Miller v. Volkswagen of Am., Inc.

• Decision Date: 23 February 2012
• Docket Number: Case No. 3:11 CV 2377.
• Citation: 889 F.Supp.2d 980
• Parties: Charles MILLER, et al., Plaintiffs, v. VOLKSWAGEN OF AMERICA, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

889 F.Supp.2d 980

Charles MILLER, et al., Plaintiffs,

v.VOLKSWAGEN OF AMERICA, INC., et al., Defendants.

Case No. 3:11 CV 2377.

United States District Court,

N.D. Ohio,

Western Division.

Feb. 23, 2012.

Dennis E. Murray, Sr., Donna Jean A. Evans, Murray & Murray, Sandusky, OH, Juan P. Bauta, II, Bauta & Associates, Coral Gables, FL, for Plaintiff.

Hugh J. Bode, Martin T. Galvin, Reminger & Reminger, Cleveland, OH, Daniel V. Gsovski, Jeffrey L. Chase, New York, NY, for Defendant.

MEMORANDUM OPINION AND ORDER

JACK ZOUHARY, District Judge.

Introduction

This case has a long history—seven and a half years and counting.

This is a class action against Defendant Volkswagen of America, Inc. (“Volkswagen”) commenced in the Erie County Common Pleas Court in August 2004. Defendant filed a Notice of Removal on November 3, 2011, asserting jurisdiction under the Class Action Fairness Act (“CAFA”) (Doc. No. 1). Pending before this Court is Plaintiffs' Motion to Remand (Doc. No. 6). Defendant opposed (Doc. No. 12); and Plaintiffs replied (Doc. No. 13). This Court held a record hearing on January 17, 2012.

Background

This class action arises from Plaintiffs' allegations that the front bumper assembly of VW Jettas (model years 1999–2003) were manufactured with inferior materials, resulting in considerable damage from ordinary contact with standard curbs or stops due to the vehicle's low clearance. Plaintiffs sought to certify two separate classes in state court, including a broad class composed of all individuals and entities who owned or leased a 1999–2002 Jetta in Ohio. The state court declined to certify that class, but did certify a narrower class after two days of evidentiary hearings in 2007. The certified class was defined as:

All individuals and entities in Ohio who purchased, leased or acquired a 1999, 2000, 2001 or 2002 Volkswagen Jetta and who incurred expenses not covered or reimbursed by Volkswagen, when the vehicle suffered damage causing the front bumper assembly to separate from the body of the car as a result of contact of the underbody of the vehicle with a wheel stop, tire barrier or curb, during the period of time wherein the New Car Warranty for that vehicle was in effect.

An Ohio appellate court affirmed the class certification in 2008, and the Ohio Supreme Court denied review.

In February 2005, six months after this suit was filed in Ohio state court, a similar class action was filed in an Oklahoma state court asserting the same design failure for 1994–2003 Jettas. The Oklahoma class, once certified, consisted of all those owners in the United States who purchased or leased a 1999–2003 Jetta.

Defendant sought to settle the Ohio and Oklahoma actions beginning in December 2010. According to Plaintiffs, the contours of a nationwide settlement were reached, where Defendant would compensate a class of current or former owners of 1999–2002 Jettas. Ohio, however, was eventually excluded from the settlement due to a disagreement on what role the Ohio judge would play in determining attorney fees for the Ohio class members (Doc. No. 6 at 3). The Oklahoma case proceeded to a final agreement specifically excluding class members certified in the Ohio case. The agreement has not been filed with the Oklahoma court, and Defendant has not yet sought court approval (Doc. No. 6 at 4).

In September 2011, based on the Oklahoma class allegations and the class certified by the Oklahoma court, Plaintiffs here sought leave to file an Amended Class Action Complaint. The original Complaint alleged causes of action for breach of express and implied warranties for Jetta model years 1999–2002; the Amended Complaint added causes of action for violations of the Ohio Consumer Sales Practices Act (“OCSPA”), R.C. § 1345 et seq. (Count III), and for fraud by concealment (Count IV). The Amended Complaint also sought to add the model year 2003 to the Ohio class already certified, as the Oklahoma court deemed the 2003 model to have the same design defect as the 1999–2002 vehicles. Lastly, the Amended Complaint sought to certify an additional class of all individuals and entities in Ohio who currently own or were the original owners of 1999–2003 Jettas. This new class is designated in the parties' briefs as “Class 1.” The original class, certified by the Ohio court in 2007, is designated as “Class 2.”

Plaintiffs were granted leave, and the Amended Complaint was filed on November 1, 2011. Two days later, Defendant filed a Notice of Removal with this Court (Doc. No. 1). Defendant asserts removal is proper pursuant to CAFA because: (1) Plaintiffs' addition of model year 2003 to the currently certified Ohio class is a “new claim” giving rise to removal jurisdiction; (2) Plaintiffs' addition of claims on behalf of proposed Class 1, though untimely, are also “new claims;” (3) Plaintiffs' proposed Class 1 consists of approximately 20,000 individuals and CAFA's amount-in-controversy requirement of $5 million has been satisfied.

Plaintiffs disagree with each of Defendant's contentions, urging this Court to remand because: (1) the addition of model year 2003 “relates back” and does not create a “new cause of action” for CAFA purposes; (2) the addition of claims on behalf of proposed Class 1 is conceded to be untimely and cannot be the basis for CAFA jurisdiction; and (3) the proposed class size is less than 400 individuals and the claims are nowhere near $5 million.

Discussion

CAFA gives federal courts diversity jurisdiction over putative class actions where at least one defendant is diverse from at least one plaintiff (“minimal diversity”), the putative class consists of over 100 members, and the amount-in-controversy with respect to the entire putative class exceeds $5 million. 28 U.S.C. § 1332(d)(2). CAFA also creates an exception to the “one year rule” of 28 U.S.C. § 1446(b), and permits removal in a diversity action even if it occurs more than one year after the complaint was filed. 28 U.S.C. § 1453(b); Smith v. Nationwide Prop. & Cas. Ins., 505 F.3d 401, 406–07 (6th Cir.2007). While CAFA allows removal during the pendency of the state court litigation, the defendant must initiate removal within thirty days of the case becoming removable. Id. at 407. Furthermore, CAFA, effective in 2005, does not apply retroactively—removal is only proper if amendments to the existing class action create a “new” cause of action post-dating CAFA. See Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 571, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005). The removing defendant has the burden of establishing all jurisdictional prerequisites by a preponderance of the evidence. Smith, 505 F.3d at 404.

Plaintiffs concede “the requisite diversity of citizenship exists” under CAFA (Doc. No. 6 at 5). Indeed, complete diversity exists because Defendant is a citizen of New Jersey, where it is incorporated, and Virginia, where it maintains its principal place of business, and the putative class members are all citizens of Ohio (Doc. No. 1–2 at 2). Likewise, there is no dispute this case exceeds CAFA's 100 class-member requirement. Therefore, the issues in this case are twofold: whether any of Plaintiffs' claims arose after CAFA's effective date of 2005 and, if so, whether Defendant has met its burden of demonstrating CAFA's $5 million amount-in-controversy requirement by a preponderance of the evidence.

The Addition of 2003 Model Year to Plaintiffs' Breach of Warranty Claims of the Currently Certified Class Does Not Create a “New Cause of Action”

This Court finds Plaintiffs' addition of the 2003 model year Jetta to the currently certified class is a routine modification of the class definition—not an amendment creating an entirely new cause of action for CAFA purposes. As discussed above, Plaintiffs sought to add model year 2003 to the already certified Ohio class because the Oklahoma court deemed that year to have the same design defect as earlier vehicles.

While the Sixth Circuit has not decided whether an amendment to a class definition commences a “new action” for CAFA purposes, the Seventh Circuit in Schorsch v. Hewlett–Packard Co., is persuasive on this point. 417 F.3d 748, 749 (7th Cir.2005). In Schorsch, the court held “amendments to class definitions do not commence new suits.” Id. at 751. The court drew a distinction between amendments that “kick off wholly distinct claims,” and those tantamount to a “workday change”—that is, those that do not alter the substance of the original allegations in any way. Id.Schorsch was reinforced in a subsequent Seventh Circuit opinion emphasizing “the expansion of a proposed class does not change the parties to the litigation nor does it add new claims.” Schillinger v. Union Pacific R. Co., 425 F.3d 330, 334 (7th Cir.2005); see also Powers v. Hamilton County Public Defender Com'n, 501 F.3d 592, 619 (6th Cir.2007) (“[D]istrict courts have broad discretion to modify class definitions.”).

Here, as in Schorsch and Schillinger, Plaintiffs' proposed amendment adding the 2003 model year does not alter the substance of the original allegations against Defendant, does not change the theory of liability, and does not expand allegations to reach new and unrelated misconduct. Rather, the “allegations remain focused on the defective VW Jetta bumper and upon [Defendant's] refusal to acknowledge the defect and cover the repairs under the expressed and implied warranties” (Doc. No. 6 at 12). In short, Plaintiffs have not created a “new cause of action” giving rise to CAFA removal.

The Addition of Two New Causes of Action to the Currently Certified Class Does Not Create a “New Cause of Action” Because the New Claims “Relate Back”

Plaintiffs also added causes of action for violations of the OCSPA, and for fraud by concealment, on behalf of the currently certified Ohio class. Plaintiffs argue these two additional counts in their Amended Complaint may be pursued, along with the breach of warranty claims initially pled, because they relate...