Walsh v. Ford Motor Co.
| Decision Date | 19 December 1986 |
| Docket Number | No. 85-5879,85-5879 |
| Citation | 257 U.S.App.D.C. 85,807 F.2d 1000 |
| Parties | , 55 USLW 2367, 1986-2 Trade Cases 67,378, 6 Fed.R.Serv.3d 536 John F. "Jack" WALSH, et al., Appellees, v. FORD MOTOR COMPANY, Appellant. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal from the United States District Court for the District of Columbia, (Civil Action No. 81-01998).
Richard C. Warmer and William T. Coleman, Jr., with whom Carl R. Schenker, Jr., John H. Beisner, Aaron S. Bayer and Barbara L. Strack, Washington, D.C., were on brief for appellant.
Beverly C. Moore, Jr., with whom Landon Gerald Dowdey, Washington, D.C., was on brief for appellees.
Before EDWARDS, RUTH B. GINSBURG and STARR, Circuit Judges.
Plaintiffs-Appellees, who proposed to represent several million owners of Ford automobiles, initiated the instant suit against Ford Motor Company to pursue breach of warranty claims by means of class actions. The appellees' suit arises under the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act ("Magnuson-Moss" or the "Act"); 1 the essence of appellees' complaint is that certain Ford models suffer from a transmission defect that causes the automobiles to slip out of the "park" position and into "reverse."
In order to obtain class action certification under Rule 23 of the Federal Rules of Civil Procedure, appellees grouped their breach of warranty claimants into three principal categories: one group ("written warranty incidents" class) included all Ford owners who had allegedly experienced a "park-to-reverse" incident within Ford's 12,000 mile/12 month written warranty period; the second group ("implied warranty incidents" class) included every Ford owner who allegedly experienced a park-to-reverse incident; and the third group ("all-owners" class) included all owners of an allegedly defective Ford vehicle, without regard to whether the owner had ever experienced a park-to-reverse incident. Citing a variety of legal objections, Ford opposed class certification; in particular, Ford argued that none of the appellees' proposed claimant groups was a cognizable "class" under Rule 23.
Although the District Court recognized that appellees' proposed class groupings raised some difficult legal issues under Rule 23, the trial judge nevertheless conditionally certified all three classes. The District Court decided to apply Rule 23 only where it is consistent with the terms and intent of Magnuson-Moss; therefore, having found that Magnuson-Moss reflects a congressional intent liberally to allow class actions as a device to facilitate consumers' recovery for breach of warranties, the District Court concluded that appellees' proposed classes should be certified as suggested. The effect of this ruling was to allow appellees to avoid the strict requirements of class certification under Rule 23.
Given the importance of the legal questions at issue, and the enormity of the litigation presently contemplated, the District Court approved appellant's request for interlocutory review under 28 U.S.C Sec. 1292(b). On November 7, 1985, this court granted interlocutory appeal on the issue of class certification. 2
Because we find that the District Court's decision to certify appellees' classes was based in significant part on an improper construction of Magnuson-Moss, rather than on a normal application of Rule 23, we vacate and remand for further consideration as to whether any class certification is appropriate under unmodified Rule 23 standards.
The plaintiffs-appellees brought this action under section 110 of Magnuson-Moss, 3 alleging that the defendant-appellant, Ford Motor Company, breached both its implied and written warranties of merchantability by marketing defectively designed automobiles. In particular, the appellees alleged that 1976-79 (and 1980 pre-design change) Ford vehicles equipped with FMX, C-3, C-4 and C-6 automatic transmissions suffer from a defect that causes the automobiles to slip out of the "park" position and into "reverse." 4 The appellees, claiming to represent several million Ford owners, sought to pursue their breach of warranty claims by means of class actions. For the purpose of obtaining class action certification, they grouped their principal claims into three broad categories. The first group ("written warranty incidents" class) consisted of all Ford owners who allegedly experienced a park-to-reverse incident within Ford's 12,000 mile/12 month written warranty period. This group sought certification under Rule 23(b)(3) to recover property damages incurred in these incidents. 5 The second group ("implied warranty incidents" class) consisted of all Ford owners who allegedly experienced a park-to-reverse incident. This group also sought certification under Rule 23(b)(3) to recover property damages. The third group ("all-owners" class) consisted of all owners of an allegedly defective Ford vehicle, without regard to whether the owner had experienced an actual park-to-reverse incident. 6 This group sought certification under Rule 23(b)(3) to recover damages equal to the difference in value between the transmissions as received and as warranted; or, in the alternative, certification under Rule 23(b)(2) to compel Ford to repair the defective vehicles. 7 The appellees also asked the District Court to certify two additional "incidents" classes, one to recover punitive damages and the other to pursue personal injury claims.
Before the District Court, Ford opposed class certification on numerous grounds. 8 Under Rule 23(b)(3), Ford observed, a district court may not certify a class unless it finds that "questions of law or fact common to the members of the [proposed] class predominate over any question affecting only individual members." With respect to the implied warranty classes, Ford argued, it could not be found that common questions of law predominated, because Magnuson-Moss defines implied warranties as those arising under state law, 9 and there are material variations in state laws governing the interpretation of implied warranties. 10 With respect to all the proposed classes, Ford argued, it could not be found that common questions of fact predominated, because the appellees had not proffered any proof that the four different transmissions (the FMX, C-3, C-4 and C-6) suffered from a common defect. 11 With respect to the "incidents" classes, Ford argued, it again could not be found that common questions of fact predominated, because each plaintiff would be required to make an individual showing that her accident was caused by Ford's allegedly defective design.
Ford also argued that certification of an "all-owners" class was improper in light of the appellees' concession that they could not bear the cost of providing individual notice of the action to the several million absentee class members. As interpreted in Eisen v. Carlisle & Jacquelin, Ford observed, Rule 23(c)(2) requires proposed plaintiff class representatives to send individual notice to all class members whose names and addresses may be ascertained through reasonable effort, irrespective of the financial burden placed on the plaintiffs by this requirement. 417 U.S. 156, 176, 94 S.Ct. 2140, 2151, 40 L.Ed.2d 732 (1974) ( ) In addition, Ford argued, individual notice was required by procedural due process, for without such notice, absentee class members would be deprived of the opportunity to be heard or to opt out of the litigation.
The District Court found that none of the above arguments foreclosed class certification under Rule 23(b)(3). Accordingly, the trial judge conditionally certified an "all-owners" class, 12 an "implied warranty incidents" class and a "written warranty incidents" class. 13
Before addressing Ford's Rule 23 arguments, however, the District Court examined the statutory framework of Magnuson-Moss to determine the extent to which Rule 23 applies to class actions brought under the Act. Section 110 of the Act establishes jurisdictional requirements for a class action brought in federal district court. In particular, the Act requires that there be at least 100 named plaintiffs, that each individual claim exceed $25 and that the aggregate claims exceed $50,000. 14 The Act also provides that a plaintiff may file a class action, but may not proceed with that action, until she has afforded the defendant a reasonable opportunity to cure its alleged breach. While the class action is held in abeyance pending possible cure, the district court may rule on the representative capacity of the named plaintiffs, its determination to be made "in the application of rule 23 of the Federal Rules of Civil Procedure." 15
The appellees contend that these statutory provisions evince a congressional intent that Rule 23 should apply to Magnuson-Moss class actions only to the extent necessary to determine the representative capacity of the named plaintiffs. Congress, they argue, would not have explicitly mentioned Rule 23 in a particular context had it meant for Rule 23 to apply across the board. 16 The fact that Congress specified the circumstance under which Rule 23 would apply, and delineated the jurisdictional requirements for a class action in federal court, purportedly suggests that Congress may have intended to create a " 'self-contained' class action regime" under which those portions of Rule 23 not explicitly mentioned in the statute would...
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