Chamberlan v. Ford Motor Co.

• Decision Date: 31 March 2005
• Docket Number: No. 04-80074.,04-80074.
• Citation: 402 F.3d 952
• Parties: Susan CHAMBERLAN and Henry Fok, Plaintiffs-Respondents, v. FORD MOTOR COMPANY, Defendant-Petitioner.
• Court: U.S. Court of Appeals — Ninth Circuit

402 F.3d 952

Susan CHAMBERLAN and Henry Fok, Plaintiffs-Respondents, v. FORD MOTOR COMPANY, Defendant-Petitioner.

No. 04-80074.

United States Court of Appeals, Ninth Circuit.

Submitted March 23, 2005.^*

Filed March 31, 2005.

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Brian C. Anderson, Matthew M. Shors, and Michael E. Stamp, O'Melveny & Myers, Washington, D.C., for the defendant-petitioner.

Suzanne Solomon and Michael F. Ram, Levy, Ram & Olson, San Francisco, CA, for the plaintiffs-respondents.

Appeal from the United States District Court for the Northern District of California; Claudia Wilken, District Judge, Presiding. D.C. No. CV-03-02628-CW.

Before: LEAVY, McKEOWN, and BERZON, Circuit Judges.

PER CURIAM.

Federal Rule of Civil Procedure 23(f) permits a discretionary interlocutory appeal from a district court order denying or granting a class action certification. Although other circuits have explored the contours of the rule, we have not. We take this opportunity to identify for the first time the criteria we will consider in evaluating whether to permit an interlocutory appeal under Rule 23(f).

We begin with the premise that Rule 23(f) review should be a rare occurrence. We adopt the principles justifying review that are set out in the Advisory Committee Notes — the presence of a death knell situation for either party absent review and the presence of an unsettled and fundamental issue of law related to class actions — along with an additional criterion, manifest error in the district court's certification decision. Employing these guidelines in the present case, we conclude that the application for permission to appeal should be denied.

BACKGROUND

Plaintiffs Susan Chamberlan and Henry Fok ("Class Plaintiffs") filed a class action lawsuit in state court against Ford Motor Company ("Ford") and several John Does, alleging that Ford knowingly manufactured, sold, and distributed automobiles containing a defective engine part, in violation of the California Consumers Legal Remedies Act ("CLRA"), California Civil Code § 1750, et seq.¹ The action was removed to federal court and the district court certified a plaintiff class of Ford automobile owners.

The engine parts at issue are plastic intake manifolds that Ford used in some, but not all, of its automobiles. The manifold distributes air to the engine's cylinders, where the air mixes with fuel and ignites to power the engine. The manifold includes water crossover tubes that distribute coolant from one side of the engine to the other, and then to the radiator. Plastic manifolds, particularly the plastic water crossover component, are allegedly more likely to crack and cause coolant leaks than the aluminum intake manifolds Ford used in some of its cars.

According to Class Plaintiffs, as early as 1995, Ford became aware that the plastic manifolds were prone to cracking. Ford began an investigation of the plastic manifolds and redesigned the part several times, but was unable to resolve the cracking problem. In 1999, Ford implemented several notification programs to alert owners to potential problems caused by plastic manifolds. According to Class Plaintiffs, these programs covered only a fraction of the affected vehicles, and Ford concealed the defective nature of the plastic manifolds from consumers. Ford discontinued use of plastic manifolds in 2002.

After the case was removed to federal court, Class Plaintiffs moved for class certification. Ford opposed certification on the grounds that the facts pertaining to the causes of action differ depending on which vehicle the claimant owns, when that vehicle was produced, and what each individual buyer's expectations were regarding the durability of the intake manifold on the vehicle. Ford argued that these claimant-specific issues predominate over whatever common issues might exist. Ford also sought to defeat certification on the ground that certain potential defenses — such as the CLRA's three-year statute of limitations period — might apply only to some individuals within the proposed class. Finally, Ford argued that Class Plaintiffs had not shown how the class trial could be managed to account for these potential distinctions.

The district court granted the certification motion and certified a class consisting of:

All consumers residing in California who currently own, or paid to repair or replace the plastic intake manifold in any of the following cars: 1996-2001 model year Mercury Grand Marquis, 1998-2001 model year Ford Mustangs, 2002 model year Ford Explorers, 1996-2001 model year Ford Crown Victorias, or 1996-2001 Lincoln Town Cars.

Excluded from the Class are (1) anyone to whom Ford has provided an extended warranty for her intake manifold; (2) the judge to whom this case is assigned and any member of the judge's immediate family; and (3) anyone who suffered personal injury related to Ford's plastic water crossover.

The district court found that all four prerequisites of Rule 23(a) for class certification had been met.² The district court further held that the requirement of subsection (b)(3),³ that common questions predominate over individual questions, was satisfied. The court identified the following common questions: (1) whether the design of the plastic intake manifold was defective; (2) whether Ford was aware of alleged design defects; (3) whether Ford had a duty to disclose its knowledge; (4) whether it failed to do so; (5) whether the facts that Ford allegedly failed to disclose were material; and (6) whether the alleged failure to disclose violated the CLRA. Finally, the district court found that few potential class members could afford to undertake individual litigation against Ford, making a class action a superior way to resolve these claims.

Ford filed a timely petition asking this court to allow an immediate, interlocutory appeal from the district court's certification order under Rule 23(f). Ford challenges the rigor of the district court's analysis, particularly with respect to whether common issues predominate over individual ones. Ford additionally faults the district court for neglecting to address CLRA's elements and affirmative defenses and for failing to establish a trial plan. In its supplemental brief, Ford complains that the certification creates tremendous pressure to settle, even though it believes the district court order is manifestly incorrect and likely to be reversed or vacated.

DISCUSSION

I. THE CONTOURS OF Rule 23(f)

Federal Rule of Civil Procedure 23(f), which became effective in 1998, provides that:

[a] court of appeals may in its discretion permit an appeal from an order of a district court granting or denying class action certification under this rule if application is made to it within ten days after entry of the order. An appeal does not stay proceedings in the district court unless the district judge or the court of appeals so orders.

Fed.R.Civ.P. 23(f). When, as here, an appeal falls within the court of appeals' discretion, a party must file a petition for permission to appeal. Fed. R.App. P. 5(a)(1).

The Advisory Committee's Notes provide a good starting point for exploring the contours of Rule 23(f). The drafters intended the court of appeals to enjoy "unfettered discretion" to grant or deny permission to appeal based on "any consideration that the court of appeals finds persuasive." Fed.R.Civ.P. 23, Advisory Committee Notes to 1998 Amendments, Subdivision (f). The Committee contemplated that "[t]he courts of appeals will develop standards for granting review that reflect the changing areas of uncertainty in class litigation." Id.

Despite the wide open grant of discretion, and the absence of any articulated standards in the rule itself, the drafters identified three situations in which an appeal under Rule 23(f) would most likely be appropriate. The first occurs when a denial of certification effectively ends the litigation for the plaintiff. A plaintiff who is denied certification might be left with only one path to appellate review: proceeding to a final judgment on the merits of an individual claim that, without the class, is worth far less than the cost of litigation. Id. The second situation arises when a grant of certification may "force a defendant to settle rather than incur the costs of defending a class action and run the risk of potentially ruinous liability." Id. In both situations, the certification "sounds the death knell of the litigation." Blair v. Equifax Check Servs., Inc., 181 F.3d 832, 834 (7th Cir.1999). The drafters identified as a third circumstance one in which the certification decision turns on a novel or unsettled question of law.

These criteria reflect the dual purposes of Rule 23(f), which the First Circuit aptly summarized. First, the rule provides a "mechanism through which appellate courts, in the interests of fairness, can restore equilibrium when a doubtful class certification ruling would virtually compel a party to abandon a potentially meritorious claim or defense before trial." Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 293 (1st Cir.2000). And second, "the rule furnishes an avenue, if the need is sufficiently acute, whereby the court of appeals can take earlier-than-usual cognizance of important, unsettled legal questions, thus contributing to both the orderly progress of complex litigation and the orderly development of law." Id.

Relying on the purposes of the rule and the guidance provided by the Advisory Committee's Notes, several of our sister circuits have examined the appropriate scope of Rule 23(f). In the first decision to thoroughly consider Rule 23(f), the Seventh Circuit articulated fundamental principles that have been echoed by other circuits. Blair, 181 F.3d at 834-35.

In Blair, the Seventh Circuit rejected the adoption of a bright-line rule for granting review and instead identified three general categories of cases in which appellate review under Rule 23(f) would be appropriate. These...