Porsche Cars N. Am., Inc. v. Diamond

• Decision Date: 11 June 2014
• Docket Number: No. 3D12–2829.,3D12–2829.
• Citation: 140 So.3d 1090
• Parties: PORSCHE CARS NORTH AMERICA, INC., etc., Appellant, v. Peter DIAMOND, et al., Appellees.
• Court: Florida District Court of Appeals

140 So.3d 1090

PORSCHE CARS NORTH AMERICA, INC., etc., Appellant,
v.
Peter DIAMOND, et al., Appellees.

No. 3D12–2829.

District Court of Appeal of Florida,
Third District.

June 11, 2014.

[140 So.3d 1092]

DLA Piper LLP, and William F. Kiniry, Jr., Philadelphia, and Fredrick H.L. McClure and E. Colin Thompson, Tampa, for appellant.

Eaton & Wolk, PL, and Douglas F. Eaton and William G. Wolk, Miami, for appellees.

Before LAGOA, SALTER, and LOGUE, JJ.

LOGUE, J.

We have for review a trial order certifying a class action against Porsche Cars North America, Inc. (“Distributor”). In analyzing whether common issues will predominate over individual issues, the trial court used an outdated definition of unfair trade practices. When the updated definition is used, common issues will not predominate. We accordingly reverse and remand.

[140 So.3d 1093]

BACKGROUND A. Distributor.

Distributor is a wholly-owned subsidiary of Porsche A.G. (“Porsche”). Porsche is the German company that designs and manufactures Porsche vehicles for worldwide distribution. Distributor, the exclusive importer and distributor of Porsche cars in the United States, purchases vehicles and parts from Porsche and sells them to authorized dealerships in the United States for subsequent sale to consumers. Distributor does not sell directly to consumers.

B. High Intensity Discharge Headlights.

This case focuses on Porsche's High Intensity Discharge Headlights (“Headlights”). The Headlights are an upscale amenity in the luxury car market. The intense blue-white light given by the Headlights is closer to natural daylight than the yellowish light of regular headlights. The Headlights provide better nighttime visibility than older types of headlights. Since model year 2000, the Headlights have been offered as standard or optional equipment across the Porsche vehicle line. The Headlights were mounted on modules that were slid into a plastic tray in the fender and clamped in place. This mounting made the Headlights relatively less expensive to install and repair. At the same time, however, it made them easier to steal. A knowledgeable thief could pry the Headlights out of the vehicle in a few moments by forcing a large screwdriver or pry bar under the lights, bending the clamp, and breaking either the head lamp unit or baseplate. This process would also damage the fender, sometimes extensively.

C. Crime Wave of Headlight Thefts.

Distributor became aware in late 2003 or early 2004 that the Headlights were increasingly becoming the target of theft. Distributor reported this problem to Porsche: “According to a Jan. 12, 2004 article in the Miami Herald, theft of Porsche and Nissan headlights is becoming a major problem. Over 60 thefts have occurred in one Miami suburb over the last year.” After exploring various solutions, Porsche determined that design changes would not eliminate the problem of theft and would make the vehicles more expensive to purchase and repair. No changes were made to the Headlights.

The City of Coral Gables experienced a tide of headlight thefts from vehicles of all makes and models that rose in 2002, crested in 2004, and ebbed in 2006. Although headlights were stolen from all makes and models of cars, the rate of headlight thefts from Porsche vehicles was disproportionately higher than the rates of thefts from other cars. We summarize pertinent details provided in a larger chart submitted into evidence as follows: ¹

City of Coral Gables

Vehicle Headlight Thefts

May 31, 2002—May 15, 2010

Yearly Comparison

	2002	2003	2004	2005	2006	2007	2008	2009	2010	Total
Porsche	18	59	60	47	27	5	4	6	0	226
All Vehicles	22	87	141	117	81	11	9	14	1	483

[140 So.3d 1094]

The Coral Gables Police Department formed a task force that undertook efforts to eliminate headlight theft. Arrests were made and the incidence of headlight thefts from all cars began to steadily and significantly decline. Since 2007, reported headlight thefts have become increasingly rare in Coral Gables. No evidence indicated that the rate of theft in Coral Gables projected across the State; to the contrary, some evidence indicated the problem was regional and centered mainly in South Florida.

D. The Class Representatives.

Class representatives, Peter Diamond, Irma Matos, Richard Sharp, and Luis Alayo–Riera, are all residents of Miami–Dade County, Florida, who purchased replacement headlights after the Headlights in their vehicles were stolen. Some class representatives knew about the problem of thefts when they leased or purchased their vehicle, others did not. Irma Matos, for example, had no knowledge regarding the special characteristics of the Headlights and no idea that the Headlights were targeted for theft until after three different sets of Headlights were stolen. Exasperated after the three incidents of stolen Headlights, she terminated her lease early and traded her vehicle for a BMW.

Luis Alayo–Riera, on the other hand, was a more sophisticated and knowledgeable buyer. A self-described “Porsche fanatic” and “car enthusiast,” he was attracted by the characteristics of the Headlights. From both discussions with friends and articles he read, he learned about the problem of the thefts in South Florida. Nevertheless, he intentionally leased a Porsche equipped with the Headlights. Later, when thieves twice stole his Headlights, he consciously chose to have the same type of Headlights reinstalled. After the second incident, however, he began taking extra security measures, including parking his car next to the security guard post in the office parking lot where the thefts had occurred. The thefts stopped. He subsequently purchased the vehicle with the Headlights. When he finally sold the vehicle, he admitted the car suffered no diminished value due to the Headlights. To the contrary, he maintained the Headlights enhanced the sale price of the car.

E. The Legal Theory.

In their claim for a class action, the class representatives assert unfair trade practices and unjust enrichment claims. They allege Distributor acted unfairly by profiting from distributing a product highly susceptible to theft without taking remedial steps. Specifically, Distributor failed to “notify owners of the flaw and potential risk of theft so they could take their own precautions,” to “offer replacement lights at reduced costs,” and to “work with law enforcement agencies to assist in the prevention of the theft of their headlights.” ² This course of conduct, the representatives members allege, violated the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”). §§ 501.201–.213, Fla. Stat. They seek consequential damages in the form of the cost of repairing the cars and replacing the stolen Headlights; they do

[140 So.3d 1095]

not claim that the vehicles they purchased or leased were worth less than the prices paid.³

The unjust enrichment claim states that plaintiffs conferred a benefit on Distributor by purchasing replacement Headlights which were ultimately supplied by Distributor, and that it would be inequitable to allow Distributor to profit from customer losses caused by a design flaw of which Distributor was fully aware yet failed to remedy.

F. The Classes Certified.

Plaintiffs sought certification of a class consisting of:

All Florida owners or lessees of Porsche 911 (models 996 and 997), Boxster (986 and 987) or Cayman vehicles whose HID headlights were forcibly removed from outside their vehicles during the period from May 31, 2002 until present.

Following a hearing on the motion, the trial court granted the motion and certified the class described above to pursue the FDUTPA violation claim. The trial court also certified two subclasses to pursue the unjust enrichment claims defined as:

Unjust Enrichment Subclass 1: All owners described above whose headlights were removed on only one occasion during the time period described above.

Unjust Enrichment Subclass 2: All owners described above whose headlights were removed on more than one occasion during the time period described above.

Distributor appeals that order.

ANALYSIS I. Determining Class Certification: Will the Proof of the Class Representatives' Case Necessarily Prove the Case of the Absent Class Members?

The threshold requirements for class certification are well known: a class will be certified based upon a showing of numerosity, commonality, typicality, and adequacy of representation. Fla. R. Civ. P. 1.220(a). In addition to meeting these threshold requirements, the class must fall within one of the three different types of class actions established in Florida Rule of Civil Procedure 1.220(b).

The focus of a class certification hearing is not on whether the class representatives will prevail at trial. Sosa v. Safeway Premium Fin. Co., 73 So.3d 91, 105 (Fla.2011). Instead, the focus is on “whether a litigant's claim is suited for class certification” and whether the proposed class provides “a superior method for the fair and efficient adjudication of the controversy.” Id. at 105–06. “However, if consequential to its consideration of whether to certify a class, a trial court may consider evidence on the merits of the case as it applies to the class certification requirements.” Id. at 105.

The trial court certified the present case as a rule 1.220(b)(3) class action. In a(b)(3) class action, not all issues of fact and law are common, but common issues

[140 So.3d 1096]

predominate over individual issues. Fla. R. Civ. P. 1.220(b)(3). Common issues predominate when, considering both the rights and duties of the class members, the proof offered by the class representatives will necessarily prove or disprove the cases of the absent class members. As the Supreme Court explained in Sosa:

[A] class representative establishes predominance if he or she demonstrates a reasonable methodology for generalized proof of class-wide impact. A class representative accomplishes this if he or she, by proving his or her own individual case, necessarily proves the cases of the other class members.

73 So.3d at 112...