Case Halted: California Court Denies Class Certification in Ford Defective Steering Case

by Proskauer - Minding Your Business
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On December 22, 2016, a federal District Court Judge in the Northern District of California denied certification of three proposed classes of statewide consumers who purchased or leased certain Ford Fusion or Ford Focus vehicles. The plaintiffs allege that their vehicles contain defective Electronic Power Assisted Steering (“EPAS”) systems prone to sudden and premature failure during normal driving situations. The plaintiffs claim that Ford knew as early as 2007 that the EPAS system was defective, and Ford fraudulently concealed this defect. The plaintiffs also contend they paid more for their cars than they would have if Ford had disclosed the defect. The plaintiffs brought causes of action for (1) common law fraudulent concealment; (2) violation of California’s Consumer Legal Remedies Act (“CLRA”); (3) implied warranty under California’s Song-Beverly Act; and (4) implied warranty under the federal Magnuson-Moss Act.

The plaintiffs moved to certify three classes: (i) new vehicle owners/lessees (those who purchased or leased certain new Ford vehicles from a Ford Motor Company or Ford Motor Company dealership), (ii) those seeking reimbursement for fixing the defect, and (iii) current owners/lessees (those who currently own or lease certain Ford vehicles). The plaintiffs sought to certify the new vehicle owners/lessees and reimbursement classes under Rule 23(b)(3) of the Federal Rules of Civil Procedure, and the current owners/lessees class under Rule 23(b)(2).

After first finding that the plaintiffs met the requirements of Rule 23(a), the court turned to the predominance requirement of Rule 23(b)(3). The court concluded that although the plaintiffs successfully alleged a common defect in the EPAS system, individual issues would predominate in determining reliance with respect to the plaintiffs’ fraudulent concealment and CLRA claims, and that the plaintiffs failed to offer a damages model that is consistent with their theory of liability for any of the proposed claims or classes—a requirement imposed by the Supreme Court in Comcast Corp. v. Behrend.

With respect to reliance, Ford pointed out that there was a warning about sudden EPAS failure in the owner’s manual of the vehicles, and there would have to be extensive individualized inquiries to determine which class members had the opportunity to read the owner’s manual before purchasing or leasing their cars. The court found that the issue of reliance would thus vary from consumer to consumer, causing individual issues to predominate such that the plaintiffs could not meet the requirements of Rule 23(b)(3).

With respect to damages, the plaintiffs’ expert calculated them based on the assumption that the true value of the EPAS system was $0. However, the court found that a damages model consistent with the plaintiffs’ theory of harm would attempt to measure the expected utility of an EPAS system, offset by the expected lack of utility that an average consumer would attribute to safety issues and risk aversion. The court thus concluded that the new vehicle and reimbursement classes failed to meet Rule 23(b)(3)’s predominance requirement because plaintiffs’ damages model was inconsistent with their theory of liability under Comcast.

With regard to the motion to certify a current owners/lessees class under Rule 23(b)(2),the plaintiffs seek an injunction requiring Ford to uniformly repair and/or replace the defective EPAS systems. However, the court took more of a merits-based approach and found that the Magnusson-Moss Act claim contained no allegations regarding injunctive relief, and that the plaintiffs have an adequate remedy at law for Ford’s alleged violation of the Song-Beverly Act. The court also noted that the class request for injunctive relief was odd in light of the fact that Ford had already conducted a recall to remedy the defect.  The court thus denied certification under Rule 23(b)(2) as well.

With the case unable to proceed as a class action, the plaintiffs will need to decide whether to pursue their individual claims.

[View source.]

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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