Class Certification Reversed Where Trial Court Relied On Erroneous Legal Assumptions Regarding Common Issues Of Fact

October 21st, 2011
By: Erich Schiefelbine, Stephens Friedland LLP
Evan M. Rothman, Stephens Friedland LLP

The California Court of Appeal, in American Honda Motor Co., Inc. v. Superior Court, — Cal.Rptr.3d – (2011), recently granted a writ of mandate overturning class certification in a case against American Honda Motor Co., Inc. for breach of warranty and unfair competition.  The Court of Appeal determine that the trial court relied on an erroneous legal assumption regarding the community of interest of the purported class.  In short, the trial court mistakenly adhered to precedent relied on by plaintiff while disregarding a case relied on by defendant which the Court of Appeal held to be a “better reasoned statement of the law on [the] issue.”  The issue in American Honda was whether individuals who purchased or leased Acura cars with defective third gears constituted a proper class under California Code of Civil Procedure § 382 relating to breach of warranty and unfair competition claims.

In American Honda, the trial court relied “almost exclusively” on Wolin v. Jaguar Land Rover North America LLC, 617 F.3d 1168 (9th Cir. 2010), a case which was factually similar to American Honda and relied on by Plaintiff.  Wolin involved an alignment defect in certain vehicles that potentially resulted in premature tire wear.  There, the court held that “proof of the manifestation of a defect is not a prerequisite to class certification” and granted certification for the breach of warranty cause of action.  Honda, however, relied on Hicks v. Kaufman & Broad Home Corp., 89 Cal.App.4th 908 (2001).  The court in Hicks held that “proof of breach of warranty does not require proof the product has malfunctioned but only that it contains an inherent defect which is substantially certain to result in malfunction during the life of the product.”  The trial court in Honda, however, erroneously dismissed this holding in Hicks as dictum and instead relied on Wolin.

The Court of Appeal disagreed with the trial court’s characterization of Hicks and overturned the class certification.  The Court of Appeal found that, in light of Hicks, “the party moving for class certification must provide substantial evidence of a defect that is substantially certain to result in malfunction during the useful life of the product.”  Under this inquiry, the Court of Appeal held, individualized inquiries predominated over common issues in Honda since only a small portion (less than 4%) of the purported class even reported a problem with their third gear and the evidence showed that their where “variances in what caused the third gear problems.”

Moreover, the Court of Appeal held that the Plaintiff failed to present substantial evidence that common questions of fact predominated regarding his UCL claim.  Plaintiff “does not contend that Honda or its dealers made standard or scripted representations to class members.  Instead, the evidence submitted by [Plaintiff] to support his certification motion demonstrate[d] how variable the representations made to class members were.”

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