McManus v. Fleetwood Enterprises, Inc.

• Decision Date: 14 February 2003
• Docket Number: No. 01-51045.,01-51045.
• Citation: 320 F.3d 545
• Parties: Donnie McMANUS and June McManus, Plaintiffs-Appellees, v. FLEETWOOD ENTERPRISES, INC., et al., Plaintiffs, Fleetwood Enterprises, Inc., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

320 F.3d 545

Donnie McMANUS and June McManus, Plaintiffs-Appellees, v. FLEETWOOD ENTERPRISES, INC., et al., Plaintiffs Fleetwood Enterprises, Inc., Defendant-Appellant.

No. 01-51045.

United States Court of Appeals, Fifth Circuit.

February 14, 2003.

John Creig Roberson, Hill & Parker, Mark A. Carrigan, Law Office of Mark A. Carrigan, Houston, TX, George Louis LeGrand, LeGrand & Bernstein, San Antonio, TX, Jonathan David Selbin (argued), Lieff, Cabraser, Heimann & Bernstein, New York City, for Plaintiffs-Appellees.

John Loyd Carter (argued), Adam P. Schiffer, Karen B. Jewell, Vinson & Elkins, Houston, TX, for Defendant-Appellant.

Appeal from the United States District Court for the Western District of Texas.

Before EMILIO M. GARZA and CLEMENT, Circuit Judges, and HUDSPETH, District Judge.^*

CLEMENT, Circuit Judge:

The district court certified a subclass of plaintiffs who purchased Class A motor homes in Texas from defendant Fleetwood Enterprises, Inc., a California corporation, between 1994 and 1999. Representative plaintiffs Donnie and June McManus allege that Fleetwood misrepresented the towing capacity of its motor homes. They seek injunctive relief under Federal Rule of Civil Procedure 23(b)(2) and, in the alternative, damages under Rule 23(b)(3). The district court abused its discretion in certifying the class under Rule 23(b)(3), except with regard to the McManuses' claim for breach of implied warranty of merchantability. The district court also abused its discretion in certifying the class under Rule 23(b)(2). We affirm in part, and reverse and remand in part.

I. FACTS AND PROCEEDINGS

The McManuses purchased a Fleetwood motor home in Texas in 1997, with the intention of towing a Jeep Cherokee behind it. Donnie McManus noticed a tag affixed to the wardrobe door stating that the motor home could tow 3,500 pounds, and the sales representative assured him that the motor home would be able to tow a Jeep Cherokee. The wardrobe door tag was titled "CARRYING CAPACITY" and it listed various statistics, including an entry reading "GTW 3500 LBS." The tag explained:

GTW (Gross Towed Weight): means the maximum permissible loaded weight of a trailer or car that this motor home has been designed to tow. This cannot be increased by changing the trailer hitch. The bottom of the tag stated in large, bold print:

CONSULT OWNER'S MANUAL FOR WEIGHING INSTRUCTIONS AND TOWING GUIDELINES

A Fleetwood engineer contacted Fleetwood's chassis manufacturers in 1994 and discovered that, according to the chassis manufacturers, the motor homes would require supplemental brakes to safely tow 3,500 pounds. For example, Ford told Fleetwood that its motor homes would require supplemental brakes when towing anything above 1,500 pounds. The engineer concluded in a company memorandum, "To assure safe operation of our products, the wardrobe door tag, owners manual and advertising material should reflect two GCW's [gross combination weight], one for towed loads without brakes and one for towed loads with brakes."

The McManuses allege that the representation that the motor home could safely tow 3,500 pounds amounted to a representation that it could safely brake while towing 3,500 pounds. Their complaint asserts the following five claims: (1) violation California's Consumers Legal Remedies Act, CAL CIV.CODE §§ 1750-1784; (2) breach of express warranty; (3) breach of implied warranty of merchantability under California's Song-Beverly Consumer Warranty Act, CAL CIV.CODE § 1792; (4) negligent misrepresentation; and (5) fraudulent concealment. They seek injunctive relief under Federal Rule of Civil Procedure 23(b)(2) to compel Fleetwood to provide each class member information concerning the towing limitations, as well as supplemental braking equipment. In the alternative, the McManuses seek money damages under Rule 23(b)(3).

Fleetwood counters, in short, that the wardrobe tag was accurate because it said nothing about supplemental brakes, and because it conspicuously led the consumer to a paper trail that would reveal the relevant information. The tag directed the consumer to the motor home owner's manual, which directed the consumer to the chassis manufacturer's manual containing the relevant towing limitations.¹

The district court originally certified a nationwide class of all persons who purchased new, and still owned, a Fleetwood Class A motor home manufactured between 1994 and 1999. On a motion for reconsideration to take into account Spence v. Glock, 227 F.3d 308 (5th Cir. 2000), which impacts class certification in cases dealing with multistate choice-of-law issues, the district court decertified the national class. Following oral argument on their supplemental motion for certification of a nationwide class, the McManuses filed a motion indicating that they wished to proceed with certification of a Texas-only subclass. The district court granted the post-hearing motion and certified the subclass, with no apparent opposition from Fleetwood. Fleetwood then filed a motion for reconsideration, prompting the district court to withdraw its previous order. After considering Fleetwood's new objections to the Texas-only subclass, the district court issued an order concluding that a Texas-only subclass was proper under both Rule 23(b)(2) and Rule 23(b)(3). As a preliminary determination in deciding that the Rule 23 class action prerequisites were met, the district court also concluded, contrary to the McManuses' assertions, that Texas law would govern the dispute instead of California law.

II. DISCUSSION

The McManuses now concede that Texas law governs the dispute, so the only issue for this interlocutory appeal is the propriety of the district court's certification decision, which we review for abuse of discretion. Spence, 227 F.3d at 310-11. "The decision to certify is within the broad discretion of the court, but that decision must be exercised within the framework of [R]ule 23. The party seeking certification bears the burden of proof." Castano v. Am. Tobacco Co., 84 F.3d 734, 740 (5th Cir.1996) (internal citations omitted). Although "the strength of a plaintiff's claim should not affect the certification decision," the district court must look beyond the pleadings to "understand the claims, defenses, relevant facts, and applicable substantive law in order to make a meaningful determination of the certification issues." Id. at 744.

Under Rule 23, plaintiffs must first define the class with specificity and show they are members of the class. Forbush v. J.C. Penney Co., 994 F.2d 1101, 1105 (5th Cir.1993). They must then establish all four requirements of Rule 23(a). Shivangi v. Dean Witter Reynolds, Inc., 825 F.2d 885, 890 (5th Cir.1987). These requirements are: "(1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class." FED.R.CIV.P. 23(a). Fleetwood does not challenge the district court's conclusion that plaintiffs have met these requirements.² In addition to satisfying the above requirements, the parties seeking class certification must show that the action is maintainable under Rule 23(b)(1), (2), or (3). FED.R.CIV.P. 23(b). We consider the district court's decision under Rule 23(b)(3) and Rule 23(b)(2), in turn.

A. Certification is only proper under Rule 23(b)(3) for the McManuses' claim for breach of implied warranty of merchantability

Under Rule 23(b)(3), the district court may certify a class where it determines "that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy." FED.R.CIV.P. 23(b)(3). Fleetwood argues that the common questions of fact do not predominate over individual matters. In particular, Fleetwood asserts that since each of the plaintiffs' claims requires a showing of reliance on the alleged misrepresentation, the district court abused its discretion in certifying the class under Rule 23(b)(3). The McManuses respond that the district court may presume class-wide reliance because the same information — that the motor homes could tow 3,500 pounds — was given to all of the class members.

1. Reliance may not be presumed under Texas law

The McManuses rely upon Life Ins. Co. of Southwest v. Brister, 722 S.W.2d 764 (Tex.App.1986) and Reserve Life Ins. Co. v. Kirkland, 917 S.W.2d 836 (Tex.App. 1996) for the proposition that Texas law permits a class-wide presumption of reliance. In each case, the appellate court determined that the proposed class members had a "sufficient community of interest," Brister, 722 S.W.2d at 774, to justify certification under Texas Rule of Civil Procedure 42. See Kirkland, 917 S.W.2d at 843-44; Brister, 722 S.W.2d at 773-75. The result was premised on the view that Texas courts "should err in favor and not against the maintenance of the class action since the class certification order is always subject to modification should later developments during the course of the trial so require." Brister, 722 S.W.2d at 774-75. The Texas Supreme Court has since overruled those cases, explicitly "reject[ing] this approach of certify now and worry later." Southwestern Refining Co. v. Bernal, 22 S.W.3d 425, 435 (Tex.2000).

The Bernal court emphasized that "[p]rocedural devices may `not be construed to enlarge or diminish any substantive rights or obligations of any parties to any civil action.'" Id. at 437 (citing TEX.R. CIV. P. 815). In a particularly instructive post-Bernal case, the Texas Supreme Court held that issues of reliance defeated the predominance requirement of Rule 42 in a class action alleging, among other...