Putative Nationwide Class Of Car Dealers Turns Out To Be A Lemon - Individualized Issues Preclude Certification

The U.S. District Court for the Northern District of Georgia denied plaintiffs’ motion for nationwide class certification because the proposed class did not meet Rule 23’s commonality or predominance requirements. The putative class plaintiffs had entered into agreements granting them rights to distribute the defendant’s cars in the United States. The plaintiffs had paid the defendant’s “application” fees and, in some instances, prepared dealerships to receive new inventory. When the defendant decided not to enter the U.S. market, the plaintiffs brought suit and sought certification of a nationwide class asserting statutory claims for violations of the Georgia Motor Vehicle Franchise Practices Act, and common law claims for unjust enrichment, and promissory estoppel. The plaintiffs argued that all claims should be governed by Georgia law.

The court held that individualized issues regarding whether Georgia law could properly be applied precluded a finding a commonality. In particular, the court pointed to evidence that several of the named plaintiffs never operated in Georgia and that the defendants purportedly marketed to plaintiffs at “different places across the country for different [p]laintiffs at different times.” Thus, individual inquiries would be required to determine, among other issues, whether due process barred the application of Georgia law to certain putative class members’ claims. The court also held that plaintiffs had signed a variety of agreements containing differing substantive provisions, thus raising individualized issues and further preventing a finding of commonality.

Next, the court found that the proposed class could not satisfy Rule 23(b)(3)’s predominance requirement for the same reasons it failed the commonality test—individualized issues surrounding choice of law and “various factual issues such as potential class members’ prior relationships with [defendant through its distributor], the dates in which class members formed their relationships . . . and the specific agreements signed by class members.” Further, citing Comcast, the court found that Rule 23(b)(3)’s requirements could not be met because of individualized damages issues as class members were seeking to recover different amounts from the defendant, that were paid at different times, and for different expenditures.

Auto. Leasing Corp. v. Mahindra & Mahindra, Ltd., No. 12-02048 (N.D. Ga. Mar. 14, 2014).

Topics:  Car Dealerships, Class Action, Putative Class Actions

Published In: Civil Procedure Updates, General Business Updates, Franchise Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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