Riley Johannessohn; Daniel C. Badilla; James Kelley; Kevin R. Wonders; William Bates; James Pinion, individually and on behalf of others similarly situated v. Polaris Industries Inc.
No. 20-2347
United States Court of Appeals For the Eighth Circuit
August 20, 2021
Submitted: April 13, 2021
State of Minnesota
Amicus on Behalf of Appellant(s)
Appeal from United States District Court for the District of Minnesota
Before KELLY, GRASZ, and KOBES, Circuit Judges.
Appellants filed this putative class action alleging that Polaris Industries, Inc. failed to disclose heat defects and that this artificially
I.
Polaris makes ATVs. About 15 years ago, it began receiving consumer complaints about excessive heat in its ATVs. In 2014, the U.S. Consumer Product Safety Commission started investigating reports of several ATV fires. The CPSC preliminarily found that one model presented a “substantial product hazard” under
Appellants bought Polaris ATVs. They sued, alleging that Polaris failed to disclose the heat defect, which “artificially inflated the market price for ATVs.” D. Ct. Dkt. 66 at 2. Six plaintiffs in six states sought to certify a nationwide class under Minnesota consumer protection laws for consumers who purchased new (1) MY (Model Year) 2016-17 Sportsman 450s; (2) MY2014-17 Sportsman 570s; (3) MY2009-16 Sportsman 850s; and (4) MY2015-2016 Sportsman 1000s. Alternatively, they asked the district court to certify six statewide classes for ATV owners in California, Florida, Minnesota, Missouri, New York, and North Carolina, under the laws of each state.
The district court denied the motion for class certification for three reasons. First, the putative classes included plaintiffs who did not suffer an injury. Second, questions involving individual members predominated over questions of law or fact common to class members. Finally, the district court found that a class action was not superior to individualized methods of adjudication. The plaintiffs appealed.
II.
To certify a class, a district court must find that the plaintiffs satisfy all the requirements of
A.
Appellants tried to certify the classes under
In In re St. Jude Medical, Inc., we held that a district court abused its discretion by certifying a class of plaintiffs that alleged material misrepresentations concerning heart valve replacements in violation of the Minnesota Consumer Fraud Act. 522 F.3d 836, 841 (8th Cir. 2008). We noted that fraud cases are ill-suited for class actions because they require individualized findings on whether the plaintiffs actually relied on the alleged misrepresentation. Id. at 838. The defendants there put on evidence showing that the plaintiffs did not remember whether their doctors mentioned the unique qualities of the valve. Id. at 839. Considering this rebuttal evidence, we held that individual issues predominated over common questions. Id. at 841.
The same is true here. Plaintiffs’ nationwide class action complaint alleges violations of the MCFA, so rebuttal evidence is permitted. See St. Jude, 522 F.3d at 840. Polaris has evidence challenging how much each consumer-plaintiff relied on the alleged omissions. It showed that some of the named plaintiffs are previous Polaris owners who bought new ATVs despite earlier experiences with the alleged defect. A couple of these owners tried to sell their ATVs to third parties and said they were in excellent condition—without mentioning a heat defect. While a jury is free to reject this evidence, Polaris may present it. This will require individualized findings on reliance and is likely to make for multiple mini-trials within the class action. Because these fact issues will predominate, the district court was within its discretion to deny the motion for class certification on this basis.
B.
Appellants also argue that the district court should have certified six statewide classes for the states of California, Florida, Minnesota, Missouri, New York, and North Carolina. But at least two2 of these proposed classes—Minnesota and North Carolina—require individualized fact findings on the issue of reliance. See St. Jude, 522 F.3d at 838-39 (MCFA requires a showing of reliance); see also Arnesen v. Rivers Edge Golf Club & Plantation, Inc., 781 S.E.2d 1, 7 (N.C. 2015) (affirming dismissal of claim under North Carolina Unfair and Deceptive Trade Practices Act because “plaintiffs have failed to sufficiently allege justifiable reliance on any omission“). Consistent with our holding above, we agree with the district court that those two statewide classes
C.
The Appellants say that even if classes could not be certified as Minnesota and North Carolina classes, the district court could have certified class actions for the remaining four states. Under
The district court did not abuse its discretion by denying class certification for superiority reasons. The district court found that class action was not superior because the underlying issues in the case “would present a significant risk of jury confusion and would create enormous challenges to trial management.” D. Ct. Dkt. 453 at 83. This was based on the observation that the proposed classes will require application of the laws of four different states to forty-three different vehicle configurations, including at least four different engines, with changing exhaust standards through the years, and various attempts by Polaris to remedy the problems.
But those are not the only concerns here. If the lead plaintiffs are any indication, a sizable portion of Polaris owners have resold their ATVs, and these sales “may have reflected different discounts that could require vehicle-specific litigation.” In re Bridgestone/Firestone, Inc., 288 F.3d 1012, 1019 (7th Cir. 2002).
Appellants argue that they have solved some of these problems by producing expert testimony on the price premium paid by purchasers, and so no individualized findings are needed. But cases are not tried on the evidence of one party. Polaris would be entitled to present contrary evidence suggesting the price premium theory does not appropriately provide proper damages figures for each specific class member. The district judge would then need to weigh how to instruct the jury to take these differing theories into account, especially as they relate to different state laws applying to different model years, different vehicle configurations, and different recall efforts. The district court was uniquely positioned to assess these management concerns and it was within its discretion to deny class certification on this basis.
Appellants also say that the district court focused too much on manageability, ignoring the other factors in
There is a more fundamental problem here. “Although federal courts do not require that each member of a class submit evidence of personal standing, a class cannot be certified if it contains members who lack standing.” Avritt, 615 F.3d at 1034 (citation omitted). “A class must therefore be defined in such a way that anyone within it would have standing.” Id. (citation omitted). “If members who lack the ability to bring a suit themselves are included in a class, the court lacks jurisdiction over their claims.” In re Zurn Pex Plumbing Prod. Liab. Litig., 644 F.3d 604, 616 (8th Cir. 2011) (citation omitted).
“Standing to sue is a doctrine rooted in the traditional understanding of a case or controversy.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016), as revised (May 24, 2016). “The doctrine limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong.” Id. To satisfy Article III standing, a plaintiff must show (1) an injury in fact; (2) a causal connection between the injury and conduct complained of; and (3) the likelihood that the injury will be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (citation omitted). “To establish injury in fact, a plaintiff must show that he or she suffered an invasion of a legally protected interest that is concrete and particularized and actual or imminent, not conjectural or hypothetical.” Spokeo, 136 S. Ct. at 1548 (citation omitted). “It is well established that purchasers of an allegedly defective product have no legally recognizable claim where the alleged defect has not manifested itself in the product they own.” Briehl v. Gen. Motors Corp., 172 F.3d 623, 628 (8th Cir. 1999) (citation omitted).
Appellants did not define their class to make sure all proposed members have standing. While Appellants seek to certify classes for everyone who bought the models in question, evidence at the class certification stage shows that not all of the ATVs manifested the alleged heat defect. For example, Polaris employee Robin Stroot said that the panels on his own Sportsman 850 did not melt—the key defect manifestation alleged in the model—because his ATV had a larger gap between the exhaust and the engine than others. And Appellants’ own briefing before the district court acknowledges only that the “the high [exhaust gas temperatures] and low clearance create melt risks to the ATV and burn risks to the rider.” D. Ct. Dkt. 335 at 30 (emphasis added). But “[i]t is not enough to allege that a product line contains a defect or that a product is at risk for manifesting this defect; rather, the plaintiffs must allege that their product actually exhibited the alleged defect.” O‘Neil v. Simplicity, Inc., 574 F.3d 501, 503 (8th Cir. 2009) (emphasis added).
Appellants try to reframe the issue by saying that there is an inherent heat defect common to all Polaris ATVs. This misses the mark. That ATVs run “hot” is not the subject of our inquiry; what matters is whether the heat caused injury. Zurn helps demonstrate. There, we found homeowners who had brass fittings installed in their pipes had standing. 644 F.3d at 617. But the fact that the pipe fittings were made of brass was inconsequential. Id. What mattered was that the fittings developed cracks “as soon as they [were] exposed to domestic water.” Id. In the same way, we care little about the temperatures in the ATVs—whether five or five hundred degrees hotter. Of course, increased temperatures lead to greater risks of injury. But even if the ATVs run “hot,” Article III standing will only rest on the actual injury Polaris owners suffer when
Appellants’ attempt to sidestep the manifest defect rule fails. They say that the manifest defect line of cases is inapposite because they can show economic injury by the mere fact that they paid an inflated purchase price. They also claim the average ATV buyer would not pay the sticker price if they knew how hot the engine ran. In other words, because some buyers did not receive the benefit of the bargain, all buyers should have paid less for their ATVs. And because all class members paid sticker price, all class members suffered an economic injury. At its core, Appellants’ argument is that purchasers without manifest defects should be able to piggyback on the injury caused to those with manifest defects. That theory is in direct conflict with the manifest defect rule and does not create an Article III injury-in-fact. See, e.g., O‘Neil, 574 F.3d at 504 (“[B]ecause the O‘Neils’ crib has not exhibited the alleged defect, they have necessarily received the benefit of their bargain.“).
In this circuit, plaintiffs claiming economic injury do not have Article III standing in product defect cases unless they show a manifest defect. Some class members cannot. Because the class has not been “defined in such a way that anyone within it would have standing,” the class cannot be certified. Avritt, 615 F.3d at 1034 (citation omitted).3
IV.
The district court‘s denial of the motion for class certification is affirmed.
KELLY, Circuit Judge, concurring in the judgment.
I concur in the judgment because I agree the district court did not abuse its discretion in denying class certification. Yet I write separately to express my view that the plaintiffs nevertheless had standing to pursue their claims on behalf of the proposed class.
The Supreme Court has said that whether a suit is a class action “adds nothing to the question of standing.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 n.6 (2016) (quoting Simon v. E. Ky. Welfare Rts. Org., 426 U.S. 26, 40 n.20 (1976)). “The requirements for standing do not change in the class action context,” and a class action “can proceed as long as one named plaintiff has standing.” In re SuperValu, Inc., 870 F.3d 763, 768 (8th Cir. 2017); see 1 William B. Rubenstein, Newberg on Class Actions § 2:1 (5th ed. 2012) (“Once threshold individual standing by the class representative is met ... there is no further, separate ‘class action standing’ requirement.“). Accordingly, whether “the named plaintiff who meets individual standing requirements may assert the rights of absent class members is neither a standing issue nor an Article III case or controversy issue.” Lewis v. Casey, 518 U.S. 343, 395-96 (1996) (Souter, J., concurring in part, dissenting in part, and concurring in the judgment) (quoting 1 Herbert B. Newberg & Alba Conte, Newberg on Class Actions § 2.07 (3d ed. 1992)). Rather, it “depends ... on meeting the prerequisites of Rule 23 governing class actions.” Id. (cleaned up).
In my view, to conclude that the plaintiffs lack standing simply because there is no evidence that all potential class members experienced the alleged heat defect is to conflate the requirements for standing with those for class certification. We previously held in Avritt v. Reliastar Life Insurance Company, 615 F.3d 1023 (8th Cir. 2010) that “a class cannot be certified if it contains members who lack standing.” Id. at 1034 (citing Denney v. Deutsche Bank AG, 443 F.3d 253, 263-64 (2d Cir. 2006)). But to my knowledge we have never required potential class members to submit evidence of their standing “so long as every class member contemplated by the class definition can allege standing.” In re Deepwater Horizon, 739 F.3d 790, 804 (5th Cir. 2014) (cleaned up); see Denney, 443 F.3d at 263 (“We do not require that each member of a class submit evidence of personal standing.“).
Here, the plaintiffs allege that the ATVs “have a common design defect that makes them dangerous to ride.” Am. Compl. ¶ 2. They further assert that the ATVs’ exhaust pipes heat up and cause vehicle components to melt, exposing riders “to temperatures up to nearly 250 °F” and potential burns. Id. The named plaintiffs claim to have experienced this defect in the ATVs they purchased. See id. ¶¶ 44-70. This is sufficient to establish their standing to pursue claims on behalf of the class. See In re SuperValu, 870 F.3d at 768. Further, because the plaintiffs allege that all of the ATVs at issue suffered from this common defect, they have, in my view, defined the proposed class “in such a way that anyone within it would have standing.” Avritt, 615 F.3d at 1034 (quoting Denney, 443 F.3d at 264); see Stuart v. State Farm Fire and Cas. Co., 910 F.3d 371, 377 (8th Cir. 2018) (“Whether some plaintiffs [or class members] are unable to prove damages . . . is a merits question, and the district court has the power to amend the class definition at any time before judgment.“).