ANNE MCVICAR, еt al., Plaintiffs, vs. GOODMAN GLOBAL, INC., et al., Defendants.
Case No.: SA CV 13-1223-DOC (RNBx)
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION
August 20, 2015
DAVID O. CARTER
O
I. Background
Plaintiffs bring suit on behalf of themselves and similarly situated consumers, claiming that Defendants Goodman Global, Inc., Goodman Manufacturing Company, LP, and Goodman Company, LP (collectively, “Goodman“) manufactured and sold air-conditioning systems with defective evaporator coils and condenser coils.1 The gravamen of the Second Amended Class Action Complaint (“SAC“) (Dkt. 74) is that Defendants “marketed and warranted to homeowners, builders, and contractors, including Plaintiffs and members of the class, that [] Goodman Air Conditioners were of superior quality and engineered and built to be long-lasting and reliable, even though Defendants had knowledge [] that the [systems] contained a common defect in the evaporator coils” which led the units to prematurely malfunction and leak refrigerant, rendering them incapable of cooling. Id. ¶¶ 4-6, 8. After several rounds of motions to dismiss, the remaining Plaintiffs are Rich Harlan (“Harlan“) and Jeffrey and Andrea Gross (“the Grosses“) (сollectively, “Plaintiffs“).
The SAC alleges the following facts, drawn from the Court‘s Order Granting in Part and Denying in Part Defendants’ Motion to Dismiss the SAC (Dkt. 97):
A. The Grosses
In December 2012, Jeffrey and Andrea Gross (“the Grosses“) purchased a Goodman-manufactured heating and air conditioning unit from AC Unit Direct, LLP, through AC Unit Direct‘s website. Id. ¶ 104. The Grosses spent $2,976.00 on the unit. Id. The unit was installed in the Grosses’ home in January 2013 by Mike Mechanical Heating and Air (“Mike Mechanical“). Id. ¶ 107.
When the Grosses attempted to turn on the Goodman-manufactured unit on in May 2013, it did not work properly. A technician from Mike Mechanical concluded on May 20, 2013 that the evaporator coil contained a leak that could not be repaired and that the coil needed to be replaced. Id. ¶ 108.2 The Grosses tried to make a claim through the Goodman warranty program but were denied and told that the warranty protections were unavailable because they had purchased their unit through an online retailer. Id. ¶ 109. The Grosses have expended $1,600 to replace the evaporator coil. Id. ¶ 110. SAC Order (Dkt. 97) at 2-3.
On January 31, 2008, Rich Harlan (“Harlan“) instructed his contractor Erick Trejo to purchase a Goodman-manufactured heating and air conditioning unit on Harlan‘s behalf. Id. ¶ 112. The unit cost approximately $4,500.00. Id. The unit was installed in Harlan‘s home on or around that same date. Id. ¶ 116.
Before choosing a Goodman product, Harlan read and relied on Goodman‘s advertising materials, including the representations that the Grosses viewed. See id. ¶ 113. Relying on those representations, which allegedly contain material misrepresentations and omissions of material fact regarding the reliability of the Goodman-manufactured unit, Harlan chose a Goodman product. Harlan specifically relied on Goodman‘s representations that its product is of a superior quality and fitness and carries a superior warranty. Id. ¶ 114-115.
Harlan paid for a service contract with Bell Brothers Heating and Air (“Bell Brothers“) in Sacramento to cover the repair and maintenance of his Goodman-manufactured unit. Id. ¶ 117. The contract was initiated in or around February 2013. Id. In or around May 2013, Harlan noticed that the Goodman unit was not performing up to his expectations and notified Bell Brothers, which sent a technician. Id. ¶ 118. The technician informed Harlan that the unit‘s refrigerant levels were low and needed to be replenished. Id. ¶ 119. The refrigerant was refilled under the service contract with Bell Brothers. Id. On March 21, 2014, a Bell Brothers technician performed a routine check on the unit, and informed Harlan that the unit was leaking refrigerant and again out of coolant. Id. ¶ 120. Harlan was told that the repair was not covered by his service contract and would cost approximately $1,200.00. Id. On April 8, 2014, repair technicians from Bell Brothers replaced Harlan‘s evaporator coil. Id. ¶ 121. The technicians
SAC Order at 3-4.
C. Class Allegations
Goodman manufactures and sells air conditioners under the Amana and Goodman brand names. Id. ¶¶ 23-24, 37.
They also designed, manufactured, marketed, and advertised those air conditioners. Id. ¶ 44. With each air conditioner, Goodman provided an express warranty, along with representing that the air conditioners were fit for the ordinary purpose for which air conditioners are used and were free from defects in materials and workmanship. Id. ¶ 45-46. The express warranties provided that the air conditioners would be “free from defects in materials and workmanship under normal use and maintenance” for periods ranging from five to ten years. Id. ¶ 48. [] On its website, Goodman represents that, “[w]hen you choose a Goodman brand, you can rest assured that you‘ll receive a refreshingly affordable product that‘s covered by what many consider to be the best product warranties in the heating and cooling industry.” Id. ¶ 47. Goodman has also advertised that “[e]ven on the hottest days of the year, [consumers] can keep [their homes] cool and comfortable while enjoying low energy costs with a high-efficiency Goodman brand air conditioner,” that “[consumers] will enjoy top quality, high-efficiency cooling,” and that Goodman “focused on the design, engineering, and manufacture of dependable products that have helped millions and millions of homeowners achieve reliable, high-quality, and affordable indoor comfort.” Id. ¶ 53.
SAC Order at 4-5.
D. Air Conditioning Systems
Because it may be helpful for readers, the Court will review the general components of an air conditioning system as explained to the Court by the parties. A residential air conditioner is comprised of three primary components: (1) an evaporator coil; (2) a condenser coil; and (3) a compressor. The three components are connected in a hermetic system with a refrigerant, such as Freon. The two coils are the key components in removing heat form inside the home and exhausting it outside. The coils at issue in this care are made with small diameter copper tubes (called hairpins) and copper u-bends that are brazed3 together in a continuous fashion so that refrigerant can pass through the coil to other components of the air conditioner. Sikorsky Decl. (Dkt. 104-3; Sealed Dkt. 112) ¶ 9.
Figure 1: Air conditioning schematic. Sikorsky Decl. Ex. B
Plaintiffs Anne and Archie McVicar filed a class action complaint in this Court on August 12, 2013 (Dkt. 1). Goodman filed a motion to dismiss on October 4, 2013 (Dkt. 10). On February 25, 2014, the Court granted in part and denied in part Goodman‘s motion (Dkt. 37), and ordered the parties to show cause why the McVicar action should not be consolidated with a rеlated case (Dkt. 33). Plaintiffs filed a First Amended Complaint (“FAC“), consolidating the claims in the related action, on March 31, 2014, including the claims of the McVicars, Robert Farmer, the Grosses, and Rich Harlan (Dkt. 42). Goodman filed a motion to dismiss the FAC on April 30 (Dkt 48); a motion which the Court subsequently granted in part and denied in part (Dkt. 66). On September 12, 2014, Plaintiffs filed the SAC. Defendants moved to dismiss the SAC on October 3, 2014 (Dkt. 80). On November 13, 2014, the Court granted in part and denied in part Defendants’ motion (Dkt. 97)
On January 30, 2015, Plaintiffs filed the instant Motion to Certify Class (Dkt. 104, Sealed Dkt. 111). Plaintiffs seek class certification of one class (the “Class“):
All individuals and entities in the State of California that own real property on which one or more residential air conditioners manufactured with copper evaporator and/or condenser coils under the Goodman or Amana brand names was installed from July 1, 2006 to the present.
Cert. Mot. at 1. Plaintiffs request certification of the Class for: (1) violation of the Consumer Legal Remedies Act (“CLRA“),
Defendants filed an opposition to the Certification Motion (Dkt. 145), along with the Motion to Exclude (Dkt. 149, Sealed Dkt. 154) on April 30, 2015. Plaintiffs opposed the motion to exclude on May 26, 2015 (Dkt. 163) and Defendants replied on June 1, 2015 (Dkt. 166). The Court rescheduled the hearing on that matter to align with the Motion for Class Certification (Dkt. 170). Plaintiffs filed their reply to the Certification Motion on June 30, 2015
II. Legal Standard
Courts may certify a class action only if it satisfies all four requirements identified in
After satisfying these four prerequisites, a party must also demonstrate compliance with one of the requirements under
The decision to grant or deny a motion for class certification is committed to the trial court‘s broad discretion. Bateman v. American Multi-Cinema, Inc., 623 F.3d 708, 712 (9th Cir. 2010). However, ”
III. Class Certification Under Rule 23(a)
The Court will first address the prerequisites to class certification under
A. The Class is Ascertainable
Before establishing numerosity, commonality, typicality, and adequacy, “the party seeking class certification must demonstrate that an identifiable and ascertainable class exists.” Mazur v. eBay Inc., 257 F.R.D. 563, 567 (N.D. Cal. 2009). “A class definition should be precise, objective, and presently ascertainable,” though “the class need not be so ascertainable that every potential member can be identified at the commencement of the action.” O‘Connor v. Boeing N. Am., Inc., 184 F.R.D. 311, 319 (C.D.Cal.1998) (internal quotations omitted). “As long as the general outlines of the membership of the class are determinable at the outset of the litigation, a class will be deemed to exist.” Id.
As long as the class definition is sufficiently definite to identify putative class members, “the challenges еntailed in the administration of this class are not so burdensome as to defeat certification.” Astiana v. Kashi Co., 291 F.R.D. 493, 500 (S.D.Cal.2013) (quoting Ries v. Arizona Beverages USA LLC, 287 F.R.D. 523, 536 (N.D.Cal.2012)). Thus, the Court will continue to address the other
B. Numerosity
Numerosity requires that the class be “so numerous that joinder of all members is impractical.”
Goodman does not dispute that the Class satisfies the numerosity requirement, and Plaintiffs have presented evidence to confirm that the prerequisite is satisfied. According to Goodman‘s data, Goodman shipped a total of 150,019 copper evaporator coils into California during the proposed class period from 2006 to 2014. Mot. at 5; Sikorsky Decl. ¶ 17. Thus, the Court concludes the Class is so large that joinder is impracticable, satisfying the requirement for numerosity under
C. Commonality
The “commonality” prerequisite mandates that there be “questions of law or fact common to the class.”
The requirements of
Plaintiffs present the following common questions that will be resolved by this action, namely, whether:
- Goodman‘s air conditioners have a propensity to leak refrigerant and prematurely fail;
- Goodman knew that the air conditioners have a propensity to leak refrigerant due to formicary corrosion and prematurely fail;
Goodman‘s omissions of the material fact that the air conditioners have a propensity to leak refrigerant due to formicary corrosion was likely to deceive a reasonable consumer; - Plaintiffs and the rest of the Class are entitled to equitable relief, including but not limited to restitution; and
- as a result of Goodman‘s conduct, Plaintiffs have suffered damages and, if so, the proper amount thereof.
See Cert. Mot. at 16.
In support of their Motion, Plaintiffs present the declaration of Mr. Paul Sikorsky, a 30-year veteran of the heating, ventilation, and air conditioning (HVAC) industry, working primarily for one of Goodman‘s competitors, Trane Company. Sikorsky Decl. ¶ 5. In his declaration, Mr. Sikorsky provides an overview of the general function of an air conditioning system. Id. ¶¶ 8-11. He notes that evaporator and condenser coils should not typically fail during their ordinary use, because of the absence of moving parts. Id. ¶ 13. A coil that leaks refrigerant is defective, and will cause the air conditioner to fail. Id.
After reviewing Goodman documents regarding copper evaporator coils manufactured by Goodman from 2006 to 2014, Mr. Sikorsky concludes that the relatively high warranty claims rate is evidence of a defect in the design or manufacture of the product. Id. ¶ 18. In his experience, warranty claims rates exceeding 1% are excessive. Id. Mr. Sikorsky concludes that, due to the significant average time from installation to failure, most of the failures identified in the warranty claim information occurred as a result of a slowly progressing, degenerative process like formicary corrosion. Id. ¶ 19. Formicary, or ant-hill-like, corrosion is a corrosion process that occurs in copper, which forms tunnels or perforations in copper that wind and intersect, evocative of its namesake - the ant-hill. Id. ¶ 21. Formicary corrosion has been identified in the industry as a potential failure for copper coils in air conditioning systems for many years, and could be caused by either the operating environment (e.g., chemicals used in the home) or from the internal processes used by the HVAC manufacturer (e.g., chemicals used in the manufacture of coils, including some lubricants). Id. ¶¶ 20, 23. Mr. Sikorsky evaluated
Goodman implemented a number of attempts to fix the problems that presented with formicary corrosion, including applying polymer coаting and increasing the wall thickness of the coils, but neither fixed the underlying problem. Id. ¶¶ 33-34. Eventually, Goodman switched to using all-aluminum evaporator coils. Id. ¶ 35. Plaintiffs also present significant documentary evidence of company knowledge of coil failures in several states, including Texas, Tennessee, and Louisiana.5 See Mann Decl. (Dkt. 104-2) Exs. K-P.
Defendants assert that the common questions are not susceptible to common proof because the Class definition will include years and model types and units that do not meet the theory of defect proffered by Plaintiffs’ expert. Plaintiffs’ “theory of defect” is not as simplistic as Defendants present it to be. Plaintiffs assert that the copper coils were defective due to their tendency to develop formicary corrosion and fail prematurely due to a refrigerant leak. Although Mr. Sikorsky indicated that the warranty claims rate of 1% is indicative of a problem, a warranty claims rate of lower than that does not necessarily indicate an absence of a defect during that period.6
Even accepting Defendants’ critiques of Mr. Sikorsky‘s conclusions, Defendants argument does not undermine the fact that there are common questions that are susceptible to common proof - specifically, Plaintiffs’ evidence proposing that all the coils had a propensity to leak refrigerant due to formicary corrosion and prematurely fail—the “truth or falsity” of
Under the permissive standard of
D. Typicality and Adequacy
A class representative‘s claims or defenses must be “typical of the claims or defenses of the class.”
“[C]lass certification is inappropriate where a putative class representative is subject to unique defenses which threaten to become the focus of the litigation.” Hanon, 976 F.2d at 508. Unique defenses can go to either the typicality or adequacy of class representatives. Petrie v. Elec. Game Card, Inc., No. SACV100252DOCRNBX, 2015 WL 4608227, at *4 (C.D. Cal. July 31, 2015) (citing Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 903 F.2d 176, 180 (2d Cir. 1990)). Arguments regarding standing, or the lack of a claim, however, naturally precede the
Defendants challenge the typically and adequacy of Harlan and the Grosses, asserting that “they have no individual standing or claim.” Opp‘n at 14.
The Court addresses each one in turn.
1. Rich Harlan
Defendant asserts that Rich Harlan does not have standing to bring his claim because he never actually relied on actionably misleading materials nor omissions. Mr. Harlan testified that he relied on representations that “Goodman units are built to last,” which the Court has held to be non-actionable puffery. He also states that he relied on omissions from marketing materials regarding the coils propensity to fail. However, Defendants point out that Harlan believed that the coils failed 80% of the time, and stated in his deposition that if “the evaporator coils didn‘t fail 98 to 99 percent of the time,” he would consider the product reliable. Harlan Dep. 130:3-8. Therefore, Defendants argue, had they disclosed that up to 2% of evaporator would leak because of formicary corrosion, Harlan would not have altered his purchase decision, meaning he incurred no injury as a result of the alleged omissions. Opp‘n at 15.
While Defendants’ evidence is compelling, it does not conclusively establish here that Harlan lacks standing. Defendants’ deposition questions do not finally determine that, had Harlan known the exact specifics of the product defect he would still have made his purchase. See Jordan v. Los Angeles Cnty., 669 F.2d 1311, 1321 (9th Cir.) cert. granted, judgment vacated on other grounds, 459 U.S. 810 (1982) (“[T]he class representative need not demonstrate a likelihood of success on the merits in order to maintain a class action.“); Tait, 289 F.R.D. at 487 (“It is well established that a plaintiff‘s purported likelihood to lose on the merits is an impermissible basis for denying class certification.“). Therefore, while Plaintiffs face an uphill battle in proving reliance, the Court will not resolve that inquiry here.
2. The Grosses
Defendants argue the Grosses have no clаim because the Grosses now admit that they never had a problem with their evaporator coil. Instead, they experienced a problem solely with their condenser coil. The court has previously ruled that, because the SAC contains only factual allegations regarding the evaporator coil, claims involving the condenser coil fail because those were never alleged to be defective. See SAC Order at 9-10, 13-14, 19, 22. When the Court ruled upon the prior Motion to Dismiss resolving the McVicars’ claims, it looked to the SAC to determine whether Plaintiffs had alleged a defect in the condenser coil, such that harm caused by the condenser coil could be fairly attributed to the defective condition alleged in the SAC. SAC Order at 10. It found that it could not, and therefore the McVicars lacked “standing” to bring the claims, and had otherwise failed to state a claim. Id. In their moving papers, Plaintiffs do not address the Court‘s previous ruling on the condenser coil. They impliedly argue that because the Grosses were harmed by defective copper coils, the misstatement in the SAC - that they were harmed by defective evaporator coils, rather than condenser coils - is irrelevant.
The Court аgrees with Defendants. The SAC does not allege a defect in condenser coils. The products perform different functions, and, therefore, are subject to different failure rates. Sikorsky Decl. ¶ 21. It is improper to simply broaden the scope of the litigation at this stage, where no defect as to the condenser coil has ever been adequately alleged or demonstrated. Therefore, like the McVicars, the Grosses have not alleged that they were harmed by the alleged defect that is the subject of this suit. The Grosses lack standing on this basis.7
The Court will also reach Defendants other arguments. Defendants contend the Grosses lack standing under the UCL, FAL, and CLRA because they cannot prove that their economic injury was caused by the unfair business practice or false advertising that serves as the basis of
Defendants assert that, as to the MMWA claims, because the Grosses admit they did not rely on the manufacturers’ advertising, and they lack privity with the seller (Goodman), their MMWA claim fails. Opp‘n at 16, FAC Order at 16. As noted above, Defendants arguments regarding the merits of Plaintiffs’ claim are not properly resolved here. Defendants do not argue that this defense would be unique to Plaintiffs, instead asserting that the evidence establishes a lack of reliance on Defendants’ representations. For the same reasons as above, the Court concludes that there is still evidence to support the fact that Mr. Gross relied on Defendants’ misrepresentations, supporting an MMWA claim even in the absence of vertical privity.
Finally, Defendants assert that the Grosses’ damages are atypical because they are only seeking to recover the cost of purchasing from their mechanic а replacement condenser coil, but the part was provided to their mechanic free of charge. Defendants argue that the Grosses’ injury (paying for the condenser coil) was caused by their mechanic, not Goodman. The Court does not see how this argument is unique to Plaintiffs, so as to render them atypical. Negrete v. Allianz Life Ins. Co. of N. Am., 287 F.R.D. 590, 604 (C.D. Cal. 2012) (where multiple potential class member claims are potentially subject to these same legal defenses as the named plaintiff, and names plaintiff was not necessarily atypical representatives). However, the Grosses are nevertheless not sufficient representatives for the reasons above.
3. Other Findings
Harlan is otherwise an adequate representative who has vigorously litigated the case and taken his obligation to the Class seriously. Harlan Decl. ¶ 3-4. Plaintiffs’ counsel is also adequate. To be adequate, plaintiffs’ counsel must be qualified, experienced, and generally able to conduct the proposed litigation. See Lerwill v. Inflight Motion Pictures, Inc., 582 F.2d 507, 512 (9th Cir. 1978).
In sum, the Court finds that both Plaintiffs’ counsel and Harlan will continue to adequately represent the Class.
The Grosses have admitted that there is an error in the SAC, and it is now apparent that they have not alleged any damage as a result of the defect at issue in the this case, faulty evaporator coils. Therefore, they are not adequate or typical representatives.
4. Conclusion
The Court finds that Harlan is an adequate and typical representative under
IV. Class Certification under Rule 23(b)
Once Plaintiffs have satisfied the requirements of
A. Rule 23(b)(3)
1. Predominance
”
Here, Plaintiffs suggest that the central predominating questions are the same as the common issues under
- Goodman‘s air conditioners have a propensity to leak refrigerant and prematurely fail;
- Goodman knew that the air conditioners have a propensity to leak refrigerant due to formicary corrosion and prematurely fail;
- Goodman‘s omissions of the material fact that the air conditioners have a propensity to leak refrigerant due to formicary corrosion was likely to deceive a reasonable consumer;
- Plaintiffs and the rest of the Class are entitled to equitable relief, including but not limited to restitution; and,
- As a result of Goodman‘s conduct, Plaintiffs have suffered damagеs, and the proper amount thereof.
Having considered the issues closely, the Court concludes that the common questions in this case do not predominate over the many individual questions. While there is a common question as to whether the air conditioners are defective and Goodman knew it, individualized questions regarding exposure to representations, materiality, and damages would overwhelm class litigation, in the case of the UCL, FAL, and CLRA claims, and individual issues regarding device failure would overwhelm any warranty claims.
a. False Advertising/Unfair Competition
Plaintiffs seek to certify a class based on claims of the Class for violation of California‘s UCL, FAL, and CLRA.
California‘s UCL, “FAL and CLRA rely on the same objective test, that is, whether ‘members of the public are likely to be deceived.‘” Bruno v. Quten Research Inst., LLC, 280 F.R.D. 524, 532 (C.D. Cal. 2011) (quoting In re Tobacco II Cases, 46 Cal. 4th 298, 312 (2009); see also Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1022 (9th Cir. 2011) (holding that, under
i. Exposure to Misrepresentations or Omissions
Class certification in a UCL, FAL, and CLRA case is inappropriate where Plaintiffs cannot show that members of the class were exposed to the same misrepresentations or any omissions, for example, through a long-term advertising campaign or where the misrepresentations or nondisclosures were included (or would have been included) on the product itself. See Mazza v. Am. Honda Motor Co., 666 F.3d 581, 596 (9th Cir. 2012) (“A presumption of reliance does not arise when class members were exposed to quite disparate information from various representatives of the defendant.“) (quoting Stearns, 655 F.3d at 1020); Algarin v. Maybelline, LLC, 300 F.R.D. 444, 455 (S.D. Cal. 2014); Moheb v. Nutramax Labs. Inc., No. CV 12-3633-JFW JCX, 2012 WL 6951904, at *4 (C.D. Cal. Sept. 4, 2012) (declining to certify class for misleading representations under FAL, CLRA, and UCL because some of the members of the class nevеr saw or relied upon defendant‘s alleged misrepresentation regarding the drug at issue). In a case alleging fraudulent omissions, there must be some method to conclude that there was exposure of some materials containing representations to the class, in order to establish that “had the omitted information been
In some cases, for example, those involving automobile safety, it is fair to assume that all of the purchasers of automobiles read some marketing materials regarding the product, sufficient to conclude “that Defendants’ conduct [in omitting information] was ‘likely to deceive’ members of the public.” Keegan, 284 F.R.D. at 533 (citing Plascencia v. Lending 1st Mortgage, LLC, 259 F.R.D. 437, 448 (N.D. Cal. 2009)). The same goes for cases involving extensive and long running advertising campaigns, such as in the tobacco industry. In Tobacco II, the class was composed of individuals who had unquestionably been exposed to the defendants’ ubiquitous marketing and advertising activities and certification was appropriate. In re Tobacco II Cases, 46 Cal. 4th 298, 320 (2009). However, ”Tobacco II does not stand for the proposition that a consumer who was never exposed to an alleged false or misleading advertising or promotional campaign is entitled to restitution.” Pfizer Inc. v. Superior Court, 182 Cal. App. 4th 622, 632 (2010).
Here, there is evidence that a majority of the proposed class never encountered any marketing materials regarding the product that they were going to purchase or already owned.8
This case is different from cases like Tobacco II and Keegan where all class members may be presumed to have been exposed to some type of representations. This case is more like Cohen, where many members of the proposed class “who never saw [] advertisements or representations of any kind before deciding to purchase the company‘s” product would have been swept into the class definition. Cohen, 178 Cal. App. 4th at 979.
Granting class certification is inappropriate in this case where Defendants have proffered overwhelming evidence that owners of the subject air conditioners were not exposed to the alleged misrepresеntation and omissions for myriad reasons: (1) many members of the class never purchased the air conditioners, and instead, purchased real property already containing one; (2) Goodman markets its air conditioners almost exclusively to contractors, meaning representations are unlikely to have been made to the consumers; and (3) most putative class members did not view any brochures or websites which allegedly contained the misleading material prior to purchasing an air conditioner. Therefore, the Court finds that the class definition lacks “cohesion.”
Plaintiffs have not disputed Defendants’ evidence regarding the exposure to representations in any meaningful way. Nor have they proposed any method for culling the class
ii. Materiality as to the CLRA Claims
Defendants argue that the issue of materiality is subject to individualized proof, and therefore, common issues do not predominate.
The Ninth Circuit has recognized that, as to CLRA claims, “[i]f the misrepresentation or omission is not material as to all class members, the issue of reliance ‘would vary from consumer to consumer’ and the class should not be certified.” Stearns, 655 F.3d at 1022-23 (citing In re Vioxx Class Cases, 180 Cal. App. 4th 116, 129 (2009)). The materiality provision “requires that plaintiffs in a CLRA action show not only that a defendant‘s conduct was deceptive but that the deception caused them harm.” Massachusetts Mut. Life Ins. Co. v. Superior Court, 97 Cal. App. 4th 1282, 1292 (2002).
That the defendant can establish a lack of causation as to a handful of class members does not necessarily render the issue of causation an individual, rather than a common, one. Plaintiffs may satisfy their burden of showing causation as to each by showing materiality as to all. In contrast, however, if the issue of materiality or reliance is a matter that would vary from consumer to consumer, the issue is not subject to common proof, and the action is properly not certified as a class action.
In re Vioxx Class Cases, 180 Cal. App. 4th at 129 (citations omitted).
Defendants hаve present a consumer survey showing that consumers would not have changed their behavior if they had been confronted with a disclosure regarding the propensity
Plaintiffs appear to argue, unconvincingly, that no member of the putative class would have purchased a Goodman air conditioning unit with a copper coil if they had known about the formicary corrosion issue. Plaintiffs, however, have failed to proffer any proof as to that issue beyond the declarations of the named plaintiffs (two of which must now be disregarded), and the Court does not agree that it is a fair assumption to make in this case. Even accepting Plaintiffs’ experts’ conclusions regarding the existence of a defect due to the “high” warranty rate of approximately 1%, Plaintiffs have not shown that consumers would uniformly find any alleged “defect” material to their purchase decision. Plaintiffs Reply does not even substantively engage this issue.
However, the Ninth Circuit has acknowledged the danger of per se class certification of defect claims. For example, as to Wolin, the Ninth Circuit “did not adopt a per se rule requiring class certification of defect claims.... Rather than adopting a per se rule, [it] simply rejected Land Rover‘s suggestion that [it] should categorically decline to certify classes in automobile defect cases.” Id. at *7. Similarly, in Baker, it noted “plaintiffs in this case never moved for class certification. Instead, the district court [had] erroneously ruled that defect allegations are not amenable to resolution on a class-wide basis and struck the class allegations from the complaint” and therefore the Ninth Circuit did not reach the merits of several class certification arguments under
Thus, the Court finds that, at least as to the CLRA claims, Defendants have demonstrated that the materiality of an alleged defect in Defendants’ evaporator coils would vary from consumer to consumer, providing another reason why individual issues would overwhelm any class-wide ones.
b. Conclusion
In sum, the Cоurt concludes that Plaintiffs have not shown that common questions predominate regarding the FAL, UCL, and CLRA claims. Individualized questions regarding materiality as to the CLRA claim and exposure to the alleged representations as to all claims predominate over common issues – such as the defectiveness of the product or Defendants’ alleged knowledge of a defect.
Plaintiffs also seek to certify the Class for violations of the implied warranty of merchantability as well as a derivative federal claim under the MMWA. See Mot. at 3. The Court‘s previous Order established that, for the implied warranty claims to continue, Plaintiffs had to establish that the defect actually manifested, and did so within one year. FAC Order (Dkt. 66) at 17. Individual issues abound as to this claim – two most notably: when the air conditioner failed and whether formicary corrosion (the defect) in fact caused the failure. Any common questions presented by the defect itself are subsumed in these individualized, fact-intensive questions. Further, a vast majority of the proposed class members would have no viable warranty claim, because they would never experience a product failure. Thus, the Court concludes that Plaintiffs have not shown that common questions predominate regarding the implied warranty and MMWA claims.
d. Damages Model
A final but essential reason that these claims cannot proceed on a class basis is that Plaintiffs have failed to produce any plausible class-wide damages theory. At the class certification stage, Plaintiffs must present a theory that can measure, on a class-wide basis, damages attributable to Plaintiffs’ theory of liability. Comcast, 133 S. Ct. at 1433; see also Chavez, 268 F.R.D. at 379 (“At class certification, plaintiff must present a likely method for determining class damages, though it is not necessary to show this method will work with certainty at this time.“).
Plaintiffs propose measuring damages as the out-of-pocket repair costs for the air conditioning units that actually failed or will fail.11 Typically, here is where the Court would
Of course, the Court recognizes that “[t]he amount of damages is invariably an individual question and does not defeat class action treatment.” Blackie, 524 F.2d at 905 (emphasis added). Nevertheless, here, individual issues would predominate, because each failure would require proof that it arose from the defect alleged, reinserting the issue of causation previously avoided by the consumer claims, which is an issue that does not appear as if it could be resolved feasibly and efficiently. See Leyva v. Medline Indus. Inc., 716 F.3d 510, 514 (9th Cir. 2013) (“removal notice thus demonstrates that damages could feasibly and efficiently be calculated once the common liability questions are adjudicated“). Furthermore, this method does not appear to address Plaintiffs’ own theory of the case, that Goodman manufactured and sold defective copper coils, knowing they were prone to prematurely leak refrigerant, and failed to disclose this information to Plaintiffs and other class members. Plaintiffs’ damages theory does not touch on the economic impact of any alleged misrepresentations leading to purchases of air conditioners containing the defective product where the product does not fail. Finally, Plaintiff‘s damages theory does not purport to be
2. Conclusion Regarding Rule 23(b)(3)
In sum, the Court concludes that the predominance requirement of
The second prong of the analysis under
B. Rule 23(b)(2)
Plaintiffs also argue that the class should be certified pursuant to
Plaintiffs purportedly seeks certification under
V. Disposition
For the foregoing reasons, the Court:
- DENIES Plaintiffs’ Motion for Class Certification, and
- DENIES AS MOOT Defendants’ Motion to Exclude.
DAVID O. CARTER
UNITED STATES DISTRICT JUDGE
DATED: August 20, 2015