct by businesses headquartered within its borders
MAZZA v. AMERICAN HONDA 213
and protecting consumers from fraudulent misrepresentations
emanating from California would override any possible inter-
est of any other state in application of its own laws to its resi-
dents’ claims.”).
In assessing “which state’s interests would be more
impaired if its policy were subordinated to the policy of the
other state,” Clothesrigger, 236 Cal. Rptr. at 609, the majority
concludes both that applying California law would impair for-
eign states’ ability to foster commerce and that California has
an attenuated interest in applying its law to nonresidents,
Majority Opinion at 204-206. I strongly disagree. Each state
with a material conflict has an interest in having its consumer
protection laws apply to transactions taking place within that
state’s borders. However, California’s interest would be most
significantly impaired if its laws were not applied to this liti-
gation. Honda is incorporated and headquartered in Califor-
nia; the advertisements at issue emanated from the state.
California has a compelling interest in regulating the conduct
of corporations operating within the state and availing them-
selves of the state’s privileges. Clothesrigger, 236 Cal. Rptr.
at 614; Wershba, 110 Cal. Rptr. 2d at 159 (noting that Califor-
nia Business and Professions Code Section 17500 addresses
deception of nonresident class members deceived by repre-
sentations disseminated from California).
Thus, California law should govern. In fact, California
courts themselves have held that “a California court may
properly apply the same California statutes at issue here to
non-California members of a nationwide class where the
defendant is a California corporation and some or all of the
challenged conduct emanates from California.” Wershba, 110
Cal. Rptr. 2d at 160; see also Clothesrigger, 236 Cal. Rptr. at
615-16 (applying California law to nationwide class).
The majority’s holding will prove devastating to consum-
ers. Individual claimants will not bring actions to recover the
$4,000 paid for the CMBS systems. Even if consumers did
214 MAZZA v. AMERICAN HONDA
pursue these claims, and even if these claims proved success-
ful, they “would not only unnecessarily burden the judiciary,
but would prove uneconomic for potential plaintiffs” because
“litigation costs would dwarf potential recovery.” Hanlon v.
Chrysler Corp., 150 F.3d 1011, 1023 (9th Cir. 1998). Without
certification of a nationwide class to which California law
applies, Honda becomes free to avail itself of the benefits
offered by California without having to answer to allegations
by consumers nationwide that it has violated the consumer
protection laws of its forum state. This situation will allow
corporations to take advantage of a forum state’s hospitable
business climate on the one hand, while simultaneously dis-
counting the potential for litigation by nationwide consumers
in response to a particular profit-motivated but harmful action
on the other. If the harm to individual consumers is small
enough to create a disincentive to individual litigation, and if
a nationwide class action is not a potential consequence, cor-
porations can choose increased revenues over the consumer
with impunity. Thus, corporations like Honda will be able to
act without accountability for past behavior and without a
check on future profit-motivated actions that may risk con-
sumer harm.
The district court did not abuse its discretion in certifying
a nationwide class to which California law applies. I respect-
fully dissent.