In re Gen. Motors LLC Ignition Switch Litig.

• Decision Date: 06 August 2019
• Docket Number: 14-MD-2543 (JMF),14-MC-2543 (JMF)
• Citation: 407 F.Supp.3d 212
• Parties: IN RE: GENERAL MOTORS LLC IGNITION SWITCH LITIGATION This Document Relates to All Actions
• Court: U.S. District Court — Southern District of New York

407 F.Supp.3d 212

IN RE: GENERAL MOTORS LLC IGNITION SWITCH LITIGATION This Document Relates to All Actions

14-MD-2543 (JMF)

14-MC-2543 (JMF)

United States District Court, S.D. New York.

Signed August 6, 2019

OPINION AND ORDER

JESSE M. FURMAN, United States District Judge:

[Regarding New GM's Motion for Summary Judgment as to the Bellwether Economic Loss Plaintiffs' Claims for Benefit-of-the-Bargain Damages]

In February 2014, General Motors LLC ("New GM") announced the recall of certain General Motors vehicles that had been manufactured with a defective ignition switch — a switch that moved too easily from the "run" position to the "accessory" and "off" positions, causing moving stalls and disabling critical safety systems. In the months that followed, New GM recalled millions of other vehicles, some for reasons relating to the ignition switch and some for other reasons. Not surprisingly, litigation followed, and was ultimately consolidated in this Court by the Judicial Panel on Multidistrict Litigation. Thousands of plaintiffs filed personal injury and wrongful death claims against New GM. And more relevant for present purposes, hundreds of plaintiffs ("Plaintiffs") brought claims on behalf of a broad putative class of GM car owners and lessors whose vehicles were subject to those recalls, seeking to recover for "economic losses." Their operative complaint — the Fifth Amended Consolidated Complaint or "5ACC" — runs nearly 1700 pages and 7500 paragraphs, and includes claims under state law brought by named Plaintiffs in all fifty states and the District of Columbia. See ECF No. 4838.

Over the last few years, the Court has issued a handful of lengthy rulings on the viability of Plaintiffs' claims under federal law and the laws of various jurisdictions. See, e.g. , In re Gen. Motors LLC Ignition Switch Litig. , 339 F. Supp. 3d 262 (S.D.N.Y. 2018) ; In re Gen. Motors LLC Ignition Switch Litig. , No. 14-MD-2543 (JMF), 2017 WL 3382071 (S.D.N.Y. Aug. 3, 2017) ; In re Gen. Motors LLC Ignition Switch Litig. ("4ACC Op. "), 257 F. Supp. 3d 372, 392-94 (S.D.N.Y. 2017) ; In re Gen. Motors LLC Ignition Switch Litig. , No. 14-MD-2543 (JMF), 2017 WL 6509256 (S.D.N.Y. Dec. 19, 2017) ; In re Gen. Motors LLC Ignition Switch Litig. ("3ACC Op. "), No. 14-MD-2543 (JMF), 2016 WL 3920353 (S.D.N.Y. July 15, 2016). Following those rulings, the parties and the Court selected three "bellwether" states — California, Missouri, and Texas (collectively, the "Bellwether States") — for summary judgment, class certification, and Daubert motion practice. See ECF No. 4499 ("Order No. 131"), at 2; ECF No. 4521. Thereafter, the parties filed a wide array of motions relating to Plaintiffs in these Bellwether States. Plaintiffs filed a motion to certify classes in each Bellwether State pursuant to Rule 23 of the Federal Rules of Civil Procedure, New GM filed a motion for summary judgment with respect to the claims of each putative class, and each side filed various Daubert motions challenging the testimony of certain experts for the other side. See, e.g. , ECF No. 5846; ECF No. 5859 ("New GM SJ Mem."); ECF No. 6130 ("New GM Gans Daubert Mem."); ECF No. 6131 ("New GM Boedeker Daubert Mem.").

In this Opinion, the Court resolves portions of New GM's motion for summary judgment. In doing so, the Court addresses two related questions that have yet to be resolved in the context of a mature factual record: the proper measure of damages under Plaintiffs' "benefit-of-the-bargain" damages theory and — although it does not ultimately affect the damages claims adjudicated in this Opinion — whether and how evidence that New GM repaired Plaintiffs' vehicles through its many recalls would be relevant to the calculation of such damages. The Court reaches several significant conclusions. First, the Court holds that, in all three Bellwether States, Plaintiffs' benefit-of-the-bargain damages are properly measured as the lesser of (1) the cost of repair or (2) the difference in fair market value between the Plaintiffs' cars as warranted and those same cars as sold. Second, that means that evidence of New GM's post-sale repairs is relevant to the calculation of Plaintiffs' damages and, indeed, could theoretically eliminate those damages altogether. And third, whether or not Plaintiffs' claims for "cost-of-repair" damages could survive New GM's motion, the Court is compelled to conclude that their claims for "difference-in-value" damages cannot because Plaintiffs have failed to introduce any evidence of the fair market value of the allegedly defective vehicles they actually purchased and, therefore, have failed to create a triable issue of fact on an essential element of any such claim.¹

BACKGROUND

Broadly speaking, Plaintiffs have sought relief in this litigation for economic losses pursuant to two theories of injury. One theory, the so-called "brand devaluation" theory, "assume[d] that when a consumer purchases a car, the purchase comes not only with a promise ... that the car does not contain any safety defects, but also with the promise that the manufacturer of the car has, and will maintain, a particular reputation for making safe and reliable cars separate and apart from the car purchased by the consumer at issue." 3ACC Op. , 2016 WL 3920353, at *7. On that theory, Plaintiffs "thought they were buying cars made by a brand that had a reputation for producing safe and reliable cars, that brand turned out not to be what consumers thought it was ..., and when the revelations about defects and corporate culture became public the brand was tarnished, resulting in lower resale values across the board for the brand's product." Id. (internal quotation marks omitted). Plaintiffs thus sought damages measured according to the diminution in their cars' "resale value and the [New GM] brand's continuing good name." Id. (emphasis omitted). The Court rejected the "brand devaluation" theory wholesale in deciding New GM's motion to dismiss the Third Amended Consolidated Complaint. Id. at *9-10.

The Plaintiffs' second theory of injury is the by-now-familiar "benefit-of-the-bargain" theory, which recognizes that "because a car with a safety defect is worth less than a car without a safety defect," a plaintiff who bargains for a defect-free car is injured when she receives a defective one instead. Id. at *7. The Court has addressed that theory repeatedly throughout this litigation. In ruling on New GM's motion to dismiss the Third Amended Consolidated Complaint, for example, the Court upheld the theory in the abstract — rejecting New GM's arguments "that the benefit-of-the-bargain defect theory fails across the board" and holding that "the viability of the benefit-of-the-bargain defect theory must be analyzed with respect to each Plaintiff's claims under the relevant jurisdiction's law." Id. at *10. More specifically, the Court has held that Plaintiffs' claims predicated on the theory were sufficient to survive motions to dismiss under the laws of several jurisdictions, including the Bellwether States. See 4ACC Op. , 257 F. Supp. 3d at 445-55 (Texas) ; 3ACC Op. , 2016 WL 3920353, at *19-24 (California) ; id. at *32-35 (Missouri). But Plaintiffs' second theory has yet to be tested on a mature factual record. In 2017, New GM moved for summary judgment on Plaintiffs' economic-loss claims in sixteen jurisdictions, including the Bellwether States, arguing that Plaintiffs received the benefit of their bargain when New GM repaired any defects through a series of recalls. See ECF No. 4681. In April 2018, the Court denied that motion without prejudice, deferring summary judgment practice in each of the Bellwether States until after the close of expert discovery on the grounds that it was likely "evidence of post-sale mitigation would affect the availability or calculation of damages in the sixteen jurisdictions [then] at issue" and that "the viability of Plaintiffs' claims for benefit-of-the-bargain damages [could] turn on the question of whether New GM actually fixed the defects at issue in its many recalls." In re Gen. Motors LLC Ignition Switch Litig. , No. 14-MD-2543 (JMF), 2018 WL 1638096, at *2 (S.D.N.Y. Apr. 3, 2018).

With discovery now complete with respect to those claims, New GM renews its attempt to win summary judgment, this time limited to the claims of named Plaintiffs — who seek relief on behalf of themselves and on behalf of putative classes — under the laws of each Bellwether State. See New GM SJ Mem. 1-8. Among New GM's arguments is that, with discovery now complete, Plaintiffs have failed to produce sufficient evidence that they suffered any benefit-of-the-bargain damages in the first place. See id. at 19-24. In response, Plaintiffs rely on the expert testimony of Stefan Boedeker, whose analysis now serves as the proposed factual underpinning of their benefit-of-the-bargain theory. ECF No. 6059 ("Pls.' SJ Opp'n"), at 34-36. Boedeker performed what is known as a "conjoint analysis" — essentially a survey of consumer preferences for certain automotive features at certain price points. See id. at 35; see also ECF No. 5848 ("Berman Class Cert. Decl."), Ex. 214 ("Boedeker Report"), ¶¶ 23-26.² Boedeker proposes to measure the compensable difference in value between what Plaintiffs bargained for and what they received with data that purport to show the difference between what Plaintiffs paid for their cars and what they would have been willing to pay had they known about the undisclosed defects. Boedeker Report ¶ 30. In this Opinion, the Court explains why such data are not enough, on their own, to demonstrate benefit-of-the-bargain damages under the laws of any of the Bellwether States, and why, as a result, New GM is entitled to summary judgment on these named Plaintiffs' claims.

LEGAL STANDARDS

A. Summary Judgment

Summary judgment is appropriate where the admissible evidence and pleadings demonstrate "no genuine dispute as to any material fact and the movant is entitled to judgment...