Chief Justice CASTILLE.
Appellant, an automobile manufacturer who unsuccessfully defended a class action lawsuit for breach of express warranty, appeals the Superior Court's decision to affirm the certification of the class by the trial court, and the amount of damages and litigation costs awarded to the class. Costs included a significant legal fee, entered pursuant to the Magnuson-Moss Warranty Improvement Act (the "MMWA"), 15 U.S.C. § 2310(d)(2). For the reasons that follow, we affirm in part and reverse in part, with reversal being limited to the lower courts' approval of an enhancement of class counsel's legal fee by application of a risk multiplier to the amount of the lodestar;
Appellee Shamell Samuel-Bassett, on behalf of herself and others similarly situated (the "class"), filed this class action lawsuit in January 2001, in the Philadelphia Court of Common Pleas. Bassett alleged that, in October 1999, she purchased a model year 2000 Sephia from appellant Kia Motors America, Inc., ("KMA" or the "manufacturer") with an extended warranty of sixty months or 60,000 miles.
According to the complaint, Bassett experienced malfunctioning of her Sephia's brakes within 17,000 miles of use, which manifested as an inability to stop the vehicle, increased stopping distances, unpredictable and violent brake pedal pressures, brake lockup and vibration, and general interference with control of the vehicle. She attributed these manifestations to a defect in the design of the Sephia's brake system causing inadequate heat dissipation, premature wear of the brake pads, and warping of the rotors.
The complaint stated four causes of action: breach of express warranty, breach of implied warranty of merchantability, violation of the MMWA, and violation of the Unfair Trade Practices and Consumer Protection Law ("UTPCPL"). Bassett claimed that each member of the class was entitled to compensatory damages for out-of-pocket repair costs, loss of use costs, loss of resale value, funds for permanent repair of the vehicle, treble damages, and costs of litigation, including legal fees. Finally, Bassett requested an injunction compelling KMA to notify all class members of the potential danger for personal injury deriving from the Sephia's brake defect, and to provide free repair and replacement of the affected brake systems.
In February 2001, counsel for KMA filed a notice to remove the action to the U.S. District Court for the Eastern District of Pennsylvania, invoking that court's diversity jurisdiction. The parties then filed an amended complaint and answer with the federal court. Bassett's amended federal court complaint re-stated the allegations in her original state court complaint, and KMA answered denying all allegations and asserting forty-seven boilerplate affirmative defenses. The manufacturer sought dismissal of the amended complaint. In due course, the district court certified the class on all of Bassett's claims except her UTPCPL claim. See Samuel-Bassett v. Kia Motors Am., Inc., 212 F.R.D. 271 (E.D.Pa.2002). KMA appealed and the U.S. Court of Appeals for the Third Circuit, which raised the issue of jurisdiction sua sponte, vacated the lower court's certification decision, and remanded for a determination of whether the parties met the amount in controversy required to establish diversity jurisdiction. See Samuel-Bassett v. Kia Motors Am., Inc., 357 F.3d 392 (3d Cir.2004). In light of the Third Circuit's decision, the parties agreed that the jurisdictional requirement had not been satisfied and, on April 8, 2004, the district court remanded the case to the Philadelphia County Court of Common Pleas.
Following remand, in May 2004, Bassett filed her motion for class certification with the Philadelphia Court of Common Pleas. Bassett's motion for class certification filed in state court simply incorporated by reference the motion she originally filed in federal court. Compare Pa.R.C.P. Nos. 1702.1708 with Fed.R.Civ.P. 23(a)(b). In September 2004, the trial court granted Bassett's motion for class certification in part. The court certified the following class as to the breach of express warranty, breach of implied warranty of merchantability, and MMWA claims:
Certification Order, 9/17/04, at 1. Following discovery, the parties stipulated that KMA did not begin selling the Sephia in the United States until 1997. Bassett also conceded that the 2001 model Sephia had undergone substantial redesign that corrected the alleged brake defect. Consequently, the class was limited to purchasers of 1997 to 2000 Sephias. Class certification was denied as to the UTPCPL claim, and Bassett was permitted to proceed alone on that count. Bassett
Bassett notified the class of the action against KMA. The parties then filed various motions in limine and proposed findings of fact in anticipation of trial. In addition, KMA filed a motion to bifurcate, which the trial court denied. Tr. Ct. Order, 5/16/05. Subsequently, the parties proceeded to trial.
The trial took place between May 16 and May 27, 2005. At the conclusion of Bassett's case, KMA moved for compulsory nonsuit, but the court denied the motion. Notes of Testimony ("N.T."), 5/23/05, Vol. 5, at 55-60. KMA renewed its request for summary relief at the end of its case, moving for a directed verdict on the warranty and MMWA claims. After argument, KMA withdrew its request in part, and the trial court denied the remainder of the motion.
On June 10, 2005, KMA—represented by new counsel—filed a post-trial motion for judgment notwithstanding the verdict or, in the alternative, for a new trial. See Pa.R.C.P. No. 227.1. On September 26, 2005, the trial court held a hearing on KMA's motion, at the end of which it directed the manufacturer to file an addendum indicating where issues raised in the motion had been preserved; KMA complied. The trial court issued no further order to dispose of the request for post-trial relief within 120 days of filing and, therefore, upon praecipe of the class, the prothonotary entered judgment on the molded jury verdict on October 25, 2005. See Pa.R.C.P. No. 227.4(1)(b). KMA appealed the judgment to the Superior Court and the class filed a cross-appeal.
In parallel, on June 6, 2005, Bassett filed a motion for attorneys' fees. After several postponements, the trial court held a hearing on the motion on September 13, 2005. In January 2006, the court granted the motion and awarded class counsel $4,125,000 in fees, and $267,513 in costs and expenses of litigation. KMA separately appealed this order to the Superior Court in February 2006.
We granted allocatur and consolidated the appeals to address the following issues, as stated by KMA:
Samuel-Bassett v. Kia Motors Am., Inc., 598 Pa. 104, 954 A.2d 565 (2008); Samuel-Bassett v. Kia Motors Am., Inc., 598 Pa. 105, 954 A.2d 566 (Pa.2008).
KMA's first claim is that the trial court certified the class in error because Bassett failed to prove: that questions of law and fact were common to the class, that the common questions predominated over individual issues, that Bassett's claims were typical of the class claims, and that Bassett was an adequate class representative.
Class certification presents a mixed question of law and fact. Liss & Marion, P.C. v. Recordex Acquisition Corp., 603 Pa. 198, 983 A.2d 652, 663 (2009) ("Liss"). The trial court is vested with broad discretion in deciding whether an action may be pursued on a class-wide basis and, where the court has considered the procedural requirements for class certification, an order granting class certification will not be disturbed on appeal unless the court abused its discretion in applying them. Id.; Kelly v. County of Allegheny, 519 Pa. 213, 546 A.2d 608, 610 (1988). See also In re Community Bank of Northern Virginia, 622 F.3d 275, 290 (3d Cir.2010). An abuse of discretion will be found if the certifying court's "decision rests upon a clearly erroneous finding of fact, an errant conclusion of law, or an improper application of law to fact;" the trial court must have "exercised unreasonable judgment, or based its decision on ill will, bias, or prejudice." 622 F.3d at 290; In re E.F., 606 Pa. 73, 995 A.2d 326, 329 (2010). See also Twp. of Exeter v. Zoning Hearing Bd. of Exeter Twp., 599 Pa. 568, 962 A.2d 653, 659 (2009). The existence of evidence in the record that would support a result contrary to that reached by the certifying court does not demonstrate an abuse of discretion by that court. In re E.F., 995 A.2d at 329. In deciding whether class action procedural requirements were misapplied or "an incorrect legal standard [was] used in ruling on class certification," we review issues of law subject to plenary and de novo scrutiny. See Delaware County v. First Union Corp., 605 Pa. 547, 992 A.2d 112, 118 (2010).
For the trial court, the question of whether a class should be certified entails a preliminary inquiry into the allegations of the putative class and its representative, whose purpose is to establish the identities of the parties to the class action. Pa.R.C.P. No. 1707 cmt. (certification process "is designed to decide who shall be the parties to the action and nothing more"). See generally Liss, 983 A.2d at 663; Bell v. Beneficial Consumer Disc. Co., 465 Pa. 225, 348 A.2d 734, 739 (1975). As a practical matter, the trial court will decide whether certification is proper based on the parties' allegations in the complaint and answer, on depositions or admissions supporting these allegations, and any testimony offered at the class
Pursuant to Pennsylvania's civil procedure rules, the trial court may allow a representative to sue on behalf of a class if, the class is numerous ("numerosity"); there are questions of law or fact common to the class ("commonality"); the claims of the representative are typical of the class ("typicality"); the representative will fairly and adequately protect the interests of the class ("adequate representation"); and a class action is a fair and efficient method for adjudicating the parties' controversy, under criteria set forth in Rule 1708. Pa. R.C.P. No. 1702. Among the Rule 1708 criteria for determining whether the class action is a fair and efficient method of adjudication is "whether [the] common questions of law or fact predominate over any question affecting only individual members" ("predominance"). Pa.R.C.P. No. 1708(a)(1) (also listing six factors in addition to predominance). The class "is in the action until properly excluded" by, e.g., an order of court refusing certification or an order de-certifying the class. Pa. R.C.P. No. 1701(a) & cmt.; Bell, 348 A.2d at 736 (same).
During certification proceedings, the proponent of the class bears the burden to establish that the Rule 1702 prerequisites were met. Kelly, 546 A.2d at 612. The burden is not heavy at the preliminary stage of the case. Clark v. Pfizer Inc., 990 A.2d 17, 24 (Pa. Super.2010). Indeed, evidence supporting a prima facie case "will suffice unless the class opponent comes forward with contrary evidence; if there is an actual conflict on an essential fact, the proponent bears the risk of non-persuasion." Id.; Debbs, 810 A.2d at 153-54; Baldassari v. Suburban Cable TV Co., 808 A.2d 184, 191 (Pa.Super.2002), appeal denied, 573 Pa. 694, 825 A.2d 1259 (2003); Cambanis v. Nationwide Ins. Co., 348 Pa.Super. 41, 501 A.2d 635, 637 (1985). It is essential that the proponent of the class establish requisite underlying facts sufficient to persuade the court that the Rule 1702 prerequisites were met. Kelly, 546 A.2d at 612.
The trial court prepared a certification memorandum dated September 17, 2004, explaining its class certification decision ("Certification Memo."), and addressing each disputed issue, of commonality, predominance, typicality, and adequacy of representation, as follows. First, respecting commonality, the trial court noted that the theory of liability of the putative class centered on KMA selling one vehicle "with a uniformly defective braking system that affected all drivers" and on KMA's unsuccessful
Finally, with regard to the adequacy of representation prong, the trial court concluded that, contrary to KMA's arguments, Bassett did not have a conflict of interest in the maintenance of the class, and that her financial resources and legal representation were adequate. Specifically, the court rejected KMA's claim that Bassett was an inadequate representative because she had a conflict of interest arising from potential, not-yet-asserted Lemon Law and personal injury claims (resulting from a brake-related accident) that other class members did not share. The court concluded that, instead, Bassett's personal injury made her "a more zealous advocate on behalf of the class." Certification Memo., 9/17/04, at 14-16 (citing Janicik, supra).
The trial court further addressed class certification issues in its Pa.R.A.P. 1925(a) opinion. In addition to incorporating by reference its September 2004 certification memorandum, the court stated that the evidence introduced at trial confirmed that a class action was the most appropriate means to present the class's claims, that class counsel was able to present the issues to the jury fully, and that the jury was able to decide all issues before them "sincerely, productively, appropriately and justly." According to the court, separate trials on the 9,402 claims of the class members, claiming damages of only $600 each, would have placed a strain on the courts and effectively "seal[ed] shut" the doors to the courtroom in violation of the Pennsylvania Constitution. The effect would have
On appeal to this Court, KMA argues that Bassett failed to establish that common questions of law and fact existed, that these common issues predominated over individual issues, that her experience was typical of the class, and that she was an adequate representative of the class.
KMA claims that Bassett did not meet either the commonality or the predominance prerequisites for certifying the class, raising the same arguments in support of both claims. According to KMA, the trial court certified the class on a record that contained proof of Bassett's "anecdotal" experience but no evidence that KMA had breached its express warranty with respect to all class members or that the class members sustained out-of-pocket costs as a result.
KMA states that to prove liability for breach of express warranty, Bassett had to submit evidence for each absent class member. KMA states that Bassett's evidence of her personal experience, expert testimony and internal documents regarding a defect present in all 1997-2000 Sephias, and warranty brake repair data were not probative to satisfy Bassett's burden of proof with regard to all the elements of a breach of warranty cause of action for the class. Without specifying whether it is addressing the certification hearing or the trial testimony, KMA attacks Bassett's evidence as not credible and not probative. Thus, KMA challenges the conclusion of Bassett's expert witness that the Sephias suffered from a common defect, on the basis that he personally inspected only two vehicles rather than all the vehicles in the class. According to KMA, warranty repair statistics did not cure any deficiencies in the expert's testimony regarding the existence of a defect and, instead, showed only that "KMA honored its express warranty" by routinely covering brake repairs to Sephia vehicles.
Moreover, KMA argues that reliance, manifestation, notice, and opportunity to cure are elements of proof in a breach of express warranty action, and that Bassett failed to prove them with respect to the class claims. According to KMA, Bassett was required to produce evidence that each absent class member was aware of and relied on KMA's express warranty, yet the record lacks any such proof respecting class members other than Bassett. KMA's Brief at 19-20 (citing Goodman v. PPG Indus., Inc., 849 A.2d 1239, 1245-46 (Pa.Super.2004), aff'd per curiam, 584 Pa. 537, 885 A.2d 982 (2005) (buyers could not enforce warranty made by third party to seller)). KMA also argues that Bassett offered no evidence that each class member notified KMA of a covered defect, provided opportunity to cure, or that KMA failed or refused to cure the brake defect. Id. at 20-22 (citing 13 Pa.C.S. § 2607(c)(1) ("buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy")). KMA reiterates that simply proving the existence of a defect based on consumer expectations of brake pad longevity is insufficient evidence that KMA breached its express, rather
Bassett responds first with a waiver argument. Bassett claims that KMA waived all certification issues by failing to object on the trial court record and distinguish express warranty issues from implied warranty issues for certification purposes. According to Bassett, KMA contested certification as to all claims, "hoping as a matter of strategy to obtain the same res judicata benefit it now claims for the implied warranty claim." Our review, however, reveals that KMA raised and preserved issues related to certification of the class with respect to all of Bassett's claims on behalf of the class. Therefore, KMA's claims related to the express warranty were not waived, even if they were not addressed separately from implied warranty claims, and regardless of KMA's strategy.
On the merits, Bassett argues that consumer product warranty claims are recognized as "particularly suitable" for class litigation. Bassett's Brief at 14 (citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997) (predominance is "readily met" in certain cases alleging consumer fraud) and 15 U.S.C. § 2310(e) (establishing separate notice and opportunity to cure procedures for class actions)). According to Bassett, warranty data showing high percentage rates of covered brake repairs was prima facie proof that all 1997-2000 Sephias experienced a premature wear defect. Further,
Bassett argues that she proved that each class vehicle manifested the defect by showing that the abnormal degradation of the brake pads and rotors was measurable. KMA's business records, i.e., warranty data and internal memoranda, showed that the defect was measured, tested, and ultimately recognized internally by KMA. Thus, Bassett asserts, warranty data supported the commonality and predominance allegations, regardless of whether the same data also showed that KMA complied with its warranty promises, a fact relevant to KMA's liability but not a factor for the court to consider for certification purposes.
According to Bassett, KMA did not object to or introduce evidence to rebut Bassett's commonality evidence. Bassett notes that KMA's appeal strategy is different from its trial argument: at trial, KMA sought to prove that a common defect did not exist but, on appeal, KMA is claiming that existence of a defect is irrelevant. Bassett emphasizes that, at trial, KMA "recognized" that it was replacing one set of defective brakes with another and, therefore, that warranty repairs did not restore the Sephias to a defect-free condition. But, Bassett adds, on appeal, implicit in the jury's verdict is a finding that commonality existed so there is no basis to overturn the certification decision.
Bassett also argues that common issues predominated over any individual issues. Common issues included whether KMA met its express promise to deliver vehicles free from defect; whether the Sephias had a braking system design defect; and whether the design defect manifested as abnormal or premature wear of the brakes. According to Bassett, these issues were essential to proving the warranty claims and were properly supported with generalized proof.
Next, Bassett responds to KMA's assertion that evidence of individual reliance is necessary to prove breach of warranty and is not amenable to generalized proof. According to Bassett, reliance is not an element of proof in a warranty action because the written warranty is an affirmation of fact and part of the basis of the bargain. Bassett's Brief at 29 (citing Liberty Lincoln-Mercury, Inc. v. Ford Motor Co., 171 F.3d 818, 825 & n. 7 (3d Cir.1999) (not all promises are warranties; to be a warranty, promise must be part of basis of bargain and reliance may become factor in determining whether promise is part of basis of bargain)). Bassett states that the burden was, therefore, on KMA to prove that the written warranty was not part of the bargain and did not cover the defective condition of which class members complained. Id. (citing 13 Pa.C.S. § 2313 cmt. 3 (seller's affirmations of fact about goods during bargain become part of description, hence no particular reliance need be shown to weave them into agreement; rather, fact which takes affirmations out of agreement requires clear affirmative proof)). Here, according to Bassett, KMA did not offer any proof that class members disregarded
Bassett also rejects KMA's arguments that each class member was required to provide individual notice of the common defect, opportunity to cure, and to establish failure to repair in order for the class to maintain suit. According to Bassett, KMA "received ample notice" that the Sephias' brakes were defective from consumer complaints, warranty claims, and internal records; thus, individual notice prior to suit was not required. Id. at 31-32 (citing In re Latex Gloves, 134 F.Supp.2d 415, 422 (E.D.Pa.2001), vacated in part on diff. grounds, Whitson v. Safeskin Corp., 2001 WL 34649695 (E.D.Pa. Apr. 6, 2001) (whether buyer provided notice within reasonable time to seller via complaint, which was filed two years after discovery of injury, is issue for finder of fact)). Indeed, Bassett argues that the MMWA did not require notice to KMA on behalf of the class and an opportunity to cure until after certification of the class. Id. at 32 (citing 15 U.S.C. § 2310(e) (class of consumers may not proceed on breach of warranty claim except to establish representative capacity of named plaintiffs, unless warrantor "is afforded a reasonable opportunity to cure" failure to comply with warranty; named plaintiffs shall notify defendant that they are acting on behalf of class at that time)). Additionally, Bassett claims that she notified KMA of the class's claim in timely fashion, which led KMA's counsel to withdraw a motion for directed verdict after trial. See N.T., 5/25/05, Vol. 7, at 26-27.
Finally, Bassett responds to KMA's argument that her evidence of damages at trial was inadequate because individual out-of-pocket costs of repair were not demonstrated. Bassett states that KMA's current argument on this issue highlights the difference in posture at the time of class certification, when Bassett was asserting that the class action mechanism was appropriate, versus on appeal, when KMA is attacking a completed trial as improper. Bassett emphasizes that her expert's testimony at trial, and KMA's records, substantiated the request for per person damages, to which KMA had a full opportunity to object but did not. Furthermore, according to Bassett, the jury's award was supported by the evidence at trial.
In its reply brief, KMA reemphasizes that the existence of a common defect "is not the answer to the question of whether the class was properly certified" but merely a threshold fact. KMA also states that Bassett's arguments ignore evidence that among the 1997-2000 Sephias, KMA introduced thirteen separate design changes to the brakes and that not simply one automobile model was at issue.
Preliminarily, to better focus the dispute, we address the proper scope of our review of the trial court's decision to certify the class. "Scope of review refers to the confines within which an appellate court must conduct its examination ... [or] to the matters (or "what") the appellate court is permitted to examine." Morrison v. Commonwealth, 538 Pa. 122, 646 A.2d 565, 570 (1994); see generally Jeffrey P. Bauman, Standards of Review and Scopes of Review in Pennsylvania—Primer and Proposal, 39 DUQ. L.Rev. 513 (2001). Both parties here offer extensive argument about whether the trial court's decision to certify was proper in view of evidence offered during the liability phase of trial. But, as stated, a certification
An appellate court does not second-guess a trial court's discretionary "preliminary" decision to certify the class by considering subsequent case developments of which the trial court could not have been aware at the time of its decision. Thus, arguments regarding subsequent case developments, such as evidence revealed at the liability phase of trial or the jury's verdict, cannot prove an abuse of discretion at the certification stage.
For ease of discussion, we will address commonality and predominance together as the parties do, but we emphasize that the Rule 1702(2) commonality requirement and the Rule 1708(a)(1) predominance requirement are distinct prerequisites for class certification, both of which must be established by the class proponent.
To establish the commonality requirement, Bassett had to identify common questions of law and fact—"a common source of liability." Weismer, 615 A.2d at 431. Simply contending that all putative members of a class have a complaint is not sufficient if the complaints are disparate personal allegations arising from different circumstances and requiring different evidence, i.e., "one requiring less, the other requiring more, the one not indicative of the merits, the other appearing to approach the merits of individual cases." Allegheny County Hous. Auth. v. Berry, 338 Pa.Super. 338, 487 A.2d 995, 996-98 (1985) (commonality requirement not met with bare allegation that a number of plaintiffs had different verifiable complaints against same defendant); see Eisen v. Indep. Blue Cross, 839 A.2d 369, 372 (Pa.Super.2003) (same). Commonality may not be established if "various intervening and possibly superseding causes of damage" exist. Weismer, 615 A.2d at 431. The critical inquiry for the certifying court is whether the material facts and issues of law are substantially the same for all class members. Liss, 983 A.2d at 663. The court should be able to envision that the common issues could be tried such that "proof as to one claimant would be proof as to all" members of the class. Id.
The "predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation." Amchem Prods., 521 U.S. at 623, 117 S.Ct. 2231; see In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 310-11. Thus, a class consisting of members for whom
Here, we do not discern any abuse of discretion in the pre-trial certification decision. The evidence available to the court at the time of certification supported the following findings of fact by the trial court. KMA sold the Sephia to U.S. consumers between 1997 and 2000. N.T., 7/15/04, at 10, 19. Although KMA made several changes to the design of the Sephia's brake system during those years, the modifications did not significantly alter the basic defective design. N.T., 7/15/04, at 86-87, 129; 7/16/04, Vol. 1, at 79-81. According to Bassett's expert, the brake systems of all 1997-2000 Sephias had a common design defect related to heat dissipation in the front brakes, which caused premature wear of the brake pads and rotors. N.T., 7/15/04, at 93, 100-01.
The findings of fact by the certifying court formed a sufficient basis to conclude that commonality was met, as the class's claims were based on "a common source of liability" and were susceptible to common proof. Liss, 983 A.2d at 663; Weismer, 615 A.2d at 431. KMA warranted Sephias to be "free from defects in material and workmanship." Bassett and the class asserted several causes of action on the basis of the common source of liability (i.e., the defective design of the brake system), including breach of express and implied warranties, and violation of the MMWA. The trial court did not abuse its discretion in concluding that common questions of law and fact existed, such as whether the 1997-2000 Sephias had the common defect alleged, whether KMA had the ability to repair the defect, whether KMA breached the express and implied warranties, and whether KMA violated the MMWA. Based on the same evidence, the certifying court also did not abuse its discretion in concluding that common issues predominated over individual issues of liability.
KMA's arguments on appeal do not prove an abuse of discretion by the trial court. First, the class here was not required to prove "reliance" in order to recover for breach of the express warranty.
Second, the trial court did not abuse its discretion in concluding that the issue of proximate cause could be proven by common evidence. The court considered KMA's internal memoranda and expert testimony regarding the brake design defect, in conjunction with warranty claims data, which tended to prove that the brake design defect was the proximate cause of premature wear of brake pads and rotors with respect to the class claims. N.T., 7/15/04, at 88-91, 99-102. On appeal, KMA argues that commonality was not established because evidence of record proved that premature wear could also have other causes, such as environmental conditions, driver habits, or separate defects, id. at 120-23, 148. We reject KMA's implicit invitation to reweigh the evidence
Third, we also reject KMA's claims that certification was an abuse of discretion because the record was devoid of evidence that class members provided notice of the defect and an opportunity to cure.
As a final matter, KMA argues that common proof for individual class members of the related issues of defect manifestation and amount of damages, see Briehl v. Gen. Motors Corp., 172 F.3d 623, 627-28 (8th Cir.1999), was not available and that the trial court's decision to certify the class was erroneous on this ground. According to KMA, testimony related to Bassett's repair history was insufficient to prove the damages of the other class members and the trial court should have found commonality lacking on this ground.
At issue are two different considerations: whether the class could demonstrate the impact of the defective brakes on each member and whether the amount of damages for each class member was provable with common evidence. See Behrend v. Comcast Corp., 655 F.3d 182, 204-06 (3d Cir.2011) ("At the class certification stage we do not require that Plaintiffs tie each theory of antitrust impact to an exact calculation of damages, but instead that they assure us that if they can prove antitrust impact, the resulting damages are capable of measurement and will not require labyrinthine individual calculations."); Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 188 (3d Cir.2001) (ability to calculate amount of damages "does not absolve plaintiffs from the duty to prove each investor was harmed by the defendants' practice"); accord Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 565, 51 S.Ct. 248, 75 L.Ed. 544 (1931) ("rule which precludes the recovery of uncertain damages applies to such as are not the certain result of the wrong, not to those damages which are definitely attributable to the wrong and only uncertain in respect of their amount"). The impact of the defect on each class member implicates concepts of manifestation and causation. Impact may be proven with common evidence "so long as the common proof adequately demonstrates some damage to each individual." Bogosian v. Gulf Oil Corp., 561 F.2d 434, 454 (3d Cir.1977), abrogated on other grounds by Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The question regarding the impact on each class member turns on the individual facts of a case "rather than upon a rule of law precluding common proof of fact of damage." Id. at 454-55; accord Summers, supra.
The design defect of which the class complained was susceptible to proof on a class-wide basis, and testimony showed that the inability of the Sephia brake system to exhaust heat manifested as premature wear of brake pads and rotors, accompanied by noise and inability to brake, symptoms of which Sephia owners complained. High warranty claims confirmed the impact of the defect on individual members of the class. The fact that the claims rates were not one hundred percent across all models was not dispositive of the issue of manifestation because, as KMA's representative testified, only covered claims were included in the calculations of the warranty rate. Uncompensated claims were not. See N.T., 7/15/04, at 91-92, 97-98. KMA offered testimony that the decision whether to replace brake pads and rotors, wear-and-tear items generally not covered under the warranty, was at the discretion of KMA. Moreover, Bassett's evidence supported the conclusion that, even where KMA replaced brake system components free of charge, the replacement parts were equally defective and required additional repairs, whose replacement at no cost to the Sephia owners would again be subject to KMA's discretion. Notably, at the preliminary stage of trial, the class was pursuing several types of compensation, including out-of-pocket costs, diminished re-sale value of the vehicle, and retrofit costs. The record following the certification hearing contained sufficient evidence to support the trial court's decision that all class members were affected by the defect and sustained some form of damages.
KMA argued in opposition to certification—and renews the argument now, on appeal—that the individual nature of damages proves that the trial court abused its discretion in its finding of commonality and predominance. We disagree. As our previous analysis shows, Bassett and the class adduced sufficient evidence during certification proceedings to show a common source of liability. Any question regarding individual expenditures resulting from varying attempts to repair the defect was not a ground to reject the commonality found on other issues, to defeat the predominance of common issues and, ultimately, to deny certification of the class at the preliminary stages of trial.
In his dissent, Mr. Justice Saylor addresses damages and observes that class members had "plainly individualized experience[s] with out-of-pocket expenditures," which the trial court "glossed over" both at certification proceedings and at trial. Dissenting Op., at 63-64. Justice Saylor criticizes the trial court for failing to manage the class action proceedings fairly and efficiently to account for differences in out-of-pocket damages incurred by the individual class members. Id. at 62. "The looseness of the certification decision yielded ongoing controversy about how the certification was to operate and its impact on required substantive proofs" at trial. Id. at 60.
We do not discount the concern of our esteemed colleague. Respectfully, however, in our view, the concern has less power in the context of assessing the trial court's ruling on the commonality and predominance prerequisites for class certification (especially since claims proceedings that account for different damages
But, we do not view the trial court's failure to devise a proper damages management plan during class certification proceedings—a failure that itself invited a distinct objection—as sufficient to render an abuse of discretion its determination that "potential differences in individual damage claims based upon individual experiences and costs associated with attempts to repair the vehicle" do not "pose any serious management difficulty." Tr. Ct. Op., 9/21/04, at 18. The question is rather whether the individual damages issues were especially difficult and burdensome on the trial court so as to factor against class certification. See Pa.R.C.P. No. 1708(a): accord Smilow, 323 F.3d at 40 n. 8 (citing 5 J.W. Moore, Moore's Federal Practice, § 23.46[.2][b], at 23-209 & n. 17) (3d ed.1997 & Supp.2002). KMA argued at the certification proceedings that the class should not be certified because individual claims proceedings on the issues of causation, manifestation, and damages would require the trial court "to preside over thousands of mini hearings, which would take years," and the class was therefore unmanageable. KMA's Supp. Memo. of Law in Opposition to Class Certification, 7/8/04, at 11. On appeal to this Court, KMA states that "the necessity for 9,401 [sic] individual post-verdict class proceedings in and of itself would have overwhelmingly established that class certification was improper in the first instance." KMA's Brief, at 30.
Setting aside KMA's failure to develop the claim in any meaningful fashion in its brief so as to allow for appellate review—a sufficient basis in itself to reject the argument, Commonwealth v. Walter, 600 Pa. 392, 966 A.2d 560, 566 (2009)— KMA's claim also fails on the merits. First, contrary to KMA's arguments, only the issue of individual damages would have been subject to individualized proceedings. See also Teamsters, 431 U.S. at 361-62, 97 S.Ct. 1843 (question of individual relief does not arise until defendant's liability has been proved and "force of that proof does not dissipate at the remedial stage of the trial"). Second, "[w]here damages issues are likely to require more individualized treatment, a judge has available a number of creative methods of managing questions of remedy in a manner that protects the defendant's rights while redressing harms to individual plaintiffs." Salvas v. Wal-Mart Stores, Inc., 452 Mass. 337, 893 N.E.2d 1187, 1212 (2008) (citing 2 A. Conte & H.B. Newberg, Class Actions § 4.32, at 287-88 (4th ed.2002) ("Newberg") (listing class action management techniques)). Among these are bifurcated trials for liability and damages and the use of special masters. Id. We are not persuaded that it is appropriate to adopt what amounts to a per se rule that the prospect of individualized variations in damages alone required ruling against certification. On the issue of damages, for purposes of
Concerning typicality, Pa.R.C.P. No. 1702(3), KMA claims that Bassett's experience was "vastly different" from that of the other class members and required different treatment from other class members at trial. According to KMA, "unrebutted" evidence established that the Sephia's front brake system underwent continuous redesign between 1997 and 2000, that Bassett's vehicle was only one of "over thirteen" designs, and, as a result, that her experience was unrepresentative of the class. KMA emphasizes that the model of Bassett's car, her repair history, and interaction with KMA were unique to her so that any claim of typicality should have been fruitless.
KMA argues that, as with the commonality and predominance prongs, the trial court considered evidence irrelevant to an express warranty claim like Bassett's, which evidence would have supported "at best" an uncertifiable Lemon Law violation. But, KMA states, Bassett failed to pursue her Lemon Law claim and her individual experience and individual proof were not probative of class-wide claims of express warranty. According to KMA, the class in this case lacked a representative whose experience was typical and should not have been certified.
Bassett responds that typicality was established. According to Bassett, her position on common issues of law and fact is sufficiently aligned with that of absent class members so that pursuit of her own interests would also advance those of the class. Bassett reiterates that she purchased a model year 2000 Sephia with the same warranty and same front brake defect as the absent class members. She states that the brake components were interchangeable between 1997-2000 Sephias and that she was "ideally suited" to present the class claims regarding the ineffectiveness of the design changes, because her vehicle was the latest model in the class. Bassett emphasizes that proof of her claims necessarily proved each class member's claims as well.
Rule 1702(3) states that "[o]ne or more members of a class may sue ... as representative parties on behalf of all members in a class action only if[, inter alia,] the claims ... of the representative parties are typical of the claims or defenses of the class." Pa.R.C.P. No. 1702(3). A challenge to the typicality requirement presumes that commonality has been established. The purpose of the typicality requirement is to ensure that "the class representative's overall position on the common issues is sufficiently aligned with that of the absent class members to ensure that her pursuit of her own interests will advance those of the proposed class members."
Here, the trial court did not abuse its discretion in deciding that Bassett was a typical class member. Bassett and the class asserted the same claims for breach of express warranty, premised on similar facts and KMA conduct. During class certification proceedings, Bassett adduced evidence to support her averments that, like the other class members, she purchased a Sephia vehicle model year 1997-2000 and received the standard purchase contract and written warranty. Because of a design defect that affected the ability of the Sephias' front braking system to dissipate heat, Bassett's vehicle, like the other vehicles in the class, experienced premature wear of the brake pads and warping of the rotors. As with the other members of the class, KMA failed to effectively repair Bassett's vehicle free of charge in accordance with the written express warranty. Bassett's Complaint, at ¶¶ 15-21; N.T., 7/15/04, at 84-89, 99-106.
During certification proceedings, KMA emphasized testimony that not all 1997-2000 Sephias utilized the same brake pads or rotors because the brake system was constantly redesigned and Bassett's vehicle had one of thirteen designs available on 1997-2000 Sephias. N.T., 7/16/04, Vol. 1, at 8-23. Bassett's expert acknowledged the design changes, but testified that these changes were minor and that they did not eliminate the design defect which affected all Sephias in the class, including Bassett's vehicle. N.T., 7/15/04, at 102, 105. KMA also suggested that driver habits or environmental conditions were likely to cause premature brake wear and that, therefore, Bassett's experience could only be atypical of the class and insufficient to prove the brake defect allegations of the class. N.T., 7/15/04, at 120-23, 148. But, Bassett rebutted the suggestion by referring to KMA internal documents and her own expert's testimony, which traced the cause of premature wear of the Sephias' brakes to a design defect rather than to other factors. N.T., 7/16/04, Vol. 1, at 52-53 (referring to McCurdy documents). Bassett's expert also testified that wear rates on the 1997-2000 Sephias were abnormal even when accounting for factors such as driver habits and environmental conditions highlighted by KMA. N.T., 7/15/04, at 131. On this disputed evidence, the trial court was persuaded that Bassett's experience was typical of the class.
KMA's central position that the trial court's decision on this point "was contrary to the evidence," see KMA's Brief
Finally, KMA states that it is also challenging the adequacy of Bassett's representation of the class. Pa.R.C.P. No. 1702(4). Rule 1702(4) states that a representative party may sue on behalf of a class if, inter alia, the representative party "will fairly and adequately assert and protect the interests of the class under the criteria set forth in Rule 1709." Id. Rule 1709 states that fairness and adequacy of representation is an inquiry into the adequacy of class counsel, into any conflict of interest that Bassett, as the representative party, may have in the maintenance of the class action, and into the financial resources secured by Bassett and intended "to assure that the interests of the class will not be harmed." Pa.R.C.P. No. 1709; Klusman, 564 A.2d at 531.
Here, KMA develops its adequacy of representation argument only as a subset of and in reference to whether Bassett's interests are typical or aligned with those of the class, and fails to develop any arguments that address the Rule 1709 criteria. See KMA's Brief at 25. This argument thus sounds more as a challenge to typicality rather than to the adequacy of representation prerequisite for certification. Therefore, any claim of trial court error or abuse of discretion regarding the adequacy of representation prerequisite is waived for failure to develop "in any meaningful fashion capable of review." Commonwealth v. Walter, 600 Pa. 392, 966 A.2d 560, 566 (2009); see Purple Orchid, Inc. v. Pa. State Police, 572 Pa. 171, 813 A.2d 801, 804 (2002) (issue waived by failure to address and develop in appellate brief).
For the foregoing reasons, we conclude that the trial court did not abuse its discretion in certifying the class. Kelly, 546 A.2d at 610. The case properly proceeded to trial as a class action.
Intermingled with its issues of class certification, KMA raises questions of whether the evidence was sufficient to support the jury's finding of liability for breach of express warranty, and of whether the jury's verdict was against the weight of the evidence. KMA asks that we reverse the Superior Court's decision and vacate the judgment in favor of the class.
KMA maintains that Bassett's proof in support of her own claim against KMA was not probative of the other class members' claims and the trial court erroneously allowed the jury to extrapolate from evidence of Bassett's claim proof respecting the entire class. KMA again rests its argument on the premise that Bassett did not establish the commonality, typicality, adequacy of representation, and predominance prerequisites for class certification. According to KMA, the class also failed to prove all the elements of a breach of the express warranty claim and the Superior Court "improperly used [evidence of] the [jury-]rejected implied warranty claims to justify a class-wide breach of express warranty cause of action." KMA's Brief at 28.
In its Rule 1925(a) opinion, the trial court described the evidence introduced at trial and decided that it was sufficient to support the jury's verdict on Bassett's breach of express warranty claim. The court recounted that the of-record deposition of Tim McCurdy, KMA's Director of Technical Operations, and the testimony of Donald Pearce, KMA's Vice President of Parts and Service, and Bassett's expert indicated that all 1997-2000 Sephias had similarly designed brake systems with interchangeable components and all were equally affected by a systemic design problem. The court also noted internal documents which demonstrated that KMA was aware of the brake system problems as early as 1995 and tried unsuccessfully to convince parent-company KMC to remedy the problem. One document prepared for KMA vendors, for example, related the discrepancy between the high warranty claims rate for the Sephia (41.8%) versus the relatively low rate for KMA's Sportage (6.3%) during the 1997-1999 period. In addition, a field report from a Kia Parts Service Manager in May 1999 described the Sephias' defect as "a well[-]known condition [that] needs to be corrected ASAP," and a record of calls to KMA's technical assistance hotline documented complaints that "systemic design problems existed causing unreasonably early wear-out of brakes and rotors." The court also described evidence of KMA attempting to identify the brake problem with the aid of an independent engineering firm, and to remedy the defect by developing and introducing improved pads and rotors from different manufacturers. But, testing of the Sephias after KMC's brake pad and rotor improvements showed that the vehicles' brake system components continued to underperform. Subsequently, KMA offered a "Brake Coupon Program" to provide unconditional free repairs to Sephia owners who had had three or more brake repairs. Tr. Ct. Op., 12/29/06, at 10-22.
Finally, the court described KMA's sale of 1997-2000 Sephias to consumers with identical written warranties, which provided that KMA promised the "new Kia Vehicle [to be] free from defects in material and workmanship." KMA's warranty manual also included a maintenance schedule which recommended a first inspection of the brake system at 30,000 miles or 30 months for ordinary driving use, or 15,000 miles or 15 months for instances of severe driving conditions. Witnesses testified that, under ordinary use conditions, the Sephias did not meet consumer expectations for brake component life under either KMA or American consumer standards. The American consumer expectation was
Initially, we agree with Bassett that our examination of the trial court's pre-trial certification decision is materially different from our examination of issues raised post-trial following the judgment in favor of the class, including issues of evidentiary sufficiency and weight. Accord Behrend, 655 F.3d at 194-95 (court determined relevant geographic market solely for purposes of class certification and not binding on merits). The action proceeded at trial on behalf of the entire class. The class action mechanism is designed to permit a named individual to proceed to trial on behalf of the class, including herself, and to try all of the class members' claims together to judgment. See Bell, supra; Pa.R.C.P. No. 1715(c) ("judgment entered in an action certified as a class action shall be binding on all members of the class except as otherwise directed by the court"). Accord Joel H. Bernstein & Ronna Kublanow, Securities Arbitration 1993: Products, Procedures, and Causes of Action, 819 PLI/Corp 689, 703-05 (1993) (comparing discovery and trial procedure in class action versus multi-plaintiff proceedings). The record reflects that, at trial, the parties proceeded on the premise that Bassett was introducing evidence in support of all the class members' claims. Indeed, at no time did KMA file a motion to decertify the class pursuant to Rule 1710. Pa.R.C.P. No. 1710(d) (order certifying class may be revoked, altered, or amended "before a decision on the merits").
Once the jury rendered its decision, the trial court's certification of the class was no longer revocable. Id. The only available avenue for KMA to obtain relief from the judgment based on post-verdict arguments that evidence personal to Bassett was not probative of the class claims was to challenge the sufficiency or weight of the evidence. And, indeed, KMA essentially appears to be challenging the sufficiency and weight of the evidence, even if its claims are not so precisely articulated.
When reviewing a sufficiency of the evidence claim in a civil case (here, a breach of express warranty action), an appellate court, viewing all the evidence and reasonable inferences therefrom in the light most favorable to the verdict winner, must determine whether the evidence was sufficient to enable the factfinder to find that all the elements of the causes of action were established by a preponderance of the evidence. Elliott-Lewis Corp. v. York-Shipley, Inc., 372 Pa. 346, 94 A.2d 47, 50 (1953); Mescanti v. Mescanti, 956 A.2d 1017, 1020 (Pa.Super.2008). See McElwee v. Southeastern Pa. Transp. Auth., 596 Pa. 654, 948 A.2d 762, 774 (2008); Commonwealth v. Hawkins, 549 Pa. 352,
To prevail on her breach of express warranty claim in this class action, Bassett had to establish that KMA breached or failed to meet its warranty promise with respect to the members of the class, that the breach was the proximate cause of the harm to the class members, and the amount of the ensuing damages. Price v. Chevrolet Motor Div., 765 A.2d 800, 809 (Pa.Super.2000).
KMA's warranty, provided to all the members of the class, states that:
E.g., KMA's 1999 Warranty and Consumer Information Manual at 4, 6; N.T., 5/24/05, Vol. 1, at 67 (warranty manual same for 1997-2000 Sephias).
At trial, the record shows that Bassett offered evidence (in the form of expert testimony from R. Scott King, testimony from KMA executives and other corporate designees, Tim McCurdy, Lee Sawyer, Donald Pearce, and Y.S. Sohn,
Further, KMA did not make effective necessary repairs free of charge. KMA's warranty data, internal KMA documents, and King's testimony regarding the nature of the brake system defect allowed the jury to conclude that simply replacing the pads and rotors on the 1997-2000 model year Sephias was an ineffective repair, which did not resolve the defective design problem that affected the vehicles. Indeed, only a "field fix" for vehicles already on the market, announced via a January 2002 Technical Service Bulletin, and a redesign of the brake system for new models (re-named the Spectra), successfully offered the necessary repair in late 2001. See KMA Technical Service Bulletin (chassis division), 1/02, Vol. 3 # 8. Testimony from KMA's corporate designees Donald Pearce and Michelle Cameron
Both Bassett's expert and KMA executives attributed consumer complaints of noise, vibration, and early brake component wear to the brake system design. Bassett's expert testified that none of the
The record also contained evidence that, at least since late 1998 (more than two years before the class action was filed), KMA had notice that the brake system on the Sephias, beginning with the 1997 model, was performing under market expectations in terms of wear and required frequent repair and replacement. According to KMA executives, they became aware of the problem because of an increase in the sale of brake parts and warranty claim activity. KMA sought repeatedly to increase the performance of the brake system but failed until 2001, when a field fix was developed for in-use models concurrently with the re-design of front brake system on the new model in the Sephia line. In the meantime, class members experienced varying treatment in seeking replacement of brake pads and rotors under the warranty. See Tim McCurdy Inter-Office Memorandum to James Lee, 2/03/99; KMC Brake Quality Team Meeting Summary, 2/15/99; N.T., 5/23/05, Vol. 1, at 16-18, 23-24 (Sawyer deposition); N.T., 5/18/05, Vol. 2, at 35 (McCurdy deposition). Finally, Bassett adduced sufficient evidence to prove that the members of the class suffered damages. Donald Pearce and Michelle Cameron testified that KMA dealerships offered some free repairs to promote good will for Sephia owners, as well as the brake coupon program in late 2001. But, according to the KMA witnesses, in general, the replacement of brake pads and rotors was not covered by the written warranty. As a result, KMA owners sustained out-of-pocket repair costs estimated by Bassett's expert at approximately $1,005 over the life of their Kia Sephia. On cross-examination, the expert stated that he derived the number not from Bassett's repair history data but by relying on data from KMA, and in particular on the Field Assurance and the Technical Assistance Center Incident reports, regarding the frequency of repairs over the life time of a Sephia. N.T., 5/19/05, Vol. 3, at 19-26 (King testimony); N.T., 5/20/05, Vol. 1, at 23 (King cross-examination); N.T., 5/23/05, Vol. 1, at 23-24 (Sawyer deposition); N.T., 5/23/05, Vol. 5, at 103; N.T., 5/24/05, Vol. 1, at 39 (Cameron cross-examination), 64-77 (Pearce cross-examination).
KMA's primary defense strategy at trial was to undermine the class assertions that the Sephia brake system was defective and that any defect affected all the members of the class, by referencing the design changes and the fact that it is common to hear complaints regarding noise, vibration, and brake component wear. KMA executive Y.S. Sohn explained that the primary goal of designing brakes was safety and that brake component longevity was simply an issue of merchantability or competitiveness in the automobile market. According to Sohn, there was no stated or
KMA elicited testimony from Bassett's expert which confirmed that the rotors on Bassett's vehicle did not present a safety concern. The expert also agreed that other vehicle or driver-specific causes were possible for the symptoms exhibited by vehicles in the class; but, on re-direct, he concluded that KMA internal memoranda and warranty data persuaded him that they were not the proximate cause of the premature wear of brake system components experienced by the class members. Finally, although KMA asked the expert about whether he based his calculation of out-of-pocket repair costs for the class on Bassett's experience and challenged the expert's qualifications in providing an opinion on damages, KMA did not object to the introduction of aggregate damages evidence on due process or other grounds, and did not introduce any evidence to rebut the class expert's damages testimony. N.T., 5/16/05, Vol. 1, at 44-50 (motions); N.T., 5/19/05, Vol. 3, at 49, 52-61 (King cross-examination); N.T., 5/20/05, Vol. 1, at 5-9, 23 (King cross-examination), 46-51 (King re-direct).
On appeal, KMA no longer presses the "no defect" theory it pursued at trial, and challenges instead whether sufficient evidence was introduced at trial to prove all the elements of a breach of warranty claim with respect to all the class members on the basis that the evidence described only Bassett's individual experience. Essentially, KMA questions whether Bassett established a breach of express warranty with respect to the entire class. See McElwee, 948 A.2d at 773.
Contrary to KMA's claims, the evidence of record was sufficient to establish all the elements of a breach of warranty claim by a preponderance of the evidence. See Mescanti, 956 A.2d at 1020. The evidence established that KMA made the same promise to all class members, 1997-2000 Sephia owners, to deliver a vehicle free of manufacturing defects and to correct free of cost any problem covered by the warranty. All vehicles in the class were sold with a defectively designed brake system causing premature wear of brake components that necessitated frequent replacement. KMA knew that the 1997-2000 Sephias were not performing up to the expectations of KMA and the American market, and that the transactions were troublesome well before this lawsuit was filed. Although KMA sometimes covered the repairs under the warranty or offered free repairs under other consumer satisfaction programs, members of the class also paid for repairs out-of-pocket. Testimony supported a verdict of up to $1,005 per class member for out-of-pocket costs over the life of a Kia Sephia. This evidence was sufficient to establish the breach of warranty claim with respect to the entire class. Price, 765 A.2d at 809. The trial court did not commit an error of law in sustaining the verdict and rejecting KMA's application for a judgment notwithstanding the verdict or for a new trial.
Next, KMA essentially contends that the jury's verdict in favor of the class was against the weight of the evidence because the record contained "nothing more than anecdotal testimony regarding [Bassett]'s personal experience, expert testimony regarding alleged `defects' generally present in class vehicles and irrelevant KMA statistics...." KMA's Brief at 18 (emphasis in original, footnote omitted). KMA insists that the individual experiences and circumstances of the class members
Allegations that a motion for judgment notwithstanding the verdict or a new trial should have been granted because the verdict was against the weight of the evidence are addressed to the discretion of the trial court. Commonwealth v. Cousar, 593 Pa. 204, 928 A.2d 1025, 1035-36 (2007). "An appellate court, therefore, reviews the exercise of discretion, not the underlying question whether the verdict is against the weight of the evidence. The factfinder is free to believe all, part, or none of the evidence and to determine the credibility of the witnesses." Id. The trial court awards a judgment notwithstanding the verdict or a new trial "only when the jury's verdict is so contrary to the evidence as to shock one's sense of justice. In determining whether this standard has been met, appellate review is limited to whether the trial judge's discretion was properly exercised, and relief will only be granted where the facts and inferences of record disclose a palpable abuse of discretion." Id. at 1036. Thus, the trial court's decision based on a weight of the evidence claim is among "the least assailable of its rulings." Id.
After examining the evidence in this case, we find meritless KMA's assertion that the jury improperly extrapolated to the class evidence personal to Bassett, and that this process resulted in a verdict that shocks one's sense of justice. Bassett, as the representative of the class, introduced evidence that addressed and tended to prove KMA's liability to each of the class members. KMA's assertion to the contrary is based on selected witness testimony and rests on claims of erroneous credibility determinations.
Witness credibility is an issue "solely for the jury to determine." Commonwealth v. Hawkins, 549 Pa. 352, 701 A.2d 492, 501 (1997). The jury in this case had an opportunity to hear conflicting evidence regarding the existence of a common brake system design defect affecting the 1997-2000 model Sephias, of KMA's knowledge of the defect, of KMA's unsuccessful efforts to repair the defect, and of its policy to consider brake component repairs non-warranty items, only sometimes covering replacements and, consequently, causing Sephia owners out-of-pocket costs. Bassett presented evidence in support of claims for the entire class. Cf. Behrend, 655 F.3d at 203-04 (court's inquiry is whether class claims may be proven on class-wide basis using common proof). Based on this evidence, the jury found in favor of Bassett and the class on the breach of express warranty claim and awarded damages. We see no abuse of discretion in the trial court concluding that the verdict is not so contrary to the evidence as to shock one's sense of justice.
Whether the amount of damages awarded to each class member is against the weight of the evidence is a narrower and potentially more difficult question.
As Mr. Justice Saylor explains in his dissent, the class never attempted to account for variables in damages resulting from "markedly different experiences of personal expenditure to address Sephia brake problems." Dissenting Op., at 59, 60-61 & n. 7. The class expert testified to aggregate damages representing out-of-pocket costs that likely did not reflect the actual expenses of each or even most members of the class. As Justice Saylor points out, this evidentiary approach "blur[s] the substantive requirements of the law of damages." Id. at 64. The dissent emphasizes that court sanctioning of agreements to calculate damages in the aggregate as part of class action settlements involves different considerations from court approval of aggregate damages evidence proffered in the adversarial trial setting. See id. at 63-64 n. 14 (citing City of Detroit v. Grinnell Corp., 356 F.Supp. 1380, 1385 (S.D.N.Y.1972)). As Justice Saylor notes, the parties' consensual acceptance of rough justice does not distort the expectations, predictability, and fundamental fairness of our judicial system. See id. at 64.
On the other hand, we note that some jurisdictions have permitted the use of aggregate damages calculations in class actions. See, e.g., Scottsdale Mem'l Health Sys., Inc. v. Maricopa County, 224 Ariz. 125, 228 P.3d 117, 133 (App.2010) (rejecting claim that calculating damages based on statistical sampling is per se violation of due process); In re Pharm. Indus. Average Wholesale Price Litig., 582 F.3d 156, 197-99 (1st Cir.2009) ("In re Pharm.") (rejecting due process challenge to aggregate damages and to expert's method of calculating those damages); Hilao v. Estate of Marcos, 103 F.3d 767, 784-86 (9th Cir. 1996) (rejecting due process challenge to aggregate damages calculation based on sample claims); but see, e.g., McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 231-33 (2d Cir.2008) (aggregate recovery for class followed by individualized distribution violates due process); In re Fibreboard Corp., 893 F.2d 706, 711-12 (5th Cir.1990) (aggregate damages extrapolated from damages of sample plaintiffs violated Texas law requiring proof of causation and damages). In In re Pharm., the U.S. Court of Appeals for the First Circuit concluded that: "Aggregate computation of class monetary relief is lawful and proper. Courts have not required absolute precision as to damages." 582 F.3d at 197 (quoting 3 Herbert B. Newberg & Alba Conte, Newberg on Class Actions § 10.5,
The question of whether testimony regarding aggregate damages is probative to calculate the amount of damages in a class action would be an issue of first impression for this Court. In this instance, Bassett's expert offered such testimony. Once the evidence was offered, KMA had the opportunity to object that it was incompetent to the task or violated KMA's right to due process (or other rights), to cross-examine the witness on the weakness of his methodology, or rebut the argument with evidence of its own; yet, the testimony of Bassett's expert went unchallenged in these respects.
Instead, as we read the record and KMA's brief, KMA proceeded both at trial and on appeal on the theory that Bassett introduced only evidence of her own damages and no evidence of damages to any other member of the class. But, this position misapprehends the record. As described, Bassett's expert specifically testified to his calculation of estimated damages for each member of the class, which in the aggregate produced the molded verdict.
Justice Saylor has well demonstrated that this testimony was subject to a colorable objection on the ground that it inaccurately or imprecisely captured the amount of damages for individual members of the class. But, at the appropriate time at trial, when any error in this regard could have been addressed or avoided, KMA did not challenge the expert's method of calculating damages in the aggregate on due process or any other grounds, and thus waived the argument. The dissent articulates a problematic issue regarding the proof and determination of individual damages differently, and certainly more cogently, than KMA did either at trial or on appeal. In light of existing jurisprudence that articulates a reasonable ground upon which to permit certain forms of aggregate damages evidence in class action litigation, and in light of the narrower nature of KMA's preserved challenge to the damages calculation here, we find no abuse of discretion in the rejection of this aspect of KMA's weight claim.
Next, KMA claims that the Superior Court erred in affirming the trial court's judgment of a molded verdict of $5,641,200. KMA makes two related but nonetheless distinct arguments. First, KMA contends that molding of the verdict was improper or in violation of its due process rights because it allowed each member of the class to recover $600, although no evidence of liability and amount of out-of-pocket costs was of record for any member of the class except Bassett. Essentially, the manufacturer re-asserts its prior arguments regarding the certification of the class and the sufficiency of evidence to prove a breach of the express warranty. See Jackson v. Virginia, 443 U.S. 307, 313-14, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979) (constitutional predicate of sufficiency claim is due process clause). Second, KMA states that molding of the verdict was improper because the trial court did not conduct claims proceedings per its pre-trial order of May 16, 2005 ("May 16th Order"), which disposed of KMA's motion to bifurcate the trial into proceedings on what KMA perceived as "common" versus "individual" issues. The May 16th Order stated:
Tr. Ct. Order, 5/16/05. According to KMA, in light of the May 16th Order, the trial court molded the verdict "without forewarning" and in violation of KMA's constitutional due process rights. Regarding its due process claim, KMA also insists that the improper certification of the class denied KMA the opportunity to present a defense as to each member of the class and have its merits fairly judged. KMA claims that the trial of the case as a class action improperly expanded the substantive rights of class members other than Bassett, who "were awarded damages for a harm they did not prove." KMA's Brief at 28-32.
Bassett and the class respond that KMA distorts the record. According to Bassett, the evidence was "crystal clear that this case was tried on a class basis and defended on a class basis." Bassett's Brief at 39. She states that the jury entered a verdict for the class and not for Bassett alone, as the jury questionnaire reflected. Question 5 on the jury questionnaire stated:
Jury Verdict Special Interrogatories, 5/27/05. After the jury awarded $600 per class member, the trial court merely realized the plain intent of the jury by multiplying the per person award by the stipulated number of class members, and arrived at the molded verdict. The trial court then entered judgment pursuant to Rule 1715(d), which required the court to specify who was bound by the judgment.
In its reply brief, KMA asserts that its objection to the molded verdict was timely, because the first appropriate opportunity to object was in its motion for post-trial relief; the post-trial motion gave the trial court "every opportunity to correct its error." KMA's Reply Brief at 12 n. 12. According to KMA, the jury questionnaire, which referenced damages of each class member, was consistent with the May 16th Order, which, according to KMA, required that "there
In its Rule 1925(b) statement, KMA raised the molding of the verdict issue in
KMA argues that the molding of the verdict was improper because evidence as to Bassett's claim was not probative of the claims of other class members and, as a result, the class failed to carry its burden of proof at trial. The car manufacturer essentially incorporates and re-asserts its prior claims of trial court error regarding the sufficiency and weight of the evidence to justify the jury's verdict as the basis for its due process argument. We have already discussed at length and dismissed KMA's prior claims. Accordingly, we also reject this repetitive claim. Jackson, supra.
KMA argues that the molding of the verdict was erroneous in light of the May 16th Order. In April 2005, KMA filed a motion to bifurcate, seeking separate trials on common issues from issues that it identified as individual, i.e., defect manifestation, notice and opportunity to cure, causation, and damages. According to KMA, its request was for a court order "confirming that issues of fact and law identified by KMA [t]herein [would] be adjudicated in future, class-member-specific proceedings, in the event that [Bassett] prevail[ed] in the . . . common issue trial." See KMA's Motion to Bifurcate, 4/25/05, at 14, 19. The trial court denied the motion and stated that "class members' entitlement to recover[,] if plaintiff class prevails, shall be determined at class proceedings." Tr. Ct. Order, 5/16/05. Thereafter, the parties proceeded to trial and Bassett introduced evidence to prove the claims of all the members of the class.
On May 25 and 26, 2005, the trial court conferred in chambers with both parties regarding their requested jury instructions and the jury verdict sheet, and sought to provide prompt resolution to the parties' objections. The court described its jury instructions and jury questions in terms of amount "sustained by each class member," inter alia, "for repair expenses as a result of defendant's breach of warranty." The trial court asked if there were any objections to the questions on the jury verdict form as explained and KMA's counsel responded "No, Your Honor." N.T., 5/25/05, Vol. 7, at 70-73. Both the jury instructions and the verdict form reflected the discussion in chambers. Indeed, after providing a description of the damages requested by the class in its charge to the jury, the court explained: "[b]ecause you're rendering a verdict for each class member, I will take care of making sure that the Class members recover." At sidebar, immediately after the damages instruction, the court again asked attorneys for both parties if there were any objections
The questions on the verdict sheet, in relevant part and with the jury's answers, read:
Jury Verdict Special Interrogatories, 5/27/05; accord N.T., 5/27/05, Verdict, at 3-8.
After the trial court recorded the jury's answers to the questions on the verdict slip, the court multiplied the $600 damages award by the agreed-upon number of class members—9,402—and recorded a verdict of $5,641,200 on behalf of the class. After dismissing the jury, the court asked the parties if there was anything further they wished to address at that time. Counsel for KMA answered "No, Your Honor. Thanks to the Court." The court concluded proceedings. N.T., 5/27/05, Verdict, at 4-8.
On appeal, KMA concedes that it raised an objection to the molding of the verdict premised on the May 16th Order for the first time in its post-trial motion, re-asserted it in its Rule 1925(b) statement, and argues that such an objection afforded the trial court sufficient opportunity to correct its error. In the Rule 1925(b) statement, KMA asserted that Bassett had consented to undertake post-verdict claims proceedings to determine each class member's entitlement to recover, yet the trial court "sua sponte and in derogation of its own order on bifurcation, transformed this bifurcated class action trial into a unitary verdict in favor of the class." The manufacturer also raised an alternate, facially contradictory, argument that "[t]he time for determining whether class members have claims against KMA is at trial, not `at claims proceedings' following trial and verdict." KMA's Concise Statement of Matters Complained of on Appeal, ¶ 3. KMA had initially asserted the latter, but not the former, argument in its post-trial motion for a judgment notwithstanding the verdict. KMA's Motion for Post-Trial Relief, ¶ 9. On appeal, KMA insists that absent reversal and decertification of the class, KMA's due process rights will have been violated. KMA's Brief at 30-32; KMA's Reply Brief at 12 n. 12.
We disagree with KMA that its objection, which it concedes was offered for the first time in a post-trial motion, was timely under the circumstances. Under prevailing Pennsylvania law, a timely objection is required to preserve an issue for appeal. Pa.R.C.P. No. 227.1(b)(1) & n.; Pa.R.A.P. 302; Straub v. Cherne Indus., 583 Pa. 608, 880 A.2d 561, 567 (2005); Dilliplaine v. Lehigh Valley Trust Co., 457 Pa. 255, 322 A.2d 114, 116-17 (1974). Here, KMA failed to object to the verdict sheets when
The substance of the trial court's May 16th Order does not affect this conclusion. This Court's Straub decision is particularly instructive. In Straub, after the parties rested, the trial court discussed the verdict sheets with the parties and stated that it aimed to explain to the jury that the plaintiffs were forwarding two independent claims, and that the plaintiffs could win on one claim but lose on the other or vice versa. The parties agreed and the trial court issued its instruction. The jury returned a verdict in favor of the plaintiffs on one claim but not on the second. The defendant did not object to the jury questionnaire, the trial court's instructions, or the jury's verdict. Then, in post-trial motions, the defendant sought a judgment notwithstanding the verdict on the ground that once the jury found that the product was not defective respecting the first claim, it should have found in its favor on all counts. The trial court did not rule on the post-verdict motions and entered judgment on the verdict; the Superior Court reversed and remanded. This Court, however, held that the Superior Court erred in rejecting the plaintiffs' waiver argument and reversed. We concluded that the defendant premised its claim of error "on the argument that the jury's verdict was incompatible with a principle of law." But, this alleged error should have been evident when the verdict sheets and the trial instructions were agreed upon and formulated. Yet, the defendant did not object to the verdict sheets, to the trial court's related instructions, or "to the verdict itself when it was rendered." By failing to object, the defendant had waived its claim. 880 A.2d at 567.
Here, we have a similar scenario. KMA argues that the molded verdict was incompatible with the May 16th Order, which it poses as the law of the case, and upon which it claims it relied to allegedly forego pursuit of undisclosed defenses to the class claims.
Next, KMA argues that the counsel fee award should be vacated because, when the award was issued, the trial court had been deprived of jurisdiction by KMA's appeal from the judgment on the verdict. According to KMA, Bassett entered judgment pursuant to Rule 227.4(1)(b) on October 25, 2005, while the attorney's fee petition of June 6, 2005, was still pending. See Pa.R.C.P. No. 227.4(1)(b) (upon party's praecipe, prothonotary to enter final judgment on jury's verdict if court does not dispose of all post-trial motions within one hundred twenty days after filing of first post-trial motion). The manufacturer appealed the judgment on October 28, 2005, and the trial court decided the fee petition on January 23, 2006, nearly three months later. According to KMA, the MMWA requires that the counsel "fee award be entered `as part of' the underlying judgment." But, here, the trial court issued the fee award months after and, thus, it was not part of the final judgment entered. The manufacturer argues that, pursuant to Rule of Appellate Procedure 1701(a), the trial court no longer had jurisdiction to act on the petition for counsel fees once Bassett entered voluntary judgment on the verdict. Pa.R.A.P. 1701(a) ("Except as otherwise prescribed by these rules, after an appeal is taken . . . the trial court . . . may no longer proceed further in the matter."). Thus, KMA asserts that the trial court's award of counsel fees should be vacated. See KMA's Brief at 34.
Bassett answers that the award of costs was proper. She recognizes that the MMWA is the statute authorizing legal fees here, but argues that matters of trial court jurisdiction and procedure related to the award of attorneys' fees are governed by Pennsylvania law and rules. According to Bassett, petitions for attorneys' fees are ancillary to the judgment on the merits and the trial court does not lose jurisdiction to decide them separately after an appeal on the merits is filed. Bassett's Brief at 49-50 (citing Old Forge Sch. Dist. v. Highmark Inc., 592 Pa. 307, 924 A.2d 1205 (2007); Miller Elec. Co. v. DeWeese, 589 Pa. 167, 907 A.2d 1051 (2006) ("Miller")). Bassett notes that the MMWA does not control trial and appellate jurisdiction in Pennsylvania. Indeed, Bassett claims that the U.S. Supreme Court has recognized that counsel fees may be awarded separately from the judgment on the verdict and later incorporated into the judgment. Id. at 51 (citing Budinich v. Becton Dickinson & Co., 486 U.S. 196, 200, 108 S.Ct. 1717, 100 L.Ed.2d 178 (1988)).
The trial court agreed with Bassett that the fee petition and award were timely. According to the court, issues regarding attorneys' fees and costs are collateral or ancillary to the merits and may be addressed by the trial court after an appeal has been filed. Entry of judgment and the
Rule 1701 provides that "[e]xcept as otherwise prescribed by these rules, after an appeal is taken . . . the trial court. . . may no longer proceed further in the matter." Pa.R.A.P. 1701(a). But, after an appeal is taken, the trial court may take other action "ancillary to the appeal." Pa. R.A.P. 1701(b)(1). In Pennsylvania, the trial court's action on a petition for counsel fees has been deemed to be ancillary to the appeal from the judgment on the merits. Miller, 907 A.2d at 1057. Therefore, if the petition for counsel fees is timely filed, the trial court is empowered to act on it after an appeal was taken.
Pursuant to the MMWA, a consumer who prevails on a claim under that statute or on a claim for breach of warranty may recover "as part of the judgment" the reasonably incurred "amount of cost and expenses (including attorneys' fees based on actual time expended)." 15 U.S.C. § 2310(d)(2).
As here, the statute at issue in Budinich provided that the "judgment" would "include a reasonable attorney fee in favor of the winning party, to be taxed as part of the costs of the action." Id. at 197, 108 S.Ct. 1717 (citing Colo.Rev.Stat. 8-4-114 (1986)). The prevailing plaintiff took judgment on the jury's verdict on March 26, 1984, and the defendant filed post-trial motions, which were denied May 14, 1984. The district court issued its final order concerning attorneys' fees on August 1, 1984. The defendant took its only appeal on August 19, 1984, as to all issues. The U.S. Supreme Court held that the appeal was untimely as to all issues except the attorneys' fees. According to the Court, the judgment on the merits was final and appealable on May 14, 1984, and its finality did "not turn upon the characterization of [attorneys'] fees by the statute or decisional law that authorizes them." Id. at 201, 108 S.Ct. 1717. The High Court explained that the important value at stake in adopting this uniform interpretation of finality was the "preservation of operational consistency and predictability" with respect to jurisdictional and procedural rules governing
Like the Colorado statute at issue in Budinich, the MMWA describes the same paradoxical characterization of attorneys' fees as both a "cost" of litigation and "as part of the judgment." 15 U.S.C. § 2310(d)(2). In the interpretation of the U.S. Supreme Court, similar statutory language conveyed no legislative intent to modify jurisdictional and procedural rules applicable to determine the finality of an order for purposes of appeal. Following the High Court's lead, we hold that the trial court's authority to proceed on the petition for attorneys' fees "does not turn" on the MMWA's characterization of those fees. We have no reason to believe that, if faced with this question, the High Court would decide otherwise. Council 13, Am. Fed'n of State, County & Mun. Employees, AFL-CIO v. Rendell, 604 Pa. 352, 986 A.2d 63, 77 (2009) ("Council 13") ("It is fundamental that by virtue of the Supremacy Clause, the State courts are bound by the decisions of the Supreme Court with respect to . . . federal law, and must adhere to extant Supreme Court jurisprudence.").
Similar to the U.S. Supreme Court, we have a strong interest in the preservation of consistency and predictability in the operation of our appellate process. Pennsylvania law is well established that a petition for attorneys' fees is an ancillary matter, which the trial court retains authority to decide after entry of judgment on the verdict. Here, there is no dispute that the application for attorneys' fees was timely when filed on June 6, 2005. Accordingly, the trial court was authorized to decide Bassett's application for attorneys' fees in January 2006, irrespective of KMA's appeal on October 28, 2005, from the judgment on the verdict dated October 25, 2005. We must reject KMA's request for relief from the fee award on this ground.
Finally, KMA argues that the Superior Court erred in affirming the trial court's application of a "risk multiplier" to the attorneys' fees award under the MMWA. According to KMA, the U.S. Supreme Court "prohibited" risk multipliers in federal fee shifting cases and, because fees were awarded here pursuant to a federal statute—the MMWA—state courts are bound by that interpretation. KMA's Brief at 35-36 (citing City of Burlington v. Dague, 505 U.S. 557, 559, 112 S.Ct. 2638, 120 L.Ed.2d 449 (1992); U.S. CONST., Art. VI, Cl. 2). KMA states that the lower courts ignored Dague to rely on a distinguishable Pennsylvania Superior Court case, Signora v. Liberty Travel, Inc., 886 A.2d 284 (Pa.Super.2005), in awarding the enhanced fee. KMA notes that in Signora, attorneys' fees were awarded pursuant to a Pennsylvania statute rather than a federal statute. And, citing the U.S. Supreme Court's opinion in Dague, the Signora panel observed that federal statutes do not permit enhancement for risk. Id. at 293 n. 14. KMA posits that this Court is bound by U.S. Supreme Court precedent in this matter and should vacate the award of the enhanced fee as contravening that precedent.
Finally, Bassett emphasizes that Pennsylvania has a strong public policy to fully compensate parties that incur attorneys' fees where a statute permits fee-shifting. Id. (quoting Solebury Twp. v. Dep't of Envtl. Prot., 593 Pa. 146, 928 A.2d 990, 1004 (2007) ("federal standards that have not been incorporated into state statutes can only be supported to the extent that those standards are consistent with Pennsylvania public policy")). According to Bassett, the discretion of state courts to award attorneys' fees is broader than that of federal courts in purely federal cases and, as a result, state courts may adjust the lodestar. Id. at 55-56 (citing Signora, 886 A.2d at 293 & n. 14; Skelton v. Gen. Motors Corp., 860 F.2d 250 (7th Cir.1988); Krebs v. United Ref. Co. of Pennsylvania, 893 A.2d 776 (Pa.Super.2006); Croft v. P & W Foreign Car Serv., Inc., 383 Pa.Super. 435, 557 A.2d 18 (1989)). Bassett claims that to fulfill the consumer-friendly purposes of the MMWA's fee-shifting provision, accounting for the nature of the services, amount of time expended, results obtained, amounts recovered, and for the contingent nature of the fee arrangement, via the application of a risk multiplier, is integral. Id. at 58-61. Bassett asserts that Pennsylvania Rule of Civil Procedure 1716 reflects these considerations and controls the "discretionary determination of a `reasonable' class fee by the Commonwealth's courts."
In its reply brief, KMA briefly reiterates the arguments in its main appellate brief and adds that application of a risk multiplier is in plain conflict with the language of Section 2310 of the MMWA. According to KMA, the Dague decision applies to all federal fee-shifting statutes, including the MMWA.
The trial court agreed with Bassett that class counsel was entitled to an attorneys' fee award equal to a risk multiplier of 1.375 times the $3 million lodestar, for a total of $4.125 million.
Generally, where the award of attorneys' fees is authorized by statute, an appellate court reviews the propriety of the amount awarded by the trial court under an abuse of discretion standard. Solebury Twp., 928 A.2d at 997 n. 8. We will not find an abuse of discretion in the award of counsel fees "merely because [we] might have reached a different conclusion." Hoy v. Angelone, 554 Pa. 134, 720 A.2d 745, 752 (1998). Rather, we require a showing of manifest unreasonableness, partiality, prejudice, bias, ill-will, or such lack of support in the law or record for the award to be clearly erroneous. Id. To the extent that the issue before us is a question of statutory interpretation, however, our scope of review is plenary and the standard of review is de novo. Solebury Twp., 928 A.2d at 997 n. 8.
The authorizing statute here— the MMWA—is a federal statute. "The construction of a federal statute is a matter of federal law." Council 13, 986 A.2d at 80. Pursuant to federal rules of statutory construction, the courts consider the particular statutory language, as well as the design of the statute and its purposes in determining the meaning of a federal statute. Id. (citing Crandon v. United States, 494 U.S. 152, 158, 110 S.Ct. 997, 108 L.Ed.2d 132 (1990)). But, if the MMWA's language is clear, we should refrain from searching other sources in support of a contrary result. See Ali v. Fed. Bureau of Prisons, 552 U.S. 214, 228, 128 S.Ct. 831, 169 L.Ed.2d 680 (2008) ("We are not at liberty to rewrite the statute to reflect a meaning we deem more desirable."); Carter v. United States, 530 U.S. 255, 271, 120 S.Ct. 2159, 147 L.Ed.2d 203 (2000) (statutory interpretation "begins by examining the text . . . not by psychoanalyzing those who enacted it"); United States v. Gonzales, 520 U.S. 1, 6, 117 S.Ct. 1032, 137 L.Ed.2d 132 (1997) (where "[g]iven [a] straightforward statutory command, there is no reason to resort to legislative history"); Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 253-54, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992) ("[I]n interpreting a statute a court should always turn first to one, cardinal canon before all others. We have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there. When the words of a statute are unambiguous, then, this first canon is also the last: `judicial inquiry is complete.'"). Accord Dooner v. DiDonato, 601 Pa. 209, 971 A.2d 1187, 1195 (2009) ("The language used by [Congress] is the best indication of its intent.").
15 U.S.C. § 2310(d)(2) (emphasis added). Here, there is no dispute that the MMWA authorizes an award of attorneys' fees to prevailing consumers such as Bassett and the class. 15 U.S.C. § 2310(d)(2). The salient question is whether, in view of the authorizing statute, the trial court abused its discretion in factoring the class counsel's risk into its calculation of the final award of attorneys' fees.
On its face, Section 2310(d)(2) contains no language authorizing a mandatory contingency multiplier nor does it give the courts discretion to apply such a multiplier to supplement the actual fee. The provision explicitly states that attorneys' fees are to be "based on actual time expended," and does not provide for a discretionary fee enhancement. In practical terms, this means that the amount of attorneys' fees authorized by the MMWA is a factor of the actual hours expended and billed by the attorneys in the case—that is, the lodestar. See Dague, 505 U.S. at 559, 112 S.Ct. 2638 ("product of reasonable hours times a reasonable rate" is lodestar); Stair v. Turtzo, Spry, Sbrocchi, Faul & Labarre, 564 Pa. 305, 768 A.2d 299, 308 n. 8 (2001) (same). Thus, Section 2310(d)(2) specifically addresses fee awards and permits only fee awards equal to the lodestar, with no mention, much less approval, of a contrary scheme of fee enhancement such as a contingency multiplier. The plain language of Section 2310(d)(2) is clear and unambiguous regarding attorneys' fees equaling the lodestar.
Moreover, even assuming arguendo that Section 2310(d)(2) is subject to a construction contrary to its plain terms, U.S. Supreme Court precedent provides additional strong legal support for KMA's position that the statute does not allow for a contingency multiplier in the present circumstances. Congress qualified the right of consumer-plaintiffs to recover costs and expenses, limiting recovery to those costs and expenses "reasonably incurred." See 15 U.S.C. § 2310(d)(2). Controlling case law from the U.S. Supreme
505 U.S. at 561-62, 112 S.Ct. 2638 (emphasis in original; internal citations omitted). The Supreme Court, of course, is the final word on federal statutory interpretation and our decisional mandate is to follow its teachings. See Council 13, 986 A.2d at 77 ("It is fundamental that by virtue of the Supremacy Clause, the State courts are bound by the decisions of the Supreme Court with respect to . . . federal law, and must adhere to extant Supreme Court jurisprudence.").
Bassett's argument that Dague's holding must be deemed limited to the environmental statutes "at issue" there, the Solid Waste Disposal Act and the Clean Water Act, proceeds as follows. Section 2310(d)(2) of the MMWA is different from the fee-shifting provisions in Dague, Bassett argues, because it awards an "aggregate amount" of "expenses" in addition to costs as incurred by the consumer/plaintiff, which necessarily should include "contingent fees." Bassett's Brief at 54, 59-60. We recognize that the High Court concluded Dague by saying "we hold that enhancement for contingency is not permitted under the fee-shifting statutes
Writing for the Dague Court, Justice Antonin Scalia focused on whether a "reasonable" attorneys' fee award may include a contingency enhancement of the lodestar. The High Court concluded that the lodestar benefits from a "strong presumption" of reasonableness because it generally reflects the merits and difficulties of a case, i.e., the risk of loss. For an attorney who expected a premium over his hourly rates when he or she accepted a contingency fee case, the "lodestar enhancement [would] amount[ ] to double counting" the risk of loss and is unreasonable. 505 U.S. at 562-63, 112 S.Ct. 2638. The Court also discussed various approaches to lodestar enhancement and decided that all the approaches suffered from similar infirmities: undesirable social costs (such as creating incentives to bring nonmeritorious claims and overcompensating cases with above-average chances of success), added incentives for burdensome satellite litigation over attorneys' fees, and inconsistency with the Court's general rejection of contingent fees. Id. at 563-66, 112 S.Ct. 2638 (rejecting, inter alia, the Delaware Valley approach, see supra at n. 2). Importantly, "reasonableness" of the attorneys' fees is the linchpin under the MMWA just as it was under the statutes analyzed in Dague. Compare 15 U.S.C. § 2310(d)(2) (courts may award expenses, including attorneys' fees "reasonably incurred by the plaintiff") with 42 U.S.C. § 6972(e) (courts may award costs of litigation that include "reasonable attorney . . . fees") and 33 U.S.C. § 1365(d) (same). Bassett's argument regarding the limiting language notwithstanding, Dague plainly requires rejection of the non-textual contingency multiplier that the lower courts engrafted here onto the MMWA.
Bassett also insists that we limit the application of Dague to "federal-question
The MMWA is an act that provides, inter alia, federal standards governing contents of warranties and minimum standards for warranties. See, e.g., 15 U.S.C. §§ 2302, 2304, 2311(c). Failure to comply with the MMWA's requirements or prohibitions constitutes an unfair method of competition, in violation of 15 U.S.C. § 45. See 15 U.S.C. § 2310(b). The MMWA does not create a cause of action for breach of warranty, but it also does not preempt a breach of warranty claim or, generally, "any right or remedy of any consumer under State law." See 15 U.S.C. § 2311(b)(1). According to Section 2310(d)(1) of the MMWA, "a consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this chapter,
In the same vein, Bassett argues that the award of attorneys' fees is traditionally a matter of procedure "exclusively" governed by state law and procedure, specifically Pennsylvania Rule of Civil Procedure 1716.
Bassett also looks to the MMWA's savings clause and concludes that Congress intended to preserve a consumer/plaintiff's right under state law, which in Pennsylvania—as Bassett would have it—permits a contingency multiplier. Bassett's Brief at 55, 60-61 (citing 15 U.S.C. § 2311(b)(1) ("Nothing in this chapter shall invalidate or restrict any right or remedy of any consumer under State law or any other Federal law.")). According to Bassett, the right to a contingency multiplier is vested and embodied in Pennsylvania procedural Rule 1716(5), which states, inter alia, that "[i]n all cases where the court is authorized under applicable law to fix the amount of counsel fees it shall consider, among other things . . . whether the receipt of a fee was contingent on success." Even aside from Dague, we hold that the MMWA's savings clause is not applicable here and that no general "right" to a contingency multiplier exists in Pennsylvania.
Rule 1716 is a rule of procedure prescribed by this Court that does not purport to create any substantive right to a contingency multiplier in all cases. See PA. CONST. Art. V § 10(c) ("The Supreme Court shall have the power to prescribe general rules . . . if such rules are consistent with this Constitution and neither abridge, enlarge nor modify the substantive rights of any litigant."). Under Pennsylvania law, the contingency multiplier of Rule 1716 cannot be fairly construed as a "right or remedy" that was intended to be preserved under the MMWA's savings clause so as to undo the express substantive terms of the federal statute.
Finally, we must reject Bassett's claim that Pennsylvania's "strong public policy to justly compensate parties who incur attorney fees" and are entitled to attorneys' fees under fee-shifting provisions justifies an application of the contingency multiplier here. Bassett's Brief at 55 (citing Solebury Twp., 928 A.2d at 1004) (awarding attorney fee under Pennsylvania's Clean Streams Law, 35 P.S. § 691.307(b)).
Rule 1716's actual procedural purpose is as follows. With respect to authorized counsel fee awards under legislation, courts must weigh the considerations of Rule 1716 as a matter of procedure. See, e.g., Signora, supra. But, the procedural vehicle does not create the underlying entitlement. Here, the class requested attorneys' fees under a federal statute—the MMWA. The plain language of the MMWA and the High Court's clear precedent provide no basis to trigger our procedural rule. Applying Dague to the
For the foregoing reasons, we affirm in part and reverse in part the decisions of the Superior Court dated October 24, 2007, and February 8, 2008. Our reversal is limited to the lower courts' decision to permit application of a risk of loss multiplier to enhance the attorneys' fee award beyond the amount of the lodestar. We remand to the trial court for adjustment of the attorneys' fees in accordance with this Opinion. Jurisdiction is relinquished.
Justice GREENSPAN did not participate in the decision of this case.
Justices EAKIN, BAER, TODD and McCAFFERY join the opinion.
Justice SAYLOR files a dissenting opinion.
I agree with the majority's rationale as it concerns the attorney-fee matters but dissent relative to the class treatment as it was administered by the trial court.
Initially, the majority's overarching approach to this appeal appears to suggest liberality in favor of class certification. I have no objection, to the degree that this does—as the majority indicates and our rules prescribe—nothing more than indicate who the parties to the action will be. See Majority Opinion, at 15-16 (quoting Pa.R.C.P. No. 1707, cmt.).
The difficulty we are seeing in the cases, however, is that many proponents of class treatment believe the judiciary concomitantly should bring about substantive changes in the law favorable to consumer classes. It seems, more often than not, that such innovations are not being presented to our courts as the matters of substantive law they truly represent. Rather, they are being passed off as if they were merely part and parcel of the procedural aspects of class treatment.
My intention is not to advance or criticize any particular position advanced in the legitimate, ongoing policy debate concerning what the substantive law should be in the class setting. It may be that changes are desirable. My point is that substantive modifications require choices among competing social policies, can have deep and wide-reaching social impact, and may implicate defendants' constitutional rights and entitlements.
Accordingly, and in the first instance, it is essential to recognize substantive accretions for what they are. Moreover, even assuming judicial lawmaking is appropriate to facilitate collectivized litigation, there can be no legitimate dispute that substantive changes are well beyond the contemplation of the class action provisions presently reposited in our Civil Procedural Rules. See Pa.R.C.P. Class Actions, Explanatory Comment 1977 ("Many desirable approaches to class action problems involve substantive rather than procedural solutions. . . . These are beyond the power of the Procedural Rules."). Therefore, if such alterations of law are to occur, they must be overtly presented, considered, and sanctioned as matters of substance.
In the present case, the phenomenon of substantive inroads riding the coattails of class action procedure is most vividly illustrated with regard to the damages question. To develop this, in light of the breadth and complexity of the underlying litigation, it is necessary first to lay some supporting groundwork. Upon review of this background, I will discuss how class members were relieved of the obligation to present necessary, fair, and sufficient
In assessing the damages question, it is important to understand that there simply was no evidence of class-wide commonality relative to numerous factors affecting out-of-pocket costs, including the mileage of affected Sephias or the length of actual ownership by class members. Moreover, Appellees' own proofs established that many remedial measures were undertaken by KMA as warranty brake repairs at no cost to individual class members. See, e.g., N.T., May 19, 2005, Vol. 1, at 92, 96-97 (testimony of Appellees' automotive expert). Given such substantial variables,
Rather than addressing individualized damages on conventional terms, as required under ordinary substantive law, class counsel repeatedly argued to the judge and the jury that—on account of the small amounts involved and the nature of a class action—there simply was no need for any sort of individualized assessments. See, e.g., N.T., May 26, 2005, Vol. 4, at 113-14. For its part, the trial court, at the certification stage, did not concretely address how individualized damages matters would be managed. Instead, the court rested its approval of class treatment entirely on conclusory pronouncements indicating that damages issues simply were not a problem. See Samuel-Bassett v. Kia Motors Am., Inc., No. 2199, Jan. Term 2001, slip op. at 18, 2004 WL 2173324 (C.P. Phila., Civ. Trial Div. Sep. 21, 2004) ("Neither do potential differences in individual damage claims based upon individual experiences
The looseness of the certification decision yielded ongoing controversy about how the certification was to operate and its impact on required substantive proofs.
N.T., May 16, 2005, Vol. 1, at 60. Such consensus was then memorialized in the pretrial order, referenced by the majority, specifying that "[e]ach class member's entitlement to recover if plaintiff class prevails, shall be determined at claims proceedings." Majority Opinion, at 42 (quoting Samuel-Bassett v. KMA Motors of Am., Inc., No. 2199 Jan. Term 2001 (Order of May 16, 2005)).
Despite this prescription for claims proceedings (which, conceptually, should have worked a major alteration in the path of the litigation), Appellees attempted at trial to quantify the out-of-pocket expenses incurred by absent class members via grossly generalized, hypothetical proof. In this regard, Appellees presented an "automotive expert" who indicated—based on assumptions that each class member paid for all relevant brake repairs and drove his vehicle 100,000 miles—all plaintiffs incurred $1,005 in damages. See N.T., May 19, 2005, Vol. 3, at 23-26. Two obvious deficiencies in the testimony were that: the first of the underlying assumptions was directly contrary to the record (not the least because it was well established that KMA already had paid for many of the repairs as warranty items, see supra note 3); and the second was in strong tension with common experience (since it
In response to defense criticisms of this evidence, class counsel, for his part, maintained before the jury that the class action procedural device alleviated his problems of substantive proof:
N.T., May 26, 2005, Vol. 4, at 113-14 (emphasis added).
Finally, contradicting its pretrial order providing for claims proceedings, the trial court instructed the jurors that there would be no subsequent proceedings to decide anything.
In my view, the irregularities discussed above are manifestations of a core analytical problem, i.e., the failure to distinguish between the procedural class action device and substantive legal innovations being employed to facilitate them, including adjustments to the plaintiffs' burden of proof. It could not be argued seriously that hypothetical testimony from an automotive expert
The complexity of class action litigation, and the concomitant need for probing consideration of foundational questions concerning the appropriateness of full or partial class treatment, is apparent both from the many closely reasoned judicial opinions and the broad range of commentary on the subject. See, e.g., Cimino v. Raymark Indus., Inc., 151 F.3d 297, 319-21 (5th Cir.1998). A judicious class certification decision requires the trial court to distinguish between common questions and individual ones, and to approve a litigation plan for fair and efficient administration which will provide appropriate treatment for both issue categories.
In the present case, certification of a 9,400-person class action occurred without the predicate, closely-reasoned justification or any rational plan for the handling of individualized issues.
I recognize that the record of this case creates the impression that purchasers of Sephias in the relevant time period sustained injury on account of a poor brake design and that the amount of the damages awarded to each individual class member appears to be modest. Thus, there may be a sense that the jury verdict in this case serves a "rough justice" and, as such, should not be disturbed. Result orientation in the law, however, yields its own set of perverse consequences, not the least of which is the silent dilution of the consistency, predictability, and fundamental fairness which are aspirations of the American judicial system. Cf. Erbsen, From "Predominance" to "Resolvability", 58 VAND. L.REV. at 1037-39 (discussing the deleterious impact of ad hoc lawmaking in class action proceedings on democratic legitimacy and concluding that "[a]llowing courts to bend substantive rules to the procedural needs of particular cases is . . . inconsistent with the normal process of rulemaking and prone to prioritize the welfare of litigants over broader social welfare with undesirable distributive consequences").
Finally, Appellees forcefully contend that KMA's attorneys did not do enough to bring their criticisms to the attention of the trial court, and the majority credits such argument. See Majority Opinion, at 41-42. My response is twofold. First, I do not believe the majority opinion in this case will be read as an error-review, issue-preservation decision.
In summary, left to my own devices, I would vacate the verdict and overturn the class certification order on its terms. I would also highlight the evaluative process which I believe should be required from the outset to shape the course of broad-scale, aggregate litigation likely to span the better part of a decade. I do not believe justice is served by insulating this verdict in reliance on the discretionary aspect of certification decisions, thus extending a liberality which yields trials where substantive requirements are subject to dilution and non-enforcement without substantive justification.
Martin H. Redish & Clifford W. Berlow, The Class Action As Political Theory, 85 WASH. U.L.REV. 753, 754 (2007) (footnotes omitted).
There is nothing unusual about the phenomenon that class actions encompass both common and individual questions. See generally Allan Erbsen, From "Predominance" to "Resolvability": A New Approach to Regulating Class Actions, 58 VAND. L.REV. 995, 998-99 (2005) ("Factual distinctions at various levels of subtlety and materiality usually permeate the legal claims of putative class members, such that their collective claims raise both `common' and `individual' questions relevant to proving liability and damages." (footnote omitted)). As further developed below, the irregularities in this case pertain to the absence of a management approach which would fairly account for such material differences.
N.T., May 26, 2005, Vol. 3, at 49-50 (emphasis added).
I note that, in some circumstances, some jurisdictions have accepted the use of statistical, surveying, and sampling techniques to fill this sort of evidentiary void. See generally Laurens Walker, A Model Plan to Resolve Federal Class Action Cases By Jury Trial, 88 VA. L.REV. 405, 415-20 (2002). Such techniques are not universally and uncritically accepted, however. See generally 2 McLAUGHLIN ON CLASS ACTIONS § 8:7 (6th ed.2010) (collecting cases). Moreover, whatever the merits of these sorts statistical and/or scientific techniques for approximating individualized damages in a class action, nothing of the sort was attempted here. Rather, and again, Appellees' "automotive expert" offered an opinion based on a hypothetical entailing unproven, demonstrably erroneous, and under-inclusive assumptions.
Erbsen, From "Predominance" to "Resolvability", 58 VAND. L.REV. at 1049.
Parenthetically, the majority cites Professor Erbsen's substantial work for the proposition that claims proceedings are not required in class actions. See Majority Opinion, at 45 n. 30. While this may be true, the majority does not capture the author's overarching point that some fair mechanism for individualized treatment of individualized issues is required.
Erbsen, From "Predominance" to "Resolvability", 58 VAND. L.REV. at 1009-10.
Again, it may well be that, as a matter of social policy, some or all of the techniques and philosophies pertaining to class action settlements should be transported into the trial context. My main point here is that, undisputably, the approval of the class action device as acceptable procedure did not accomplish such a substantive change in Pennsylvania. See supra Part I. Moreover, and again, in any such substantive decision making, separation of powers considerations and the constitutional interests of affected defendants obviously merit careful consideration. See id.
Professor's Erbsen's overview perspective is again illuminating:
Erbsen, From "Predominance" to "Resolvability", 58 VAND. L.REV. at 1012-13.
