JEREMY FOGEL, District Judge.
Plaintiffs Renee Tietsworth, Suzanne Rebro, Sondra Simpson, and John Carey ("Plaintiffs") move for class certification pursuant to Fed. R. Civ. P. 23. Defendants Sears, Roebuck and Co. ("Sears") and Whirlpool Corporation ("Whirlpool") (collectively, "Defendants") oppose the motion. In connection with the motion, Defendants move to exclude certain testimony and opinions of Plaintiffs' expert, Dr. Raymond Pietila ("Pietila"), and Plaintiffs move to exclude certain testimony and opinions of Defendants' expert, Noshirwan K. Medora ("Medora"). The Court has considered the briefing,
The facts giving rise to this action are well-known to the parties and to the Court and need not be set forth in full here. On April 30, 2010, Plaintiffs filed the operative third amended complaint ("TAC"), asserting a putative class action on behalf of purchasers and owners of top-loading Kenmore Elite Oasis automatic washing machines ("Machines"). According to Plaintiffs, the Machines were manufactured with a defective electronic control board ("ECB") that has caused an unacceptably high percentage of the Machines to malfunction. Plaintiffs assert that these malfunctions occur in three ways: (1) the ECB's defective software and defective pressure sensor together trigger a "F1" error; (2) the ECB's defective software causes a "F51" error; and (3) the ECB's defective software causes a "sudden instability event" that can result in an explosion when certain types of fabric are in the wash load.
Plaintiffs assert claims against Whirlpool, which manufactured the Machines, and Sears, which marketed and distributed the Machines, asserting claims under California unfair competition and consumer protection laws, California common law, and the federal Magnuson-Moss Act ("MMWA"), 15 U.S.C. § 2301 et seq. In compliance with the Court's order of March 31, 2010, Plaintiffs limited the proposed classes to consumers who actually have experienced the alleged problems with their Machines. See TAC ¶ 86. On July 29, 2011, the Court granted in part Plaintiffs' motion to amend their class definitions to include all purchasers and owners of Machines regardless of whether the alleged defect has manifested; the expanded definitions apply to Plaintiffs' claims for fraudulent concealment and nondisclosure, breach of express warranty, violation of the MMWA, and violation of the CLRA, but not to Plaintiff's claim for violation of the UCL. The Court did not require Plaintiffs to file an amended pleading, nor did it require Defendants to file amended answers.
Plaintiffs now move for certification of the following classes and sub-class:
Before addressing the merits of Plaintiffs' motion for class certification, the Court must address the parties' cross-motions to exclude expert testimony and opinion. Defendants move to exclude certain testimony and opinions of Plaintiffs' expert, Pietila, and Plaintiffs move to exclude certain testimony and opinions of Defendants' expert, Medora. The experts' opinions may be summarized as follows.
With respect to the F1 error code, Pietila states that the ECB's software includes a sophisticated washing algorithm. In order to determine water level with more precision, a pressure sensor converts information regarding water level to digital data that is used by the ECB. Id. at 11. However, as originally designed, the test limits used by the ECB software were not compatible with the range of possible data received from the pressure sensor. Id. Thus sensor outputs that actually were acceptable were causing the ECB to generate a false F1 error code, which in turn caused operational failure. Id. Pietila opined that "[r]esolution of this problem required a software change in the ECB." Id.
With respect to the F51 error code, Pietila explains that "one of the major defects in the overall Oasis system design was that the ECB did not reliably control motor speed." Id. at 12. "Losing ability to track and control the motor led to problems associated with excessive spin rate and the inability to implement the `out of balance' algorithm." Id. This resulted in a F51 error code and operational failure. Id. Whirlpool addressed this problem by redesigning ECB software so that motor rotational status could be determined more reliably. Id.
Pietila concludes that "the defective ECB resulted in a product that had an unacceptably high failure rate," citing a service incident rate ("SIR") of 35.51% for the second quarter of 2006, and a SIR of 31.17% for 2006 as a whole. Id. at 4-5. The SIR for the first quarter of 2008 had been reduced to 9.87%. Id. at 5. Pietila opines that "[t]he remedy selected to resolve the underlying problem was installation of a redesigned ECB." Id. at 5.
Medora examines in detail error rates for Machines that were purchased with Sears extended service plans ("ESPs"). He believes that individuals who had pre-paid Sears to address problems with the Machines could be expected to report errors because they would have no disincentive to seek repair. Id. at 23. He states that there are significant differences in the rates of F1 and F51 error codes in Machines manufactured at different times during the putative class period. Id. at 23, 37. "Washers sold in 2008 and 2009 show far lower rates than Washers sold in 2006 and 2007, and Washers sold in 2007 shower far lower rates than Washers sold in 2006." Id. at 27, 37. Medora concludes that "[t]he patterns and magnitude of repairs vary so dramatically between different periods of washer production that, to a reasonable degree of engineering certainty, there is a real and significant difference in the performances of these washers that correspond to real and significant differences in software and hardware designs between washers manufactured at different times." Id. He states that "Washers sold in 2006 and 2007 show rates of F1 error codes that peak between about 1 1/2 and 2 1/2 years, and then the rates drop." Id. at 37. He also states that "[t]he Washers sold in 2006 and 2007 show rates of F51 error codes that peak in the first months of service, but then the rates dramatically decrease, strongly suggesting that product owners will experience F51 error codes, if at all, in the first 12 months of life." Id. at 27-28. He concludes that "[s]ince the Washers have not been manufactured since 2009, the vast majority of product owners whose machines might experience" F1 and F51 error codes have already done so. Id. at 28, 38.
Finally, Medora describes inspections of two Machines, the first owned by Plaintiff Suzanne Clark-Rebro, and the second an exemplar provided by Defendants. See id. at 43-47. He states that diagnostic testing did not reveal any F1 or F51 error codes with either Machine. Id. at 51.
Pietila also points to other evidence that he believes supports his conclusion of a common defect associated with the ECB, including "six relevant Service Flashes between August 1, 2007 and April 13, 2009" and "a letter to Sears customers . . . [that] advised them that they may be eligible for an ECB `upgrade,'" id. at 4, as well as deposition testimony of Whirlpool engineer Eric Farrington stating that the SIR at the end of 2006 was 28% and that F51 was a large contributor to that figure, id. at 21.
In response to Medora's assertion that Pietila inappropriately included other brands in his analysis, Pietila represents that "[t]he basic items that control motor speed and water level (where F-1 and F-51 error codes develop) are the same for all brands that use the Oasis platform," and thus that any inclusion of other brands was appropriate. Id. at 22. Moreover, Pietila does not concede that other brands were included in his analysis, stating that "the only other Oasis platform-based product during 2006 was the Whirlpool Cabrio that was released during the 18th week and there is no indication that the 35.51% SIR included the Cabrio or any other models than those in Plaintiffs' class." Id.
Pietila goes through Medora's remaining criticisms of his initial report point by point, explaining why he believes that Medora's analysis is flawed. Id. at 22-30. He concludes that portion of his sur-rebuttal report with the following:
Id. at 30. Pietila opines that "there is a relatively large set of customers who now own a machine without the later ECB who have a Machine that is degenerating. At some point, there is a high probability that their Machine will `incubate' and malfunction and require a repair." Id. at 29.
Medora criticizes numerous other aspects of Pietila's sur-rebuttal report and describes in detail further testing he conducted on the Machines. Medora also supplements his findings with respect to Plaintiff Clark-Rebro's Machine. After Medora conducted the initial inspection of that Machine, Plaintiff Clark-Rebro discovered her original ECB in her home. When that ECB was tested, it appeared that it had experienced F51 error codes and other error codes. Id. at 51.
Id. 31:24-32:11. Pietila conceded that he had not actually tested the hardware or analyzed the code, but he represented that he had read documentation and had an understanding of the instability event and its cause. Id. at 33:2-10. He stated that "from functionality, it's my opinion that the explosion event is caused by the — the control board failing to properly determine whether the tub has actually drained." Id. at 33:10-13. Pietila admitted that he had not yet done any work to verify whether his opinion was valid, and that he did not hold the opinion to a reasonable degree of engineering certainty. Id. at 34:19-24. Defense counsel then focused the remainder of the deposition on the F1 and F51 errors that were the subject of Pietila's reports. Pietila attempted to testify about the explosion issue several more times during the deposition. See, e.g., Pietila Dep. 102:19-23 ("I would be dissatisfied with — with that situation if they — ten years plus I decided to wash raincoats and my machine blew up. I — I wouldn't be happy. I don't think that's expected by the customer."); 156:3-6 ("if everybody in the customer community that owns an Oasis washing machine decided to wash raincoats and tablecloths next Monday morning, the SIR rate would probably be 90 percent"); 204:16-17 ("as I mentioned this morning, if you get the right combination of wash load in the Oasis washer —"); 270:9-13 ("In this case, we have, I consider, serious defects because the customer spent a lot of money"). However, defense counsel repeatedly steered the questioning back to the F1 and F51 error codes, for example, telling Pietila "that's certainly not the hypothetical I gave you and that's not really the facts in this case." Id. 102:24-103:1.
"A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case." Fed. R. Evid. 702. Once a witness qualifies as an expert, "the trial judge must ensure that any and all scientific testimony or evidence admitted is not only relevant, but reliable." Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 589 (1993). The Supreme Court has indicated that Daubert should be applied to expert testimony at the certification stage of class action proceedings. See Wal-Mart Stores, Inc. v. Dukes, 564 U.S. —, 131 S.Ct. 2541, 2553-54 (2011) ("The District Court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings. We doubt that is so. . . ."). "Accordingly, in order to grant class certification, this Court must first determine whether it may rely on the methodology used by [the parties' experts] to decide whether the claims in this case are amenable to common proof." In re Aftermarket Automotive Lighting Products Antitrust Litig., 276 F.R.D. 364, 370 (C.D. Cal. 2011).
Pietila is an electrical engineer with extensive experience designing, testing, and evaluating electrical and electronic systems. The Court concludes that in general he is qualified to give expert opinion as to the type of product defects alleged in this case. Defendants do not dispute Pietila's qualifications in his field. Rather, they contend that certain of his opinions are inadmissible because they are unsupported by facts in the record. Ordinarily, the factual basis of an expert's opinion goes to the credibility of the testimony, not to its admissibility. See Hangarter v. Provident Life and Acc. Ins. Co., 373 F.3d 998, 1017 n.14 (9th Cir. 2004) (citing Children's Broad. Corp. v. Walt Disney Co., 357 F.3d 860, 865 (8th Cir. 2004)). "Only if the expert's opinion is so fundamentally unsupported that it can offer no assistance to the jury must such testimony be excluded." Children's Broad. Corp., 357 F.3d at 865.
Defendants assert that there is absolutely no factual support for Pietila's conclusion that "there is a high probability" that class members' Machines will fail in the future. See Pietila Sur-Rebuttal Rpt. at 29. In his deposition, Pietila recast this opinion somewhat, stating that all of the ECBs "have a propensity to fail." Pietila Dep., 154:10-11. He followed up by stating that "these machines have inherent design defects that are sitting there like a bomb armed, ready to go, and . . . there's a high probability that this will happen during the operational life." Id. 154:17-22. Defendants contend that Pietila did not consider any quantitative data in reaching this opinion, citing as an example Pietila's deposition statement that he does not know what the failure rate in 2009 is for Machines manufactured in 2006. Pietila Dep. 265:10-21. Defendants also assert that Pietila failed to address facts that undercut his opinion, such as a downward trend of F1 and F51 errors over time. To the extent that Pietila relies upon subsequent remedial measures to prove the propensity of the original ECBs to fail, Defendants contend that such reliance is inappropriate under Federal Rule of Evidence 407. That rule provides that "[w]hen measures are taken that would have made an earlier injury or harm less likely to occur, evidence of the subsequent measures is not admissible to prove . . . a defect in a product or its design." Fed. R. Evid. 407.
Considering both of his reports and his deposition testimony, it appears that Pietila applied his experience as an electrical engineer in concluding that the ECBs in the earlier-manufactured Machines were defective as designed; that the defects caused a significant percentage of the Machines to fail; that the only reason the failure rate has trended downward is that Defendants have fixed the design defects in later-manufactured machines; and that earlier-manufactured Machines that are still in use have a propensity to fail given the magnitude of the design defects in question. In forming his opinion, Pietila considered the ECB design; statistical analysis with respect to failure rates at various points in time; the Service Flashes; the customer letter sent out by Sears advising of eligibility for an "upgrade"; and the testimony of Mr. Farrington. While Defendants' expert draws contrary conclusions from the same evidence based upon different statistical analysis and methodology, the Court cannot conclude as a matter of law that Pietila's analysis and methodology are so flawed as to render his opinions inadmissible. To the extent that Pietila refutes Defendants' reliance on a downward trend in the reporting of defects by arguing that this trend is the result of fixes applied by Defendants rather than an absence of a defect, the Court concludes that Rule 407 does not apply.
Defendants also argue that Pietila is unqualified to opine on whether the Machines' failure rate was underreported. As noted above, Pietila relied on a 1970s study of consumer behavior in surmising that the errors that were reported were only the "tip of the iceberg." Defendants correctly point out that Pietila is not an expert in consumer behavior, and that the source upon which he relied is quite outdated. See Pietila Dep. 225:18 — 231:14. Under these circumstances the Court will exclude Pietila's opinion that the failure rates were underreported.
Finally, Defendants seek to exclude Pietila's opinion concerning "sudden instability failures" that may cause the Machines to explode when waterproof fabrics are in the load. Pietila first mentioned this opinion during his deposition, which occurred nearly seven months after he submitted his initial report, only two weeks before Plaintiffs filed their motion for class certification, and the day after Medora's deposition. Defendants contend that under these circumstances Pietila's opinion on sudden instability failures should be excluded as untimely and prejudicial. The Court agrees that Pietila's opinion on this topic fails to comport with the requirements of Federal Rule of Civil Procedure 26(a). Moreover, the opinion is so fundamentally unsupported that it could not properly be considered by a jury. Pietila conceded that he had not actually tested the hardware or analyzed the code relating to the sudden instability failures, had not yet done any work to verify whether his opinion was valid, and did not hold the opinion to a reasonable degree of engineering certainty. Id. at 33-2-34:24. Based upon this record, the Court will exclude Pietila's opinion with respect to sudden instability events for purposes of the present motion.
Accordingly, Defendants' motion to exclude will be granted in part. Pietila's opinions with respect to the asserted underreporting of errors and with respect to the sudden instability defect will not be considered in connection with the present motion for class certification. The motion otherwise will be denied.
Medora is a Senior Managing Engineer with Exponent, an engineering and scientific consulting firm. He has more than thirty years of experience in failure analysis of electronic components and systems. The Court concludes that in general he is qualified to give expert opinion as to the type of product defects alleged in this case.
As discussed above, much of Medora's testimony depends upon statistical analysis of the subject failures. Medora admittedly is not a statistician; rather, he directed database analysts at Exponent to examine the customer and service data collected by Sears in the ordinary course of Sears' business operations. Rebuttal Rpt. at 5, 8-9. Medora explains in his rebuttal report the methodology used by Exponent's database analysts. Id. at 5-6. He appends to his rebuttal report a description of the database program used to conduct the queries, a list of search terms used, and the specific part numbers for which the analysts searched. Medora also explained his methodology in detail during his deposition. Medora Dep. 55:18-59:11. He stated expressly that the data was analyzed at his request, and that the data was reviewed and approved by a PhD-level statistician as part of Exponent's quality control process. Id. at 69:15-70:22.
Plaintiffs assert that because Medora himself did not perform the statistical analysis and cannot explain precisely how it was performed, he is not qualified to render any opinions based upon the analysis. However, Federal Rule of Evidence 703 provides as follows:
Fed. R. Evid. 703. Defendants present deposition testimony and declarations of in-house engineers demonstrating that engineers routinely rely upon others' analysis of service data to evaluate and address field issues. See, e.g., Chowanec Dep. 51:21-57:21; Farrington Dep. 77:8-20.
The Court concludes that Medora's reliance upon the statistical analysis prepared by his team is appropriate under Rule 703. In Monsanto Co. v. David, 516 F.3d 1009 (Fed. Cir. 2008), Plaintiff's employees performed scientific field tests to determine whether the defendant's soybean fields had been planted with a particular brand of soybeans. Plaintiff's expert relied upon those field tests in rendering his opinions. The court rejected the defendant's argument that the expert's opinions based upon the field tests should have been excluded, noting that "an expert need not have obtained the basis for his opinion from personal perception." Id. at 1015. The court observed that "numerous courts have held that reliance on scientific test results prepared by others may constitute the type of evidence that is reasonably relied upon by experts for purposes of Rule of Evidence 703." Id. The court concluded that "[the expert's] reliance on the scientific reports prepared by his team is therefore the type of reliance that is reasonable for expert witnesses." Id.
Plaintiffs cite this Court's decision in Heisler v. Maxtor Corp., No. 5:06-cv-06634-JF (PSG), 2011 WL 1496114 (N.D. Cal. April 20, 2011) in support of their argument that Medora's reliance on the statistical analysis of his team is inappropriate under Rule 703. However, the cited portion of Heisler addresses not the applicability of Rule 703 but the requirement that an expert's opinions be based upon reliable methodology. The Court was troubled by the fact that the expert had no familiarity with the software program that was used for testing a computer drive and by the expert's own acknowledgement that he had learned about the program from a "local computer guy" on the day of the testing. Id. at *7.
Plaintiffs also cite Judge Illston's decision in Stein v. Pac. Bell, No. C 00-2915 SI, 2007 WL 831750 (N.D. Cal. Mar. 19, 2007), for the proposition that "Rule 703 does not sanction the simple transmission of hearsay." See id. at *11 (quoting United States v. Tomasian, 784 F.2d 782, 785-86 (7th Cir. 1986)). In Stein, the expert reviewed documents and then restated as his opinions the findings or allegations in those materials. See id. at 11. While this case offers Plaintiffs more support than does Heisler, it is factually distinguishable in that Medora did not merely parrot the statistical analysis of his team but rather explained the methodology of the analysis and incorporated the analysis into his report regarding the alleged product defects.
The Court notes that if it were to exclude Medora's opinions on this ground, it likewise would have to exclude Pietila's opinions to the extent that they are based upon statistical analyses that he did not perform personally. Plaintiffs argue that exclusion of Pietila's opinions on this ground would be inappropriate because Defendants' motion to exclude does not raise it. However, in its capacity as a gatekeeper, the Court seeks to apply evidentiary rules uniformly.
Accordingly, Plaintiffs' motion to exclude will be denied.
"The class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only." Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2550 (2011) (internal quotation marks and citation omitted). "In order to justify a departure from that rule, a class representative must be part of the class and possess the same interest and suffer the same injury as the class members." Id. (internal quotation marks and citation omitted). "Before certifying a class, the trial court must conduct a `rigorous analysis' to determine whether the party seeking certification has met the prerequisites of Rule 23." Mazza v. American Honda Motor Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012) (quoting Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186, as amended by 273 F.3d 1266 (9th Cir. 2001)).
Under Rule 23(a), four prerequisites must be satisfied for class certification:
Fed. R. Civ. P. 23(a).
A plaintiff also must satisfy one or more of the separate prerequisites set forth in Rule 23(b): (1) there is a risk of substantial prejudice from separate actions; (2) declaratory or injunctive relief benefiting the class as a whole would be appropriate; or (3) common questions of law or fact predominate and the class action is superior to other available methods of adjudication. See Fed. R. Civ. P. 23(b).
"Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule — that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc." Dukes, 131 S.Ct. at 2551. Analysis of these factors "generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff's cause of action." Id. at 2552 (internal quotation marks and citation omitted). "Nor is there anything unusual about that consequence: The necessity of touching aspects of the merits in order to resolve preliminary matters, e.g., jurisdiction and venue, is a familiar feature of litigation." Id.
Both parties have filed statements of recent decision. The Court has considered all of the decisions cited by the parties to the extent that they are relevant to its analysis.
The operative pleading asserts claims for: (1) violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200 et seq.; (2) fraudulent concealment and nondisclosure; (3) breach of express warranty; (4) violation of the Magnuson-Moss Act ("MMWA"), 15 U.S.C. § 2301 et seq.; (5) violation of California's Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1750; and (6) unjust enrichment. Defendants assert that the Court already has stricken class claims based upon sudden instability events and based upon the MMWA and that as a result these claims are not at issue for purposes of class certification. Plaintiffs argue that Defendants are misreading this Court's prior orders, and that both sudden instability claims and MMWA claims are at issue in their motion for class certification.
On March 31, 2010, the Court struck Plaintiffs' previously proposed class definitions, with leave to amend, after concluding that only class members who actually had experienced problems with their Machines' ECBs had standing to sue and that the putative classes included members who had not experienced such problems. See March 2010 Order at 30. In the same order, the Court concluded that Plaintiffs could not pursue warranty claims on a classwide basis because individual questions would predominate. See id. at 32. Plaintiffs subsequently moved to amend their class definitions based upon authority supporting maintenance of a class on behalf of all purchasers of the Machines regardless of whether the alleged defect has manifested. On July 29, 2011, the Court granted the motion to amend with respect to Plaintiffs' "claims for violation of the CLRA, fraudulent concealment and nondisclosure, breach of express warranty, and violation of the MMWA." July 2011 Order at 6. The motion was denied as to Plaintiffs' claims for violation of the UCL. Id. at 6-7.
The Court acknowledges that its July 2011 order may have created confusion, because it permitted Plaintiffs to add class allegations with respect to their MMWA claim notwithstanding its earlier determination that class claims based upon warranty theories were inappropriate. Because the March 2010 Order was interlocutory in nature, and because the July 2011 order clearly granted Plaintiffs leave to allege a classwide MMWA claim, the Court concludes that as a procedural matter such a claim is not precluded.
Defendants assert without elaboration that Plaintiffs are asking the Court to "second guess the reasoned decision of the U.S. Consumer Product Safety Commission." Defs' Opp. at 12. Defendants do not make clear how the Commission's decision precludes class certification here. Defendants also claim that permitting Plaintiffs to go forward with sudden instability claims would "sandbag" Defendants. Id. As discussed above, the Court's July 2011 decision granted Plaintiffs' motion for leave to assert class claims even where the alleged defect has not manifested.
"As a threshold matter, and apart from the explicit requirements of Rule 23(a), 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). The proposed Nationwide Class includes "All United States residents and entities who purchased or own" Machines with specified model numbers "from January 1, 2005 to the present." Similarly, the proposed California Class includes "All California residents and entities who purchased or own" Machines with specified model numbers "from January 1, 2005 to the present."
At the hearing on the present motion, the Court questioned the January 1, 2005 start date, observing that it appears that the subject Machines were manufactured from 2006 through 2009. See Medora Rebuttal Rpt. at 12-13. In their supplemental brief filed on April 2, 2012, Plaintiffs suggest that the class definitions should be revised to reflect a start date of December 2005. See Pltffs' Supp. Opp. at 7 n.6. Plaintiffs represent that a limited number of test Machines were sold prior to December 2005, and that complaints and product returns began occurring in December 2005. The Court agrees that under these circumstances, December 2005 is an appropriate start date for the class period.
Other aspects of Plaintiffs' class definitions are more troubling. Plaintiffs' expert, Pietila, opines that by 2008 Defendants had corrected the ECB defect. In fact, Pietila chastises Defendants' expert for including later versions of the Machine in his statistical analysis: "Dr. Medora dilutes his statistical figures by improperly including later versions of the Oasis washing machines that do not contain a defective ECB (by 2008, at the introduction of the Phase II software, Whirlpool had corrected the software defects contained in earlier ECBs)." Pietila Sur-Rebuttal Rpt. at 16. Medora observes in his sur-sur-rebuttal report that although the proposed class includes persons who have purchased Machines through the present, Pietila appears to concede that ECBs programmed with the S19 or later versions of software are not defective. See Medora Sur-Sur-Rebuttal Rpt. at 3-4. When the Court raised this issue at the hearing, Plaintiffs' counsel represented that all of the model numbers listed in the proposed class definition contain defective ECBs, and that the class period properly is defined to run from 2005 to "the present" because the subject machines still run the risk of failing. Defendants contend that the model numbers identified in the proposed class definition were used both on Machines containing the allegedly defective ECB and on Machines containing new ECBs that corrected the earlier software defect. Thus, Defendants argue, the proposed definition is over-inclusive. While conceding that the subject model numbers might have been used on "some unidentified (and likely small number of) Machines within those model ranges that do not have a defective ECB," Plaintiffs assert that they have provided the Court with a chart identifying every defective ECB by part number, software version, and pressure sensor manufacturer. See Pltffs' Supp. Br. at 7 n.6. Plaintiffs argue that this identifying information may be checked on each Machine during a claims procedure if and when appropriate. This approach seems somewhat unwieldy given that approximately 190,000 Machines were in the field through the end of 2006. See Defs' Response and Objs., at 6.
After considering the parties' arguments, the Court concludes that the proposed classes are overbroad. "[N]o class may be certified that contains members lacking Article III standing." Mazza, 666 F.3d at 594 (internal quotation marks and citation omitted). "[S]tanding requires that (1) the plaintiff suffered an injury in fact . . . (2) the injury is fairly traceable to the challenged conduct, and (3) the injury is likely to be redressed by a favorable decision." Id. (internal quotation marks and citation omitted). If the allegedly defective ECB was not included in some Machines that carry the model numbers identified in the class definitions, then the classes necessarily contain members who lack Article III standing. Moreover, it is unclear how an individual who purchased a Machine within the class period but then returned, sold, or otherwise disposed of the Machine without experiencing any error codes could be deemed to have suffered a compensable injury. See Defs' Response and Objs. at 6 (discussing evidence that some Machines were returned to Sears and resold to a second purchaser, and some were sold by the original owner to a second owner). Because of the way that the classes are defined, it appears that "ascertaining class membership would require unmanageable individualized inquiry." Xavier v. Philip Morris USA Inc., 787 F.Supp.2d 1075, 1089 (N.D. Cal. 2011).
Finally, in light of the recent decision Wilson v. Hewlett-Packard Co., 668 F.3d 1136 (9th Cir. 2012), it appears that Plaintiffs' claims based upon Defendants' alleged concealment of the ECB defect are viable only to the extent that the defect causes an unreasonable safety hazard. In Wilson, purchasers of a notebook computer claimed that the manufacturer concealed a design defect that rendered the laptops "substantially likely to cease working and require expensive repair during their useful life and with normal use and after the expiration of the warranty." Id. at 1139. The plaintiffs alleged that the defendant's conduct violated the California's UCL, CLRA, and common law fraud and deceit statutes. See id. at 1140. The district court concluded that for a manufacturer's omission and/or concealment of a design defect to be legally "material" for purposes of these claims, the defect must cause "an unreasonable safety hazard." See id. at 1143. The district court also concluded that the plaintiffs had not sufficiently alleged a causal connection between the design defect and a safety hazard. See id. The appellate court affirmed the district court on both of these points. See id. Plaintiffs argue that the Wilson court misinterpreted California law. However, a decision of the Ninth Circuit is binding upon this Court, and Wilson does not appear to be distinguishable from the present case in any meaningful way. Plaintiffs point out that Wilson itself distinguished the present case on the ground that here Plaintiffs allege that they began experiencing problems with the Machines within the express warranty period while in Wilson the plaintiffs alleged that the problems manifested after expiration of the warranty period. See id. at 1142 n.1. It is not apparent how this distinction is relevant to whether a particular fact is "material" for purposes of UCL, CLRA, and fraud claims. Moreover, the proposed classes capture not only individuals who experienced an error code during the one-year warranty period but also those who experienced an error code outside the warranty period or who have not experienced an error code at all. Even if Wilson could be read to hold that concealment of a non-safety defect is material if the defect manifests during the warranty period, the proposed class definitions still would be far too broad.
The Court recognizes that a motion for class certification is not the appropriate means for determining whether Plaintiffs' claims under the UCL, CLRA, and common law are subject to dismissal wholly or in part, but in light of Wilson, it appears that these claims no longer are viable with respect to non-safety defects such as the manifestation of error codes. To the extent that the Court would be inclined to certify the claims, certification necessarily would be limited to the claim that the ECB defect posed an unreasonable risk that the Machines would explode. However, as is discussed above, the Court concludes that Plaintiffs' expert evidence on that point must be excluded. It would be inappropriate to certify the UCL, CLRA, or common law claims for class treatment absent record evidence that individuals were subjected to a common defect that posed an unreasonable risk of harm. See Bruce v. Harley-Davidson Motor Co., Inc., Case No. CV 09-6588 CAS (RZx), 2012 WL 769604, at *6 (C.D. Cal. Jan. 23, 2012) (denying class certification based upon the plaintiffs' "failure to show that common evidence will ultimately be admissible to prove that the Class Vehicles share a common defect"); Stevens v. Harper, 213 F.R.D. 358, 383 (E.D. Cal. 2002) ("Because there is no evidence of a systemwide CYA policy or practice of denying wards outdoor exercise, certification of a systemwide class is inappropriate.").
In summary, the Court concludes that the proposed classes are overbroad and unmanageable as defined. In addition, the Court concludes that Plaintiffs' UCL, CLRA, and common law fraud claims are not appropriate for certification for the reasons discussed above. Although this determination is sufficient to dispose of the present motion, the Court will address the remaining Rule 23 factors in order to provide a complete record.
Plaintiffs present evidence that the nationwide class consists of more than 200,000 consumers who purchased or own a defective Machine. Defendants do not argue that Plaintiffs have failed to satisfy the numerosity requirement.
Class members' claims must depend upon a common contention that is "of such a nature that it is capable of classwide resolution — which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." Dukes, 131 S.Ct. at 2551. "What matters to class certification . . . is not the raising of common questions — even in droves — but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation. Dissimilarities within the proposed class are what have the potential to impede the generation of common answers." Id. (internal quotation marks and citation omitted).
Plaintiffs' claims turn upon the theory that all of the Machines in question were manufactured with a defective ECB. Plaintiffs assert that the defect manifested in three ways: (1) the ECB's defective software and defective pressure sensor together trigger a "F1" error; (2) the ECB's defective software causes a "F51" error; and (3) the ECB's defective software causes a "sudden instability event" that can cause an explosion when certain types of fabric are in the wash load. These claims appear to be susceptible to common resolution — either the Machines in question contained a common defect in the ECB or they did not, and either the defect rendered the machines substantially certain to fail or it did not. Other common issues include whether Defendants were aware of the defect and concealed it.
Defendants argue that there is no common defect. Setting aside the alleged sudden instability defect, as to which there is no record evidence as discussed above, the parties have submitted competing expert testimony and other evidence as to whether there is a common defect in the ECB. The Court need not resolve this merits issue at this stage of the proceedings. See Wolph v. Acer Am. Corp., 272 F.R.D. 477, 482 (N.D. Cal. 2011). The question is whether resolution of this issue "will resolve an issue that is central to the validity of each one of the claims in one stroke." See Dukes, 131 S.Ct. at 2551. The answer is yes.
Defendants also argue that a number of individual issues will predominate. That argument presents a separate inquiry that is addressed below in the discussion of Rule 23(b).
The Court must determine whether "the claims or defenses of the representative parties are typical of the claims or defenses of the class." Fed. R. Civ. P. 23(a)(3). "[R]epresentative claims are `typical' if they are reasonably co-extensive with those of absent class members; they need not be substantially identical." Hanlon Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998). "[T]he commonality and typicality requirements of Rule 23(a) tend to merge. Both serve as guideposts for determining whether under the particular circumstances maintenance of a class action is economical and whether the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence." Dukes, 131 S.Ct. at 2551 n.5. A proposed class representative is not typical if his or her claims are subject to time-consuming specific defenses that would not apply to absent class members. See State of Alaska v. Suburban Propane Gas Corp., 123 F.3d 1317, 1321 (9th Cir. 1997) ("A named plaintiff's motion for certification should not be granted if there is a danger that absent class members will suffer if their representative is preoccupied with defenses unique to it.") (quoting Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992)).
Defendants assert that the claims of the named Plaintiffs are not typical of the claims of the proposed classes. This assertion is based upon Defendants' assumption that recovery may not be had by individuals who did not actually experience an F1 or F51 error code. Defendants argue that there is no evidence that any of the named Plaintiffs experienced a false error code, and thus that the named Plaintiffs cannot represent the claims of those individuals who did experience a false error code. In its order of July 2011, the Court concluded that class claims may be certified with respect to claims based on an inherent defect theory even if class members have not experienced a manifestation of the alleged defect. July 2011 Order at 6. It held that "when a latent defect is substantially certain to result in malfunction of the product, the product is not worth the price for which it was sold, regardless of whether or not the alleged defect has manifested." Id. The Court is not inclined to revisit this determination.
Plaintiffs must demonstrate that "the representative parties will fairly and adequately protect the interests of the class." Fed. R. Civ. P. 23(a)(4). When considering the adequacy of a class representative, courts generally consider only two questions: "(1) [d]o the representative plaintiffs and their counsel have any conflicts of interest with other class members, and (2) will the representative plaintiffs and their counsel prosecute the action vigorously on behalf of the class?" Staton v. Boeing Co., 327 F.3d 938, 957 (9th Cir. 2003). There is no evidence of any conflict of interest, and Plaintiffs have been zealous in prosecuting the action.
In addition to demonstrating that this case meets the four requirements of Rule 23(a), Plaintiffs must demonstrate that it meets one of the requirements of Rule 23(b). They assert that the requirements of Rule 23(b)(3) are met because common questions of law or fact predominate and the class action is superior to other available methods of adjudication. When considering application of Rule 23(b)(3), the Court must go beyond asking whether any common questions exist and ask whether these common questions "predominate over any questions affecting only individual members" of the putative class. See Fed. R. Civ. P. 23(b)(3). This analysis focuses on "the relationship between the common and individual issues. When common questions present a significant aspect of the case and they can be resolved for all members of the class in a single adjudication, there is clear justification for handling the dispute on a representative rather than on an individual basis." Hanlon, 150 F.3d at 1022 (internal quotation marks and citation omitted). The Rule 23(b)(3) inquiry "tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation." Id. (citation omitted). If common questions do predominate, the plaintiff must demonstrate that the class action is superior to other available methods of adjudication. See Fed. R. Civ. P. 23(b).
For the reasons discussed above, the Court declines to certify the UCL, CLRA, and common law concealment claims. As noted in the March 2010 Order, "Plaintiffs' express warranty claims involve elements that are individual to each purported class member, such as the provision of notice, an opportunity to cure, and reliance." March 2010 Order at 32. Although it has reconsidered this determination in light of the confusion inadvertently created by the July 2011 order, the Court remains persuaded that individual questions would predominate with respect to the warranty claims. With respect to the MMWA claim, Plaintiffs' counsel clarified at the hearing that the claim is based solely upon the federal statute and does not depend upon the laws of individual states. In light of that clarification, the Court conceivably could certify a properly-defined class with respect to the MMWA claim. However, because the proposed classes are overbroad and unmanageable as currently defined, the present motion for class certification will be denied in its entirety.
Because there appears to be a reasonable possibility that Plaintiffs could define an appropriate class with respect to their MMWA claim, this determination is without prejudice, but only to that extent. Because of the length of time this case has been pending and in the interest of finality, any renewed motion for class certification must be filed within forty-five (45) days of the date this order is filed. Such a renewed motion shall not contain any new or amended claims or additional supporting evidence.
Good cause therefor appearing:
