Ford Motor Co., Inc. v. Sheldon

Decision Date12 March 1998
Docket NumberNo. 03-97-00074-CV,03-97-00074-CV
Citation965 S.W.2d 65
PartiesFORD MOTOR COMPANY, INC.; Leif Johnson Ford, Inc.; and Fred Capedeville, Appellants, v. Barry SHELDON, Matthew Rueter, Margaret Dunayer, John Porter, William Dobbs, James Beasley, and B.J. Sanders, Individually and on Behalf of All Others Similarly Situated, Appellees.
CourtTexas Court of Appeals

Jessie A. Amos, John Coates, Brown McCarroll & Oaks Hartline, Austin, for Appellants.

Ray N. Donley, Steve McConnico, Scott Douglass & McConnico, Austin, for Appellees.

Before CARROLL, C.J., and ABOUSSIE and B.A. SMITH, JJ.

ABOUSSIE, Justice.

Ford Motor Company, Inc., Leif Johnson Ford, Inc., and Fred Capedeville (collectively, "Ford") complain in this interlocutory appeal that the trial court incorrectly certified appellees' suit as a class action. We will modify the order, and affirm it as modified.

The Trial Court Action

Apellees purchased various Ford models on which the paint peeled:

                Appellee          Car 1    Sale date       First noticed peeling after sale
                Barry Sheldon     1987 Ranger  January 1987    18"22 months
                B.J. Sanders      1989 Ranger  September 1989  9 months
                John Porter       1988 F"150   March 1988      18 months
                Matthew Reuter    1989 F"150   December 1988   4 years
                William Dobbs     1990 F"150   February 1990   4 years
                Margaret Dunayer  1991 F"150   December 1990   17"18 months
                James Beasley     1990 Bronco  January 1990    4 years
                

Appellees claim the cars peeled because the paint process was defective, that Ford knew of the defect, and that Ford nevertheless persisted in using the process and selling the affected cars to Texas consumers. Appellees seek to recover for breach of the implied warranty of merchantability and violations of the deceptive trade practices act. The alleged DTPA violations include representing that goods have characteristics they do not; representing that goods are of a particular standard, quality, or grade when they are not; and failing to disclose information about goods known at the time of the transactions and intending by that nondisclosure to induce transactions that would not have occurred but for the nondisclosure. Appellees contend Ford's conduct was an unconscionable action or course of action.

The trial court certified the case as a class action on behalf of the following class of plaintiffs:

All persons who purchased a new 1987-1993 Ford F-Series Truck, 1987-1993 Ford Bronco, 1987-1989 Ford Bronco II, 1987-1992 Ford Ranger or 1987-1989 Ford Mustang in Texas on or after March 8, 1988 which was painted with high build electrocoat or medium build electrocoat and no spray primer and who suffered past and/or future damage as a result of peeling or flaking paint on these vehicles caused by a defective paint process (i.e., high build electrocoat or medium built electrocoat and no spray primer) excluding persons who purchased vehicles pursuant to a fleet account or fleet identification number; and

All persons who purchased a new 1984-1988 Ford F-Series Truck, 1984-1988 Ford Bronco, 1984-1988 Ford Bronco II, 1984-1988 Ford Ranger or 1984-1988 Ford Mustang in Texas prior to March 8, 1988 which was painted with high build electrocoat or medium build electrocoat and no spray primer and who paid Ford or a Ford dealership for a paint repair to their vehicle to repair peeling or flaking paint caused by a defective paint process (i.e., high build electrocoat or medium build electrocoat and no spray primer), excluding persons who purchased vehicles pursuant to a fleet account or fleet identification number.

Though finding issues common to the class, the court acknowledged that the multiplicity of potential causes of peeling meant that the case likely would have a phase of individual

trials following the class-wide resolution of the common issues.

The Interlocutory Appeal

Ford contends that the trial court erred by certifying the class action because the proposed trial structure violates Texas's general strictures against bifurcated trials and because the suit lacks the prerequisites for class certification. We review the trial court's decision whether to certify a class for an abuse of discretion. RSR Corp. v. Hayes, 673 S.W.2d 928, 930 (Tex.App.--Dallas 1984, writ dism'd). A trial court does not abuse its discretion by basing its decisions on conflicting evidence, but does abuse its discretion by failing to properly apply the law to undisputed facts. Forsyth v. Lake LBJ Inv. Corp., 903 S.W.2d 146, 149 (Tex.App.--Austin 1995, writ dism'd w.o.j.); RSR, 673 S.W.2d at 930.

I. Bifurcated trial

By points of error four and five, Ford complains that the trial court set up an impermissibly bifurcated, piecemeal trial process. 2 Ford contends that Texas courts' traditional aversion to piecemeal trials overcomes or modifies the class-action rule that, when appropriate, "an action may be brought or maintained as a class action with respect to particular issues." Tex.R. Civ. P. 42(d)(1). Texas courts' aversion to bifurcated trials predates the class-action procedural rule. Ford cites cases dating back sixty years illustrating the principle. See Phoenix Assurance Co. of London v. Stobaugh, 127 Tex. 308, 94 S.W.2d 428, 430 (1936) (insurance coverage case: whether building was total loss not severable issue from whether plaintiff covered by policy); see also Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 30 (Tex.1994) (exception to non-bifurcation rule: amount of punitive damages tried separately from rest of action); Otis Elevator Co. v. Bedre, 776 S.W.2d 152, 153 (Tex.1989) (appellate court cannot remand negligence separately from contributory negligence and damages); Waples-Platter Co. v. Commercial Standard Ins. Co., 156 Tex. 234, 294 S.W.2d 375, 377 (Tex.1956) (appellate court cannot remand damages only; court cannot require piecemeal trial because liability and damages are elements of indivisible cause of action). These cases were not class actions under the rules of civil procedure, however.

The language of Rule 42(d) indicates that it creates an exception to the general prohibition of bifurcation. Allowing trial of separate "issues" rather than "claims"--a conscious choice, because Rule 42 refers to "claims" elsewhere--indicates that the rulemakers envisioned that something less than an entire cause of action might be tried as a class action. Unlike former Texas Rule of Appellate Procedure 81(b)(1), Rule 42 does not require that the particular class issues be "clearly separable without unfairness to the parties." See Otis Elevator, 776 S.W.2d at 153 (interpreting former Tex.R.App. P. 81(b)(1)). 3 For cases meeting its other requirements, Rule 42 requires only that the class trial of particular issues be "appropriate." Tex.R. Civ. P. 42(d).

Ford also argues that the term "issues" in Rule 42 should be interpreted like "issue" in Texas Rule of Civil Procedure 174(b). Rule 174(b) provides, "The court in furtherance of convenience or to avoid prejudice may order a separate trial of any claim, cross-claim, counterclaim, or third-party claim, or of any separate issue or of any number of claims, cross-claims, counterclaims, third-party claims, or issues." The supreme court held that Rule 174(b) did not allow a trial court to try damages separately from liability in a personal injury case. Iley v. Hughes, 158 The efficiency interests the Iley court cited for unitary trials actually favor the bifurcated trial of the common and individual issues in this case. Though individual trials may be necessary on individual causation and damage issues, the limited class action will allow Ford to consolidate its case regarding the paint process and knowledge about defects into one presentation in the class trial. If the factfinder fails to find that the paint process is defective, Ford (and the court system) will have saved great amounts of time compared to having the estimated 100,000 individual trials on all the issues in all the claims. Even if the class jury finds the paint process was defective and Ford learned of the defect sometime during the class period, Ford could be exonerated of knowledge of wrongdoing against class members who bought cars before that time. Further, should Ford lose on all issues in the class action segment of the trial, it and the public will have gained the economies of the unified trial of these common issues.

                Tex. 362, 311 S.W.2d 648, 651 (1958).  The jury had found liability and medical expenses, but deadlocked on general and exemplary damages;  the trial court granted a mistrial and empaneled a new jury for the damages issues only.  Id. at 649.   The supreme court held that, though the text of the rule would seem to permit such, Texas's aversion to piecemeal trials required a reading of the rule to prohibit it.  Id. at 651.   The court noted, however, that the rule had been invoked to allow separate trials on issues of standing and limitations.  Id. at 650.   The court wrote that Texas courts dislike piecemeal trials because the public interest, the interests of litigants, and the administration of justice are better served by rules of trial which avoid a multiplicity of suits.  Id. at 651
                

The question remains whether this separation of liability and damages issues is appropriate and permissible. It does not appear, however, that individual liability and damages trials will be entirely separated. Rather, it appears that the class trial will determine whether the paint process was defective; and, if so, when Ford knew this and if it withheld this knowledge. The individual trials could then focus on other factors that might diminish or eliminate damage awards to individuals, such as individual contributory causation. The trial structure jointly tries common class issues pursuant to Rule 42(d)(1), but, at the individual trial stage, tries each individual's intertwined liability and damage issues together. We conclude that the trial court did...

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