The Warranty of Variability
In Cole, et al. v. General Motors Corp., No. 05-31070 (pdf), a strong panel of the Fifth Circuit (King, Garza and Owen) has vacated class certification in a nationwide warranty action against GM. In 1998 and 1999, GM marketed its Cadillac Seville with side airbags. In 2000, GM learned that the air bag sensors were defective and could cause deployment of the airbag in the absence of a collision. GM issued a voluntary recall notice and, despite some hitches with production of replacements, GM completed the recall in 2002. Naturally, litigation ensued.
Bottom Line: Regardless of whether it establishes a per se rule (and it comes close), Cole is a very powerful decision standing between the class action bar and nationwide certification of warranty claims.
Plaintiffs sued GM, stating claims for breach of warranty on behalf of themselves and all other persons who had purchased or leased 1998 and 1999 Sevilles. Plaintiffs' theory of damages was loss of the benefit of the bargain. In other words, plaintiffs claimed that the product they received, i.e., a car with defective side airbags, was worth substantially less than the product for which they had bargained, i.e., a car with non-defective side airbags. After puzzling over its decision for three years, the W.D. La. certified the nationwide class. The Fifth Circuit accepted review under Rule 23(f) and reversed for failure to satisfy the predominance requirement of Rule 23(b)(3), which demands that common issues of law and fact predominate among the claims of would-be class members.
The Fifth's conclusion that common issues did not predominate was wholly predicated on differences among the laws of the various states, which all applied because any given plaintiff's claim was governed by the law of the jurisdiction in which he bought or used the vehicle. The differences in state laws, the court held, implicated far too many individual issues of fact and law to support class treatment of plaintiffs' claims.
Although plaintiffs assert that the law of the fifty-one jurisdictions are 'virtually the same' . . . we noted that many of the variations in state law raise the potential for the application of multiple and diverse legal standards and a related need for multiple jury instructions. For some issues, variations in state law also multiply the individualized factual determinations that the court would be required to undertake in individualized hearings. Specifically, the laws of the jurisdictions vary with regards to (1) whether plaintiffs must demonstrate reliance, (2) whether plaintiffs must provide notice of breach, (3) whether there must be privity of contract, (4) whether plaintiffs may recover for unmanifested vehicle defects, (5) whether merchantability may be presumed and (60 whether warranty protections extend to used vehicles.
Although there are oodles of similar decisions throughout the federal courts, the decision in Cole is the closest thing yet to a holding that state warranty laws are, as a matter of law, simply too different to enable nationwide class resolution of warranty claims. Although the court leaves open the possibility that a more "extensive" multi-state analysis of warranty law than that which plaintiffs offered might someday support certification, the court's analysis of GM's multi-state analysis suggests that the possibility is quite slim.
All in all, regardless of whether it establishes a per se rule, Cole is a very powerful decision standing between the class action bar and nationwide certification of warranty claims.
