KMC Leasing, Inc. v. Rockwell-Standard Corp.

Decision Date27 June 2000
Docket NumberNo. 92,344.,92,344.
Citation2000 OK 51,9 P.3d 683
PartiesKMC LEASING, INC., et al., v. ROCKWELL-STANDARD CORP., et al.
CourtOklahoma Supreme Court

Robert G. McCampbell, Crowe & Dunlevy, Oklahoma City, OK, and Richard C. Coyle, Rex Browning, Perkins Coie, Seattle, WA, for Defendant/Appellee Twin Commander Aircraft Corporation.

David C. Johnston, Jr., Law Office of David C. Johnston, Jr., Oklahoma City, OK, and Fred J. Meier, Jeffrey A. Hage, Jonathan J. Cunningham, Winstead, Sechrest & Minick P.C., Dallas, TX, for Defendants/Appellees Rockwell-Standard Corporation, Rockwell International Corporation, Aero Commander Inc. and Gulfstream Aerospace Corporation. Thomas A. Wallace, John W. Norman, John B. Norman, Norman, Edem, McNaughton & Wallace, Oklahoma City, OK, for Plaintiffs/Appellants KMC Leasing, Inc., Westak of Oregon, Inc., B & B Transportation, Inc., Provost & Umphrey Law Firm, L.L.P., Black Hawk Mining Company, Steven Myers & Associates, Inc., S-R Aviation, Inc., Andersen Construction Company, Inc., Praegitzer Industries, Inc., Challenge Tool and Manufacturing Company, Ltd., Golconda Capital Corp., John L. Kennamer, Umberb, Inc., Aspen Base Operation, Inc., Air Capitol S.R.L., Detroit Business Machines, Inc., Gay Company, L.C., Great Western Hotels Corporation, Hammill Manufacturing Company, Inc., N.A. Degerstrom, Inc., Structural Steel Services, Inc., Western Precooling Systems, Inc., Statewide Cooling, Inc., J. Charles Casebeer, M.D., Budget Motels, Inc. and Elliott Tarson, president of Twin Commander Owners Association, an unincorporated association each individually, and on behalf of the class herein defined.

WINCHESTER, J.

¶ 1 This matter concerns the motion of appellants, KMC Leasing, Inc., Westak of Oregon, Inc., B & B Transportation, Inc., Provost & Umphrey Law Firm, L.L.P., Black Hawk Mining Company, Steven Myers & Associates, Inc., S-R Aviation, Inc., Andersen Construction Company, Inc., Praegitzer Industries, Inc., Challenge Tool and Manufacturing Company, Ltd., Golconda Capital Corp., John L. Kennamer, Umberb, Inc., Aspen Base Operation, Inc., Air Capitol S.R.L., Detroit Business Machines, Inc., Gay Company, L.C., Great Western Hotels Corporation, Hammill Manufacturing Company, Inc., N.A. Degerstrom, Inc., Structural Steel Services, Inc., Western Precooling Systems, Inc., Statewide Cooling, Inc., J. Charles Casebeer, M.D., Budget Motels, Inc. and Elliott Tarson, president of Twin Commander Owners Association, an unincorporated association, each individually and on behalf of the class herein defined, to certify this action as a class action. The instant matter has its roots in an action filed by plaintiffs/appellants against defendants/appellees alleging negligent design, testing and manufacture of the Aero Commander aircraft, failure to disclose known defects and fraudulent concealment of the aircraft's alleged defective design of a component part of the Aero Commander aircraft's wing. Appellants assert hidden defects exist in the wing spar that were not detected in pre-purchase inspections. They seek damages for diminution in value, inspections the Federal Aviation Administration required them to conduct and repairs. The sole issue we address on certiorari is whether the trial court abused its discretion in denying appellants' motion to certify the instant action as a class action.

FACTS AND PROCEDURAL HISTORY

¶ 2 Appellants are purchasers, owners or past owners of used aircraft designed, manufactured and initially sold by Rockwell International Corporation in Bethany, Oklahoma, between 1967 and 1979. The Rockwell entities held the original Type Certificates to these aircraft and had no contact with the aircraft after 1981. Appellee GAC held the Type Certificates from 1981 to 1989 and did not design, manufacture or sell any of the aircraft. Appellee Twin Commander acquired the Type Certificates in 1989, and also did not design, manufacture or sell any of the aircraft. Appellants purchased their aircraft used, from entities other than appellees. The purchases occurred in numerous states and foreign jurisdictions. None of the aircraft were housed, operated or purchased in Oklahoma.

¶ 3 The record shows alleged defects do not uniformly affect these aircraft. Some exhibit no signs of corrosion in the wing spar, others experience corrosion and require inspection while still others require repairs that vary in expense and frequency, including actual spar cap replacement. For those aircraft with corrosion, the degree and progression of the corrosion also varies. The first known discovery of corrosion occurred in 1985, in Australia. The Australian government issued an airworthiness directive which advised Australians to inspect the aircraft.

¶ 4 Prior to the instant appeal, the trial court granted partial summary judgment in favor of appellees on appellants' manufacturers' products liability claim. The court also granted partial summary judgment in favor of Twin Commander on appellants' fraud claim. On appeal, the Court of Civil Appeals upheld partial summary judgment for Twin Commander as to owners of aircraft purchased prior to June 11, 1990, but reversed the trial court's grant of partial summary judgment against owners of aircraft purchased subsequent to that date. In a related appeal on attorneys' fees, summary judgment was affirmed as to the negligence claims. See KMC Leasing Inc. v. Twin Commander Aircraft Corp., Case No. 91,398, ¶ 8 (July 2, 1999)(not for publication). We denied appellees' petition for writ of certiorari on June 25, 1996, and remanded the case to the trial court for further proceedings.

¶ 5 After remand, appellants filed a motion to certify the class action on September 25, 1997, nearly five years after they filed their initial lawsuit. The trial court denied appellants' motion to certify and appellants appealed. On December 15, 1999, the Court of Civil Appeals, Division III, reversed the trial court's denial of class certification and remanded the cause in an opinion released for publication. Appellees filed separate petitions for writs of certiorari to review the opinion of the Court of Civil Appeals. We granted the petitions by special order on March 14, 2000, and will treat them as though only one appeal were before us. The sole issue on appeal is whether the trial court abused its discretion when it denied appellants' motion to certify the action as a class action. We find the trial court did not abuse its discretion when it denied the motion to certify the action as a class action. The Court of Civil Appeals failed to apply the appropriate standard of review and improperly substituted its own judgment for that of the trial court.

¶ 6 In its opinion, the court certified a class under a definition not presented to the trial court and also certified a subclass of purchasers who bought their aircraft between June 11, 1990, and April 9, 1991, pursuant to 12 O.S.1991, § 2023(C)(4). The court also deemed Twin Commander a successor corporation to the other appellees. The holding that Twin Commander is liable as a successor of the Type Certificates issued by the FAA under 49 U.S.C. § 44704 certifying this aircraft meets federal safety standards, presents a question of first impression and impermissibly goes to the merits at the class certification stage. Davoll v. Webb, 160 F.R.D. 142, 143 (D.Colo.1995), aff'd. by 194 F.3d 1116 (10th Cir.(Colo.) 1999)(the merits of an action are not judged in ruling on a motion for class certification).

¶ 7 At the hearing before the trial court on March 27, 1998, appellants requested that the court certify a class consisting of current or prior owners of the Commander aircraft who owned the aircraft on May 14, 1991. Appellants also proposed certain subclasses consisting of class members who incurred expenses associated with recurring inspections of spar caps and those who replaced spar caps. Appellants later suggested the trial court certify a class that distinguished between those who were aircraft owners on May 14, 1991, before the Administrative Directive was issued, and those who purchased the aircraft after that date but before the last Administrative Directive of April 12, 1994. Appellants also suggested a separate class of thirteen members who purchased aircraft with a grain size problem. They then suggested the trial court adopt a test case basis approach for damages, followed by a suggestion that the court calculate a statistical matrix. Appellants also tried to persuade the trial court to certify this action as a class action to further the settlement of claims, stating at the hearing that many, if not most, cases settle after a court certifies them as class actions.

STANDARD OF REVIEW

¶ 8 Reversal of a trial court's order denying certification requires a clear showing of abuse of discretion. Mattoon v. City of Norman, 1981 OK 92, ¶ 25, 633 P.2d 735, 740 (appeal after remand). Denial of class action status is deemed to rest on an adequate record when any one of the five requisites for class certification appears to be absent. Mattoon, 1981 OK 92 at ¶ 1, 633 P.2d 735 at 736. The trial court's order denying class certification in Mattoon was a general order, as is the trial court's order in the instant case. ¶ 9 Since Oklahoma's class action scheme closely parallels that provided in the Federal Rules of Civil Procedure, we may look to federal authority for guidance regarding its rationale. Shores v. First City Bank Corp., 1984 OK 67, ¶ 5, 689 P.2d 299, 301. The party who seeks certification has the burden of proving each of the requisite elements for a class action. Davoll v. Webb, 160 F.R.D. 142, 143 (Colo.1995) aff'd. by 194 F.3d 1116 (10th Cir.(Colo.)1999), citing Anderson v. City of Albuquerque, 690 F.2d 796, 799 (10th Cir.(N.M.) 1982).

"The discretion granted to the trial court on the certification issue leaves the decision as to what method of trial is most efficient primarily to the court that is in the best
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