407 F.Supp.3d 212
S.D.N.Y.2019Background
- In 2014 New GM recalled millions of vehicles for a defective ignition switch and related defects; hundreds of plaintiffs sued seeking economic-loss damages on behalf of putative classes; litigation was consolidated in this MDL.
- Plaintiffs pursue benefit-of-the-bargain damages (expectation damages) and previously abandoned a brand-devaluation theory; the benefit theory measures the gap between a defect-free car bargained for and the defective car received.
- The Court selected three bellwether states (California, Missouri, Texas) for summary judgment and related proceedings; expert discovery closed and Plaintiffs rely primarily on Stefan Boedeker’s conjoint-analysis to prove class-wide difference-in-value damages.
- New GM moved for summary judgment arguing (inter alia) Plaintiffs lack evidence of market-value damages and post-sale repairs (recalls) mitigate or eliminate damages.
- The Court analyzed substantive state law in each bellwether state and held that benefit-of-the-bargain damages are generally the lesser of (1) cost to repair or (2) difference in fair market value between the vehicle as warranted and as sold, with post-sale mitigation relevant.
- The Court granted summary judgment to New GM to the extent Plaintiffs seek difference-in-value damages because Boedeker’s demand-side-only conjoint analysis fails to prove market value (which requires both willingness-to-pay and willingness-to-sell/supply evidence).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper measure of benefit-of-the-bargain damages | Plaintiffs: damages measured by what buyers would have paid (willingness-to-pay) — Boedeker’s conjoint shows overpayment | New GM: state law requires market-value measure; repair costs and supply-side effects matter | Court: In CA, MO, TX damages = lesser of repair cost or difference in fair market value (supply and demand), reduced by mitigation |
| Relevance of post-sale repairs/recalls | Plaintiffs: post-sale remedies do not fully negate bargained-for loss | New GM: repairs mitigate/eliminate damages | Court: Post-sale repairs are relevant and can eliminate damages where defendant restored the vehicle to the bargained-for condition |
| Sufficiency of Boedeker’s conjoint analysis to prove difference-in-value | Plaintiffs: Boedeker’s conjoint shows class members would have paid less — suffices to prove overpayment | New GM: Boedeker measures only demand (willingness-to-pay); he ignores supply/willingness-to-sell and market equilibrium, so cannot prove market value | Court: Boedeker’s demand-only model is insufficient to establish market-value difference; summary judgment granted on difference-in-value damages |
| Burden at summary judgment / remaining path | Plaintiffs: Boedeker evidence creates triable issue on damages | New GM: absence of evidence on market value is an essential-element failure | Court: Plaintiffs failed to produce other competent market-value evidence; the absence of evidence on an essential element requires summary judgment on difference-in-value claims |
Key Cases Cited
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary-judgment genuine-issue standard)
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary-judgment burden-shifting and pointing to absence of evidence)
- West v. Am. Tel. & Tel. Co., 311 U.S. 223 (federal courts follow state high-court pronouncements on state law)
- Bagdasarian v. Gragnon, 192 P.2d 935 (Cal. 1948) (value ordinarily means market value)
- Kwikset Corp. v. Superior Court, 246 P.3d 877 (Cal. 2011) (UCL standing distinct from proof of restitutionary damages)
- Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979 (9th Cir. 2015) (UCL restitution measured by what purchaser would have paid but supply considerations remain important)
- Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 (class certification vs. summary-judgment limits when there is a failure of proof)