In re Toyota Motor Corp.. Unintended Acceleration Mktg.

• Decision Date: 08 June 2011
• Docket Number: Case No. 8:10ML 02151 JVS(FMOx).
• Court: U.S. District Court — Central District of California
• Parties: In re TOYOTA MOTOR CORP. UNINTENDED ACCELERATION MARKETING, SALES PRACTICES, AND PRODUCTS LIABILITY LITIGATION.This document relates to: All Plaintiffs' Economic Loss Cases.

785 F.Supp.2d 925

In re TOYOTA MOTOR CORP. UNINTENDED ACCELERATION MARKETING, SALES PRACTICES, AND PRODUCTS LIABILITY LITIGATION.This document relates to: All Plaintiffs' Economic Loss Cases.

Case No. 8:10ML 02151 JVS(FMOx).

United States District Court, C.D. California.

June 8, 2011.

Andrea Bierstein, Clinton B. Fisher, Jayne Conroy, Mitchell M. Breit, Paul J. Hanly, Jr., Thomas I. Sheridan, III, Hanly Conroy Bierstein Sheridan Fisher & Hayes LLP, New York, NY, Daniel H. Chang, Diversity Law Group APC, Edward Wonkyu Choi, Choi & Associates Law Offices, Los Angeles, CA, David C. Wright, Jae Kook Kim, Kristy M. Arevalo, Richard D. McCune, Jr., McCune Wright LLP, Redlands, CA, Derek Yeats Brandt, Simmons Browder Gianaris Angelides & Barnerd LLC, East Alton, IL, Peter J. Cambs, Parker Waichman Alonso LLP, Bonita Springs, FL, Fred R. Rosenthal, Fred Rosenthal Law Offices, Port Washington, NY, Lisa M. Hasselman, Hagens Berman Sobol Shapiro LLP, Seattle, WA, for Plaintiff.Andrew R. Kwiatkowski, Gregory A. Harrison, Jeffrey P. Hinebaugh, Cincinnati, OH, Anna S. McLean, Sheppard Mullin Richter and Hampton LLP, C. Brandon Wisoff, Douglas R. Young, Farella Braun & Martel LLP, San Francisco, CA, Thomas M. Klein, Bowman and Brooke LLP, Phoenix, AZ, for Defendant.

ORDER DENYING PLAINTIFFS' MOTION FOR APPLICATION OF CALIFORNIA LAW

JAMES V. SELNA, District Judge.

Presently before the Court is the Motion for the Application of California Law filed by a number of domestic economic loss Plaintiffs. (Docket Nos. 810, 841 (sealed versions), 845–2 (public redacted version).) Defendants have filed an Opposition to the Motion, and Plaintiffs have filed a Reply. (Docket Nos. 1248–4 (Opp'n, public redacted version), 1354 (Reply, public redacted version).) As set forth below, the Court denies the Motion.¹

This action arises out of Plaintiffs' purchase of vehicles designed, manufactured, distributed, marketed, and sold by Defendants Toyota Motor Corporation dba Toyota Motor North America, Inc. (“TMC”), and its subsidiary, Toyota Motor Sales, U.S.A., Inc. (“TMS”) (collectively, “Toyota” or “the Toyota Defendants”). Putative classes of domestic Plaintiffs seek damages for diminution in the market value of their vehicles in light of defects in those vehicles that have led to incidents of sudden, unintended acceleration (“SUA”).

The term “Plaintiffs” or “Moving Plaintiffs,” as used in this Order, generally refers to a subset of the domestic consumer Plaintiffs, as well as all the non-consumer Plaintiffs. Two categories of consumer Plaintiffs are Moving Plaintiffs. The first category consists of those Plaintiffs who (a) reside in California, and (b) purchased or leased their vehicles in California. The second category consists of those Plaintiffs who (a) reside in a state other than California, and (b) purchased or leased their vehicles in a state other than California.² The non-consumer Plaintiffs are businesses that operate in California, Missouri, Nevada, New Jersey, and Ohio. (¶¶ 74, 75, 85, 76, 71.) All these Plaintiffs, regardless of their state of residence, filed their actions in California federal court. ( See Motion at 3 n. 2.) This is a pivotal fact in deciding the present Motion.

After extensive briefing, the Court expressly provided the opportunity for a subset of Plaintiffs to move for rulings regarding choice-of-law issues. ( See Docket No. 601.) When, in conjunction with its Opposition to the present Motion, the Toyota Defendants filed their “Cross–Motion for Choice–of–Law Determination as to All Economic Loss Cases and Plaintiffs,” the Court struck the Cross Motion. (Docket No. 1213.) The Court therefore only considers Certain Economic Loss Plaintiffs' Motion for the Application of California Law. (Docket No. 810). The Court's inquiry is therefore limited to a determination of whether the Moving Plaintiffs may assert their claims under California law on behalf of a nationwide class.

The parties have developed an extensive factual record concerning Toyota's activities in California and throughout the United States. The record provides a factual basis to take up Toyota's Due Process challenge and the application of a particular choice-of-law rule, here principally California's “governmental interest” approach. However, the focus of this Order is whether the Court may adopt California's choice-of-law rule, not the application of that rule. Accordingly, the Court has resisted the temptation to summarize those factual showings.

I. Determining the Applicability of California's Choice–of–Law Rule.

The choice-of-law analysis requires a two-step inquiry. First, the Court must determine whether California law may be applied to the Toyota Defendants consistent with constitutional Due Process. Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 821–22, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985); Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1187 (9th Cir.2001). For present purposes, the Court assumes that the Moving Plaintiffs can carry their burden to show that the factual record here satisfies the requirements of Due Process. See Wash. Mut. Bank v. Superior Court, 24 Cal.4th 906, 921, 103 Cal.Rptr.2d 320, 15 P.3d 1071 (2001).

Second, the Court must identify the applicable choice-of-law rule, and then determine whether the application of that rule permits selection of California law on a nationwide basis.

A. Governing Federal Principles.

Plaintiffs' claim for the application of California's choice-of-law rule is based on constitutional first principles which require the application of the forum state's rule. As the Supreme Court analyzed the principle in Klaxon v. Stentor Electric Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941):

The conflict of laws rules to be applied by the federal court in Delaware must conform to those prevailing in Delaware's state courts. Otherwise the accident of diversity of citizenship would constantly disturb equal administration of justice in coordinate state and federal courts sitting side by side.... Any other ruling would do violence to the principle of uniformity within a state upon which the [Erie Railroad v. Tompkins] decision is based.

Id. (internal citation and footnote omitted). Accord Zinser, 253 F.3d at 1187; cf. Van Dusen v. Barrack, 376 U.S. 612, 639, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964) (Section 1404 transferee forum applies the law in the same manner as transferor court).

Here, the Moving Plaintiffs represent, and the Toyota Defendants have not disputed, that all the Moving Plaintiffs filed their actions in California. ( See Motion at 1 n. 1.) Thus, in the first instance, long-standing federal principles lead to the application of California's law which employs a “governmental interest” analysis test. Wash. Mut., 24 Cal.4th at 919–20, 103 Cal.Rptr.2d 320, 15 P.3d 1071.³

But other considerations, some unique to multidistrict litigation, convince the Court that a fuller analysis compels a different result. There are three independent but related reasons why the Court should not undertake the analysis suggested by Plaintiffs. First, Supreme Court authority strongly suggests that a plaintiff's strategic decisions should not be permitted to dictate the applicable substantive law. Second, granting the relief sought by Plaintiffs here would undermine the purposes of the present MDL because it fails to take into account the requirement that the cases retain their separate and distinct identities in a manner that facilitates their statutorily mandated return to their home states for trial. Finally, granting the relief sought here would elevate the status of the Master Consolidated Complaint beyond that of a mere procedural device and would instead have the impermissible effect of altering the parties' substantive rights.

B. Strategic Decisions Cannot Conclusively Dictate Substantive Law.

Plaintiffs' strategy has been crafted—thoughtfully and candidly—to maximize the case for adopting California's choice-of-law rules. The Moving Parties are a subset of the larger group of putative class members who reside in more than fifty different jurisdictions. In the ordinary course, the Moving Plaintiffs would find support in the case law for the application of California's choice of law, and potentially California's substantive law, to a nationwide class.

However, albeit in a slightly different context,⁴ the Supreme Court has recognized the danger of permitting a plaintiff to choose the controlling law by virtue of his choice of where to file. See Shutts, 472 U.S. at 820, 105 S.Ct. 2965. In Shutts, the Court rejected the Kansas Supreme Court's reliance on the plaintiffs' failure to opt out of claims asserted under Kansas law as a basis for the application of Kansas law to all plaintiffs. Id. The Court rejected the theory that one plaintiff should be able to assert claims under a particular state's law simply by choosing to file in that state:

Even if one could say that the plaintiffs “consented” to the application of Kansas law by not opting out, plaintiff's desire for forum law is rarely, if ever controlling. In most cases the plaintiff shows his obvious wish for forum law by filing there. If a plaintiff could choose the substantive rules to be applied to an action the invitation to forum shopping would be irresistible.Id. (internal alteration marks, quotation marks, and citation omitted).

In the present litigation, there is no single plaintiff such as the individuals in Shutts who filed in California in order to achieve the desired result of the application of California substantive law to his or her claims. Instead, here, there are a multitude of Plaintiffs, having filed in many states but consolidated before the Court in this multidistrict litigation, from which counsel may choose those Plaintiffs who might best achieve the desired result—application of California substantive law—on behalf of all Plaintiffs. Thus, based on a strategic choice regarding which Plaintiffs...