Celedonia Yue v. Conseco Life Insurance Company
Filing
31
Filed (ECF) Appellant Conseco Life Insurance Company in 11-55275, Appellee Conseco Life Insurance Company in 11-55359 citation of supplemental authorities. Date of service: 01/19/2012. [8037425] [11-55275, 11-55359] (MMW)
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Only the Westlaw citation is currently available.
[1] Federal Civil Procedure 170A
United States Court of Appeals,
Ninth Circuit.
Michael MAZZA; Janet Mazza; Deep Kalsi, Plaintiffs–Appellees,
v.
AMERICAN HONDA MOTOR COMPANY, INC.,
Defendant–Appellant.
170A Federal Civil Procedure
No. 09–55376.
Argued and Submitted June 9, 2010.
Submission deferred Dec. 7, 2010.
Resubmitted June 22, 2011.
Filed Jan. 12, 2012.
Background: Putative class action complaint was
filed alleging that automobile manufacturer misrepresented characteristics of braking system in automobile and stating causes of action under California
Business and Professions Code sections prohibiting
acts of unfair competition and false advertising, for
unjust enrichment, and for violation of California's
Consumer Legal Remedies Act (CLRA). The United
States District Court for the Central District of California, Valerie Baker Fairbank, J., 254 F.R.D. 610,
certified nationwide class of persons who purchased
or leased automobiles. Manufacturer appealed.
Holdings: The Court of Appeals, Gould, Circuit
Judge, held that:
(1) differences between California law and laws of
other jurisdictions in which class members resided
were “material”;
(2) each class member's claim was governed by consumer protection laws of jurisdiction in which transaction took place; and
(3) common issues of fact did not predominate in
nationwide class.
Vacated and remanded.
D.W. Nelson, Senior Circuit Judge, filed a dissenting opinion.
West Headnotes
0
Before certifying a class, the trial court must
conduct a rigorous analysis to determine whether the
party seeking certification has met the prerequisites of
the rule governing class certification. Fed.Rules
Civ.Proc.Rule 23, 28 U.S.C.A.
[2] Federal Courts 170B
0
170B Federal Courts
A federal court sitting in diversity must look to
the forum state's choice of law rules to determine the
controlling substantive law.
[3] Federal Civil Procedure 170A
0
170A Federal Civil Procedure
Under California's choice of law rules, the class
action proponent bears the initial burden to show that
California has significant contact or significant aggregation of contacts to the claims of each class
member; such a showing is necessary to ensure that
application of California law is constitutional.
[4] Federal Civil Procedure 170A
0
170A Federal Civil Procedure
Under California's choice of law rules, once the
class action proponent makes a showing that California has significant contact or significant aggregation
of contacts to the claims of each class member, the
burden shifts to the other side to demonstrate that
foreign law, rather than California law, should apply
to class claims.
[5] Federal Civil Procedure 170A
170A Federal Civil Procedure
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0
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California law may only be used on a classwide
basis if the interests of other states are not found to
outweigh California's interest in having its law applied.
not itself indicate that there is a conflict of law problem; a problem only arises if differences in state law
are material, that is, if they make a difference in the
litigation.
[9] Automobiles 48A
[6] Federal Civil Procedure 170A
0
0
48A Automobiles
170A Federal Civil Procedure
To determine whether the interests of other states
outweigh California's interest, for purposes of applying California law on a classwide basis, the court
looks to a three-step governmental interest test: first,
the court determines whether the relevant law of each
of the potentially affected jurisdictions with regard to
the particular issue in question is the same or different,
second, if there is a difference, the court examines
each jurisdiction's interest in the application of its own
law under the circumstances of the particular case to
determine whether a true conflict exists, and third, if
the court finds that there is a true conflict, it carefully
evaluates and compares the nature and strength of the
interest of each jurisdiction in the application of its
own law to determine which state's interest would be
more impaired if its policy were subordinated to the
policy of the other state, and then ultimately applies
the law of the state whose interest would be more
impaired if its law were not applied.
[7] Automobiles 48A
Differences between California law and laws of
other jurisdictions in which class members resided
were “material,” for purposes of determining whether
California law could be applied to whole class in
action alleging that automobile manufacturer misrepresented characteristics of braking system in automobile; California consumer protection laws had no
scienter requirement, whereas many other states'
consumer protection statutes required scienter, California required named class plaintiffs to demonstrate
reliance, while some other states' consumer protection
statutes did not, and remedies varied by state. West's
C.R.S.A. § 6–1–105(1)(e), (g), (u); N.J.S.A. 56:8–2;
West's Ann.Cal.Bus. & Prof.Code §§ 17200, 17500;
West's Ann.Cal.Civ.Code § 1750.
[10] Federal Courts 170B
0
170B Federal Courts
It is a principle of federalism that each State may
make its own reasoned judgment about what conduct
is permitted or proscribed within its borders.
0
48A Automobiles
[11] Federal Courts 170B
Automobile manufacturer's settlement of unrelated nationwide class action which alleged claims
under California law did not preclude manufacturer's
argument that California law could not be applied to
whole class in consumers' action alleging that manufacturer misrepresented characteristics of braking
system in automobile; manufacturer settled with
plaintiffs in prior case before an answer had been
filed, and without addressing whether application of
California law to a nationwide class was appropriate.
[8] Federal Courts 170B
0
170B Federal Courts
The fact that two or more states are involved does
0
170B Federal Courts
Every state has an interest in having its law applied to its resident claimants.
[12] Federal Courts 170B
0
170B Federal Courts
California law acknowledges that a jurisdiction
ordinarily has the predominant interest in regulating
conduct that occurs within its borders.
[13] Federal Courts 170B
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170B Federal Courts
In the federal system, states may permissibly
differ on the extent to which they will tolerate a degree
of lessened protection for consumers to create a more
favorable business climate for the companies that the
state seeks to attract to do business in the state.
[14] Federal Courts 170B
0
lease transaction took place; although consumers
sought application of California law to entire class,
communication of advertisements to consumers and
their reliance thereon in purchasing automobiles took
place in various foreign states, foreign states had
strong interest in application of their laws to transactions between their citizens and corporations doing
business within their state, and application of California law to entire class would impair foreign states'
ability to calibrate liability to foster commerce.
[18] Federal Civil Procedure 170A
170B Federal Courts
Each state has an interest in being able to assure
individuals and commercial entities operating within
its territory that applicable limitations on liability set
forth in the jurisdiction's law will be available to those
individuals and businesses in the event they are faced
with litigation in the future.
170A Federal Civil Procedure
No class may be certified that contains members
lacking Article III standing. U.S.C.A. Const. Art. 3, §
2, cl. 1.
[19] Federal Courts 170B
[15] Federal Courts 170B
0
0
0
170B Federal Courts
170B Federal Courts
California's governmental interest test is designed
to accommodate conflicting state policies, as a problem of allocating domains of law-making power in
multi-state contexts; it is not intended to weigh the
conflicting governmental interests in the sense of
determining which conflicting law manifested the
better or the worthier social policy on the specific
issue.
[16] Federal Courts 170B
0
170B Federal Courts
Standing requires that (1) the plaintiff suffered an
injury in fact, (2) the injury is fairly traceable to the
challenged conduct, and (3) the injury is likely to be
redressed by a favorable decision. U.S.C.A. Const.
Art. 3, § 2, cl. 1.
[20] Federal Civil Procedure 170A
0
170A Federal Civil Procedure
Under California's Unfair Competition Law
(UCL), restitution is available to absent class members
without individualized proof of deception, reliance, or
injury. West's Ann.Cal.Bus. & Prof.Code § 17200.
Courts should not attempt to apply the laws of one
state to behaviors that occurred in other jurisdictions.
[21] Automobiles 48A
[17] Automobiles 48A
48A Automobiles
0
48A Automobiles
In putative class action alleging that automobile
manufacturer misrepresented characteristics of braking system in automobile, each class member's consumer protection claim was governed by consumer
protection laws of jurisdiction in which purchase or
0
Consumers alleging that they were relieved of
their money by automobile manufacturer's deceptive
conduct suffered an “injury in fact,” as required for
class members' standing in action alleging that manufacturer misrepresented characteristics of braking
system in automobile in violation of California consumer protection laws. West's Ann.Cal.Bus. &
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Prof.Code
§§
17200,
Ann.Cal.Civ.Code § 1750.
[22] Automobiles 48A
17500;
West's
0
48A Automobiles
Automobile manufacturer's objection that California state law gave right to monetary relief to citizen
suing under it without more particularized proof of
injury and causation did not preclude class standing in
action alleging that manufacturer misrepresented
characteristics of braking system in automobile in
violation of California consumer protection laws.
West's Ann.Cal.Bus. & Prof.Code § 17200.
[23] Automobiles 48A
0
48A Automobiles
Common issues of fact did not predominate in
nationwide class of all consumers who purchased or
leased automobile with braking system, as required for
certification of class in consumers' action against
automobile manufacturer, alleging that manufacturer
misrepresented characteristics of braking system in
automobile in violation of California consumer protection laws; limited scope of allegedly misleading
advertising made it unreasonable to assume that all
class members viewed it and relied on it. West's
Ann.Cal.Civ.Code § 1750; West's Ann.Cal.Bus. &
Prof.Code §§ 17500, 17200; Fed.Rules Civ.Proc.Rule
23(a)(2), 28 U.S.C.A.
[24] Federal Civil Procedure 170A
0
170A Federal Civil Procedure
Danas, Marc Primo, Initiative Legal Group APC, Los
Angeles, CA, Michael Francis Ram, Ram, Olson,
Cereghino & Kopczynski, LLP, San Francisco, CA,
for the plaintiff-appellees.
Appeal from the United States District Court for the
Central District of California, Valerie Baker Fairbank,
District
Judge,
Presiding.
D.C.
No.
2:07–cv–07857–VBF–JTL.
Before DOROTHY W. NELSON and RONALD M.
GOULD, Circuit Judges, and JAMES S. GWIN, District Judge.FN*
OPINION
GOULD, Circuit Judge:
*1 Honda appeals the district court's decision to
certify a nationwide class of all consumers who purchased or leased Acura RLs equipped with a Collision
Mitigation Braking System (“CMBS”) during a 3 year
period under Federal Rule of Civil Procedure 23(b)(3).
Plaintiffs allege that certain advertisements misrepresented the characteristics of the CMBS and omitted
material information on its limitations. The complaint
states four claims under California Law. Honda contends: (1) that Plaintiffs failed to satisfy Rule
23(a)(2)'s commonality requirement; (2) that common
issues of law do not predominate because there are
material differences between California law and the
consumer protection laws of the 43 other jurisdictions
in which class members purchased or leased their
Acura RLs; (3) that common issues of fact do not
predominate because resolution of these claims requires an individualized inquiry into whether consumers were exposed to, and actually relied on, various advertisements; and (4) that some members of the
proposed class lack Article III standing because they
were not injured.
Roy Morse Brisbois, Eric Y. Kizirian, Lewis Brisbois
Bisgaard & Smith LLP, Los Angeles, CA, Donald
Manwell Falk, Mayer Brown, LLP, Palo Alto, CA, for
the defendant-appellant.
We have jurisdiction pursuant to 28 U.S.C. §
1292, and we vacate the class certification order. We
hold that the district court erred because it erroneously
concluded that California law could be applied to the
entire nationwide class, and because it erroneously
concluded that all consumers who purchased or lease
the Acura RL can be presumed to have relied on defendant's advertisements, which allegedly were misleading and omitted material information.
Robert Ebert Byrnes, Payam Shahian, Glenn A.
I
A presumption of reliance does not arise when
class members were exposed to quite disparate information from various representatives of the defendant.
The CMBS was part of an optional technology
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package for Honda's Acura RL vehicles released in
2005. Honda said that the CMBS detects the proximity
of other vehicles, assesses the equipped car's speed,
and implements a three-stage process of warning,
braking, and stopping to minimize the damage from
rear-end collisions. At Stage 1, the system sounds a
tone and flashes a “BRAKE” warning sign on the
dashboard. At Stage 2, the system also brakes lightly
and tightens the driver's seat belt. At Stage 3, while
continuing the other warnings, the system increases
the braking force and tightens both the driver's and the
front-end passenger's seat belts. Honda promoted the
CMBS as a way to make rear-end collisions less
common and to minimize the consequences of collision. The CMBS was sold as part of a technology
package that also included adaptive cruise control and
run-flat tires, and added $4,000 to the price of the car.
To advertise the CMBS, Honda prepared marketing
materials describing the system's functionality.
In 2006, Honda released a product brochure
stating that the CMBS “is designed to help alert the
driver of a pending collision or—if it's unavoidable—to reduce the severity of impact by automatically
applying the brakes if an impending collision is detected.” The brochure described the CMBS system's
three-step process of alerting, lightly braking, and
strongly braking if a crash is imminent:
*2 If the system senses a vehicle, it determines the
distance and closing speed. If the closing speed goes
above a programmed threshold, the system will
immediately alert the driver with an audible alarm
and a flashing indicator on the instrument panel. If
the driver takes no action to reduce speed, the system will automatically tug at the driver's seat belt
and lightly apply the brakes. When the system
senses that a frontal collision is unavoidable and the
driver still takes no action, the front seat belts are
retracted tightly and strong braking is applied automatically to lower impact speed and help reduce
damage and the severity of injury.
The brochure showed a picture of an Acura behind a truck with three labels. Stage 1 was farthest
from the truck and stated “RECOGNITION OF
POSSIBLE COLLISION.” Stage 2 was in the middle
and stated “BELTS TIGHTEN AND LIGHT
BRAKING.” and Stage 3 was nearest the truck and
stated “STRONG BRAKING.” The 2007 and 2008
product brochures were similar and were available at
dealerships.
Honda also released television commercials describing the system's operation. One ran for a week in
November 2005 and another ran from February to
September 2006. In the 2005 commercial, a voice
states, “The driver is warned, and warned again. If
necessary, the system even applies the brakes to lessen
the potential impact.” A voice in the 2006 commercial
states, “The driver is warned so he can react. If necessary, the system would have even applied the brakes
to lessen a potential impact.”
From March to September 2006, Honda released
a “What Might Happen” advertisement in some
magazines. This advertisement said that “the system
can react. It can give you auditory and visual warnings, a tug on the seat belt, and when necessary, even
initiate strong braking.” Honda ceased mass advertising for the CMBS in 2006.
However, Honda still pursued smaller-scale
marketing efforts. Honda posted on its intranet two
commercials stating that the CMBS's “various alert
stages can overlap depending on the rate of closure of
your vehicle and the vehicle ahead .... The system does
have limitations, and will not detect all possible accident causing situations.” These videos were viewable on kiosks at Acura dealerships, and dealers were
encouraged to show them to potential customers. The
parties have not indicated how many people saw these
videos, and Honda discontinued the use of intranet
kiosks in March 2008. Honda also operated an
“Owner Link” website that contained video clips describing the CMBS. Although this site was developed
for car owners, the site was available to any customer
via www.ahm-ownerlink.com until 2008 and via
www.myacura.com thereafter. Also, Acura Style
magazine, a periodical sent to Acura dealerships,
subscribing Acura owners, and interested consumers
twice each year, reported in a summer 2007 article that
the CMBS responds “with any or all of three increasingly dramatic imperatives.”
*3 Finally, the Acura RL owner's manual explained that the CMBS might shut off in certain conditions, including bad weather conditions, mountainous driving, driving with the parking brake applied,
and when an abnormal tire condition is detected. The
owner's manual stated that when this automatic shut
off is triggered, a “CHECK CMBS SYSTEM” mes-
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sage appears in the instrument panel for five seconds
to alert the driver that the system has turned off.
stages of the CMBS System overlap; the CMBS will
not warn drivers in time to avoid an accident; and
that the CMBS shuts off in bad weather;
In 2007, Michael and Janet Mazza purchased a
2007 Acura RL from an authorized Acura dealership
in Orlando, Florida. That same year, Deep Kalsi
bought a 2007 Acura RL from an authorized Acura
dealership in Gaithersburg, Maryland. Both vehicles
were equipped with the CMBS System. In December
2007, the Mazzas and Kalsi filed a class action complaint against American Honda Motor Co., Inc.
(“Honda”) alleging that Honda misrepresented and
concealed material information in connection with the
marketing and sale of Acura RL vehicles equipped
with the CMBS.
According to Plaintiffs, Honda did not warn
consumers (1) that its CMBS collision avoidance
system's three separate stages may overlap, (2) that the
system may not warn drivers in time to avoid an accident, and (3) that it shuts off in bad weather. Appellees brought claims under California Law, specifically the California Unfair Competition Law (UCL),
Cal. Bus. & Prof.Code § 17200 et seq., False Advertising Law (FAL), Cal. Bus. & Prof.Code § 17500 et
seq., the Consumer Legal Remedies Act (CLRA), Cal.
Civil Code § 1750 et seq., and a claim for unjust enrichment.
On September 24, 2008, the district court denied
Plaintiffs' motion for class certification without prejudice. The district court requested that the Plaintiffs
provide clearer notice of the proposed class and subclasses, that Honda provide more detailed information
regarding the propriety of applying out-of-state law,
and that Plaintiffs clearly identify the alleged omissions and/or misrepresentations. On December 16,
2008, the district court granted Plaintiffs' renewed
motion for class certification, finding that they met the
requirements of Federal Rules of Civil Procedure
23(a) and 23(b)(3). The district court certified a nationwide class of people in the United States who,
between August 17, 2005 and the date of class certification, purchased or leased new or used Acura RL
vehicles equipped with the CMBS.FN1
The district court held that the following common
questions of law and fact satisfied Rule 23(a):
(1) whether Honda had a duty to Plaintiffs and the
prospective class members to disclose that: the three
(2) whether Honda had exclusive knowledge of
material facts regarding the CMBS System, facts
not known to the Plaintiffs and the prospective class
members before they purchased the RL equipped
with the CMBS System;
(3) whether a reasonable consumer would find the
omitted facts material; and
*4 (4) whether Honda's omissions were likely to
deceive the public.
The district court also held that common issues
predominate and that California “as the forum state,
has enough significant contact or aggregation of contacts to the claims asserted, given Defendants' contacts
with the state, to ensure that the choice of California
law is not arbitrary or unfair to nonresident class
members.” (citations omitted).
The district court concluded that California Law
can be applied to all class members because Honda did
not show how the differences in the laws of the various states are material, how other states have an interest in applying their laws in this case, and how these
interests are implicated in this litigation. It also held
that class members were entitled to an inference of
reliance under California Law. It is these rulings that
form the crux of the decisions material to class certification that are challenged on this appeal.
Honda sought permission to appeal immediately
after the decision granting class certification. That
request was granted. This case was initially argued
and submitted for decision on June 9, 2010, but submission was deferred on December 7, 2010 pending
the Supreme Court's decision in Wal–Mart Stores, Inc.
v. Dukes, ––– U.S. ––––, 131 S.Ct. 2541, 180 L.Ed.2d
374 (2011). Following the Supreme Court's Wal–Mart
decision, this appeal was resubmitted on June 22,
2011, and our decision follows.
II
[1] “Before certifying a class, the trial court must
conduct a ‘rigorous analysis' to determine whether the
party seeking certification has met the prerequisites of
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Rule 23.” Zinser v. Accufix Research Inst., Inc., 253
F.3d 1180, 1186, amended 273 F.3d 1266 (9th
Cir.2001). The trial court's factual determinations will
be reviewed for abuse of discretion so long as it remains within the framework of Rule 23. Id. When the
trial court's application of the facts to the law “requires
reference to the values that animate legal principles”
we review that application de novo. US v. Hinkson,
585 F.3d 1247, 1259 (9th Cir.2009) (en banc).
The party seeking class certification has the burden of affirmatively demonstrating that the class
meets the requirements of Federal Rule of Civil Procedure 23. Wal–Mart, 131 S.Ct. at 2551. Rule 23(a)
requires that plaintiffs demonstrate numerosity,
commonality, typicality and adequacy of representation in order to maintain a class action. The district
court concluded that Plaintiffs met their burden as to
all four requirements. Honda only challenges the district court's finding of commonality under 23(a)(2).
The Supreme Court has recently emphasized that
commonality requires that the class members' claims
“depend upon a common contention” such that “determination of its truth or falsity will resolve an issue
that is central to the validity of each [claim] in one
stroke.” Id. The plaintiff must demonstrate “the capacity of classwide proceedings to generate common
answers” to common questions of law or fact that are
“apt to drive the resolution of the litigation.” Id.
(quoting Nagareda, Class Certification in the Age of
Aggregate Proof, 84 N.Y.U.L.Rev. 97, 131–132
(2009)).
*5 Honda contends that the Plaintiffs did not meet
their burden under Wal–Mart affirmatively to
demonstrate that there is a common question of fact or
law that can resolve important issues “in one stroke.”
Honda argues that the “crucial question” of “which
buyers saw or heard which advertisements” is not
susceptible to common resolution. It also asserts that a
showing of a “greater propensity to purchase” is “the
same type of abstract question of potential peripheral
significance that the Court in Dukes held was not
common” under Rule 23(a)(2). But commonality only
requires a single significant question of law or fact. Id.
at 2556. Even assuming arguendo that we were to
agree with Honda's “crucial question” contention, the
individualized issues raised go to preponderance under Rule 23(b)(3), not to whether there are common
issues under Rule 23(a)(2). Honda does not challenge
the district court's findings that common questions
exist as to whether Honda had a duty to disclose or
whether the allegedly omitted facts were material and
misleading to the public. We hold that the Plaintiffs
satisfied their limited burden under Rule 23(a)(2) to
show that there are “questions of law or fact common
to the class.”
III
Under Rule 23(b)(3), a plaintiff must demonstrate
the superiority of maintaining a class action and show
“that the questions of law or fact common to class
members predominate over any questions affecting
only individual members.” Fed. R. Civ. Pro. 23(b)(3).
We have held that “there is clear justification for
handling the dispute on a representative rather than an
individual basis” if “common questions present a
significant aspect of the case and they can be resolved
for all members of the class in a single adjudication....” Hanlon v. Chrysler Corp., 150 F.3d 1011,
1022 (9th Cir.1998) (quoting 7A Charles Alan Wright,
Arthur R. Miller & Mary Kay Kane, Fed. Prac. &
Proc. § 1778 (2d ed.1986)).
Honda contends that common issues of law do not
predominate because California's consumer protection
statutes may not be applied to a nationwide class with
members in 44 jurisdictions. It further contends that
common issues of fact do not predominate because the
court impermissibly relies on presumptions that all
class members were exposed to the allegedly misleading advertising, that they relied on misleading
information in making their purchasing decision, and
that they were damaged as a result. We consider each
argument in turn.
A. Choice of Law
[2] Honda first argues that the district court erred
by misapplying California's choice of law rules and
certifying a nationwide class under California's consumer protection and unjust enrichment laws. “A
federal court sitting in diversity must look to the forum
state's choice of law rules to determine the controlling
substantive law.” Zinser, 253 F.3d at 1187. We review
the district court's choice of law determination de
novo, but “review factual findings underlying a choice
of law determination pursuant to the ‘clearly erroneous' standard.” Id.
*6 [3][4] Under California's choice of law rules,
the class action proponent bears the initial burden to
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show that California has “significant contact or significant aggregation of contacts” to the claims of each
class member. Wash. Mut. Bank v. Superior Court, 24
Cal.4th 906, 921, 103 Cal.Rptr.2d 320, 15 P.3d 1071
(Cal.2001) (citations omitted). Such a showing is
necessary to ensure that application of California law
is constitutional. See Allstate Ins. Co. v. Hauge, 449
U.S. 302, 310–11, 101 S.Ct. 633, 66 L.Ed.2d 521
(1981). Once the class action proponent makes this
showing, the burden shifts to the other side to
demonstrate “that foreign law, rather than California
law, should apply to class claims.” Wash. Mut. Bank,
24 Cal.4th at 921, 103 Cal.Rptr.2d 320, 15 P.3d 1071.
of the proposed class members are located in California. See Clothesrigger, Inc. v. GTE Corp., 191
Cal.App.3d 605, 236 Cal.Rptr. 605, 612–13
(Cal.Ct.App.1987). Honda does not dispute that there
are sufficient contacts in this sense, but contends that
the district court misapplied the three-step governmental interest test and erroneously concluded that
California law could be applied to the whole class.FN2
We agree, and hold that the district court abused its
discretion in certifying a class under California law
that contained class members who purchased or leased
their car in different jurisdictions with materially different consumer protection laws.
[5][6] California law may only be used on a
classwide basis if “the interests of other states are not
found to outweigh California's interest in having its
law applied.” Id. (citations omitted). To determine
whether the interests of other states outweigh California's interest, the court looks to a three-step governmental interest test:
1) Conflict of Laws
[8] “The fact that two or more states are involved
does not itself indicate that there is a conflict of law
problem.” See Wash. Mut. Bank, 24 Cal.4th at 919,
103 Cal.Rptr.2d 320, 15 P.3d 1071 (2001). A problem
only arises if differences in state law are material, that
is, if they make a difference in this litigation. Id. at
919–20, 103 Cal.Rptr.2d 320, 15 P.3d 1071; See In re
Complaint of Bankers Trust Co., 752 F.2d 874, 882
(3d Cir.1984) (“Any differences in [the states'] laws
must have a significant effect on the outcome of the
trial in order to present an actual conflict in terms of
choice of law.”). In its briefing, Honda exhaustively
detailed the ways in which California law differs from
the laws of the 43 other jurisdictions in which class
members reside. The district court acknowledged that
differences existed, but it found that Honda had not
met its burden of demonstrating that any of these
differences were material.
First, the court determines whether the relevant law
of each of the potentially affected jurisdictions with
regard to the particular issue in question is the same
or different.
Second, if there is a difference, the court examines
each jurisdiction's interest in the application of its
own law under the circumstances of the particular
case to determine whether a true conflict exists.
Third, if the court finds that there is a true conflict, it
carefully evaluates and compares the nature and
strength of the interest of each jurisdiction in the
application of its own law to determine which state's
interest would be more impaired if its policy were
subordinated to the policy of the other state, and
then ultimately applies the law of the state whose
interest would be more impaired if its law were not
applied.
McCann v. Foster Wheeler LLC, 48 Cal.4th 68,
81–82, 105 Cal.Rptr.3d 378, 225 P.3d 516 (Cal.2010)
(citations and quotations omitted).
[7] California has a constitutionally sufficient
aggregation of contacts to the claims of each putative
class member in this case because Honda's corporate
headquarters, the advertising agency that produced the
allegedly fraudulent misrepresentations, and one fifth
*7 [9] With respect for the district court's judgment, we are persuaded that at least some differences
that Honda identifies are material. For example, the
California laws at issue here have no scienter requirement, whereas many other states' consumer protection statutes do require scienter. See, e.g., Colo.Rev.Stat. 6–1–105(1)(e), (g), (u) (knowingly); N.J.
Stat. Ann. § 56:8–2 (knowledge and intent for omissions); Debbs v. Chrysler Corp., 810 A.2d 137, 155
(Pa.Super.2002) (knowledge or reckless disregard).FN3
California also requires named class plaintiffs to
demonstrate reliance, while some other states' consumer protection statutes do not. See, e.g., Egwuatu v.
South Lubes, Inc., 976 So.2d 50, 53 (Fla.App.2008);
DaBosh v. Mercedes Benz USA, Inc., 378 N.J.Super.
105, 874 A.2d 1110, 1121 (N.J.Super.App.2005);
Stutman v. Chem. Bank, 95 N.Y.2d 24, 709 N.Y.S.2d
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892, 731 N.E.2d 608, 611–12 (N.Y.2000).
We conclude that these are not trivial or wholly
immaterial differences. In cases where a defendant
acted without scienter, a scienter requirement will
spell the difference between the success and failure of
a claim. In cases where a plaintiff did not rely on an
alleged misrepresentation, the reliance requirement
will spell the difference between the success and
failure of the claim. Consumer protection laws are a
creature of the state in which they are fashioned. They
may impose or not impose liability depending on
policy choices made by state legislatures or, if legislators left a gap or ambiguity, by state supreme courts.
Moreover, even once violation is established,
there are also material differences in the remedies
given by state laws. Under the CLRA, a plaintiff can
recover actual damages (at least $1000), an injunction,
restitution, punitive damages and “any other relief that
the court deems proper,” Cal Civ Code §
1780(a)(1)-(5), while a plaintiff can only recover
restitution and injunctive relief under the UCL, Cal.
Bus. & Prof.Code § 17203. The remedies permitted by
other states vary and may depend on the wilfulness of
the defendant's conduct. E.g., Mich. Comp. Laws
Ann. § 445.911(6) (limiting recovery to actual damages if the violation was a result of bona fide error);
N.J. Stat. Ann. § 56:8–19 (requiring treble damages
and attorney's fees). The elements necessary to establish a claim for unjust enrichment also vary materially
from state to state. See Candace S. Kovacic, A Proposal to Simplify Quantum Meruit Litigation, 35 Am.
U.L.Rev. 547, 558–60 (1986). Because some of the
above differences are material we now move on to the
test's second step.
2) Interests of Foreign Jurisdictions
[10][11][12] It is a principle of federalism that
“each State may make its own reasoned judgment
about what conduct is permitted or proscribed within
its borders.” State Farm Mut. Auto. Ins. Co. v.
Campbell, 538 U.S. 408, 422, 123 S.Ct. 1513, 155
L.Ed.2d 585 (2003). “[E]very state has an interest in
having its law applied to its resident claimants.”
Zinser, 253 F.3d at 1187. California law also
acknowledges that “a jurisdiction ordinarily has “the
predominant interest” in regulating conduct that occurs within its borders....” McCann, 48 Cal.4th at 97,
105 Cal.Rptr.3d 378, 225 P.3d 516 (citations omitted).
The automobile sales at issue in this case took place
within 44 different jurisdictions, and each state has a
strong interest in applying its own consumer protection laws to those transactions.
*8 [13] In our federal system, states may permissibly differ on the extent to which they will tolerate a
degree of lessened protection for consumers to create a
more favorable business climate for the companies
that the state seeks to attract to do business in the state.
In concluding that no foreign state has “an interest in
denying its citizens recovery under California's potentially more comprehensive consumer protection
laws,” the district court erred by discounting or not
recognizing each state's valid interest in shielding
out-of-state businesses from what the state may consider to be excessive litigation. As the California's
Supreme Court recently re-iterated, each state has an
interest in setting the appropriate level of liability for
companies conducting business within its territory.
McCann, 48 Cal.4th at 91, 105 Cal.Rptr.3d 378, 225
P.3d 516.
Maximizing consumer and business welfare, and
achieving the correct balance for society, does not
inexorably favor greater consumer protection; instead,
setting a baseline of corporate liability for consumer
harm requires balancing the competing interests. Cf.
Holloway v. Bristol–Myers Corp., 485 F.2d 986, 997
(D.C.Cir.1973) (holding, in consumer false advertising class action, that there is no private right of action
under the Federal Trade Commission Act, and rejecting protests that private enforcement was needed
to achieve “meaningful consumer protection” because
the Act is “the product of a legislative balance which
took into account not only consumer protection but
also interests of the businesses affected”).
Getting the optimal balance between protecting
consumers and attracting foreign businesses, with
resulting increase in commerce and jobs, is not so
much a policy decision committed to our federal appellate court, or to particular district courts within our
circuit, as it is a decision properly to be made by the
legislatures and courts of each state. More expansive
consumer protection measures may mean more or
greater commercial liability, which in turn may result
in higher prices for consumers or a decrease in product
availability. See White v. Ford Motor Co., 312 F.3d
998, 1017–18 (9th Cir.2002) (“A national company
sometimes limits its sales according to variations in
risk”); Amy J. Schmitz, Embracing Unconscionabil-
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ity's Safety Net Function, 58 Ala. L.Rev. 73, 109
(2006) (arguing that broad consumer protection statutes may increase prices and decrease overall consumer welfare). As it is the various states of our union
that may feel the impact of such effects, it is the policy
makers within those states, within their legislatures
and, at least in exceptional or occasional cases where
there are gaps in legislation, within their state supreme
courts, who are entitled to set the proper balance and
boundaries between maintaining consumer protection,
on the one hand, and encouraging an attractive business climate, on the other hand.
[14] Each of our states has an interest in balancing
the range of products and prices offered to consumers
with the legal protections afforded to them. Each of
our states also has an interest in “being able to assure
individuals and commercial entities operating within
its territory that applicable limitations on liability set
forth in the jurisdiction's law will be available to those
individuals and businesses in the event they are faced
with litigation in the future .” McCann, 48 Cal.4th at
97–98, 105 Cal.Rptr.3d 378, 225 P.3d 516. These
interests are squarely implicated in this case.
3) Which State Interest is Most Impaired
*9 [15] California's governmental interest test is
designed to “[accommodate] conflicting state policies,
as a problem of allocating domains of law-making
power in multi-state contexts. ...” McCann, 48 Cal.4th
at 97, 105 Cal.Rptr.3d 378, 225 P.3d 516. It is not
intended to “ ‘weigh’ the conflicting governmental
interests in the sense of determining which conflicting
law manifested the ‘better’ or the ‘worthier’ social
policy on the specific issue....” Id. The test recognizes
the importance of our most basic concepts of federalism, emphasizing the “the appropriate scope of conflicting state policies,” not evaluating their underlying
wisdom. Id.
[16] The importance of federalism when applying
choice of law principles to class action certification is
reinforced by the Class Action Fairness Act of 2005.
Pub.L. 109–2, 119 Stat. 4. A key purpose of the Act
was to correct what former Acting Solicitor General
Walter Dellinger labeled a wave of “false federalism.”
“[T]he problem is that many state courts faced with
interstate class actions have undertaken to dictate the
substantive laws of other states by applying their own
laws to other states, resulting in a breach of federalism
principles.” S.Rep. No. 109–14, at 61 (2005) (quota-
tion marks and ellipses omitted). Accordingly, “courts
should not attempt to apply the laws of one state to
behaviors that occurred in other jurisdictions.” Id. at
62–63, 105 Cal.Rptr.3d 378, 225 P.3d 516 (summarizing Supreme Court cases).
[17] The district court did not adequately recognize that each foreign state has an interest in applying
its law to transactions within its borders and that, if
California law were applied to the entire class, foreign
states would be impaired in their ability to calibrate
liability to foster commerce. That this concept was
missed or given inadequate weight was error. The
district court's reasoning elevated all states' interests in
consumer protection to a superordinate level, while
ignoring or giving too little attention to each state's
interest in promoting business. This presents a mode
of analysis that the Class Action Fairness Act was
aimed at stopping. See Findings, Class Action Fairness Act § 2(a)(4), Pub.L. No. 109–2, 119 Stat. 4, 5
(2005) (categorizing as an “abuse[ ]” of the class action system the practice of state courts “making
judgments that impose their view of the law on other
States and bind the rights of the residents of those
States”).
California recognizes that “with respect to regulating or affecting conduct within its borders, the place
of the wrong has the predominant interest.” See Hernandez v. Burger, 102 Cal.App.3d 795, 902, 162
Cal.Rptr. 564 (1980), cited with approval by Abogados v. AT & T, Inc. ., 223 F.3d 932, 935 (9th
Cir.2000). California considers the “place of the
wrong” to be the state where the last event necessary
to make the actor liable occurred. See McCann, 48
Cal.4th at 94 n. 12, 105 Cal.Rptr.3d 378, 225 P.3d 516
(pointing out that the geographic location of an omission is the place of the transaction where it should
have been disclosed); Zinn v. Ex–Cell–O Corp., 148
Cal.App.2d 56, 80 n. 6, 306 P.2d 1017 (1957) (concluding in fraud case that the place of the wrong was
the state where the misrepresentations were communicated to the plaintiffs, not the state where the intention to misrepresent was formed or where the misrepresented acts took place). Here, the last events
necessary for liability as to the foreign class members—communication of the advertisements to the
claimants and their reliance thereon in purchasing
vehicles—took place in the various foreign states, not
in California. These foreign states have a strong interest in the application of their laws to transactions
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between their citizens and corporations doing business
within their state.
*10 Conversely, California's interest in applying
its law to residents of foreign states is attenuated. See
Edgar v. MITE Corp., 457 U.S. 624, 644, 102 S.Ct.
2629, 73 L.Ed.2d 269 (1982) (“While protecting local
investors is plainly a legitimate state objective, the
State has no legitimate interest in protecting nonresident shareholders.” (emphasis added)). Plaintiffs
contend that California “is connected to both sides of
the dispute,” with interests both in protecting it citizens and in regulating Honda, a California corporation. We recognize that California has an interest in
regulating those who do business within its state
boundaries, and foreign companies located there, but
we disagree with the dissent that applying California
law to the claims of foreign residents concerning acts
that took place in other states where cars were purchased or leased is necessary to achieve that interest in
this case. We also note that Plaintiffs' argument that
California law is the best choice for this nationwide
class is based on a false premise that one state's law
must be chosen to apply to all 44 jurisdictions.
Under the facts and circumstances of this case, we
hold that each class member's consumer protection
claim should be governed by the consumer protection
laws of the jurisdiction in which the transaction took
place. Accordingly, we vacate the district court's class
certification order and remand for further proceedings
consistent with this opinion. We express no view
whether on remand it would be correct to certify a
smaller class containing only those who purchased or
leased Acura RLs in California, or to certify a class
with members more broadly but with subclasses for
class members in different states, with different jury
instruction for materially different bodies of state law.
See, e.g., In re Computer Memories Sec. Litig., 111
F.R.D. 675, 685–86 (N.D.Cal.1986).
B) Predominance of Common Factual Questions
Honda contends that common issues of fact do
not predominate because this case necessarily involves an individualized determination as to whether
class members were exposed to misleading advertisements and whether they relied on those advertisements in purchasing or leasing cars with a CMBS.
Honda further argues that presuming common exposure and reliance sweep in class members who did not
suffer an injury in fact, and thus do not meet Article III
standing requirements. We hold that California class
members have Article III standing but that the district
court abused its discretion in finding that common
issues of fact predominate because the small scale of
the advertising campaign does not support a presumption of reliance.
1) Standing
[18][19][20] “[N]o class may be certified that
contains members lacking Article III standing.”
Denney v. Deutsche Bank AG, 443 F.3d 253, 264 (2d
Cir.2006). “[S]tanding requires that (1) the plaintiff
suffered an injury in fact ... (2) the injury is fairly
traceable to the challenged conduct, and (3) the injury
is likely to be redressed by a favorable decision.”
Bates v. United Parcel Svc., Inc., 511 F.3d 974, 985
(9th Cir.2007) (quotations omitted). Under California's UCL, restitution is available to absent class
members without individualized proof of deception,
reliance, or injury. In re Tobacco II Cases, 46 Cal.4th
298, 320, 93 Cal.Rptr.3d 559, 207 P.3d 20 (Cal.2009).
Honda contends that this means the class includes
individuals who have no injury in fact, and therefore
no Article III standing.
*11 [21][22] Plaintiffs contend that class members paid more for the CMBS than they otherwise
would have paid, or bought it when they otherwise
would not have done so, because Honda made deceptive claims and failed to disclose the system's limitations. To the extent that class members were relieved
of their money by Honda's deceptive conduct—as
Plaintiffs allege—they have suffered an “injury in
fact.” Stearns v. Ticketmaster Corp., 655 F.3d 1013,
1021 (9th Cir.2011). Although it is not a simple or a
clear cut matter, we conclude, in the light of our prior
precedent, that Honda's objection “that state law gives
a right to ‘monetary relief to a citizen suing under it’
without a more particularized proof of injury and
causation ... is not enough to preclude class standing
here.” Id. (quoting Cantrell v. City of Long Beach, 241
F.3d 674, 684 (9th Cir.2001)).
2) Reliance
[23] While we reject Honda's contention that
Tobacco II impermissibly allows a class to “include
members who suffered no injury in fact” in violation
of Article III, we agree with Honda's contention that
the misrepresentations at issue here do not justify a
presumption of reliance. This is so primarily because
it is likely that many class members were never ex-
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posed to the allegedly misleading advertisements,
insofar as advertising of the challenged system was
very limited. Davis–Miller v. Automobile Club of
Southern California, 201 Cal.App.4th 106, 125 (2011)
(“An inference of classwide reliance cannot be made
where there is no evidence that the allegedly false
representations were uniformly made to all members
of the proposed class.”); Cohen v. DirecTV, Inc., 178
Cal.App.4th 966, 980, 101 Cal.Rptr.3d 37 (2009)
(“[California law does not] authorize an award ... on
behalf of a consumer who was never exposed in any
way to an allegedly wrongful business practice.”). The
district court found that an inference of reliance was
appropriate, relying on Massachusetts Mutual Life
Insurance Co. v. Superior Court, 97 Cal.App.4th
1282, 119 Cal.Rptr.2d 190 (Cal.App.4th.2002). In
doing so, the court found it significant that Honda's
advertisements were allegedly misleading because of
the information they omitted, rather than the information they claimed, and that while the omitted information may have been available, there was no
evidence that customers received it.
In Mass. Mutual, plaintiffs were allegedly induced to buy “vanishing premium” life insurance
policies through sales presentations that misrepresented the extent to which premiums would decrease
over time by failing to disclose that Mass Mutual
intended to “ratchet down” the discretionary dividends
it paid to offset premium costs. Id. at 1286, 119
Cal.Rptr.2d 190. The California Court of Appeals
found that an inference of reliance was proper under
these facts, in part because the information “provided
to prospective purchasers appears to have been
broadly disseminated.” Id. at 1294, 119 Cal.Rptr.2d
190. After the district court's decision, the California
Supreme court reconfirmed that class members do not
need to demonstrate individualized reliance, and that
Proposition 64 imposes its reliance requirements only
on the named plaintiff, not unnamed class members.
Tobacco II, 46 Cal.4th at 324–27, 93 Cal.Rptr.3d 559,
207 P.3d 20. But Tobacco II's holding was in the
context of a “decades-long” tobacco advertising
campaign where there was little doubt that almost
every class member had been exposed to defendants'
misleading statements, and defendants were not just
denying the truth but representing the opposite.
*12 [24] Honda's product brochures and TV
commercials fall short of the “extensive and long-term
[fraudulent] advertising campaign” at issue in To-
bacco II, 46 Cal.4th at 328, 93 Cal.Rptr.3d 559, 207
P.3d 20, and this difference is meaningful. And while
Honda might have been more elaborate and diligent in
disclosing the limitations of the CMBS system, its
advertising materials do not deny that limitations
exist. A presumption of reliance does not arise when
class members “were exposed to quite disparate information from various representatives of the defendant.” See Stearns, 655 F.3d at 1020 (9th
Cir.2011). California courts have recognized that
Tobacco II does not allow “a consumer who was never
exposed to an alleged false or misleading advertising
... campaign” to recover damages under California's
UCL. Pfizer Inc. v. Superior Court, 182 Cal.App.4th
622, 632, 105 Cal.Rptr.3d 795 (Cal.Ct.App.2010);
Davis–Miller, 201 Cal.App.4th at 124–25. For everyone in the class to have been exposed to the omissions, as the dissent claims, it is necessary for everyone in the class to have viewed the allegedly misleading advertising. Here the limited scope of that
advertising makes it unreasonable to assume that all
class members viewed it. Pfizer Inc. 182 Cal.App.4th
at 633–34, 105 Cal.Rptr.3d 795.
In the absence of the kind of massive advertising
campaign at issue in Tobacco II, the relevant class
must be defined in such a way as to include only
members who were exposed to advertising that is
alleged to be materially misleading. The relevant class
must also exclude those members who learned of the
CMBS's allegedly omitted limitations before they
purchased or leased the CMBS system. The district
court certified a class that included all persons who
purchased or leased an Acura RL with the CMBS
between August 2005 and class certification. This
class is overbroad. We vacate the class certification
decision on this ground because common questions of
fact do not predominate where an individualized case
must be made for each member showing reliance.
IV
Because the law of multiple jurisdictions applies
here to any nationwide class of purchasers or lessees
of Acuras including a CMBS system, variances in
state law overwhelm common issues and preclude
predominance for a single nationwide class. And even
if the class was restricted only to those who purchased
or leased their car in California, common issues of fact
would not predominate in the class as currently defined because it almost certainly includes members
who were not exposed to, and therefore could not have
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relied on, Honda's allegedly misleading advertising
material. We vacate the district court's class certification and remand for further proceedings consistent
with this opinion. As we make clear above, we express
no opinion whether a differently defined class may
meet the requirements of Federal Rule of Civil Procedure 23(b)(3). FN4
The Order Granting Plaintiffs' Renewed Motion for Class Certification is VACATED and the
matter is remanded for further proceedings consistent with this opinion.
D.W. NELSON, Senior Circuit Judge, dissenting:
*13 I respectfully dissent. Because common factual and legal issues predominate, I would affirm the
district court.
First, the majority holds that the facts do not justify a presumption of reliance. Majority Opinion at
207–210. I disagree. Both California's Consumer
Legal Remedies Act and its Unfair Competition Law
allow for a presumption of reliance. Vasquez v. Superior Court, 4 Cal.3d 800, 94 Cal.Rptr. 796, 484 P.2d
964, 973 n. 9 (Cal.1971); In re Tobacco II Cases, 46
Cal.4th 298, 93 Cal.Rptr.3d 559, 207 P.3d 20, 39–41
(Cal.2009). The district court concluded correctly that
the focus of the inquiry should not be on which class
members saw the advertisements and relied on them.
Rather, the broadly disseminated advertisements
omitted potentially material information about the
limitations of the CMBS system. Mass. Mut. Life Ins.
v. Superior Court, 97 Cal.App.4th 1282, 119
Cal.Rptr.2d 190, 198 (2002). Appellees allege that
everyone in the class was exposed to those omissions.
While the omitted information may have been available to consumers from other sources, Honda has not
shown that consumers actually received the information prior to purchase. Mass. Mut., 119 Cal.Rptr.2d
at 198–99 (2002); see also Occidental Land, Inc. v.
Sup.Ct., 18 Cal.3d 355, 134 Cal.Rptr. 388, 556 P.2d
750, 754 (Cal.1976) (“[A]n inference of reliance
arises if a material false representation was made to
persons whose acts thereafter were consistent with
reliance upon the representation.”). Plaintiffs have
alleged that the named plaintiffs and class members
would not have paid for the CMBS system had Honda
disclosed the omitted information. The district court
correctly imputed reliance to the class.
Next, I concur with the majority that Honda has
sufficient contacts with California to satisfy constitutional concerns. All-state Ins. Co. v. Hague, 449 U.S.
302, 310–11, 101 S.Ct. 633, 66 L.Ed.2d 521 (1981);
Wershba v. Apple Computer, Inc., 91 Cal.App.4th
224, 110 Cal.Rptr.2d 145, 159 (Cal . Ct.App.2001).
Honda, a California corporation, has made Torrance,
California its principal place of business and its corporate headquarters for sales, marketing, research and
development. Honda hired an advertising agency in
Santa Monica, California to create print, radio and
television ads for the CMBS system and an advertising agency in Culver City, California for its internet-based ads.
I disagree, however, with the majority's choice of
law analysis pursuant to California's three-step governmental interest test. McCann v. Foster Wheeler
LLC, 48 Cal.4th 68, 105 Cal.Rptr.3d 378, 225 P.3d
516, 527 (Cal.2010). First, the majority concludes that
material differences exist between California law and
that of the 43 jurisdictions in which class members
reside. Majority Opinion at 201–202. I find only one
potentially material difference: Louisiana, Georgia,
Mississippi, Kentucky, Virginia and Alabama prohibit
class actions that allege unfair trade practices under
state law. La.Rev.Stat. Ann. § 51:1409(A) (2008);
Ga.Code Ann. § 10–1–399(a); Miss.Code Ann. §
75–24–15(4) (West 2007); Arnold v. Microsoft Corp.,
No. 00 Cv. 123, 2001 WL 193765, at *6 (Ky.Cir.Ct.
July 21, 2000); Va.Code Ann. § 59.1–204; Ala.Code §
8–19–10(f) (1981). Because California contemplates
such class actions, I must consider next whether each
of these states has an interest in applying its laws to
this litigation. McCann, 105 Cal.Rptr.3d 378, 225
P.3d at 527. They do not.
*14 The majority holds that applying California
law to a nationwide class would discount each state's
interest in achieving an optimal balance between
consumer protection and business friendliness. Majority Opinion at 202–204. But pro-business legislation does not speak to the specific interest states have
in imposing their laws on this litigation. Honda has not
shown how a state's general interest in prohibiting
class actions brought under its own consumer protection laws translates into an interest in having its laws
apply to this litigation. Unmistakably, California has a
keen interest in deterring California corporations, with
their principal places of business in California, from
engaging in tortious conduct within the state.
Clothesrigger, Inc. v. GTE Corp., 191 Cal.App.3d
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605, 236 Cal.Rptr. 605, 609 (Cal.Ct.App.1987) (
“California's interest in deterring fraudulent conduct
by businesses headquartered within its borders and
protecting consumers from fraudulent misrepresentations emanating from California would override any
possible interest of any other state in application of its
own laws to its residents' claims.”).
In assessing “which state's interests would be
more impaired if its policy were subordinated to the
policy of the other state,” Clothesrigger, 236 Cal.Rptr.
at 609, the majority concludes both that applying
California law would impair foreign states' ability to
foster commerce and that California has an attenuated
interest in applying its law to nonresidents, Majority
Opinion at 204–206. I strongly disagree. Each state
with a material conflict has an interest in having its
consumer protection laws apply to transactions taking
place within that state's borders. However, California's
interest would be most significantly impaired if its
laws were not applied to this litigation. Honda is incorporated and headquartered in California; the advertisements at issue emanated from the state. California has a compelling interest in regulating the
conduct of corporations operating within the state and
availing themselves of the state's privileges.
Clothesrigger, 236 Cal.Rptr. at 614; Wershba, 110
Cal.Rptr.2d at 159 (noting that California Business
and Professions Code Section 17500 addresses deception of nonresident class members deceived by
representations disseminated from California).
Thus, California law should govern. In fact, California courts themselves have held that “a California
court may properly apply the same California statutes
at issue here to non-California members of a nationwide class where the defendant is a California corporation and some or all of the challenged conduct emanates from California.” Wershba, 110 Cal.Rptr.2d at
160; see also Clothesrigger, 236 Cal.Rptr. at 615–16
(applying California law to nationwide class).
The majority's holding will prove devastating to
consumers. Individual claimants will not bring actions
to recover the $4,000 paid for the CMBS systems.
Even if consumers did pursue these claims, and even if
these claims proved successful, they “would not only
unnecessarily burden the judiciary, but would prove
uneconomic for potential plaintiffs” because “litigation costs would dwarf potential recovery.” Hanlon v.
Chrysler Corp., 150 F.3d 1011, 1023 (9th Cir.1998).
Without certification of a nationwide class to which
California law applies, Honda becomes free to avail
itself of the benefits offered by California without
having to answer to allegations by consumers nationwide that it has violated the consumer protection
laws of its forum state. This situation will allow corporations to take advantage of a forum state's hospitable business climate on the one hand, while simultaneously discounting the potential for litigation by
nationwide consumers in response to a particular
profit-motivated but harmful action on the other. If the
harm to individual consumers is small enough to create a disincentive to individual litigation, and if a
nationwide class action is not a potential consequence,
corporations can choose increased revenues over the
consumer with impunity. Thus, corporations like
Honda will be able to act without accountability for
past behavior and without a check on future profit-motivated actions that may risk consumer harm.
*15 The district court did not abuse its discretion
in certifying a nationwide class to which California
law applies. I respectfully dissent.
FN* The Honorable James S. Gwin, District
Judge for the U.S. District Court for Northern
Ohio, Cleveland, sitting by designation.
FN1. These class members purchased or
leased their cars in 44 different states.
Twelve states account for roughly 76% of
class members: California accounts for 20%,
Florida for 10%, and New York, Virginia,
New Jersey, Texas, Pennsylvania, Washington, Illinois, Maryland, Massachusetts,
and Ohio account for 3–6% each.
FN2. Plaintiffs contend that Honda's argument is precluded by their actions in Browne
v. American Honda Motor Corp., Inc. (C.D.
Cal. No. CV 2:09–6750), where Honda settled with plaintiffs bringing an unrelated nationwide class action which alleged CLRA
and UCL claims under California law. This
contention lacks merit. Honda settled with
plaintiffs in that case before an answer had
been filed, and without addressing whether
the application of California law to a nationwide class is appropriate.
FN3. Appellees do not contest these differ-
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 15
--- F.3d ----, 2012 WL 89176 (C.A.9 (Cal.)), 12 Cal. Daily Op. Serv. 522
(Cite as: 2012 WL 89176 (C.A.9 (Cal.)))
ences in scienter and instead rely on California's permissive recovery for consumers
to conclude, erroneously, that these differences are not relevant to this litigation.
FN4. A crucial difference between our views
and those of the dissent concerns the importance of the individualized questions of
law or fact over which any common questions must predominate. On reliance, the
dissent gives inadequate weight to the fact
that the Honda advertisements of the CMBS
were limited in nature such that many class
members were likely never exposed to them.
On choice of law, the dissent gives inadequate weight to the differences in state consumer protection laws and the interests of
each of our states in a federal system being
able to have its own laws apply to purchases
made by consumers within its borders. Finally, our opinion does not foreclose in an
appropriate case the use of smaller statewide
classes of those purchasing in a particular
state, or the use of subclasses within a larger
class.
C.A.9 (Cal.),2012.
Mazza v. American Honda Motor Co., Inc.
--- F.3d ----, 2012 WL 89176 (C.A.9 (Cal.)), 12 Cal.
Daily Op. Serv. 522
END OF DOCUMENT
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
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