Little v. KIA Motors Am., Inc.
| Citation | 242 N.J. 557,233 A.3d 377 |
| Decision Date | 25 June 2020 |
| Docket Number | 081691,A-24 September Term 2018 |
| Parties | Regina LITTLE, on behalf of herself and all others similarly situated, Plaintiff-Respondent, v. KIA MOTORS AMERICA, INC., Defendant-Appellant. |
| Court | United States State Supreme Court (New Jersey) |
Roberto A. Rivera-Soto argued the cause for appellant (Ballard Spahr and Patterson Belknap Webb & Tyler, attorneys; Roberto A. Rivera-Soto, Neal D. Walters, Casey G. Watkins, Cherry Hill, and Peter C. Harvey, of counsel and on the briefs).
Michael D. Donovan (Donovan Litigation Group) of the Pennsylvania bar, admitted pro hac vice, argued the cause for respondent (Donovan Litigation Group; Schnader Harrison Segal & Lewis; Feldman, Shepherd, Wohlgelertner, Tanner, Weinstock & Dodig; and Francis & Mailman, attorneys; Lisa J. Rodriguez, Cherry Hill, James A. Francis, Michael D. Donovan, and Alan M. Feldman (Feldman, Shepherd, Wohlgelertner, Tanner, Weinstock & Dodig) of the Pennsylvania bar, admitted pro hac vice, on the briefs).
In this class action, plaintiff Regina Little asserted breach of warranty and other claims on her own behalf and on behalf of other New Jersey owners and lessees of 1997, 1998, 1999, and 2000 Kia Sephia vehicles distributed by defendant Kia Motors America, Inc. Plaintiff alleged that Kia Sephias in those model years had a defective brake system.
At trial, plaintiff presented two distinct claims for damages. First, she alleged that the class members suffered damages because the defective brakes hastened each Kia Sephia's depreciation, diminishing the vehicle's value, and that all class members had thus overpaid for their vehicles. Second, plaintiff asserted that the class members incurred out-of-pocket costs due to the brake defect because the cars required more frequent brake repairs than they would have required absent the defect. Plaintiff premised that second damages claim not on individualized proof of class members' repair costs, but on an expert's estimate of the amount of money an average Kia Sephia owner would pay for brake repairs over the vehicle's life as a result of the defect alleged.
The jury agreed with plaintiff that the Kia Sephia had a brake defect, found that defendant had breached express and implied warranties, and determined that the class had sustained damages because of the brake defect. The jury decided that the class members suffered no damages due to their vehicles' diminution in value. It nevertheless awarded damages in the amount of $750 per class member based on plaintiff's claim for the cost of repairs.
After the jury verdict, the trial court determined that it should have required individualized proof of damages for the class members' brake repairs. The court left the jury's liability verdict undisturbed.
However, it granted defendant's motion for a new trial pursuant to Rule 4:49-1, as to the amount of out-of-pocket damages incurred by class members. The trial court decertified the class as to that limited issue and ordered individualized assessments of out-of-pocket expenses incurred by the class members. A court-appointed Special Master conducted a claims process, evaluated the class members' individual claims and recommended to the trial court that it award damages in the amount of $46,197.03 for the cost of repairs. The trial court accepted that recommendation, and final judgment was entered in plaintiff's favor in that amount plus attorneys' fees and costs.
The parties cross-appealed. The Appellate Division reversed the trial court's post-trial determinations, reinstated the jury's award for out-of-pocket repair costs based on plaintiff's aggregate proofs, and remanded for an award of attorneys' fees. Little v. Kia Motors Am., Inc., 455 N.J. Super. 411, 416-36, 190 A.3d 502 (App. Div. 2018). We granted defendant's petition for certification.
Although aggregate proof of damages can be appropriate in some settings, we consider such proof improper as presented in this case. We concur with the trial court that it erred when it allowed plaintiff to prove class-members' out-of-pocket costs for brake repairs based on an estimate untethered to the experience of plaintiff's class. We hold that the trial court properly ordered individualized proof of damages based on the actual costs incurred by the class members. We view the trial court's grant of defendant's motions for a new trial and for partial decertification of the class as a proper exercise of its discretion. The claims proceeding that followed, carefully conducted by a Special Master whose Report and Recommendations were adopted by the trial court, was equitable to all parties.
Accordingly, we reverse the Appellate Division's judgment and reinstate the final judgment entered by the trial court.
We derive our summary of the facts from the trial record.
Defendant began selling the Kia Sephia in New Jersey in 1997. Between 1997 and 2000, Kia sold or leased approximately 8400 Kia Sephias in New Jersey.
Relying in part on defendant's internal documents, plaintiff alleged that, because of design and manufacturing flaws, the Kia Sephia's front brakes prematurely wore out, and defendant's efforts to redesign the brakes failed to correct the defect.1 Defendant conceded that there was an increased rate of brake wear in model year 1997-2000 Sephias but maintained that it had resolved the problem through successive improvements in its design.
Defendant's purchase contract for 1997, 1998, and 2000 model year Sephias included the following warranty language:
The contract provided that the warranty excluded "[n]ormal [d]eterioration," defined to include "[n]ormal wear, tear or deterioration such as discoloration, fading, deformation, etc." Although defendant took the position that brake pads were among the "wear items" excluded from its warranty, some of its dealers in New Jersey and other states repaired customers' brakes at no charge, and defendant covered the dealers' costs as warranty repairs. The parties stipulated that there were 8404 repairs pursuant to warranty on the front brake components to Kia Sephias owned by New Jersey residents during the relevant period, and that those repairs were conducted on cars bearing 4875 different vehicle identification numbers. According to defendant, it conducted those warranty repairs whether or not the car was still within the three-year, 36,000-mile warranty, and paid a total of $1.4 million for those repairs.
In January 2002, defendant offered customers a "field fix" in which a redesigned rotor would be installed in the brake system of the customer's car. The parties stipulated that 242 warranty repairs involving the "field fix" were conducted in New Jersey. In addition, defendant offered the owners of model year 1997-2000 Kia Sephias that had previously required two or more brake repairs a coupon for a free brake repair using the "field fix" redesign. In New Jersey, 650 Kia Sephia owners received a coupon for a repair pursuant to that program.
Beginning with model year 2001, defendant included a redesigned brake system in Kia Sephias sold in the United States.
Plaintiff filed this action against defendant in the Law Division on June 26, 2001. She alleged that on March 1, 1999, she purchased a 1999 Kia Sephia from a New Jersey dealer for approximately $13,000. Plaintiff asserted that the brakes in her vehicle constantly malfunctioned, requiring her to return her car to Kia dealers for repairs on at least five occasions, and that defendant failed to correct the problem. She asserted individual and class action claims for violation of sections 17200 and 17500 of the California Business and Professions Code ;2 violation of the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -224; breach of an express warranty and the implied warranty of merchantability; and violation of the federal Magnuson-Moss Warranty--Federal Trade Commission Improvement Act, 15 U.S.C. §§ 2301 to 2312 (Magnuson-Moss Act).
Pursuant to Rule 4:32, plaintiff requested certification of a class "of all persons who purchased and/or leased Kia Sephia automobiles within six years preceding the filing of [the] action." On her own behalf and on behalf of the putative class, she sought compensatory damages, a declaratory judgment, injunctive relief, attorneys' fees, and other remedies.
After granting partial summary judgment dismissing plaintiff's claims to the extent they related to or purported to state a claim for a national class, the judge handling pretrial matters in this case considered plaintiff's motion to certify a class of New Jersey owners and lessees of Kia Sephias. The judge held that plaintiff had satisfied the requirements of Rule 4:32, granted plaintiff's motion for class certification, and appointed counsel for the class.3
Pursuant to an order dated February 9, 2004 and as required by Rule 4:32-2(b), plaintiff's counsel provided notice to the class in a form approved by the court.
As amended by a different judge's order dated November 17, 2006, the class represented by plaintiff was defined as follows:
All residents of the State of New Jersey who purchased or leased a model year 1995-2000 Kia Sephia within the six year period preceding the filing of the Complaint, excluding (i) all persons who are currently engaged in or have been engaged in litigation and/or arbitration with Defendant concerning...
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...breach of an express warranty and unjust enrichment are effectively the same as for the CFA and PLA claims. See Little v. Kia Motors Am., Inc., 233 A.3d 377, 394 (N.J. 2020) (difference-in-value is standard measure of damages in breach of warranty case); Gupta v. Asha Enters., LLC, 27 A.3d ......