Osborne v. Subaru of America, Inc.

CourtCalifornia Court of Appeals
Citation198 Cal.App.3d 646,243 Cal.Rptr. 815
Decision Date16 February 1988
Parties, 5 UCC Rep.Serv.2d 1330 James R. OSBORNE et al., Plaintiffs and Appellants, v. SUBARU OF AMERICA, INC., et al., Defendants and Respondents. C000314.
Michael R. Jencks and Ernest M. Thayer, San Francisco, for plaintiffs and appellants

Hardin, Cook, Loper, Engel & Bergez, Ralph A. Lombardi, Matthew S. Conant, Oakland, Morgan, Lewis & Bockius, James Wawro, and Anthony Russo, Los Angeles, for defendants and respondents.

SIMS, Associate Justice.

In Baltimore Football Club, Inc. v. Superior Court (1985) 171 Cal.App.3d 352, 215 Cal.Rptr. 323, this court recently reversed the certification of a nationwide class of National Football League ticketholders who sought damages caused by a strike. In this case, we revisit the question of certification of a nationwide class. We hold that the trial court did not abuse its discretion in refusing to certify a nationwide class of plaintiffs who are current or former owners of 1973, 1974 and 1976 Subaru automobiles and who seek damages premised on the asserted defective design of their automobiles.

FACTS AND PROCEDURAL BACKGROUND

Defendant Fuji Heavy Industries, Ltd. (Fuji), manufactures Subaru automobiles in Japan. Defendant Subaru of America, Inc. (SOA), is a New Jersey corporation that imports the cars into this country and markets them here.

Plaintiffs all experienced various engine breakdowns in their Subarus which they attribute to a defect in the design of the head gasket and valve system. Although plaintiffs themselves own Subarus in only three model years, they sought to certify a nationwide class on behalf of owners of new or used Subarus of model years 1969 through 1976, claiming all those models use the same defective engine design. Approximately 180,000 of these automobiles were sold by SOA.

At the time plaintiffs moved to certify the nationwide class, their third amended complaint set forth causes of action against both defendants for strict liability, fraud, breach of express warranty and negligent misrepresentation, the latter two claims based upon SOA's national advertising campaign. As against defendant SOA only, the complaint also set forth theories of negligence and breach of implied warranty.

Plaintiffs sought damages to compensate for repair costs, costs for additional maintenance and service, costs for replacement transportation during repairs, and diminution in value due to the defects. Plaintiffs also sought punitive damages of not less than $5,000 per vehicle.

After a hearing, the trial court denied certification of the class. The court ruled that while plaintiffs had framed an ascertainable class, separate questions of law and fact outweighed the common issues. The court noted that the "action undeniably raises certain issues which would appear to underlie all of the individual claims, but they are far outweighed by the peculiarities of each case alone. The allegation that the head gaskets were inherently defective in all the model years and the use of national advertising may be common themes. But beyond these starting points the individual cases branch off in their own separate directions with a multitude of varying legal and factual issues. [p] On the law to be applied, the national scope of the purported class immediately raises choice of law issues concerning the statute of limitations, liability, and recovery of damages. The rules on these issues throughout the states are not only inharmonious but are flatly contradictory in many respects, ... [p] The experiences of the nine individual plaintiffs also demonstrates that getting from the basic common questions to a determination of damages is a long march through a thicket of factual issues. The Court appreciates that individual questions of reliance and damages are not necessarily by themselves sufficient to defeat class treatment.... Nonetheless, these issues may still be considered in determining the basic question whether a class action is a superior means of resolving a multitude of claims, and the Court is convinced that these two issues do involve numerous difficult and disparate factual questions. Proximate cause also looms as a large issue in the case, in view of the various ways in which the vehicles have been used and maintained.... [p] The Court concludes, in short, that this case has so many difficult and peculiarly individual issues that treating it as a class action would be disadvantageous to the judicial process and, ultimately, to the litigants themselves. Accordingly, the motion to maintain this case as a class action is hereby denied." 1

From this ruling, plaintiffs appeal. 2

DISCUSSION

The trial court did not abuse its discretion in refusing to certify a nationwide class.

A. Overview of California class action law.

Code of Civil Procedure section 382 provides that a class action may be brought "when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court, ..."

" 'Class actions serve an important function in our judicial system. By establishing Plaintiffs need not show that they will necessarily prevail at trial. (Anthony v. General Motors Corp. (1973) 33 Cal.App.3d 699, 707, 109 Cal.Rptr. 254.) "It is enough that it appears that evidence in support of plaintiffs' theory may be available when the case goes to trial." (Ibid.) Here, plaintiffs made this showing in the trial court and defendants do not contend to the contrary. 3 (Compare Collins v. Safeway Stores, Inc. (1986) 187 Cal.App.3d 62, 70, 231 Cal.Rptr. 638.)

a technique whereby the claims of many individuals can be resolved at the same time, the class suit both eliminates the possibility of repetitious litigation and provides small claimants with a method of obtaining redress for claims which would otherwise be too small to warrant individual litigation.' [Citation.] Because of these important dual functions, courts and legislators have looked with increasing favor on the class action device." (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 469, 174 Cal.Rptr. 515, 629 P.2d 23.) "[T]he consumer class action is an essential tool for the protection of consumers against exploitative business practices." (State of California v. Levi Strauss & Co. (1986) 41 Cal.3d 460, 471, 224 Cal.Rptr. 605, 715 P.2d 564.)

Two prerequisites to the maintenance of a class action are the existence of an ascertainable class and a well-defined community of interest in the questions of law and fact involved. (Occidental Land, Inc. v. Superior Court (1976) 18 Cal.3d 355, 360-361, 134 Cal.Rptr. 388, 556 P.2d 750; see also Vasquez v. Superior Court (1971) 4 Cal.3d 800, 820, 94 Cal.Rptr. 796, 484 P.2d 964; Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 704, 63 Cal.Rptr. 724, 433 P.2d 732.) In addition, while the trial court has an obligation to consider the use of subclasses and other innovative procedural tools proposed by a party to certify a manageable class ( Occidental Land, Inc. v. Superior Court, supra, 18 Cal.3d at p. 360, fn. 3, 134 Cal.Rptr. 388, 556 P.2d 750; La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864, 875, fn. 10, 97 Cal.Rptr. 849, 489 P.2d 1113; see also Federal Rules of Civil Procedure, rule 23) the trial court must also consider the fundamental question whether maintenance of the lawsuit will benefit the parties and the courts. ( Occidental Land, Inc. v. Superior Court, supra, 18 Cal.3d at p. 360, 134 Cal.Rptr. 388, 556 P.2d 750; Hamwi v. Citinational-Buckeye Inv. Co. (1977) 72 Cal.App.3d 462, 471-472, 140 Cal.Rptr. 215.) As our Supreme Court noted in City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 115 Cal.Rptr. 797, 525 P.2d 701, while courts should seek to protect class actions as a general rule, they must also keep in mind "the accompanying dangers of injustice or of the limited scope within which these suits serve beneficial purposes.... [T]rial courts [must] carefully weigh respective benefits and burdens ... [and] allow maintenance of the class action only where substantial benefits accrue to both litigants and courts." ( Id., at p. 459, 115 Cal.Rptr. 797, 525 P.2d 701.)

Consequently, the party seeking certification must demonstrate "that the questions which they will be required to litigate separately are not numerous or substantial...." ( Vasquez v. Superior Court, supra, 4 Cal.3d at p. 820, 94 Cal.Rptr. 796, 484 P.2d 964.) Certification is properly denied where "the individual questions to be decided may prove too complex, numerous or substantial to allow the class action ... or the benefits to be gained may not be significant enough to justify imposition of a judgment binding on absent parties." (Harrison v. Board of Supervisors (1975) 44 Cal.App.3d 852, 861-862, 118 Cal.Rptr. 828, citations omitted; see Rose v. Medtronics, Inc. (1980) 107 Cal.App.3d 150, 155-156, 166 Cal.Rptr. 16.) Although Our task on appeal is not to determine in the first instance whether the requested class is appropriate but rather whether the trial court has abused its discretion in denying certification. "[T]rial courts have been given great discretion with regard to class certification.... [I]n the absence of other error, [an appellate] court will not disturb a trial court ruling on class certification which is supported by substantial evidence unless (1) improper criteria were used ... or (2) erroneous legal assumptions were made...." ( Richmond v. Dart Industries, Inc., supra, 29 Cal.3d at p. 470, 174 Cal.Rptr. 515, 629 P.2d 23, citations omitted; see also Occidental Land, Inc. v. Superior Court, supra, 18 Cal.3d at p. 361, 134 Cal.Rptr. 388, 556 P.2d 750; Schneider v. Vennard (1986) 183 Cal.App.3d 1340, 1345, 228 Cal.Rptr. 800.)

                class actions generally are favored, they "will not be permitted ... where there are diverse factual issues to be resolved, even
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