Ortiz v. SIG Sauer, Inc.

• Decision Date: 10 February 2023
• Docket Number: CIVIL 19-cv-1025-JL,Opinion 2023 DNH 015
• Parties: Derick Ortiz, v. Sig Sauer, Inc.
• Court: U.S. District Court — District of New Hampshire

Derick Ortiz,
v.
Sig Sauer, Inc.

CIVIL No. 19-cv-1025-JL

Opinion No. 2023 DNH 015

United States District Court, D. New Hampshire

February 10, 2023

Joshua Arisohn, Esq.

Neal J. Deckant, Esq.

Charles G. Douglas, III, Esq.

Brent Dwelkotte

Benjamin B. Folsom, Esq.

Brian Keith Gibson

Robert L. Joyce, Esq.

Benjamin T. King, Esq.

Joseph Marchese, Esq.

Michael J. Quinn, Esq.

MEMORANDUM ORDER

Joseph N. Laplante United States District Judge

The class action “predominance” requirement in Federal Rule of Civil Procedure 23(b)(3), as applied to fraudulent concealment and unjust enrichment claims, is the main focus in this motion, where a single named plaintiff moves under Rule 23 to certify a class of individuals who purchased an allegedly defective semi-automatic pistol, the SIG P320. The defendant, Sig Sauer Inc., is a New Hampshire-based firearms manufacturer that produces the P320 pistol. The plaintiff, Derick Ortiz, is an Arizona law enforcement officer who purchased the civilian version of the P320 in 2016 to use as his primary duty pistol.

Ortiz filed suit against Sig Sauer in 2019, asserting contract, breach of warranty, fraud, and unjust enrichment claims premised on a purported design defect in the P320 that makes it susceptible to “drop firing,” or discharging after being dropped. Following a motion to dismiss and a motion for summary judgment, only Ortiz's fraudulent concealment and unjust enrichment claims are subject to this class certification motion.

Under the fraudulent concealment claim, Ortiz asserts, in pertinent part, that Sig Sauer was aware of the drop defect and failed to disclose this material fact, and that the class members relied on this omission and overpaid for what they considered to be a defect-free pistol.^[1] As for

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the unjust enrichment claim, Ortiz contends that Sig Sauer secured a benefit by selling a defective pistol at an inflated price, and it would be unjust for it to retain this benefit. Ortiz seeks to certify a nationwide class of individuals from 50 states, who purchased the P320 prior to August 8, 2017. Alternatively, Ortiz moves to certify an unjust enrichment subclass and a fraudulent omission subclass, each of which limits its membership to P320 owners from specific states. Sig Sauer argues that class certification of the nationwide class and either subclass is improper under Rule 23.

The court has class action jurisdiction over this case under 28 U.S.C. § 1332(d) (diversity). After considering the parties' submissions, and receiving evidence and oral argument, the court denies Ortiz's motion, largely based on Rule 23(b)(3)'s predominance requirement, which bars certification when issues affecting individual members of the class predominate over issues that are common to the class.

First, the court denies certification of the nationwide class as to the unjust enrichment claim because the threshold, choice-of-law analysis raises individual legal and factual inquiries, which predominate over common issues. Specifically, as part of the choice-of-law analysis, the court must identify ‘actual conflicts,' or outcome-determinative differences, between New Hampshire law and the laws of 49 other interested states. This exercise requires the court to find distinctions between New Hampshire law and the foreign laws, and to adjudicate individual class members' claims under these different legal standards. Next, the court denies certification of the unjust enrichment subclass due to the predominance of individual, factual inquiries that go to the crux of the claim under applicable New Hampshire law--whether Sig Sauer's retention of the full

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sale price of the P320 would be unconscionable in each transaction. Finally, the fraudulent concealment claims cannot be managed in a class format, for the nationwide class or the fraudulent omission subclass, because the claims require individual proof of reliance on Sig Sauer's false representations regarding the drop safety of the P320.

I. Applicable legal standard

“The class action is ‘an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.'” Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013) (quoting Califano v. Yamasaki, 442 U.S. 682, 700-01 (1979)). To obtain class certification, the plaintiff must establish by a preponderance of the evidence that Rule 23(a)'s four prerequisites are satisfied. See, e.g., In re Nexium Antitrust Litig., 777 F.3d 9, 17-18 (1st Cir. 2015). Specifically, the plaintiff must show:

(1) the [proposed] 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).

Where, as here, the plaintiff moves to certify the proposed class under Rule 23(b)(3),^[2] he must also satisfy the rule's predominance and superiority requirements. This requires a showing

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that “questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed R. Civ. P. 23(b)(3); see also In re New Motor Vehicles Canadian Exp. Antitrust Litig., 522 F.3d 6, 18 (1st Cir. 2008).

These rules “do[ ] not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). The court, in turn, must engage in a “rigorous analysis,” which may involve “prob[ing] behind the pleadings.” Id. (quoting General Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 160 (1982)); see also In re Nexium, 777 F.3d at 18.

II. Background

The court recites facts relevant to class certification, as presented in the parties' submissions to the court and in the record. This case centers on an alleged design defect in the SIG P320 pistol, a semi-automatic 9-millimeter pistol manufactured by Sig Sauer. Ortiz alleges that the version of the pistol that he purchased in 2016 is defective because it is susceptible to drop firing.

Prior to entering the P320 pistol into the U.S. commercial market, Sig Sauer performed drop testing on the pistol. The goal of drop testing is to determine whether the primer ignites (or nearly ignites) after being dropped under a variety of circumstances, including from different heights and angles, and onto a range of impact surfaces. When the primer ignites, this means that the pistol would have fired if it had a live round.^[3] Sig Sauer's technicians “encountered

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primer ignition” after dropping the P320 on “a couple” of occasions during the testing, including during tests administered in December 2013 and April 2014, “and the engineers were immediately notified.”^[4]

Based on its testing, Sig Sauer determined that the P320 satisfied the drop safety standards promulgated by the National Institute for Justice^[5] and the American National Standards Institute / Sporting Arms and Ammunition Manufacturers Institute.^[6] Sig Sauer began selling the pistol in January 2014. By August 2017, the end of the proposed class period, consumers in the U.S. commercial market had purchased 314,059 P320 pistols.^[7]

A. Reports of P320 drop fires and initiation of the Voluntary Upgrade Program

Around late 2016 or early 2017, Sig Sauer received notice of drop fires in certain pistols. Caracal, a foreign firearms manufacturer that contracted with Sig Sauer to sell a version of the P320 under Caracal's brand name, notified Sig Sauer that dropping the pistols at a -30°

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orientation resulted in discharge. Meanwhile, the U.S. Army notified Sig Sauer that it observed discharges when dropping Sig Sauer's M17 and M18 handguns at the same -30° orientation. The M17 and M18 handguns have “a substantially similar design” as the P320 pistol.^[8]

Later that year, an employee at Omaha Outdoors, a store that sells Sig Sauer products including the P320, emailed two individuals at Sig Sauer to inform them that Omaha tested “four different [P]320s” and found that “three of these four [P]320s . . . consistently” fired or nearly fired when dropped at a -30° angle.^[9] The Omaha employee attached a video of the drop testing to the email; the video was also posted on YouTube. Days later, individuals connected to a blog entitled The Truth About Guns confirmed Omaha's findings upon conducting drop tests on a newly purchased P320, and then notified Sig Sauer.^[10] After that, Sig Sauer replicated Omaha's test with the same results.^[11]

Shortly thereafter, on August 8, 2017, Sig Sauer issued a press release announcing the launch of its “Voluntary Upgrade Program.” In the press release, Sig Sauer explained that the P320 passed ANSI/SAAMI, NIJ, and other safety and testing protocols, but “[r]ecent events indicate that dropping the P320 beyond U.S. standards for safety may cause an unintentional

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discharge.”^[12] Accordingly, the press release continued, Sig Sauer was offering P320 owners “a number of enhancements in function, reliability, and overall safety including drop performance.”^[13]

Sig Sauer also provided information about the VUP on its website. The website explained that the upgraded design, which was also incorporated into all subsequent shipments of new P320s, “reduces the physical weight of the trigger, sear, and striker while additionally adding a mechanical disconnector.”^[14] According to the website, customers could participate in the VUP at no cost, and once Sig Sauer received the pistol from the customer in the mail, the turnaround time in the U.S. commercial market would be approximately three to four weeks.^[15]Sig...