Samuel-Bassett v. KIA Motors America, Inc., 22 EAP 2008

CourtUnited States State Supreme Court of Pennsylvania
Writing for the CourtCASTILLE
PartiesSHAMELL SAMUEL-BASSETT ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, Appellees v. KIA MOTORS AMERICA, INC., Appellant
Docket NumberNo. 22 EAP 2008,No. 23 EAP 2008,No. 24 EAP 2008,22 EAP 2008,23 EAP 2008,24 EAP 2008
Decision Date02 December 2011

SHAMELL SAMUEL-BASSETT ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, Appellees
v.
KIA MOTORS AMERICA, INC., Appellant

No. 22 EAP 2008
No. 23 EAP 2008
No. 24 EAP 2008

SUPREME COURT OF PENNSYLVANIA EASTERN DISTRICT

ARGUED: April 15, 2009
DECIDED: December 2, 2011


[J-31A-C-2009]

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, GREENSPAN, JJ.

Appeal from the Judgment of the Superior Court entered on October 24, 2007, at No. 3048 EDA 2005 (reargument denied January 2, 2008) Affirming the Judgment entered on October 25, 2005, in the Philadelphia County Court of Common Pleas at No. 2199 January Term 2001

Appeal from the Judgment of the Superior Court entered on October 24, 2007, at No. 3068 EDA 2005 (reargument denied January 2, 2008) Affirming the Judgment entered on October 25, 2005, in the Philadelphia County Court of Common Pleas at No. 2199 January Term 2001

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Appeal from the Judgment of the Superior Court entered on February 8, 2008, at No. 537 EDA 2006 from the Order entered on January 23, 2006, in the Philadelphia County Court of Common Pleas at No. 2199 January Term 2001

OPINION

MR. CHIEF JUSTICE CASTILLE 1

Appellant, an automobile manufacturer who unsuccessfully defended a class action lawsuit for breach of express warranty, appeals the Superior Court's decision to affirm the certification of the class by the trial court, and the amount of damages and litigation costs awarded to the class. Costs included a significant legal fee, entered pursuant to the Magnuson-Moss Warranty Improvement Act (the "MMWA"), 15 U.S.C. § 2310(d)(2). For the reasons that follow, we affirm in part and reverse in part, with reversal being limited to the lower courts' approval of an enhancement of class counsel's legal fee by application of a risk multiplier to the amount of the lodestar;2 and we remand to the trial court for adjustment of the attorneys' fee award in accordance with this Opinion.

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Case History

Appellee Shamell Samuel-Bassett, on behalf of herself and others similarly situated (the "class"), filed this class action lawsuit in January 2001, in the Philadelphia Court of Common Pleas. Bassett alleged that, in October 1999, she purchased a model year 2000 Sephia from appellant Kia Motors America, Inc., ("KMA" or the "manufacturer") with an extended warranty of sixty months or 60,000 miles.3 The purchase contract included the manufacturer's standard warranty clause, which stated that: "[KMA] warrants that your new [Sephia] is free from defects in material and workmanship," subject to several terms and conditions.

According to the complaint, Bassett experienced malfunctioning of her Sephia's brakes within 17,000 miles of use, which manifested as an inability to stop the vehicle, increased stopping distances, unpredictable and violent brake pedal pressures, brake lockup and vibration, and general interference with control of the vehicle. She attributed these manifestations to a defect in the design of the Sephia's brake system causing inadequate heat dissipation, premature wear of the brake pads, and warping of the rotors.4 KMA's authorized dealerships attempted five repairs on Bassett's vehicle between January and October 2000, replacing brake pads and rotors on four of five occasions. According to Bassett, she sought to rescind her purchase contract but KMA refused her demand. Bassett claimed that, although KMA was aware of the defect in the brake system, KMA failed to correct the defect and failed to honor the warranty by charging her for the required

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repairs and replacements. Further, Bassett alleged that the defect in the brake system's design was common to all model year 1995 to 2001 Sephias. She claimed that all members of the class experienced premature wear and malfunction of the brakes, needing repairs within the first 20,000 miles of purchase. According to the complaint, all repair attempts were ineffective, most were not covered by KMA under the warranty, and the members of the class incurred damages of a similar nature to Bassett's.

The complaint stated four causes of action: breach of express warranty, breach of implied warranty of merchantability, violation of the MMWA, and violation of the Unfair Trade Practices and Consumer Protection Law ("UTPCPL"). Bassett claimed that each member of the class was entitled to compensatory damages for out-of-pocket repair costs, loss of use costs, loss of resale value, funds for permanent repair of the vehicle, treble damages, and costs of litigation, including legal fees. Finally, Bassett requested an injunction compelling KMA to notify all class members of the potential danger for personal injury deriving from the Sephia's brake defect, and to provide free repair and replacement of the affected brake systems.

In February 2001, counsel for KMA filed a notice to remove the action to the U.S. District Court for the Eastern District of Pennsylvania, invoking that court's diversity jurisdiction. The parties then filed an amended complaint and answer with the federal court. Bassett's amended federal court complaint re-stated the allegations in her original state court complaint, and KMA answered denying all allegations and asserting forty-seven boilerplate affirmative defenses. The manufacturer sought dismissal of the amended complaint. In due course, the district court certified the class on all of Bassett's claims except her UTPCPL claim. See Bassett v. Kia Motors Am., Inc., 212 F.R.D. 271 (E.D. Pa. 2002). KMA appealed and the U.S. Court of Appeals for the Third Circuit, which raised the issue of jurisdiction sua sponte, vacated the lower court's certification decision, and remanded for a determination of whether the parties met the amount in controversy

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required to establish diversity jurisdiction. See Bassett v. Kia Motors Am., Inc., 357 F.3d 392 (3d Cir. 2004). In light of the Third Circuit's decision, the parties agreed that the jurisdictional requirement had not been satisfied and, on April 8, 2004, the district court remanded the case to the Philadelphia County Court of Common Pleas.

Following remand, in May 2004, Bassett filed her motion for class certification with the Philadelphia Court of Common Pleas. Bassett's motion for class certification filed in state court simply incorporated by reference the motion she originally filed in federal court. Compare Pa.R.C.P. Nos. 1702, 1708 with Fed.R.Civ.P. 23(a)-(b). In September 2004, the trial court granted Bassett's motion for class certification in part. The court certified the following class as to the breach of express warranty, breach of implied warranty of merchantability, and MMWA claims:

All residents of the Commonwealth of Pennsylvania who purchased or leased model year 1995-2001 Kia Sephia automobiles for personal, family or household purposes for a period of six years preceding the filing of the complaint in this action.

Certification Order, 9/17/04, at 1. Following discovery, the parties stipulated that KMA did not begin selling the Sephia in the United States until 1997. Bassett also conceded that the 2001 model Sephia had undergone substantial redesign that corrected the alleged brake defect. Consequently, the class was limited to purchasers of 1997 to 2000 Sephias. Class certification was denied as to the UTPCPL claim, and Bassett was permitted to proceed alone on that count. Bassett was designated class representative and her attorneys were appointed counsel for the class. Subsequently, KMA asked the trial court to certify the September 17, 2004, order granting class certification for interlocutory appeal, but its request was denied in November 2004.

Bassett notified the class of the action against KMA. The parties then filed various motions in limine and proposed findings of fact in anticipation of trial. In addition, KMA filed

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a motion to bifurcate, which the trial court denied. Tr. Ct. Order, 5/16/05. Subsequently, the parties proceeded to trial.

The trial took place between May 16 and May 27, 2005. At the conclusion of Bassett's case, KMA moved for compulsory nonsuit, but the court denied the motion. Notes of Testimony ("N.T."), 5/23/05, Vol. 5, at 55-60. KMA renewed its request for summary relief at the end of its case, moving for a directed verdict on the warranty and MMWA claims. After argument, KMA withdrew its request in part, and the trial court denied the remainder of the motion.5 N.T., 5/25/05, Vol. 7, at 13-28. On May 27, 2005, the jury rendered a verdict in favor of the class on the claim for breach of express warranty and awarded damages in the amount of $600 per class member. The court molded the verdict to account for the 9,402 class members to which the parties had stipulated, and recorded a verdict of $5,641,200. Subsequently, the trial court denied the class's request for injunctive relief.

On June 10, 2005, KMA -- represented by new counsel --filed a post-trial motion for judgment notwithstanding the verdict or, in the alternative, for a new trial. See Pa.R.C.P. No. 227.1. On September 26, 2005, the trial court held a hearing on KMA's motion, at the end of which it directed the manufacturer to file an addendum indicating...

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