Ford Motor Co. v. Sheldon

• Citation: 22 S.W.3d 444
• Parties: (Tex. 2000) FORD MOTOR COMPANY, LEIF JOHNSON FORD, INC. AND FRED CAPDEVIELLE, PETITIONERS 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, RESPONDENTS NO. 98-0539
• Decision Date: 11 May 2000
• Court: Supreme Court of Texas

Page 444

22 S.W.3d 444 (Tex. 2000)

FORD MOTOR COMPANY, LEIF JOHNSON FORD, INC. AND FRED CAPDEVIELLE, PETITIONERS 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, RESPONDENTS

NO. 98-0539

IN THE SUPREME COURT OF TEXAS

Argued February 9, 1999.

Decided May 11, 2000.

ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] CHIEF JUSTICE PHILLIPS delivered the opinion of the Court, in which JUSTICE HECHT, JUSTICE ENOCH, JUSTICE OWEN, JUSTICE ABBOTT, JUSTICE HANKINSON, JUSTICE O'NEILL, and JUSTICE GONZALES joined.

Seven owners of certain types of Ford vehicles, individually and on behalf of all others who bought similar vehicles in Texas, brought this class action against Ford Motor Co., a Ford dealer, and a Ford district manager. The suit prayed for damages for peeling paint, allegedly caused by the lack of spray primer in the paint process, on certain 1984-1993 vehicle models. The trial court certified the class under Texas Rule of Civil Procedure 42(b)(4). The court of appeals affirmed after modifying the class definition. 965 S.W.2d 65. Ford filed this interlocutory appeal in this Court under Texas Motor Vehicle Commission Code Section 6.06(g). We hold that this Court does have jurisdiction, and that the trial court's definition and the court of appeals' modified definition are both defective. Because these defects cannot be cured on appeal, we reverse the court of appeals' judgment affirming the class certification and remand for the trial court to decertify the class.

I

Barry Sheldon, Matthew Rueter, Margaret Dunayer, John Porter, William Dobbs, James Beasley, and B.J. Sanders (collectively "Purchasers") filed this consumer class action against Ford Motor Co., Leif Johnson Ford, Inc.(a Ford dealership in Austin), and Fred Capdevielle (Ford's district manager in Houston from 1984-1994) ("Ford"), alleging that Ford knowingly used a defective paint process resulting in premature paint peeling on their Ford vehicles. They contend that the cause of this defect was Ford's removal of spray primer from the paint process as a cost-saving measure in the early 1980s. Before that time, Ford applied low-build electrocoat to sheet metal and then sprayed a primer before adding the enamel topcoat. Under the new process, which was adopted for F-Series Trucks, Broncos, Bronco IIs, Rangers, and Mustangs, Ford replaced low-build electrocoat with medium- or high-build electrocoat and then applied the topcoat directly to the electrocoat. Purchasers argue that, because electrocoat is not weather-resistant, removing the primer from the paint process caused the paint on many vehicles to delaminate. When exposed to ultraviolet sunlight, the enamel paint coat could separate from the vehicle's metal surface within 18 to 36 months. Purchasers assert that Ford learned of the alleged defect within a few years after adopting the new paint process, but continued to use it until the early 1990s, selling the affected cars to Texas consumers while consciously concealing the problem.¹

Based on these allegations, Purchasers brought claims against Ford for violating the Texas Deceptive Trade Practices Act ("DTPA") and breaching the implied warranty of merchantability. Purchasers alleged that Ford violated section 17.46(b)(5) of the DTPA by representing that the vehicles have characteristics that they do not have, section 17.46(b)(7) by representing that the vehicles are of a particular quality when they are, in fact, of another, section 17.46(b)(23) by failing to disclose information about the vehicles that was known at the time of the transactions when such failure to disclose was intended to induce consumers into transactions that they would not have entered had the information been disclosed, and section 17.45(5) by acting unconscionably. See TEX. BUS. & COMM. CODE. 17.45 (5), 17.46 (b)(5), (7), (23).

Purchasers also brought breach of contract, common-law fraud and conspiracy to defraud claims. After certification, the trial court granted Ford's motion for summary judgment with respect to Purchasers' breach of contract and common-law fraud claims. The conspiracy claim, which alleges that "Defendant Ford conspired with other dealers to hide this problem from consumers and to prevent consumers from getting their vehicles promptly and properly repaired," apparently remains pending in the trial court.

Purchasers sought certification of the following class:

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 build 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.

The trial court certified the class under Texas Rule of Civil Procedure 42(b)(4), determining that these questions were common to the class: (1) whether there was a defective paint process by reason of lack of primer, (2) whether Ford had knowledge of the defect, (3) whether Ford withheld information of the defect when it had a duty to disclose, and (4) how the discovery rule applied to delay the running of limitations. The court contemplated a two-phase trial in which the common liability questions would be determined first, with the court proceeding to individualized damage inquiries only if Ford were found liable.

The court of appeals modified the certification order. Although the court approved having "a phase of individual trials following the class-wide resolution of the common issues," 965 S.W.2d at 67-68, it determined that the class definitions in the certification order "violate Rule 42 by allowing the named plaintiffs to proceed in a class action before showing that a class exists." Id. at 73. The court modified the definitions by inserting the phrase "who allege the peeling or flaking was" before the clause "caused by a defective paint process" in both subclasses. Id. at 74. As modified, the class includes those purchasers of certain specified Ford vehicles who suffered past or future diminution in value damages or out of pocket expenses from peeling paint and who allege that the cause of the peeling is the lack of spray primer in the paint process.

Ford filed an interlocutory appeal in this Court under Texas Motor Vehicle Commission Code Section 6.06(g), requesting that we reverse the judgment of the court of appeals and decertify the class. See TEX. REV. CIV. STAT. art. 4413(36), 6.06(g). Ford argues that the court of appeals erred in (1) redefining the class sua sponte to include those who allege that the lack of primer caused the peeling of their vehicles, thereby certifying a "failsafe" class; (2) determining that common issues exist when "a jury may reach different conclusions with respect to different class members"; (3) concluding that the common issues predominate over individual issues given the court of appeals' conclusion that "thousands of individual trials might be necessary on liability and damage issues," 965 S.W.2d at 72; (4) determining that the class action is superior to alternative means of adjudication when the DTPA provides incentives for individual adjudication; and (5) affirming a trial plan providing for adjudication of liability issues before one jury and damage issues before a second group of juries when Texas prohibits multi-stage, piecemeal trials.

II

Before reaching the merits of this appeal, we must first consider Purchasers' contention that this Court lacks jurisdiction. Beginning in 1985, the Legislature provided for interlocutory review of the grant or denial of class certification under Rule 42, but only to the courts of appeals. See TEX. CIV. PRAC. & REM. CODE. 51.014 (3). This Court had authority to review such judgments of the courts of appeals only if jurisdiction was otherwise established under Section 22.001(a)(1) or (2) of the Texas Government Code. See TEX. GOV'T CODE 22.225(b)(5),(c); 22.001(a)(1),(2). Thus, we have dismissed most attempts to secure Supreme Court review of class certification for want of jurisdiction. See, e.g., Coastal Corp. v. Garza, 979 S.W.2d 318 (Tex. 1998); Glassell v. Ellis, 956 S.W.2d 676 (Tex. App.-Texarkana 1997, pet. dism'd w.o.j.); Health & Tennis Corp. of Am. v. Jackson, 928 S.W.2d 583 (Tex. App.-San Antonio 1996, writ dism'd w.o.j.); Weatherly v. Deloitte & Touche, 905 S.W.2d 642 (Tex. App.-Houston[14th Dist.] 1995, writ dism'd w.o.j.); National Gypsum Co. v. Kirbyville Ind. Sch. Dist., 770 S.W.2d 621 (Tex. App.-Beaumont 1989, writ dism'd w.o.j.).

Ford urges jurisdiction under Section 6.06(g) of the Texas Motor Vehicle Commission Code, recently enacted in 1997, which allows this Court to review a court of appeals' decision about the grant or denial of class certification involving a motor vehicle licensee even in the absence of a conflict or dissent. See TEX.REV.CIV.STAT. art. 4413(36...