Opinion
No. X01 CV-02-0184712S
May 18, 2006
MEMORANDUM OF DECISION RE MOTIONFOR CLASS CERTIFICATION
This case is brought by twelve (12) named plaintiffs on behalf of themselves and all persons similarly situated who "purchased, owned, or leased new or used Ford Explorers at any time from 1991 to 2001 and who either (1) currently own, lease, or operate the vehicles or (2) sold, traded, or otherwise disposed of such vehicles or whose lease for such vehicles expired or otherwise terminated between August 9, 2000, and the later of the date of certification or dissemination of class notice." Revised Complaint, ¶ 21. They assert causes of action arising out of this state's Unfair Trade Practices Act (CUTPA-C.G.S. § 42-110a et seq.) and unjust enrichment.
At oral argument on March 13, 2006, plaintiffs' counsel estimated the number of putative class members to be forty thousand (40,000).
The central claim is that, as a result of: a) the defendant's affirmative brand multi-media Explorer advertising that emphasized the vehicle's suitability for family use and safety, b) Ford's cover-up of known design problems which resulted in accidents stemming from handling and stability problems, and c) the company's recommendation of an allegedly low tire inflation level in order to create a "softer" ride, consumers purchased or leased Explorers at higher prices than they would have paid had the defendant disclosed the Explorer's design problems and the resulting dangers to the public. The plaintiffs additionally claim many of these Connecticut residents still own or lease Explorers of substantially diminished value as a result of Ford's fraudulent and deceptive scheme. They seek compensatory and punitive damages, disgorgement of all profits, benefits, and other compensation received by Ford as a result of its alleged wrongful conduct, and restitution to the class of the excess purchase/lease price.
The design allegedly created a vehicle of such height and width as to render it unsafe and defective because it is prone to rollover.
It is asserted that a fall, 2000, edition of Automotive Lease Guide downgraded the after-lease value of the vehicle by $1,800 and that that diminishment in current value also reflected overpayment at purchase.
The plaintiffs' burden is to demonstrate the prospective class meets the requirements of both P.B. § 9-7 (numerosity, commonality, typicality, and adequacy of representation) and P.B. § 9-8 — specifically "that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy." Id. In determining whether a class should be certified, the court is bound to take the substantive allegations of the complaint as true. Rivera v. Veterans Memorial Medical Center, 262 Conn. 730, 743 (2003). Although the question for the court is not whether the plaintiffs have either stated a cause of action or will prevail on the merits but rather whether the class action requirements are met ( Risen v. Carlisle Jacquelin, 417 U.S. 156, 178), the determination "generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff's cause of action" and it may sometimes be necessary "to probe behind the pleadings before coming to rest on the certification question . . ." General Telephone Co. of the Southwest v. Falcon, 457 U.S. 147, 160 (1982). Doubts regarding the propriety of certifying a class should be resolved in favor of certification. Rivera, supra, at 743.
Because the requirements of our statutes are similar to those of rule 23 of the Federal Rules of Civil Procedure, we look to federal law in construing the prerequisites of P.B. §§ 9-7, 9-8. See Collins v. Anthem Health Plans, Inc., 266 Conn. 12, 32 (2003) (" Collins I"). Class certification involves a two-step process in which the court must first ascertain whether the requirements of P.B. § 9-7 have been satisfied and, only if so, to evaluate whether the requirements of P.B. § 9-8 have been satisfied. Collins v. Anthem Health Plans, Inc., 275 Conn. 309, 322 (2005) ( Collins II).
P.B. § 9-7:
A. Numerosity
The proposed class is approximately forty thousand (40,000), a number the plaintiffs have determined from the defendant's sales/lease data for the years 1991-2001. The plaintiffs have therefore carried their burden of establishing the numerosity prerequisite is more than mere speculation. See Arduini Auto Ins. Co. of Hartford, Connecticut, 23 Conn.App. 585, 591 (1990). The court finds the class is so numerous that joinder of all members is impractical and, thus, the numerosity requirement is satisfied by the proposed class.
B. Commonality
In Collins II, this state's highest court concluded the test of commonality is met when there is at least one issue whose resolution will affect all or a significant number of the putative class issues. 275 Conn. at 324. The threshold of commonality is therefore not very high and can be satisfied by a demonstration that a general practice or policy of the defendant has affected class members and that that general practice is the focus of the suit. Collins II, supra, at 324. Moreover, that there are factual differences in the members' claims will not defeat certification. Id. at 325. (Citations omitted.)
Collins II does, however, note the fact that there may be individualized issues may impact the predominance and superiority requirements. 275 Conn. at 325-26.
The plaintiffs allege that, during the pertinent period, Ford engaged in a cover-up of the aforesaid claimed defects while ignoring both the incidence of Explorer accidents and the recommendations of Ford's own engineers regarding the Explorer's design and the use of under-inflated tires on the SUV. Plaintiffs allege that, in possession of such evidence, Ford nevertheless engaged in a sustained and duplicitous advertising campaign that ignored known facts to present the brand image of the Explorer SUV as appropriate for all road applications and particularly suited to family use because of its safe designs; the result it is asserted, were inflated purchase/lease prices, unwarranted company profits, and monetary losses to plaintiffs. Claims of unfair and deceptive advertising are common to all class members and, since commonality requires only that common issues exist and not that they predominate, that prerequisite is satisfied. See e.g., Campbell v. New Milford Bd. of Ed., 36 Conn.Sup. 357, 362 (1980), aff'd, 193 Conn. 93 (1984). Accepting as true the allegations of the complaint, the prerequisite of commonality is satisfied.
Though plaintiffs reference "death" and "substantial injury" in their complaint, this suit is about money damages. See e.g., Rev. Compl., First Count, ¶ 1.
CT Page 9172
C. Typicality
Typicality requires the claims of the representative plaintiffs be typical of the putative class and is satisfied "when each class member's claims arise from the same course of events, and each class member makes similar legal arguments to prove the defendant's liability." Collins I, 266 Conn. 12, at 34 (Citations omitted.). It is not that the facts of all plaintiffs' claims be identical but only that the disputed issue of law or fact "occupy essentially the same degree of centrality to the named plaintiff's claim as to that of other members of the proposed class." Id. While individualized differences regarding the attendant circumstances of each purchase/lease and/or the members' awareness of Ford's conduct will surely exist, no differences present as so peculiar as to defeat this particular requirement. Typicality is established.
D. Adequacy of Representation
A determination whether this requirement is met requires an assessment of plaintiffs' counsel's competency to litigate a class action of this sort. Collins II, 275 Conn., at 326. That involves assuring the case will be vigorously prosecuted by qualified counsel and the absence of antagonistic claims by class members. See In Re Drexel Burnham Lambert Group, Inc., 960 F.2d. 285, 291 (2d Cir. 1992). Plaintiffs' counsel assert their litigation experience in class actions and they are counsel in other such actions on this court's docket. Their firm is known and respected for its ability to litigate class actions, CUTPA claims, and other tort claims. Counsel have been both diligent and professional in their representation of their clients and the court is persuaded of their ability. The remaining inquiry is whether there are, among class members, antagonistic claims or interests which would fracture the class and present a conflict of interest between counsel and the class — or certain among the class. No such conflict is now apparent since all members make the same claim regarding Ford's liability to them and all seek the same remedies. There is adequacy of representation.
All of the requirements of P.B. § 9-7 having been met, the court considers the requirements of predominance and superiority under P.B. § 9-8. It is with regard to these requirements that the parties are in dispute.
P.B. § 9-8:
A. Predominance
"Class-wide issues predominate if resolution of some of the legal or factual questions that qualify each class member's case as a genuine controversy can be achieved through generalized proof and if these particular issues are more substantial than the issues subject only to individualized proof." (Emphasis in original.) Collins II, at 329. That requires a consideration of what value the resolution of each class-wide issue will have in each class member's underlying cause of action (Emphasis added.). Id., at 329-30. Common issues of fact and law predominate "if they have a direct impact on every class member's effort to establish liability and on every class member's entitlement to . . . relief." (Emphasis added.). Id., at 330. "[When], after adjudication of the class-wide issues, [the] plaintiffs must still introduce a great deal of individualized proof or argue a number of individualized legal points to establish most or all of the elements of their individual[ized] claims, such claims are not suitable for class certification." (Citation omitted.) Id. Thus, although the trial court cannot conduct an inquiry into the merits of the case, the court must undergo a practical analysis of the kinds of proof required at trial if the class is certified. Collins II makes clear the court must undergo a three-part analysis; it must: a) review the elements of the causes of action asserted on behalf of the putative class; b) determine whether generalized evidence can be offered to prove those elements on a class-wide basis or whether individualized proof is needed to establish each member's entitlement to relief; and c) weigh the common issues subject to generalized proof against the issues requiring individualized proof to determine which predominate. Id., at 332. The predominance test is satisfied only if most of the litigants' and court's efforts will be on common questions of law or fact. Id.
1. CUTPA
The First Count alleges a violation of the Connecticut Unfair Trade Practices Act. The standard for determining whether an act or practice constitutes a CUTPA violation is a test known as the "cigarette rule." See Willow Springs Condominium Ass'n, Inc. v. Seventh BRT Devel. Corp., 245 Conn. 1 (1998). The test is whether the practice: (1) offends public policy as established by statutes, the common law, or otherwise — in other words, whether it is within at least the penumbra of some common law or statutory or otherwise established concept of unfairness; (2) is immoral, unethical, oppressive, or unscrupulous; or (3) causes substantial injury to consumers. Fink v. Golenbock, 238 Conn. 183, 215 (1996). All three (3) criteria do not need to be satisfied to support a finding of unfairness. Id. The plaintiffs' burden under CUTPA is to prove: 1) the defendant engaged in unfair or deceptive acts or practices in the conduct of their trade or business; and 2) each class member claiming entitlement to relief has suffered an ascertainable loss of money or property as a result of the defendant's acts or practices. § 42-110g(a). Collins, 275 Conn. at 334.
§ 42-110b(a) provides, "No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." Under C.G.S. § 42-110a(3), the defendant is a "person."
With regard to the claimed CUTPA violation, the plaintiffs assert seven (7) common questions of law and fact common to all class members — i.e., whether the Explorers are unreasonably dangerous and defective in foreseeable maneuvers in view of its rollover propensity, whether Ford's pattern and practice was to conceal the vehicles' dangerous propensity, whether Ford had a duty to disclose the unreasonably dangerous propensity, whether Ford violated CUTPA through its deceptive and unfair conduct, etc. The plaintiffs asserted claims against Ford will be established by proof of such matters as that the Explorer design created the rollover risk, that Ford knew of that design defect before the Explorer's introduction to the market but concealed that information, that Ford affirmatively created a brand image of safety intended to favorably distinguish the Explorer from other SUVs, that the Explorer market price for purchasers/lessees was affected by Ford's failure to disclose and by its misleading and deceptive advertising, and that Ford therefore received more money from consumers than would have been so had the truth been known. Plaintiffs assert evidence from Ford itself and from expert witnesses regarding the SUV's stability and handling will establish no material distinction among the 1991-2001 Explorer models and that, though Ford was well aware of the rollover propensity of its Bronco II (predecessor of the Explorer) when it converted the Bronco II to the Explorer, it merely replaced the fiberglass roof with a metal one and changed the nameplate on the vehicle without addressing the rollover propensity.
Ten (10) such questions are provided on pp. 3-4 of their Opp. Memorandum. At least three (3) of those speak directly to the Second Count.
Evidence that Explorer monies received by Ford was as a result of Ford's misrepresentations and concealment will consist primarily of evidence of the diminished value of the vehicles following public disclosure in August of 2000. Causation and damages, plaintiffs state, will be established primarily through use of such market value publications as the Kelley Blue Book Auto Market Report and the National Auto Dealer Association (NADA). These Guides thus become not only the proof of causation but also the measuring stick for determining damages. Plaintiff's primary expert, Alan Schacter, describes them in his January 26, 2006, disclosure of expert opinion as "common financial methodologies involving consumer issues of proof." Id., at p. 2. Specifically, he states those methodologies can be consistently applied across all model years of the Explorer from 1991-2001 and all model types; it is applicable as well, plaintiffs state, to the measure of compensatory damages for the unjust enrichment claim. With regard to leases, the plaintiffs reason that, since the lease price is based on vehicle cost, inflation of the purchase price necessarily results in inflated lease prices.
August of 2000 is the date of the Firestone tire recall. Firestone tires were original equipment on the Explorer. August 9, 2000, is the date information related to the vehicle's instability was first disclosed.
Schacter Discl. Of Expert, Jan. 26, 2006, pp. 2-3. Whether his methodology in calculating the "True Value" of the Explorer as detailed on pp. 3-4 of the disclosure is scientifically valid is not pertinent to the certification issue before the court.
Plaintiffs correctly state they need not prove reliance as part of the CUTPA claim. See Meyers v. Cornwell Quality Tools, Inc., 41 Conn.App. 19, 35 (1996). That does not, however, relieve each class member's need to establish "that that class member suffered a loss that was caused by the challenged" conduct. (Emphasis added.) Collins II, 275 Conn. at 335. C.G.S. § 42-110g(a) in pertinent part reads, "Any person who suffers any ascertainable loss of money . . . as a result of . . ." (Emphasis added.). The plaintiffs ask this court to conclude that there is such causation with regard to all class members; that is contrary to our jurisprudence. The claim in Clay et al. v. The American Tobacco Company, Inc., 198 F.R.D. 483, So. Dist. Ill. (1999) is illustrative of the inherent deficiency in offering generalized evidence to establish causation ("which, by its very nature requires an individualized determination" — Id., at 493) and harm. There, the claim against the Tobacco manufacturers and lobbyists was that they, through various advertising and promotional campaigns, targeted America's youth for the illegal sale of tobacco products. The putative class included all U.S. persons who, as children, purchased and smoked cigarettes manufactured, promoted, or sold by the defendants. A variety of causes of action were alleged to include civil conspiracy, unjust enrichment, and the violation of various consumer protection laws. Remedies sought included, as here, disgorgement of the defendants' profits and punitive damages (The Clay plaintiffs also sought injunctive damages though the court had little difficulty concluding the case was "about money." Id., at 494.).
The Clay plaintiffs claimed the defendants denied that cigarettes contained nicotine, an addictive substance that led smokers to become dependent on cigarettes and, though the sales of cigarettes to minors was illegal in every state, the defendants promoted these illegal sales to minors by, inter alia, advertising, promotional displays, and the distribution of branded non-tobacco items (i.e., hats and tee shirts) to retailers in close proximity to high schools and colleges. The claim was that, as a direct result of those activities, minors had spent billions of dollars on the illegal purchase of cigarettes and, similar to Schacter's use of "common methodologies" to prove causation and damages here, the plaintiffs in Clay intended to rely on evidence of the money the defendants had spent researching the psychiatry, preferences, and buying habits of children and on the types of cigarette products most appealing to young adults; that research dictated marketing strategies and new product development targeting youth. The parallels between the claims and evidentiary proof offered in Clay and those here proposed cannot be avoided. Causation was purportedly established there by "assuming" children took up smoking as a result of the advertising and promotional efforts; there, the damages were measured by the amount spent by minors on cigarettes. Here, the court is asked to "assume" purchases and leases of Explorers were as a result of Ford's deceptive advertising; here, the court is asked to accept that the loss measured by comparing the value of an Explorer had there been no stability problem and the value once the August 9, 2000, disclosure (estimated at $1,800) had occurred is the loss of each class member without consideration of any other factor (i.e., the negotiation between salesperson and customer). The court in Clay had this to say:
The causal connection necessarily requires a showing that the advertising reached each class member. However, all members of the proposed class were not subjected to the same advertising and that advertising did not have a similar effect on all members. To the extent that the advertising actually reached the class members, it arrived through different mediums and with greatly varying degrees of success.
In the instant case, depositions of the representative plaintiffs belie the likelihood of accomplishing the same. Named plaintiff, William McDermott, when asked at his deposition whether he had ever heard, or read "any specific advertising for the Explorer prior to purchasing it," responded, "Not prior to purchasing, no. If I did, I don't recall it." Opp. Memorandum, Tab 7, pp. 44-45. The Ford sales/lease data upon which plaintiffs rely in estimating a putative class of approximately 40,000 informs not at all regarding the effect of the alleged wrongful conduct on each member's purchase/sale. The causation element of the CUTPA claim addressed by Collins II and Clay, supra, will require individualized inquiry of those members. As the Clay court articulated, it is not sufficient to establish the defendant created a climate that hyped the handling features of the Explorer. 188 F.R.D., at 493. Absent a bridge between the Ford media campaign (which was launched over a number of years) and the eventual purchase/lease resulting in a loss to each class member, causation is lacking. Even accepting that a given purchaser had seen the advertising and that that advertising had some impact upon him/her, the court does not conclude it was that advertising that "resulted" in the purchase since that would be to ignore that, typically, a vehicle purchase follows the sharing of information by a dealer, which information is then evaluated by the buyer and followed by a test drive of that vehicle; it also ignores that often, that same information sharing and test drive occurs with regard to other SUVs manufactured and sold by other than this defendant before the decision to purchase or lease is made. Additionally, negotiation is part of many vehicle purchases. Reliance upon Schacter's generalized evidence of loss as $1,800 per member denies entirely not only that sales are often the product of a buyer's "haggling" but also ignores that the purchase of any given vehicle at that model's year end or during those holiday periods when many sales are advertised may well be the result of lower prices. Given a class of 40,000 members, a trial of this matter would necessitate the testimony of each class member to explore, for example, their experience, if any, with the claimed advertising, the reasons for their choice of an Explorer, and, significantly, the price paid. While the advantages to plaintiffs of a class action are obvious, the efficiency gained by certification will be lost when individualized inquiries with regard to causation and harm are necessarily undertaken. At that junction, the manageability of the proceeding becomes difficult-if not clearly impossible. "[When] after adjudication of the class-wide issues, [the] plaintiffs must still introduce a great deal of individualized proof or argue a number of individualized legal points to establish most or all of the elements of their individual[ized] claims, such claims are not suitable for class certification . . ." Collins II, 275 Conn., at 330. While Collins II recognizes the contribution formulas or other mechanical methods may make to damage assessments, the use of such devices does not obviate each member's burden to establish his/her entitlement to damages. The court necessarily concludes common issues of law or fact are overwhelmed by individualized issues here and predominance is not established.
See 275 Conn. at 331.
Under the circumstances, the words of the Court in Collins II are instinctive: "Nor would the `formulaic damage' approach . . . be a viable alternative because it would require the defendant to forego its legal rights to have each class member prove the essential elements of liability." (Emphasis added.) 275 Conn. at 348.
Nor, under these circumstances, is a class action a superior method of adjudicating these claims. While clearly burdensome, separate hearings conducted in courthouses across the state offer an alternative which presents the potential for recovery to those plaintiffs who can demonstrate both a desire to endeavor and entitlement to relief. There is also, as another court faced with the certification question in a case on all fours with this one noted, the alternative method offered by the National Highway Transportation Safety Administration (NHTSA) under the authority of the Federal Motor Vehicle Safety Act, 49 U.S.C. § 30101 et seq. (1995). The NHTSA is empowered to investigate consumer complaints of safety-related vehicle defects and can order manufacturers to correct defects and/or to announce recalls.
Ortiz v. Ford Motor Company, Fla. Dist. Ct., App. Div., D.N. 02-16829 (June 30, 2004).
2. UNJUST ENRICHMENT
The Second Count incorporates the allegations of the earlier count and asserts that Ford received from the consumers something of value to which it was not entitled and was unjustly enriched by Ford's deceptive conduct. It specifically seeks an order of restitution and disgorgement of profits, benefits and other compensation received in addition to attorneys fees, interest, and costs. Rev. Compl. Second Count, ¶¶ 68, 70.
The right to recover under this doctrine is essentially an equitable right premised on the belief it is inconceivable to retain a benefit which comes at the expense of another. The test, then, is what is unjust under a given set of circumstances. The three requirements are that (1) the defendant was benefited; (2) the defendant unjustly failed to pay the plaintiff for the benefits; and (3) the failure of payment was to the plaintiff's detriment. Gagne v. Vaccaro, 255 Conn. 390, 408 (2001). "It becomes necessary in any case where the benefit of the doctrine is claimed to examine the circumstances and the conduct of the parties . . ." (Citations omitted.). Id. Our Supreme Court has described the process by which a plaintiff must establish his/her proof burden as a "highly fact-intensive inquiry." Id.
Thus, such inquiries as whether a purchaser/lessee got due value, his/her skill as a negotiator, the value he/she placed on safety, problems with stability or handling — all of which will vary from class member to class member — are necessarily individualized and make class-wide generalized proof ineffective.
The requirements of predominance and superiority are not here demonstrated and certification of the class is denied.