Spence v. Glock GES.m.b.H

• Decision Date: 27 September 2000
• Docket Number: No. 99-40533,99-40533
• Citation: 227 F.3d 308
• Parties: (5th Cir. 2000) STAN SPENCE, Individually and on behalf of others similarly situated; WILLIAM HATFIELD, Individually and on behalf of others similarly situated; JOHN JOHNSON, Lieutenant, Individually and on behalf of others similarly situated, Plaintiffs-Appellees, JOHN P. KELLOGG, Intervenor/Plaintiff-Appellee, v. GLOCK, GES.m.b.H., an Austrian limited liability company, GLOCK, INC., a Georgia Corporation Defendants-Appellants
• Court: U.S. Court of Appeals — Fifth Circuit

Page 308

227 F.3d 308 (5th Cir. 2000)

STAN SPENCE, Individually and on behalf of others similarly situated; WILLIAM HATFIELD, Individually and on behalf of others similarly situated; JOHN JOHNSON, Lieutenant, Individually and on behalf of others similarly situated, Plaintiffs-Appellees, JOHN P. KELLOGG, Intervenor/Plaintiff-Appellee, v. GLOCK, GES.m.b.H., an Austrian limited liability company, GLOCK, INC., a Georgia Corporation Defendants-Appellants.

No. 99-40533

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

September 27, 2000

Appeal from the United States District Court for the Eastern District of Texas

Before JONES, DUHE, and WIENER, Circuit Judges.

EDITH H. JONES, Circuit Judge:

Defendants appeal the district court's certification of a nationwide class of owners of Glock pistols who allege that their pistols are defective in several respects. The district court certified the class after concluding that Georgia law should be applied to all the class members' claims. Because the district court erred in its choice of law analysis, and thus abused its discretion on the issue of predominance under Rule 23(b)(3), we reverse the certification.

FACTS & PROCEDURAL HISTORY

In this class action case, purchasers of particular models of Glock handguns manufactured between 1986 and 1997 assert multiple causes of action alleging that Glock guns suffer from an alleged design defect that causes the guns to jam and/or discharge accidentally.¹ Plaintiffs' theories of liability include: 1) design defect; 2) failure to warn; 3) fraud, deceit and material misrepresentations of fact; 4) negligence; 5) breach of express and implied warranties; and 6) negligent misrepresentation.² The plaintiffs seek damages for economic loss, based on the diminished value of their pistols and the need for repairs, as well as punitive damages and attorneys' fees.

Putative class members number, at a minimum, 50,000, and reside in all fifty states and the District of Columbia. The named plaintiffs are all residents of Texas who own various Glock model handguns. Defendant-appellant Glock Ges.m.b.H. ("Glock Europe") is the Austrian corporation that manufactures Glock model pistols. Glock, Inc. ("Glock USA") is a Georgia corporation that assembles and distributes Glock pistols in the United States and Canada. Glock Austria designs the guns in Austria and manufactures the parts there. The parts are then shipped to Glock USA in Georgia, where they are assembled, tested for quality control and sent to distributors across the United States. Glock USA sells its products to law enforcement dealers and wholesale distributors throughout the United States, who then sell the products to retail handgun dealers for sale to the public.

In the district court, plaintiffs sought class certification of an opt-out class under Rule 23(b)(3). The district court referred Plaintiffs' Motion for Class Certification to a magistrate judge who issued a recommendation to certify the class. The district court accepted the recommendation and rejected the defendants' objections, reasoning that Georgia law applied by virtue of Glock USA's contacts with that state and Georgia's regulation of Glock USA, and that therefore the class satisfied Rule 23(b)(3)'s predominance requirement. The Glock defendants now appeal, arguing principally that the district court's choice of Georgia law was incorrect and that the class should not have been certified because the proper choice of law precludes a finding that common questions of law predominate.³

DISCUSSION

A district court must rigorously analyze Rule 23's prerequisites before certifying a class. See General Tel. Co. v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 2372, 72 L.Ed.2d 740 (1982); Castano v. Am. Tobacco Co., 84 F.3d 734, 740 (5th Cir. 1996). The district court has broad discretion to certify a class, which it must exercise within the confines of Rule 23. See Gulf Oil Co. v. Bernard, 452 U.S. 89, 100, 101 S.Ct. 2193, 2200, 68 L.Ed.2d 693 (1981); Castano, 84 F.3d at 740. The party seeking certification bears the burden of proof. See Castano, 84 F.3d at 740; Horton v. Goose Creek Ind. Sch. Dist., 690 F.2d 470, 486 (5th Cir. 1982), cert. denied, 463 U.S. 1207, 103 S.Ct. 3536, 77 L.Ed.2d 1387 (1983). This court reviews a class certification for abuse of discretion, but if the district court has committed legal error in the predominance inquiry, reversal is required. Castano, Id.

Rule 23 of the Federal Rules of Civil Procedure sets forth several conditions that must be met for a proposed class of plaintiffs to be certified. Appellants do not focus on whether or not the proposed class has met the initial requirements of Rule 23(a).⁴ Instead, they contend that the proposed class has not met the requirements of Rule 23(b)(3). Rule 23(b)(3) requires that questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to the individual adjudication of claims. See Fed.R.Civ.P. 23(b)(3).

The district court's predominance finding depends on its choice of law analysis that held Georgia law applicable to all the claims of all the plaintiffs. Appellants assert that, to the contrary, the laws of 51 jurisdictions apply in this class action. If appellants are correct, the variations in the laws of the states and District of Columbia "may swamp any common issues and defeat predominance." Castano, 84 F.3d at 741.⁵ The threshold question for this court, therefore, is whether the district court conducted a proper choice of law analysis and correctly decided that Georgia law controlled. See Castano, 84 F.3d at 741.

In diversity cases, federal courts are obliged to apply the choice of law rules of the forum state. See Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941). Texas courts use the ALI Restatement's "most significant relationship test" for all choice of law cases except those contract cases in which the parties have agreed to a valid choice of law clause. See Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 421 (Tex. 1984); Gutierrez v. Collins, 583 S.W.2d 312, 318 (Tex. 1979) (adopting the most significant relationship methodology for tort choice of law issues). This Court reviews a district court's choice of law determination de novo. See In re Air Disaster at Ramstein Air Base, Germany, 81 F.3d 570, 576 (5th Cir. 1996).⁶

Section 6 of the ALI Restatement (Second) of Conflict of Laws delineates the general principles that inform a choice of law determination.

Section 6 states:

(1) A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law.

(2) When there is no such directive, the factors relevant to the choice of the applicable rule of law include

(a) the needs of the interstate and international systems,

(b) the relevant policies of the forum,

(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue (d) the protection of justified expectations,

(e) the basic policies underlying the particular field of law,

(f) certainty, predictability and uniformity of result, and

(g) ease in the determination and application of the law to be applied.

In later sections, the Restatement individually addresses choice of law analysis for a variety of issues.

Section 145 concerns choice of law for issues in tort and states that:

(1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.

(2) Contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:

(a) the place where the injury occurred,

(b) the place where the conduct causing the injury occurred,

(c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and

(d) the place where the relationship, if any, between the parties is centered.

These contacts are to be evaluated according to their relative importance with respect to the particular issue.

Restatement (Second) of Conflict of Laws §145. Courts should evaluate these contacts for their quality, not their quantity. See Gutierrez, 583 S.W.2d at 319.

Georgia's contacts with the case are as follows. First, the guns at issue are imported, assembled, and tested for quality control in Georgia. Second, Glock USA is incorporated and has its principal place of business in Georgia and is regulated under Georgia firearm law in order to comply with BATF certification. Third, Glock distributes its products from Georgia and receives warranty cards there. Fourth, the alleged ejection port defect is corrected in Georgia. Of these contacts, only one is mentioned in Section 145 -- Glock USA's domicile in Georgia -- and it is offset by the fact that the plaintiffs are domiciled all over the country.

The district court also counted Georgia as the place of injury and the place where the conduct causing the injury occurred. In regard to its description of Georgia as the place of injury, the district court was clearly wrong. Plaintiffs allege that they suffered economic loss because of the defective design of the guns they bought. The manufacture of allegedly defective goods is no wrong unto itself. See Crisman v. Cooper Ind., 748 S.W.2d 273, 277 (Tex. App. 1988). Instead, the economic injury occurred when and where plaintiffs bought the guns. Furthermore, the district court's conclusion that Georgia is the place where the conduct causing the injury occurred is also suspect. The plaintiffs claim that the defect is a design defect, making it more logical to conclude that the conduct causing the injury occurred in Austria, where the gun was...