William Philips et al v. Ford Motor Company

Filing 224

Order by Judge Lucy H. Koh Denying #173 Motion to Certify Class; Granting #196 Motion; Denying #197 Motion. (lhklc2S, COURT STAFF) (Filed on 12/22/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

United States District Court
Northern District of California

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WILLIAM PHILIPS, et al.,
Plaintiffs,

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v.

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Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR
CLASS CERTIFICATION
REDACTED

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FORD MOTOR COMPANY,
Re: Dkt. No. 173

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Defendant.

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Plaintiffs William Philips, Jaime Goodman, and Alison Colburn (collectively,

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“Plaintiffs”)1 bring this action against Defendant Ford Motor Company (“Defendant” or “Ford”).

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Plaintiffs Philips, Goodman, and Colburn allege only California claims. In addition to these
Plaintiffs, the third amended complaint (“TAC”) also includes the same non-California Plaintiffs
from the first amended complaint (“FAC”): Jason Wilkinson, Robert Morris, Victoria Jackson,
Johnpaul Fournier, and Ryan and Rebecca Wolf. ECF No. 114 ¶¶ 200–230. In ruling on Ford’s
first motion to dismiss, the Court addressed all fifty-one causes of action in the FAC, which
included nationwide class claims and class claims brought under the laws of six states. ECF No.
46. After this ruling, however, the Court decided to proceed by addressing the California claims
first. Id. To that end, the parties stipulated that “[a]lthough the [second amended complaint and
any subsequent pleadings] may contain both California and non-California claims,” any future
motions to dismiss “shall address only . . . California [Plaintiffs’] claims.” ECF No. 51 at 1.
Thus, every order subsequent to the first motion to dismiss has addressed only California claims.
Accordingly, this Order is limited to the causes of action brought by California Plaintiffs in the
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ORDER DENYING MOTION FOR CLASS CERTIFICATION

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contend, causes drivers of the Class Vehicles to “experience significantly increased steering effort

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and an increased risk of losing control of their vehicles when the EPAS system fails” and “defaults

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to manual steering.” Id. ¶¶ 3, 100.

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1. The Named Plaintiffs’ Personal Experiences with EPAS Failure
i. Plaintiff Philips
The named Plaintiffs allege that they paid more for their vehicles than they would have if
Ford has disclosed that their vehicles’ EPAS systems were defective. Specifically, William

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Philips (“Plaintiff Philips”) states that he “reviewed Ford’s promotional materials and other

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information” and that he “would not have purchased his 2011 Ford Fusion, or would not have paid

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the purchase price charged” had Ford “disclosed the EPAS system defects and failures.” Id. ¶ 34.

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Philips also alleges that he experienced “problems with the steering system in his Fusion.” Id.

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¶ 36. After lodging multiple complaints with Ford, Plaintiff Philips was informed during a

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dealership visit in 2013 “that it would cost approximately $2,000 to fix the problem,” through an

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EPAS system replacement. Id. Plaintiff Philips declined to repair his vehicle at that time. In July

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2015, Plaintiff Philips received a notice from Ford alerting him that his “vehicle [was] subject to a

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safety recall,” and asking Plaintiff Philips to bring his vehicle to a dealership for further

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inspection. ECF No. 97-5 at 192. After receiving this notice, Plaintiff Philips brought his vehicle

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in for an inspection, at which time Ford replaced the EPAS system in Plaintiff Philips’s vehicle.

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ii. Plaintiff Goodman
Jaime Goodman (“Goodman”) claims that, prior to “purchasing her 2011 Ford Fusion,”

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she “(a) viewed television advertisements concerning the vehicles; (b) viewed material concerning

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the Fusion on Ford’s website; (c) reviewed the window sticker on the vehicle she would purchase;

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and (d) received and reviewed a brochure concerning the Fusion.” TAC ¶ 40. “The window

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sticker,” Plaintiff Goodman says, “indicated that the vehicle she would purchase was equipped

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with power steering.” Id. “Nowhere in these materials did Ford disclose the EPAS system defects

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and failures,” and had Ford done so, Plaintiff Goodman alleges that she “would not have

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purchased her 2011 Ford Fusion, or would not have paid the purchase price charged.” Id. ¶¶ 40–

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41. In addition, Plaintiff Goodman claims that in 2014 she “began having intermittent problems

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with the steering system in her 2011 Ford Fusion and experienced difficulty steering.” Id. ¶ 43.

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Ultimately, Plaintiff Goodman “took [her] vehicle to a Ford dealership [in December 2014]

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and was told that it would cost $1,800 to fix the problem with the steering system.” Id. As with

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Plaintiff Philips, the dealership recommended that the EPAS system in Plaintiff Goodman’s

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vehicle be replaced. Although Plaintiff Goodman contended that her power steering problems

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were a safety issue, Ford refused to defray the cost of an EPAS system replacement. ECF No. 94-

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8 at 47. Citing financial hardship, Plaintiff Goodman declined to undertake any repairs to her

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vehicle at this time and continued to experience problems with her vehicle.
In July 2015, Plaintiff Goodman received “a letter from Ford Motor Company concerning

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the 2011 Fusion and a recall for the [Fusion’s] EPAS [system].” Id. at 49. Pursuant to this letter,

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Plaintiff Goodman took her vehicle to a Ford dealership in August 2015, expecting that Ford

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would replace the EPAS system in her vehicle free of charge. During this August 2015 visit,

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however, the dealership declined to perform a system replacement and instead simply

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reprogrammed the computer in Plaintiff Goodman’s vehicle.

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In October 2015, Plaintiff Goodman once again experienced problems with her vehicle’s

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power steering. “On November 2, 2015, Ford’s counsel contacted Plaintiffs’ counsel to inform

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them that based on a review of the attached service records . . . , it appears that Jaime Goodman is

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eligible for a steering gear replacement.” ECF No. 94-6 at 10. Plaintiff Goodman thereafter

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scheduled an appointment to replace her vehicle’s EPAS system on November 12, 2015. “A few

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hours after dropping off [her] vehicle” on November 12, 2015, however, Plaintiff Goodman

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“received a call from a service associate . . . and was informed that . . . [her vehicle] was no longer

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eligible for a free replacement under Ford’s recall program.” ECF No. 95-4 at 2. After “Ford

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refused to replace [Goodman’s] EPAS system,” Plaintiffs’ counsel once again reached out to Ford.

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Id. at 3. On November 24, 2015, Ford finally replaced the EPAS system in Plaintiff Goodman’s

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vehicle.

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iii. Plaintiff Colburn
Finally, prior to “purchasing her 2010 Ford Fusion,” Alison Colburn (“Plaintiff Colburn”)
claims that, like Plaintiff Goodman, she “(a) viewed television advertisements concerning the

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vehicles; (b) viewed material concerning the Fusion on Ford’s website; (c) reviewed the window

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sticker on the vehicle she would purchase; and (d) received and reviewed a brochure concerning

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the Fusion,” and that “[t]he window sticker indicated that the vehicle she would purchase was

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equipped with power steering.” TAC ¶ 47. “Nowhere in these materials did Ford disclose the

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EPAS system defects and failures.” Id. Had Ford done so, Plaintiff Colburn alleges that she

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“would not have purchased her 2010 Ford Fusion, or would not have paid the purchase price

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charged.” Id. ¶ 48. Plaintiff Colburn alleges that the power steering in her vehicle failed in

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October 2014. Id. ¶ 52. Later that month, she took her vehicle to a Ford dealership and paid

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$990.19 to replace her vehicle’s EPAS system. Id. ¶ 53.

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2. The Nature of the Alleged Defect

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In their complaint, Plaintiffs point to various possible defects in EPAS systems in Ford

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vehicles. Id. ¶ 79. However, after considerable discovery, Plaintiffs have narrowed their theory for

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the purposes of their motion for class certification of their California claims. As relevant to the

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instant motion, Plaintiffs assert that the EPAS systems in 2010-2012 Fusion vehicles and 2012-

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2014 Focus vehicles are defective because the EPAS systems contain unreliable electro-

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mechanical relays.

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Ford began to use electro-mechanical relays in EPAS systems in 2009 to produce the 2010

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Fusion. Pascarella Rpt., Ex. A to Opp., at 3. The EPAS system is manufactured by a Ford supplier

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called TRW and includes two electro-mechanical relays: a “link relay” and a “star point” relay.

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Arora Rpt., Ex. B to Opp., at 28. The link relay controls power to the EPAS system, and the star

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point relay controls power to the steering motor. Id. at 36, 40. These relays control power through

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a circuit that is completed when two metal plates in the relays make contact. Ex. 3 to Mot., at 55–

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58. When the metal plates are in contact, the circuit is closed and power is engaged. Id. When the

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metal plates are separated, the circuit is opened and power is cut off. Id. Occasionally, these relays

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experience “faults,” meaning the circuits open and power is cut off at unexpected times. When a

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fault occurs, power steering is cut off and the vehicle reverts to manual steering. Ex. B, at 36–40.

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These faults are indicated by “diagnostic trouble codes” to assist in diagnosis and repair. A code

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number B43 indicates a fault in the link relay, and a code number B3A indicates a fault in the star

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point relay. Ex. B, at 40; Report of Dr. Marthinius van Schoor, Ex. 2 to Mot., at 8.

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Plaintiffs claim that Ford knew as early as 2007 that electro-mechanical relays were unfit

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for use in EPAS systems. Mot. at 2. In their Motion for Class Certification and the exhibits

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attached to that motion, Plaintiffs point to many Ford emails suggesting that Ford employees

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believed that electro-mechanical relays were subject to issues such as thermal expansion and
sensitivity to variations in manufacturing. Mot. at 4; Ex. 15 to Mot. at 114. Other internal Ford

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emails suggested that Ford hoped to “remove electro-mechanical relays out of EPS products.” Ex.

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16 to Mot., at 122. Nevertheless, Plaintiffs claim that because of budgetary issues, Ford decided

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not to change the design to omit electro-mechanical relays. Mot. at 5; Ex. 4 to Mot., at 63.

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Ford continually diagnosed and assessed relay problems, and Ford began to make some

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changes to the EPAS systems in 2011. Mot. at 5; Opp. at 5. However, according to Plaintiffs, none

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of these changes addressed the ultimate cause of the EPAS system’s unusually high failure rates:

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inclusion of unreliable electro-mechanical relays. During this time, Ford also received an unusual

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number of complaints regarding sudden and unexpected failures of power steering systems. Opp.

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at 17. At the time, Ford concluded that there were several causes for the power steering issues, but

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the main cause was the fact that “ribbon cables” in the EPAS systems were sometimes damaged

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during assembly. Opp. at 5, Ex. B at 48–49. After the National Highway Transportation Safety

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Administration (NHTSA) opened an investigation into reports of power steering failures in Fusion

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vehicles, Ford began a recall of certain Fusion vehicles based on the ribbon-cable issues. Opp. at

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6. However, according to Plaintiffs, this recall does not address their concerns because even after

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replacement, the EPAS systems are still defective because they incorporate unreliable electro-

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mechanical relays. Plaintiffs claim that Ford knew that inclusion of the unreliable relays posed

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safety concerns and that other feasible designs would not pose the same dangers. Mot. 7–9.

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Based on the evidence outlined above, Plaintiffs allege that Ford fraudulently concealed

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the alleged defect in the EPAS systems. Despite press releases and web-based “promotional

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materials” touting “EPAS as a reliable and beneficial product,” Ford knew as early as 2007 that

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the EPAS system was “prone to sudden, premature failure,” and yet took no remedial action. Id.

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¶ 11. Plaintiffs further claim that “Ford concealed the fact that the EPAS system [was] prone to

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sudden and premature failure from consumers so that the warranty period on the Defective

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Vehicles would expire before consumers became aware of the problem.” Id. ¶ 24. Had Ford

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disclosed the alleged defect, Plaintiffs “would not have purchased . . . th[e] vehicles, or would

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have paid substantially less for the vehicles than they did.” Id. ¶ 25. Moreover, “Ford’s failure to
disclose to consumers and the public at large the material fact that the EPAS system is prone to

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premature failure . . . recklessly risked the safety of occupants of the Defective Vehicles and the

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public at large.” Id. ¶ 6.

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B. Procedural History
On June 27, 2014, Plaintiffs filed the original complaint in this putative class action. ECF

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No. 1. Plaintiffs filed the first amended complaint (“FAC”) on September 8, 2014. ECF No. 15

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(“FAC”). At a hearing on February 12, 2015, the Court granted Ford’s motion to dismiss the FAC

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with leave to amend. ECF No. 46.

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As to Plaintiffs’ implied warranty claims, brought under California’s Song-Beverly

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Consumer Warranty Act (“Song-Beverly Act”) and the Magnuson-Moss Warranty Act

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(“Magnuson-Moss Act”), the Court found “that Plaintiffs ha[d] sufficiently alleged that the EPAS

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system defect made the [Vehicles] unfit for their ordinary purpose.” ECF No. 48, at 5. However,

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the Court also found that an “implied warranty claim is [also] limited in duration . . . and Plaintiffs

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[had] not allege[d] a defect within the warranty period.” Id. In reaching this decision, the Court

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declined to follow the California Court of Appeal’s decision in Mexia v. Rinker Boat Co., Inc., 95

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Cal. Rptr. 3d 285 (Ct. App. 2009), which the Court characterized as being an “outlier.” ECF No.

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48, at 5. The Court instead found more persuasive several federal district court decisions,

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including Daniel v. Ford Motor Company, 2013 WL 2474934 (E.D. Cal. June 7, 2013). The

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Court granted Plaintiffs leave to amend their implied warranty claims because “there [we]re

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factual allegations that the Plaintiffs could allege that could cure th[e] deficienc[ies] [identified].”

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ECF No. 48, at 10.

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In addition, in light of the unwieldy nature of the FAC, the parties agreed at the February

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18, 2015 case management conference to move forward only on the California claims for any

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subsequent motions to dismiss. ECF No. 51. If any of the California claims survived, the parties

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would continue to litigate those claims to resolution before this Court. ECF No. 54 at 9. If none

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of the California claims survived, then the Court would confer with the parties regarding how to

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proceed on the remaining claims, with the possibility of transferring this action to a more

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Northern District of California

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appropriate jurisdiction. Id.
With this understanding in mind, Plaintiffs filed a second amended complaint (“SAC”) on

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March 27, 2015. The SAC asserted four causes of action under California law: (1) violation of the

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unlawful and unfair prongs of California’s Unfair Competition Law (“UCL”); (2) violation of the

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fraud prong of the UCL; (3) violation of California’s Consumer Legal Remedies Act (“CLRA”);

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and (4) common law fraudulent concealment.

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On April 30, 2015, Ford moved to dismiss the SAC, ECF No. 58, which the Court granted

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in part and denied in part, ECF No. 69. Specifically, the Court granted with prejudice Ford’s

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motion to dismiss Plaintiffs’ UCL claims and Plaintiffs’ CLRA claim for injunctive relief, holding

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that Plaintiffs were not entitled to equitable relief because they had an adequate remedy at law. Id.

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at 30. The Court also granted with prejudice Ford’s motion to dismiss Ian Colburn, Alison

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Colburn’s son, as a named Plaintiff. Id. at 31. Two claims—the common law fraudulent

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concealment claim and the CLRA claim for damages—survived Ford’s second round motion to

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dismiss. Id. Ford answered the SAC on August 6, 2015. ECF No. 78.

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On October 28, 2015, Ford filed a second motion to dismiss the SAC. ECF No. 84. In this

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motion, Ford argued for dismissal under the prudential mootness and primary jurisdiction

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doctrines. ECF No. 105 at 8. Ford also argued that Plaintiffs lacked “standing to pursue their

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claims as to the 2012–2014 Focus and 2013–2014 Fusion.” Id. at 9. The Court denied this motion

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in its entirety. Id. at 25.

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On February 18, 2016, the parties filed a joint case management statement in advance of

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the February 25, 2016 case management conference. ECF No. 104. In this statement, Plaintiffs

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stated their intent to file a “motion for leave to amend to reassert their claims for breach of

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[implied] warranty.” Id. at 2. According to Plaintiffs, in light of the Ninth Circuit’s December 2,

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2015 decision in Daniel v. Ford Motor Company, 806 F.3d 1217 (9th Cir. 2015), the Court had

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erred in dismissing Plaintiffs’ implied warranty claims on February 12, 2015. After reviewing the

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Daniel decision, the Court agreed with Plaintiffs, and granted Plaintiffs leave to amend at the

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February 25, 2016 case management conference. ECF No. 108.

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Plaintiffs filed the TAC on March 4, 2016. The TAC includes two new claims: an implied

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Northern District of California

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warranty claim asserted under the Song-Beverly Act, TAC ¶¶ 154–170, and an implied warranty

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claim asserted under the Magnuson-Moss Act, id. ¶¶ 140–153. On March 24, 2016, Ford moved

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to dismiss these implied warranty claims. On May 3, 2016, the Court denied Ford’s motion to

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dismiss. ECF No. 134. The Court held that under the Ninth Circuit’s recent decision in Daniel v.

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Ford Motor Company, 806 F.3d 1217 (9th Cir. 2015), Plaintiffs had stated a claim for relief under

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the Song-Beverly Act and the Magnuson-Moss Act for breach of implied warranty. Id. at 16. The

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Court also found that Plaintiffs had not waived these claims by failing to replead the claims in the

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SAC, id. at 20, and that Plaintiff Colburn’s claims fell within the applicable four year statute of

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limitations because Plaintiff Colburn had sufficiently alleged tolling of the statute of limitations

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because of fraudulent concealment, id. at 26.

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On July 29, 2016, Plaintiffs filed a motion for class certification under Federal Rule of

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Procedure (“Rule”) 23. ECF No. 173. Ford filed an opposition to the motion for class certification

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on September 19, 2016. ECF No. 194. On September 26, 2016, Ford filed a Daubert motion to

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exclude the expert report of Dr. Jonathan Arnold, ECF No. 196, and a Daubert motion to exclude

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the expert report of Dr. Marthinius van Schoor, ECF No. 197. On November 8, 2016, Plaintiffs

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filed an opposition to the motion to exclude the expert report of Dr. Jonathan Arnold, ECF No.

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201, and an opposition to the motion to exclude the expert report of Dr. Marthinius van Schoor,

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ECF No. 202. On November 14, 2015, Plaintiffs filed a reply to Ford’s opposition to the motion

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for class certification. ECF No. 204. On November 22, 2016, Ford filed replies to Plaintiffs’

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oppositions to Ford’s Daubert motions. On December 6, 2016, Ford filed a notice of supplemental

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authority in support of its opposition to the motion for class certification. ECF No. 216. On

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December 8, 2016, the Court held a hearing on Plaintiffs’ motion for class certification and on

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Ford’s Daubert motions. ECF No. 219.

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C. Proposed Classes
In their motion for class certification, Plaintiffs move to certify the following three classes:

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(1) New Vehicle Class: All residents of California who, at any time, purchased or

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leased a new 2010-2012 Ford Fusion or 2012-2014 Ford Focus vehicle from Ford

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Motor Company or through a Ford Motor Company dealership.

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(2) Out-of-Pocket Class: All residents of California who incurred expenses in

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connection with the diagnosis, repair, or replacement of the Electronic Power

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Assisted Steering system in a 2010-2012 Ford Fusion or 2012-2014 Ford Focus

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vehicle.

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(3) Current Owner/Lessee Class: All residents of California who currently own or

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lease a 2010-2012 Ford Fusion or 2012- 2014 Ford Focus vehicle.

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Plaintiffs seek to certify the New Vehicle Class and the Out-of-Pocket Class under Rule

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23(b)(3), Reply at 11, and seek to certify the Current Owner-Lessee Class under Rule

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23(b)(2), id.

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On behalf of the New Vehicle Class, Plaintiffs assert CLRA claims, implied warranty

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(Song-Beverly Act and Magnuson-Moss Act) claims, and fraudulent concealment claims and

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seek benefit-of-the-bargain damages. On behalf of the Out-of-Pocket Class, Plaintiffs assert

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CLRA claims, implied warranty (Song-Beverly Act and Magnuson-Moss Act) claims, and

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fraudulent concealment claims and seek reimbursement for money spent diagnosing and

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repairing the allegedly defective EPAS systems. On behalf of the Current/Owner Lessee

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Class, Plaintiffs assert only an implied warranty claim and seek an injunction requiring Ford

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to replace the allegedly defective EPAS systems.
At the December 8, 2016 hearing on Plaintiffs’ Motion for Class Certification, Plaintiffs

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agreed that the Current Owner/Lessee Class should be revised to include only individuals who

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purchased new vehicles in California for personal, family, or household purposes. Hr’g Tr. at

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19:16–21. Plaintiffs also agreed that for the purposes of their CLRA claims and their implied

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warranty claims, the New Vehicle Class and the Out-of-Pocket Class should be revised to contain

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only individuals who purchased new vehicles in California for personal, family, or household

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purposes.3 Hr’g Tr. at 35–36.

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II.

LEGAL STANDARD
Class actions are governed by Rule 23 of the Federal Rules of Civil Procedure. Rule 23

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Northern District of California

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does not set forth a mere pleading standard. To obtain class certification, Plaintiffs bear the burden

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of showing that they have met each of the four requirements of Rule 23(a) and at least one

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subsection of Rule 23(b). Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186, amended by

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273 F.3d 1266 (9th Cir. 2001). “A party seeking class certification must affirmatively demonstrate

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. . . compliance with the Rule[.]” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011).
Rule 23(a) provides that a district court may certify a class only if: “(1) the class is so

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numerous that joinder of all members is impracticable; (2) there are questions of law or fact

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common to the class; (3) the claims or defenses of the representative parties are typical of the

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claims or defenses of the class; and (4) the representative parties will fairly and adequately protect

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the interests of the class.” Fed. R. Civ. P. 23(a). That is, the class must satisfy the requirements of

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numerosity, commonality, typicality, and adequacy of representation to maintain a class action.

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Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012). Further, while Rule 23(a)

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is silent as to whether the class must be ascertainable, courts have held that the Rule implies this

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requirement as well. See, e.g., In re Yahoo Mail Litig., 308 F.R.D. 577, 596 (N.D. Cal. 2015)

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(party seeking class certification under Rule 23(b)(3) “must demonstrate that an identifiable and

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Plaintiffs believe that such a limitation would not be appropriate for the fraudulent concealment
claims asserted by the New Vehicle Class and the Out-of-Pocket Class. Hr’g Tr. at 35–36, 19.
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ascertainable class exists”); Herrera v. LCS Fin. Servs. Corp., 274 F.R.D. 666, 672 (N.D. Cal.

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2011).

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If all four prerequisites of Rule 23(a) are satisfied, the Court must also find that Plaintiffs

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“satisfy through evidentiary proof” at least one of the three subsections of Rule 23(b). Comcast

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Corp. v. Behrend, 133 S. Ct. 1426, 1432 (2013). Rule 23(b) sets forth three general types of class

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actions. See Fed. R. Civ. P. 23(b)(1)–(b)(3). Of these types, Plaintiffs seek certification under Rule

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23(b)(3) and Rule 23(b)(2). The Court can certify a class under Rule 23(b)(3) if the Court finds

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that “questions of law or fact common to class members predominate over any questions affecting

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only individual members, and that a class action is superior to other available methods for fairly
and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). The Court can certify a

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Rule 23(b)(2) class if “the party opposing the class has acted or refused to act on grounds that

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apply generally to the class, so that final injunctive relief or corresponding declaratory relief is

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appropriate respecting the class as a whole.” Fed. R. Civ. P. 23(b)(2).

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“[A] court's class-certification analysis must be ‘rigorous' and may ‘entail some overlap

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with the merits of the plaintiff's underlying claim[.]’” Amgen Inc. v. Conn. Ret. Plans & Trust

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Funds, 133 S.Ct. 1184, 1194 (2013) (quoting Dukes, 564 U.S. at 351); see also Mazza, 666 F.3d at

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588 (“‘Before certifying a class, the trial court must conduct a ‘rigorous analysis’ to determine

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whether the party seeking certification has met the prerequisites of Rule 23.’” (quoting Zinser, 253

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F.3d at 1186)). This “rigorous” analysis applies to both Rule 23(a) and Rule 23(b). Comcast, 133

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S. Ct. at 1432 (stating that Congress included “addition[al] . . . procedural safeguards for (b)(3)

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class members beyond those provided for (b)(1) or (b)(2) class members (e.g., an opportunity to

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opt out)” and that a court has a “duty to take a ‘close look’ at whether common questions

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predominate over individual ones”).

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Nevertheless, “Rule 23 grants courts no license to engage in free-ranging merits inquiries

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at the certification stage.” Amgen, 133 S. Ct. at 1194–95. “Merits questions may be considered to

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the extent—but only to the extent—that they are relevant to determining whether the Rule 23

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prerequisites for class certification are satisfied.” Id. at 1195. If a court concludes that the moving

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party has met its burden of proof, then the court has broad discretion to certify the class. Zinser,

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253 F.3d at 1186.

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III.

DISCUSSION

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The Court begins by discussing the requirements under Rule 23(a). The Court then

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discusses the requirements under Rule 23(b)(3) and Rule 23(b)(2). Although the Court finds that

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Plaintiffs have met the Rule 23(a) requirements, the Court finds, as set forth below, that Plaintiffs

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have not met the predominance requirement of Rule 23(b)(3) or the requirements for certification

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under Rule 23(b)(2).

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A. Rule 23(a) Requirements
1. Numerosity

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Pursuant to Rule 23(a)(1), Plaintiffs must show that “the class is so numerous that joinder

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of all members is impracticable.” Fed. R. Civ. P. 23(a)(1). Plaintiffs need not state the precise

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number of potential class members, nor is there a specific minimum threshold requirement. In re

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Rubber Chems. Antitrust Litig., 232 F.R.D. 346, 350–51 (N.D. Cal. 2005). Rather, the Court must

15

examine the specific facts of each case to determine whether the numerosity requirement is met.

16

Gen. Tel. Co. of Nw., Inc. v. EEOC, 446 U.S. 318, 330 (1980).

17

Ford does not contest that the numerosity requirement is met in the instant case, and

18

“general knowledge and common sense indicate” that the number of 2010-2012 Fusion and 2012-

19

2014 Focus owners in California is “large” and that joinder is therefore impractical. Perez-Olano

20

v. Gonzalez, 248 F.R.D. 248, 256 (C.D. Cal. 2008); see also In re Beer Distrib. Antitrust Litig.,

21

188 F.R.D. 557, 562 (N.D. Cal. 1999) (holding that 25 class members satisfied numerosity

22

requirement). This is sufficient to satisfy the numerosity requirement.

23

2. Commonality

24

Rule 23(a)(2) requires that there be “questions of law or fact common to the class.” Dukes,

25

564 U.S. at 349. To satisfy the commonality requirement, Plaintiffs must show that the class

26

members have suffered “the same injury,” meaning that class members’ claims must “depend

27

upon a common contention” of such a nature that “determination of its truth or falsity will resolve

28

13
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

an issue that is central to the validity of each [claim] in one stroke.” Id. at 350 (quotation marks

2

and citation omitted). Plaintiffs must demonstrate not merely the existence of a common question,

3

but rather “the capacity of a classwide proceeding to generate common answers apt to drive the

4

resolution of the litigation.” Id. (quotation marks omitted) (emphasis in original). Nevertheless, the

5

“common contention need not be one that will be answered, on the merits, in favor of the class.”

6

Alcantar v. Hobart Serv., 800 F.3d 1047, 1053 (9th Cir. 2015) (internal quotation marks omitted).

7

Additionally, “for purposes of Rule 23(a)(2), even a single common question will do.” Dukes, 564

8

U.S. at 359 (alteration and quotation marks omitted).

9

In the instant case, Plaintiffs have alleged that the EPAS systems installed in all Class
Vehicles suffer from a common defect. “In automobile defect cases, commonality is often found

11
United States District Court
Northern District of California

10

when the most significant question concerns the existence of a defect.” Parkinson v. Hyundai

12

Motor Am., 258 F.R.D. 580 (C.D. Cal. 2008). Plaintiffs have set forth several issues that are

13

common to the class, including the existence of a defect, whether Ford knew of the alleged defect,

14

whether Ford had a duty to disclose its knowledge and breached that duty, whether the failures to

15

disclose were material, and whether those failures violated the law. Mot. at 13; see Chamberlan v.

16

Ford Motor Co., 402 F.3d 952, 962 (9th Cir. 2005) (holding that similar common questions met

17

the commonality requirement).

18

In determining commonality, “[t]he existence of shared legal issues with divergent factual

19

predicates is sufficient, as is a common core of salient facts coupled with disparate legal remedies

20

within the class.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). Thus, although

21

as discussed below Plaintiffs fail to show that common issues predominate under Rule 23(b)(3),

22

Plaintiffs have identified at least some common issues. Thus, the Court finds that issues such as

23

the existence of a defect and Ford’s knowledge of the defect are enough to meet “the relatively

24

‘minimal’ showing required to establish commonality.” Ries v. Ariz. Beverages USA LLC, 287

25

F.R.D. 523, 537 (N.D. Cal. 2012) (citing Hanlon, 150 F.3d at 1020).

26

3. Typicality

27

Under Rule 23(a)(3) a representative party must have claims or defenses that are “typical

28

14
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3). Typicality is satisfied “when each

2

class member’s claim arises from the same course of events, and each class member makes similar

3

legal arguments to prove the defendants’ liability.” Rodriguez v. Hayes, 591 F.3d 1105, 1122 (9th

4

Cir. 2010) (citations omitted). This requirement is “permissive and requires only that the

5

representative’s claims are reasonably co-extensive with those of the absent class members; they

6

need not be substantially identical.” Hanlon, 150 F.3d at 1020. Claims that are reasonably co-

7

extensive with the claims of absent class members will satisfy the typicality requirement, but the

8

class must be limited to “those fairly encompassed by the named plaintiff's claims.” Dukes, 131

9

S.Ct. at 2550. “[C]lass certification is inappropriate where a putative class representative is subject
to unique defenses which threaten to become the focus of the litigation.” Hanon, 976 F.2d at 508

11
United States District Court
Northern District of California

10

(citations omitted). “The purpose of the typicality requirement is to assure that the interest of the

12

named representative aligns with the interests of the class.” Id.
The named Plaintiffs assert that they meet the typicality requirement because “all class

13
14

members are alleged to have suffered injury as a result of the same conduct” by Ford. Mot. at 14

15

(quoting Doyle v. Chrysler Group LLC, 2014 WL 7690155, at *7 (C.D. Cal. Oct. 9, 2014).

16

Therefore, according to Plaintiffs, the named Plaintiffs’ claims are “reasonably co-extensive with

17

those of absent class members” because the named “Plaintiffs and all class members allegedly

18

suffered the same injury, entitling them to relief under the same legal theories.” Hanlon, 976 F.2d

19

at 508.

20

Ford argues that the named Plaintiffs do not meet the typicality requirement for several

21

reasons. First, Ford argues that the evidence shows that the alleged EPAS failures were due to

22

individual causes, and not to a classwide defect in the EPAS system. Opp. at 24. Second, Ford

23

argues that the named Plaintiffs owned only Fusion vehicles, but the class also covers the

24

“materially different” Focus vehicles as well. Opp. at 25. Third, Ford argues that the named

25

Plaintiffs are subject to various defenses that are not typical of the class. Opp. at 25–26.

26
27
28

The Court first addresses a threshold issue regarding Plaintiff Philips, after which the
Court addresses each of Ford’s arguments in turn.
15
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1
2

i. Plaintiff Philips is Not a Member of Any of the Proposed Classes
Before the Court addresses Ford’s arguments, the Court notes that Plaintiff Philips is not a
member of any of the proposed classes and therefore must be dismissed. Plaintiff Philips

4

purchased a used vehicle, and therefore Plaintiff Philips is not a member of the New Vehicle

5

Purchaser Class. TAC ¶ 33 (“Plaintiff Philips owns a 2011 Ford Fusion, which he purchased used

6

from Salinas Valley Ford in March 2012.”). Plaintiff Philips also does not allege that he paid for

7

diagnosis or repair for his vehicle’s EPAS system, and therefore Plaintiff Philips is not a member

8

of the Out-of-Pocket Class. See id. (containing no allegation of payment for diagnosis or repair).

9

Additionally, as discussed above, Plaintiffs concede that the Current Owner/Lessee class must be

10

revised to include only those who own Class Vehicles and who purchased those vehicles new. As

11
United States District Court
Northern District of California

3

stated above, Plaintiff Philips purchased his vehicle used. Therefore, Plaintiff Philips is not a

12

member of the Current Owner/Lessee Class as revised.

13

“[T]ypicality requires that the named Plaintiffs be members of the class they represent,”

14

and thus Plaintiff Phillips cannot represent any of the proposed classes. Torres v. Goddard, 314

15

F.R.D. 644, 656 (D. Ariz. 2010); see also Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 156

16

(1982) (“We have repeatedly held that “a class representative must be part of the class . . . .”).

17

Therefore, the Court dismisses Plaintiff Philips from the action. Nevertheless, even without

18

Plaintiff Philips, each of the proposed classes contains at least one of the named Plaintiffs.

19

Plaintiffs Colburn and Goodman are members of the New Vehicle Class. TAC ¶ 45, 38. Plaintiff

20

Goodman is a member of the Current Owner/Lessee Class. Id. ¶ 38 (“Plaintiff Goodman owns a

21

2011 Ford Fusion”). Plaintiff Colburn is a member of the Out-of-Pocket Class. Id. ¶ 53 (alleging

22

that Plaintiff Colburn spent $990.19 to repair her vehicle’s EPAS system).

23

Therefore, the Court finds that the dismissal of Plaintiff Philips does not require dismissal

24

of the action, because “if [an] action is brought by . . . several representative parties, it only is

25

necessary that one of them be a qualified member of the class as long as the other prerequisites of

26

Rule 23(a) are satisfied.” See Aiken v. Obledo, 442 F. Supp. 628, 658 (E.D. Cal. 1977) (quoting 7

27

Wright and Miller, Federal Practice and Procedure, § 1761 (1st ed. 1972)).

28

16
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

Therefore, the Court considers each of Ford’s arguments against typicality in turn. In doing

2

so, the Court does not consider Ford’s arguments regarding Plaintiff Philips because Plaintiff

3

Philips has been dismissed.

4
5

i. Differences in the Experiences of Plaintiffs Goodman and Colburn
Ford claims that the evidence shows that Plaintiff Goodman and Plaintiff Colburn’s EPAS

6

systems did not fail because of any class-wide defect, but instead each of their EPAS systems

7

failed for a different, atypical reason. Plaintiff Jaime Goodman experienced intermittent power

8

steering failures in her 2011 Fusion. Deposition of Jaime Goodman, Ex. N to Opp., at 58:4–6.

9

According to Ford’s expert Dr. Ashish Arora, an inspection of Goodman’s vehicle showed a
“relay-related” fault code (code B43), but the inspection “ruled out a faulty relay” as the cause of

11
United States District Court
Northern District of California

10

the fault. Opp. at 7, 9, Ex B., at 48–55. Plaintiff Alison Colburn gave her 2010 Fusion to her son,

12

who experienced a power steering failure. Opp. at 9–10. According to Dr. Arora, Colburn’s

13

vehicle showed an excessive friction code and also showed “one [code] related to anti-lock

14

braking, but no relay-related codes.” Ex. B., at 51. Essentially, Ford claims that Plaintiff Goodman

15

and Plaintiff Colburn are atypical because Plaintiff Coburn’s vehicle did not experience a “relay-

16

related” fault at all, and although Plaintiff Goodman’s vehicle experienced a “relay-related” fault,

17

that fault was not due to failure of the relay.

18

In short, Ford claims that the named Plaintiffs are not typical because they did not actually

19

suffer harm from the allegedly defective EPAS systems. The Ninth Circuit addressed a similar

20

argument in Wolin v. Jaguar Land Rover North America, LLC, 617 F.3d 1168, 1174 (9th Cir.

21

2010). In Wolin, the plaintiffs argued that certain vehicles were defective because the vehicles had

22

a “defective alignment geometry” that caused the tires to wear more quickly than usual. Id. at

23

1170. Land Rover argued against class certification on the grounds that the named plaintiffs’

24

“claims are not typical because their tires indicate wear that is not the kind attributable to vehicle

25

alignment.” Id. at 1175.The Ninth Circuit rejected this argument and noted that the named

26

plaintiffs alleged that they, “like all prospective class members, were injured by a defective

27

alignment geometry in the vehicles.” Id. The Court held that even if Land Rover were correct that

28

17
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

the wear on the named plaintiffs’ tires was due to a different cause than the wear on class

2

members’ tires, the named plaintiffs, “like the rest of the class, may have a viable claim regardless

3

of the manifestation of the defect.” Id. In other words, even though named plaintiffs’ tires may

4

have been worn for other reasons, plaintiffs’ theory was that their vehicles still suffered from the

5

same alignment defect, and this was sufficient to make the named plaintiffs’ claim typical of the

6

proposed class.
The same is true here. As described in more detail below, Plaintiffs’ theory of harm is that

7

Plaintiffs overpaid for their vehicles under the mistaken belief that the vehicles contained defect-

9

free EPAS systems. If this theory of harm is correct, then the named Plaintiffs were harmed at the

10

moment they purchased a Class Vehicle, even if their power steering ultimately failed for reasons

11
United States District Court
Northern District of California

8

unrelated to the relays. In short, as in Wolin, the named Plaintiffs in the instant case, “like the rest

12

of the class, may have a viable claim regardless of the manifestation of the defect.” Id.4
Under Wolin, Plaintiffs meet the typicality requirement if they allege the same claims

13
14

based on the same defect as the absent class members. In the instant case, Plaintiff Goodman and

15

Plaintiff Colburn, like the other prospective class members, purchased vehicles that contained

16

EPAS systems that were allegedly defective because the EPAS systems contained allegedly

17

unreliable electro-mechanical relays. Although Ford argues that Plaintiffs cannot prevail on these

18

claims, at the class certification stage, a court need not “determine whether class members could

19
20
21
22
23
24
25
26
27
28

4

Ford cites Sandoval v. Pharmacare US, Inc., 2016 WL 3554919, at *5 (S.D. Cal. June 10, 2016),
to support its argument that the named Plaintiffs are atypical because the power steering in their
vehicles failed for reasons other than unreliable relays. Opp. at 24. In Sandoval, the court held that
the named plaintiffs were unrepresentative partly because although the plaintiffs alleged that the
product at issue falsely claimed to improve sexual-health problems, the “[p]laintiffs testified at
their depositions that they did not suffer from the sexual-health problems they claim [the product]
falsely claimed to improve.” Id. at *5. Thus, the Court found that the named plaintiffs could not
have relied on the product’s allegedly false claims to improve sexual-health problems, and
therefore the named plaintiffs did not have claims typical of class members who were misled by
such claims. In the instant case, on the other hand, Ford does not assert that Plaintiff Goodman and
Plaintiff Colburn could not have been misled by Ford’s allegedly fraudulent omissions or had
atypical expectations for the vehicles that they purchased. Instead, Ford claims that Plaintiff
Goodman and Plaintiff Colburn are atypical because they suffered a different manifestation of the
defect. However, this argument is foreclosed by Wolin, which held that differences in
manifestation of defects do not defeat typicality. Wolin, 617 F.3d at 1175; see also Sandoval, 2016
WL 3554919, at *5 (citing Wolin as setting out the test for typicality).
18
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

actually prevail on the merits of their claims.” Ellis v. Costco Wholesale Corp., 657 F.3d 970, 983

2

n.8 (9th Cir. 2011). Instead, it is enough to know that Plaintiff Goodman and Plaintiff Colburn’s

3

claims are “reasonably co-extensive with those of the absent class members.” Hanlon, 150 F.3d at

4

1020.

5

As the Ninth Circuit has held, “[t]ypicality refers to the natures of the claim or defense of

6

the class representative, and not to the specific facts from which it arose.” Ellis v. Costco

7

Wholesale Corp., 667 F.3d 970, 984 (9th Cir. 2011) (quoting Hanon, 976 F.2d at 508). Thus,

8

under Ninth Circuit law the named Plaintiffs in the instant case assert the same claims as the

9

prospective class members, and this is enough to meet Rule 23(a)’s typicality requirement.

10

United States District Court
Northern District of California

11

ii. Differences Between Fusion and Focus Vehicles
Ford also argues that Plaintiff Goodman and Plaintiff Colburn are atypical because they

12

owned Fusion vehicles, not Focus vehicles. Ford argues that Focus vehicles are “materially

13

different” from Fusion vehicles, and the relays in Focus vehicles are “subject to different operating

14

conditions that would affect the risks involved.” Opp. at 25. Thus, Ford claims, Plaintiff Goodman

15

and Plaintiff Colburn’s claims are not typical of the claims of owners of Focus vehicles.

16

In ruling on Ford’s motion to dismiss the Second Amended Complaint, the Court has

17

already held that Plaintiffs have standing to assert claims about Focus vehicles because Plaintiffs

18

“have adequately alleged that the supposedly defective EPAS system is substantially similar

19

across the Vehicles.” ECF No. 69, at 12. Of course, at the class certification stage, unlike the

20

motion to dismiss stage, the Court does not “construe the pleadings in the light most favorable to

21

the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th

22

Cir. 2008). Nevertheless, as discussed further in analyzing predominance under Rule 23(b)(3), the

23

evidence at this stage of the litigation supports Plaintiffs’ claim that the EPAS system is

24

substantially similar between Fusion and Focus vehicles. Although Ford has pointed to some

25

differences between Fusion and Focus vehicles, such as the placement of the relays within the

26

EPAS systems and the size of the power steering motor, these differences have only minor

27

relevance to Plaintiffs’ claims and are unlikely to be a significant focus of litigation. See infra Part

28

19
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

III.B.2.iv.

2

Despite minor differences between Fusion and Focus vehicles, Plaintiffs’ argument

3

remains that the EPAS systems are defective because they incorporate electro-mechanical relays.

4

Plaintiffs and their experts claim, and Ford agrees, that an EPAS system incorporating electro-

5

mechanical relays existed in both Fusion and Focus vehicles. As discussed further below, the

6

evidence and argumentation in this case will focus on whether the inclusion of electro-mechanical

7

relays rendered the EPAS systems defective. Thus, even though Plaintiff Goodman and Plaintiff

8

Colburn owned only Fusion vehicles, their claims are typical of the claims of owners of Focus

9

vehicles because the same defect is alleged to exist in both vehicles.

10

In short, the evidence at this stage of the litigation suggests that the EPAS systems in

United States District Court
Northern District of California

11

Fusion and Focus vehicles are substantially similar. Therefore, the named Plaintiffs’ claims are

12

“reasonably co-extensive” with the claims of Focus owners. Hanlon, 150 F.3d at 1020 (holding

13

that the typicality requirement is “permissive and requires only that the representative’s claims are

14

reasonably co-extensive with those of the absent class members; they need not be substantially

15

identical”). Thus, differences between Fusion and Focus vehicles do not defeat typicality.

16
17

iii. Unique Defenses
Finally, Ford argues that “[e]ach of the three plaintiffs may be subject to unique defenses”

18

that undermine typicality. Opp. at 25. To support this argument, Ford points to several facts that

19

could give rise to “unique defenses.” First, Ford points to factual distinctions about whether or

20

how the alleged defect manifested in Plaintiff Goodman and Plaintiff Colburn’s vehicles. Second,

21

Ford argues that Plaintiff Goodman is atypical because she reviewed part of the owner’s manual

22

before buying her Fusion vehicle. Third, Ford argues that there are “potential issues as to the

23

extent of [Plaintiff Colburn’s] damages” because Plaintiff Colburn gave her vehicle to her son and

24

because Plaintiff Colburn is a member of both the New Vehicle Class and the Out-of-Pocket

25

Class. Opp. at 26. The Court addresses these arguments in turn.

26
27
28

First, Ford’s distinctions about how the defects manifested in Plaintiff Goodman and
Plaintiff Colburn’s vehicles are irrelevant to Plaintiffs’ theory of liability. As discussed above,
20
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

Plaintiffs’ theory is that they were harmed at the point of purchase, and therefore each of the

2

named Plaintiffs may have a valid claim “regardless of the manifestation of the defect.” Wolin,

3

671 F.3d at 1174. Thus, differences in manifestation of the defect in the instant case are not

4

enough to defeat typicality. See Wolin, 617 F.3d at 1173 (“[P]roof of the manifestation of a defect

5

is not a prerequisite to class certification.”).

6

Second, Ford claims that Goodman may be subject to a “unique defense” because Plaintiff

7

Goodman read some portion of the owner’s manual before buying her Fusion. However, in its

8

arguments against predominance under Rule 23(b)(3), Ford asserts that some class members likely

9

read the owner’s manual. Opp. at 19. Thus, Ford’s argument against typicality on the basis that

10

United States District Court
Northern District of California

11

Plaintiff Goodman read some portion of the owner’s manual lacks merit.
Finally, Ford argues that the fact that Plaintiff Colburn gave her vehicle to her son and the

12

fact that Plaintiff Colburn is a member of both the Out-of-Pocket Class and the New Vehicle Class

13

may have an impact on how her damages will be determined. Opp. at 25–26. Ford claims that

14

these unique damages calculations make Plaintiff Colburn’s claims atypical. However, although as

15

discussed below, Plaintiffs must present a damages model that shows that damages can be

16

measured on a class-wide basis to meet the predominance requirement of Rule 23(b)(3), Comcast

17

Corp., 133 S. Ct. at 1433, the calculation of damages applying such a model “is invariably an

18

individual question and does not defeat class action treatment,” Leyva v. Medline Indus. Inc., 716

19

F.3d 510, 513 (9th Cir. 2013) (emphasis added); see also McCarthy v. Kleindienst, 741 F.2d 1406,

20

1415 (D.C. Cir. 1984) (“[T]he mere fact that damages awards will ultimately require

21

individualized fact determinations is insufficient by itself to preclude class certification.”). Thus,

22

the fact that Plaintiff Colburn’s damages calculations may be different than the calculations for

23

some class members does not defeat typicality because Plaintiff Colburn will share with class

24

members a strong interest in proving liability.

25

In short, Plaintiff Goodman and Plaintiff Colburn do not have unique defenses that

26

“threaten to become the focus of the litigation.” Hanon, 976 F.2d at 508. Plaintiff Goodman and

27

Plaintiff Colburn assert claims that are “reasonably co-extensive with those of absent class

28

21
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

members.” Hanlon, 150 F.3d at 1020. Therefore, the Court finds that Rule 23(a)’s typicality

2

requirement is met.

3

4. Adequacy

4

In the Ninth Circuit, to test the adequacy of a class representative, a court must answer two

5

questions: “(1) do the named plaintiffs and their counsel have any conflicts of interest with other

6

class members; and (2) will the named plaintiffs and their counsel prosecute the action vigorously

7

on behalf of the class?” Staton v. Boeing Co., 327 F.3d 938, 957 (9th Cir. 2003) (citing Hanlon,

8

150 F.3d at 1020).

9

Ford does not contest adequacy. As discussed above, the Court has dismissed Plaintiff
Philips from the instant case because Plaintiff Philips is not a member of any of the proposed

11
United States District Court
Northern District of California

10

classes as properly defined. Nevertheless, the Court finds that Plaintiff Goodman and Plaintiff

12

Colburn are adequate class representatives. Plaintiff Goodman and Plaintiff Colburn and the

13

proposed class share the same claims and interest in obtaining relief, and Plaintiff Goodman and

14

Plaintiff Colburn are vigorously pursuing relief on behalf of the proposed class. Plaintiff Goodman

15

and Plaintiff Colburn share an interest with members of the proposed class in proving that the

16

EPAS systems were defective and that the proposed class was damaged by the defects. Ford does

17

not argue that Plaintiff Goodman and Plaintiff Colburn have any conflicts of interest with other

18

class members. Therefore, the Court finds that Plaintiff Goodman and Plaintiff Colburn meet the

19

adequacy requirement.

20

Additionally, the Court finds that Plaintiffs’ counsel has experience in prosecuting

21

consumer protection actions involving claims similar to those in the instant case. See Pifko Decl. ¶

22

41, Ex. 40 to Mot. (firm resume of Baron & Budd, P.C.); id. ¶ 42, Ex. 41 to Mot. (firm resume of

23

Grant & Eisenhofer P.A.); id. ¶ 43, Ex. 42 to Mot. (firm resume of Spilman Thomas & Battle).

24

Plaintiffs’ counsel has vigorously litigated this case from the beginning, and Ford does not contest

25

that Plaintiffs’ counsel will continue to do so. Thus, the Court finds that Plaintiffs’ counsel meets

26

the adequacy requirement.

27

5. Ascertainability

28

22
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

In addition to the four requirements explicitly provided in Rule 23(a), courts have held that

2

Rule 23(a) also contains an “implied prerequisite” that the class be ascertainable. Xavier v. Philip

3

Morris USA Inc., 787 F. Supp. 2d 1075, 1089 (N.D. Cal. 2011); see also, e.g., In re Yahoo Mail

4

Litig., 308 F.R.D. at 596; Herrera, 274 F.R.D. at 672. A class definition is sufficient if the

5

description of the class is “definite enough so that it is administratively feasible for the court to

6

ascertain whether an individual is a member.” O’Connor v. Boeing N. Am. Inc., 184 F.R.D. 311,

7

319 (C.D. Cal. 1998) (internal citation omitted). In addition, “the court must be able to [determine

8

that] class members are included or excluded from the class by reference to objective criteria.” 5

9

Moore’s Federal Practice, § 23.21[3] (3d ed. 1997). In its opposition to Plaintiffs’ motion for class

10

certification, Ford does not contest ascertainability.

United States District Court
Northern District of California

11

In the instant case, the proposed classes are defined by objective criteria. Specifically, the

12

classes are defined as individuals who have purchased or currently own or lease a Class Vehicle,

13

as well as individuals who have made out-of-pocket expenditures to repair an EPAS system in a

14

Class Vehicle. Plaintiffs claim that those who purchased or leased a new Class Vehicle can be

15

identified through CONCEPS, Ford’s corporate database that includes the contact information for

16

everyone who purchases a new Ford vehicle from a Ford dealership. Mot. at 11; Ex. 38 to Mot. at

17

pp. 229–30. Ford does not contest that Class Vehicle purchasers can be identified in this manner.

18

Plaintiffs also claim that Ford can obtain the names and contact information for current

19

owners and lessees through the third party company that Ford uses to administer recalls. Mot. at

20

11; Ex. 38, at pp. 233–35. Again, Ford does not contest that this method is practical.

21

Finally, the Out-of-Pocket Class can be identified through affidavits and documentation

22

submitted by potential class members. “[C]ourts in this circuit ha[ve] found proposed classes

23

ascertainable even when the only way to determine class membership is with self-identification

24

through affidavits.” Melgar v. CSK Auto, Inc., 2015 WL 9303977, at *8 (N.D. Cal. Dec. 22, 2015)

25

(citation omitted). In the instant case, the out-of-pocket costs that potential class members incurred

26

were likely fairly large. Plaintiff Colburn, for example, spent $990.19 to replace her vehicle’s

27

EPAS system. TAC ¶ 6. These are the kinds of expenditures for which class members are likely to

28

23
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

keep records, and therefore self-identification in this case would be practical. Red v. Kraft Foods,

2

Inc., 2012 WL 8019257, at *5 (C.D. Cal. Apr. 12, 2012) (“[S]elf-identification alone has been

3

deemed sufficient to render a class ascertainable . . . where the relevant purchase was a memorable

4

bigticket item.”). Therefore, the Court finds that it is “administratively feasible” to identify

5

members of the Out-of-Pocket Class and that the class is therefore ascertainable. Newton v. Am.

6

Debt Serv., Inc., 2015 WL 3614197, at *5 (N.D. Cal. June 9, 2015).

7

B. Rule 23(b)(3): Predominance

8

1. Principles Governing the Predominance Analysis

9

Under Rule 23(b)(3), plaintiffs must show “that the questions of law or fact common to
class members predominate over any questions affecting only individual members.” Fed. R. Civ.

11
United States District Court
Northern District of California

10

P. 23(b)(3). “The Rule 23(b)(3) predominance inquiry” is meant to “tes[t] whether proposed

12

classes are sufficiently cohesive to warrant adjudication by representation.” Amchem Prods., Inc.

13

v. Windsor, 521 U.S. 591, 623 (1997). The Ninth Circuit has held that “there is clear justification

14

for handling the dispute on a representative rather than an individual basis” if “common questions

15

present a significant aspect of the case and they can be resolved for all members of the class in a

16

single adjudication.” Hanlon, 150 F.3d at 1022. In ruling on a motion for class certification based

17

on Rule 23(b)(3), a district court must conduct a rigorous analysis to determine whether the class

18

representatives have satisfied both the predominance and superiority requirements. See Zinser, 253

19

F.3d at 1186. The predominance analysis focuses on “the legal or factual questions that qualify

20

each class member’s case as a genuine controversy” to determine “whether proposed classes are

21

sufficiently cohesive to warrant adjudication by representation.” Amchem Prods., 521 U.S. at 623;

22

see also Fed. R. Civ. P. 23(b)(3) (to certify a class, the court must find that “questions of law or

23

fact common to class members predominate over any questions affecting only individual

24

members”).

25
26

This Court has previously identified five principles that guide the Court’s predominance
inquiry:

27
28

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Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1
2
3
4
5
6
7
8
9
10

United States District Court
Northern District of California

11
12

First, and most importantly, the critical question that this Court must answer is
whether common questions predominate over individual questions. Amgen, 133 S.
Ct. at 1191. In essence, this Court must determine whether common evidence and
common methodology could be used to prove the elements of the underlying cause
of action. Id. Second, in answering this question, this Court must conduct a
“rigorous” analysis. Comcast Corp., 133 S. Ct. at 1432. This analysis may overlap
with the merits, but the inquiry cannot require Plaintiffs to prove elements of their
substantive case at the class certification stage. Amgen, 133 S. Ct. at 1194. Third,
this Court must determine not only the admissibility of expert evidence that forms
the basis of the methodology that demonstrates whether common questions
predominate. Ellis, 657 F.3d at 982. Rather, this Court must also determine whether
that expert evidence is persuasive, which may require the Court to resolve
methodological disputes. Id.; see also In re Rail Freight Fuel Surcharge Antitrust
Litig., 725 F.3d [244, 255 (D.C. Cir. 2013)]. Fourth, the predominance inquiry is
not a mechanical inquiry of “bean counting” to determine whether there are more
individual questions than common questions. Butler v. Sears, Roebuck & Co., 727
F.3d 796, 801 (7th Cir. 2013)]. Instead, the inquiry contemplates a qualitative
assessment, which includes a hard look at the soundness of statistical models. Id.;
In re Rail Freight Fuel Surcharge Antitrust Litig., 725 F.3d at 255. Fifth, Plaintiffs
are not required to show that each element of the underlying cause of action is
susceptible to classwide proof. Amgen, 133 S. Ct. at 1196. Rather, they need only
show that common questions will predominate with respect to their case as a
whole. Id.

13

In re High-Tech Empl. Antitrust Litig., 985 F. Supp. 2d 1167, 1186–87 (N.D. Cal. 2013). In High-

14

Tech, the Ninth Circuit denied the defendants’ petition under Rule 23(f) for review of the Court’s

15

order applying the foregoing framework to grant class certification. See In re High-Tech Empl.

16

Antitrust Litig., No. 13-80223, ECF No. 18 (9th Cir. Jan. 14, 2014).

17

2. Analysis

18

Plaintiffs argue that common issues predominate in the proposed classes for which they

19

seek certification under Rule 23(b)(3). Specifically, Plaintiffs claim that because of the common

20

issues about defect and liability, “one or more of the central issues in the action are common to the

21

class and can be said to predominate.” Mot. at 16 (citing Guido v. L’Oreal USA, Inc., 2013 WL

22

3353857, at *9 (C.D. Cal. July 1, 2013)).

23

Ford argues that common issues do not predominate over individual issues for several

24

reasons. First, Ford argues that the EPAS systems in the class vehicles do not suffer from a

25

common defect. Second, Ford argues that Plaintiffs have not shown that materiality and reliance,

26

which are relevant to Plaintiffs’ CLRA and negligent misrepresentation claims, are susceptible to

27

proof by common evidence. Third, Ford argues that Plaintiffs cannot prove their fraudulent

28

25
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

concealment or CLRA claims using common evidence because Ford’s knowledge about the

2

alleged defect varied between class vehicles and over the class period. Fourth, Ford argues that

3

Plaintiffs cannot show on a common basis that class vehicles were unmerchantable. Fifth, Ford

4

argues that Plaintiffs have not presented a damages model that aligns with Plaintiffs’ legal theory.

5

Each of Ford’s arguments applies to both the New Vehicle Class and the Out-of-Pocket Class. The

6

Court addresses each of these arguments in turn.5 Ultimately, as discussed below, the Court finds

7

that although Plaintiffs have alleged a common defect, individual issues will predominate in

8

determining reliance for Plaintiffs’ CLRA and fraudulent concealment claims and Plaintiffs have

9

not offered a damages model that is consistent with their theory of liability for any of the proposed

10

classes or claims.
i. Common Defect (CLRA, Fraudulent Concealment, and Implied Warranty
Claims)

United States District Court
Northern District of California

11
12
13
14
15
16

Both parties agree that existence of a defect is an element of Plaintiffs’ CLRA claim,
fraudulent concealment claim, and implied warranty claim. Plaintiffs argue that they can prove
this element of each claim on a class-wide basis because the EPAS systems installed in Class
Vehicles suffer from a common defect: the inclusion of unreliable electro-mechanical relays.6
Ford argues that Plaintiffs’ allegations do not relate to a uniform defect that is susceptible to class-

17
18
19
20
21
22
23
24
25
26
27
28

5

In its opposition, Ford also argues that Plaintiffs’ Song-Beverly claims do not meet Rule
23(b)(3)’s predominance requirement because the proposed classes are overbroad. Specifically,
Ford argues that the proposed classes include many class members who could not assert a claim
under the Song-Beverly Act, which applies to “any new product or part thereof that is used,
bought, or leased” in California “for use primarily for personal, family, or household purposes.”
Cal. Civ. Code § 1791(a). However, as discussed above, Plaintiffs concede that the classes should
be revised to avoid this overbreadth, and therefore the Court need not reach Ford’s argument.
6

In their Third Amended Complaint, Plaintiffs discuss various possible problems with the Class
Vehicles’ EPAS systems and allege that “[t]hese defects, individually and/or collectively, render
the EPAS System prone to failure.” TAC ¶ 79. However, Plaintiffs seek class certification based
only on the theory that “use of the [electromechanical] relays in an EPAS system is the design
defect common to all class vehicles.” Opp. at 4; see also Mot. at 1–2 (“This case centers on . . . the
“poor design” of the [EPAS] systems in all of the 2010-2012 model-year Fusion and 2012–2014
model-year Focus vehicles at issue here. . . . When developing the requirements for its EPAS
system, Ford . . . ignored sound engineering judgment by incorporating unreliable
electromechanical relays, which are foreseeably prone to failure, into the design.”). At the
December 8, 2016 hearing, Plaintiffs confirmed that their claims now allege this single design
defect. Hr’g Tr. at 18–19.
26
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

LLC, 617 F.3d 1168 (9th Cir. 2010). As discussed above, in Wolin, the plaintiffs argued that

2

certain vehicles were defective because the vehicles had a “defective alignment geometry” that

3

caused the tires to wear more quickly than usual. Id. at 1170. The defendant argued that common

4

issues did not predominate for the purposes of class certification because “the evidence w[ould]

5

demonstrate that the prospective class members’ vehicles do not suffer from a common defect, but

6

rather, from tire wear due to individual factors such as driving habits and weather.” Id. at 1173.

7

The Ninth Circuit rejected the defendant’s argument and noted that the plaintiffs

8

“assert[ed] that the defect exists in the alignment geometry, not in the tires, [and] that Land Rover

9

failed to reveal material facts in violation of consumer protection laws.” Id. The Ninth Circuit held
that “[a]lthough individual factors may affect premature tire wear, they do not affect whether the

11
United States District Court
Northern District of California

10

vehicles were sold with an alignment defect” and thus “all of [the plaintiffs’] allegations are

12

susceptible to proof by generalized evidence.” Id.

13

The same is true in the instant case. Individual factors may affect the performance of the

14

EPAS systems in different class vehicles, but these individual factors do not affect the ultimate

15

question whether the vehicles were sold with a defective EPAS system. Like the defendant in

16

Wolin, what Ford argues in the instant case “is whether class members can win on the merits.” Id.

17

Plaintiffs argue that the EPAS systems are defective because they incorporate electro-mechanical

18

relays that are unreliable because they are subject to thermal expansion, mechanical fatigue, and

19

vibration, and are “very sensitive to manufacturing variability.” Mot. at 4; Pifko Decl. at ¶ 16, Ex.

20

15 to Mot. at p. 114. Ford, on the other hand, contends that “there is no basis for the contention

21

that simply using [electro-mechanical] relays . . . was a ‘design defect.’” Opp. at 13.

22

The Court need not decide at this stage which party is correct. See Amgen Inc. v.

23

Connecticut Retirement Plans and Trust Funds, 133 S. Ct. 1184, 1194–95 (2013) (“Merits

24

questions may be considered to the extent—but only to the extent—that they are relevant to

25

determining whether the Rule 23 prerequisites for class certification are satisfied.”). In order to

26

determine whether Rule 23(b)(3)’s predominance requirement is met, the Court needs only to

27

consider Plaintiffs’ theory of the case and the type of evidence that Plaintiffs will use to prove this

28

28
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

theory. Plaintiffs’ allegations are that Class Vehicles suffered from a single design defect, and as

2

in Wolin, whether this allegation is true can be proven on a common basis. Thus, Ford’s argument

3

that there was no common defect does not defeat predominance for Plaintiffs’ CLRA, fraudulent

4

concealment, and implied warranty claims under Rule 23(b)(3).
ii. Materiality and Reliance (CLRA and Fraudulent Concealment Claims)

5

Next, the Court addresses Ford’s argument that Plaintiffs have not shown that materiality

6
7

and reliance, which both parties agree are elements of Plaintiffs’ CLRA and fraudulent

8

concealment claims, are susceptible to common evidence. Specifically, Ford argues that extensive

9

individual inquiries will be necessary to decide whether the alleged omissions were material to
class members and whether class members “took action” based on these omissions or “would have

11
United States District Court
Northern District of California

10

acted differently had a required disclosure been made.” Opp. at 18.
Plaintiffs argue that materiality and reliance are subject to common proof based on the

12
13

Ninth Circuit’s decision in Daniel v. Ford Motor Co., 806 F.3d 1217 (9th Cir. 2015).7 According

14

to Daniel, materiality can be determined on an objective standard because under the California

15

Supreme Court’s decision in Tobacco II, “[a]n omission is material if a reasonable consumer

16

‘would attach importance to its existence or nonexistence in determining his choice of action in

17

the transaction in question.’” Daniel, 806 F.3d at 1225 (quoting In re Tobacco II Cases, 46 Cal.

18

4th 298 (2009)). Thus, contrary to Ford’s suggestion, in the instant case the Court will not need to

19

consider purchasing preferences on an individual basis to determine materiality. Instead,

20

materiality can be determined on a classwide basis using a “reasonable consumer” standard. Id.
Additionally, under Daniel, a court can often infer reliance. Id. at 1225 (“That one would

21
22

have behaved differently can be presumed, or at least inferred, when the omission is material.”)

23

(citing Tobacco II, 46 Cal. 4th 298). However, the Ninth Circuit has also held that the presumption

24
25
26
27
28

7

Ford seeks to distinguish Daniel on the grounds that Daniel involved summary judgment, not
class certification. Opp. at 18. However, although Daniel was decided on summary judgment, 806
F.3d at 1220, Daniel discussed what type of proof is necessary to show materiality and reliance,
which is directly relevant to the question of whether this proof can be shown on a common basis.
Therefore, the Court may properly look to Daniel in deciding whether class certification is
appropriate.
29
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

of reliance is not always appropriate. In Mazza v. American Honda Motor Company, 666 F.3d 581

2

(9th Cir. 2012), the Ninth Circuit held that the district court was wrong to presume that class

3

members relied on particular omissions and misleading statements by Honda regarding Honda’s

4

Collision Mitigation Braking System. The Ninth Circuit held that although a presumption of

5

reliance is sometimes appropriate, such a presumption was unjustified in Mazza for two reasons.

6

First, “the limited scope of th[e] advertising” that was allegedly deceptive and allegedly omitted

7

pertinent information “ma[de] it unreasonable to assume that all class members viewed” the

8

advertisements. Id. at 596. Second, the advertisements “d[id] not deny that limitations exist” in the

9

system, and thus even class members who were exposed to the campaign were unlikely to have

10

relied on an expectation that the system would work without flaws. Id. at 596.

United States District Court
Northern District of California

11

Plaintiffs argue that Mazza is inapplicable because the instant case involves Ford’s

12

omissions despite a duty to disclose, rather than misleading advertising. Reply at 10 n.8. However,

13

the holding in Mazza cannot be so limited; Mazza itself involved alleged omissions as well as

14

allegedly misleading advertising. 666 F.3d at 585 (“Plaintiffs allege that certain advertisements

15

misrepresented the characteristics of the [Collision Mitigation Braking System] and omitted

16

material information on its limitations.”). More generally, in the context of a case involving both

17

misleading statements and omissions, the Ninth Circuit has held that if class members “were

18

exposed to quite disparate information from various representatives of the defendant,” a

19

presumption of reliance may not be justified. Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1020

20

(9th Cir. 2011).

21

In the instant case, class members were not exposed to uniform representations. Most

22

importantly, as Ford points out, a warning about sudden EPAS system failure was present in the

23

owner’s manuals for all class vehicles, and it would require extensive individualized inquiries to

24

know which class members had the opportunity to read these portions of the owner’s manuals

25

before purchasing their vehicles. Ex. Q to Opp., at 5–6 (“The EPS has diagnostics checks that

26

continuously monitor the EPS to ensure proper operation of the electronic system. When an

27

electronic error is detected, the message POWER STEERING ASSIST FAULT will be displayed

28

30
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

in the message center. If this happens, stop the vehicle in a safe place, and turn off the engine.” . . .

2

“If your vehicle loses electrical power while you are driving . . ., you can steer the vehicle

3

manually, but it takes more effort. Extreme continuous steering may increase the effort it takes for

4

you to steer.”).

5

Plaintiff argues that these disclosures were insufficient because they did not specifically

6

warn that the EPAS systems in Class Vehicles were defective for including electro-mechanical

7

relays. Reply at 9. However, as discussed below, Plaintiffs argue that they were harmed and

8

suffered damages because they paid more for EPAS systems than they would have paid if they had

9

known that the EPAS systems posed a danger because they might fail suddenly. Mot. at 22
(“Plaintiffs’ theory of harm is that because Ford failed to disclose known defects in vehicles’

11
United States District Court
Northern District of California

10

EPAS system to Class members, which put their safety at risk, Ford unlawfully forced Class

12

members to accept a risk they did not bargain for.”) (quoting Ex. 43 at 293). Thus, even though

13

Ford did not disclose the specific cause of the defect in the owner’s manual, Ford did disclose that

14

the EPAS systems might fail and pose a safety danger. A class member who read the owner’s

15

manual may therefore have no damages.8
Like the class members in Mazza, a class member who read the warnings in Class

16
17

Vehicles’ owner’s manuals would be aware that “limitations exist” and that the EPAS system may

18

fail unexpectedly. Mazza, 666 F.3d at 596. Additionally, as in Mazza, the information to which

19

class members were exposed was not uniform because some unknown number of class members

20

was exposed to Ford’s warnings in the Class Vehicles’ owner’s manuals. See Darisse v. Nest

21

Labs, Inc., 2016 WL 4385849, at *6 (N.D. Cal. Aug. 15, 2016) (denying class certification where

22

“[t]he representations were not uniform, and not all of them were misrepresentations”).

23

Furthermore, Plaintiffs have not shown whether consumers read the manuals before purchase or

24
25
26
27
28

8

Plaintiffs’ argument that Ford should have disclosed the specific cause of the defect is also
undercut by Plaintiffs own complaint, which asserts five different causes of the defect that
“individually and/or collectively, render the EPAS System prone to failure, causing marked
difficult in steering the car.” TAC ¶ 79. Only in their motion for class certification have Plaintiffs
narrowed the cause of the defect to the existence of electro-mechanical relays in the EPAS
systems.
31
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

whether Ford dealerships discuss the contents of owner’s manuals in a sufficiently uniform way

2

that the Court can determine on a classwide basis whether class members knew about the warnings

3

in the owner’s manuals. See English v. Apple Inc., 2016 WL 1188200 (N.D. Cal. Jan. 5, 2016)

4

(“English has not shown that the way in which Apple employees talk about the service plans is

5

sufficiently uniform to support an inference of classwide reliance or materiality.”). In these

6

circumstances, the Court finds that as in Mazza, in the instant case class members were exposed to

7

“quite disparate information,” some of which explicitly acknowledged the limitations of the EPAS

8

systems, and thus a presumption of reliance is inappropriate.

9

Therefore, in the instant case the Court finds that “the issue of . . . reliance is a matter that
would vary from consumer to consumer,” Webb v. Carter's Inc., 272 F.R.D. 489, 502 (C.D. Cal.

11
United States District Court
Northern District of California

10

2011) (quoting In re Vioxx Class Cases, 180 Cal.App.4th 116 (2009)), and that individual issues

12

will predominate over common issues in determining reliance for the purposes of Plaintiffs’

13

CLRA and fraudulent concealment claims. This alone warrants the denial of class certification for

14

Plaintiffs’ CLRA and fraudulent concealment claims.

15
16
17
18
19
20
21
22
23
24
25
26

iii. Variations in Ford’s Knowledge (CLRA and Fraudulent Concealment
Claims)
As part of Plaintiffs’ CLRA and fraudulent concealment claims, Plaintiffs allege that Ford
knew as early as 2007 that Class Vehicles’ EPAS systems were defective because they included
unreliable electro-mechanical relays and that Ford unlawfully failed to disclose this fact. However,
Ford argues that its knowledge cannot be proven using common evidence because Ford’s
knowledge varied over the class period. Specifically, Ford claims that “when loss-of-assist
complaints began to increase, Ford had to investigate many possible causes, and this took time.”
Opp. at 17. Ford continued its investigation throughout the class period, and thus what Ford knew
about the EPAS system changed over time. Therefore, Ford claims, the “date of purchase will
create an individualized issue” and the Court will inevitably be overwhelmed deciding what Ford
knew at different points in time between 2010 and 2014. Opp. at 17.
Plaintiffs allege and have produced evidence that well before the beginning of the class

27
28

32
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

period, Ford knew that the EPAS systems were defective because they included unreliable relays.

2

See Ex. 44 to Mot. (providing a timeline of Ford emails and internal documents discussing Ford’s

3

knowledge of problems with the relays). In Dr. van Schoor’s expert report, Dr. van Schoor refers

4

to several internal Ford emails from as early as 2008 and 2009 stating that Ford “may eliminate

5

this relay” in the future, concluding that “this relay is a poor design” that should “not [be]

6

allow[ed] . . . in our products,” and suggesting that “the thousands of hours chasing relays so far

7

justifies us taking a hard look” at “alternative designs that delete the motor and link relay.” Ex. 2,

8

at 15–16 (discussing emails dated March 28, 2008, September 4, 2009, and September 25, 2009);

9

see also Ex. 2, at 13 (“It is clear from my review of the documents and deposition testimony that

10

Ford believe[d] that safer, more reliable alternatives were available at least as early as 2007 and

11
United States District Court
Northern District of California

1

throughout the time period when the Class Vehicles were sold to the public.”). Additionally, as

12

this Court has held, it is reasonable to infer that these emails “were pr[ec]eded by an accretion of

13

knowledge by Ford.”9 ECF No. 69, at 18 (quoting In re MyFord Touch Consumer Litig., 46 F.

14

Supp. 3d 936, 958 (N.D. Cal. 2014)).
In short, Plaintiffs’ allegation is that Ford knew that the EPAS systems were defective for

15
16

including unreliable electro-mechanical relays well before the first consumer purchased a class

17

vehicle sometime in late 2009. See Opp. at 3 (“Production of a particular ‘model year’ begins

18

during the previous year, usually in June.”). The facts relevant to this allegation, and Ford’s

19

knowledge of these facts, did not change over time. See Ex. B, at 10 (“The EPAS system in the

20

proposed class of vehicles is designed with two electro-mechanical relays.”).

21

Here again, Ford’s argument is essentially that Plaintiffs cannot succeed on the merits of

22

their claims. Ford argues that “Ford’s knowledge varied over time . . . because there was never a

23

single common ‘defect’ at issue, but rather a series of engineering challenges and responses.” Opp.

24

at 1. However, as discussed above and as the Ninth Circuit held in Wolin, at the class certification

25

stage the Court should decide only whether Plaintiffs’ allegations are susceptible to generalized

26
27
28

9

This inference is particularly appropriate in this case because one of the emails discussed the
“thousands of hours chasing relays so far.” Ex. 2 to Mot., at 16.
33
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

proof. Plaintiffs allege that the EPAS systems were defective because they included

2

electromechanical relays, and Ford’s knowledge about the appropriateness of using

3

electromechanical relays did not change substantially over the class period. Additionally, Ford’s

4

argument that its knowledge varied over time is undercut by its argument that it consistently

5

disclosed the risk of EPAS system failure in the owner’s manuals of each of the Class Vehicles.10

6

Opp. at 5–6, 17. Thus, the Court finds that Plaintiffs’ “allegations are susceptible to proof by

7

generalized evidence” with respect to the knowledge element of Plaintiffs’ CLRA and fraudulent

8

concealment claims. Id.
iv. Unmerchantability (Implied Warranty Claim)

9

Ford also argues that Plaintiffs’ claims for breach of the implied warranty of

10

United States District Court
Northern District of California

11

merchantability under the Song-Beverly Act and the Magnuson-Moss Act are not susceptible to

12

common proof because whether Class Vehicles were unmerchantable is an individual issue. Opp.

13

at 15–16. Ford argues that under California law, a product is unmerchantable only if the alleged

14

defect is “substantially certain to result in malfunction during the useful life of the product,” Am.

15

Honda Motor Co. v. Superior Court, 199 Cal. App. 4th 1367, 1375 (2011). As discussed above,

16

Ford claims that several features of the EPAS system varied throughout the class period. Ford

17

argues that this variation in features may affect the likelihood that a defect will manifest. Opp. at

18

16. Ford also claims, without elaboration, that manifestation of the alleged defect may differ

19

between the Focus and Fusion. Id.

20

Under Wolin, “proof of the manifestation of a defect is not a prerequisite to class

21

certification.” 617 F.3d at 1173; see also Keegan v. Am. Honda Motor Co., 284 F.R.D. 504, 536

22
23
24
25
26

10

Ford argues that the warnings in the owner’s manual are relevant to Ford’s knowledge because a
class member who read the owner’s manual could not establish that Ford’s knowledge of the
defect was “superior” to the consumer’s knowledge, which Ford claims is necessary to establish a
duty to disclose. Opp. at 17. However, as in Mazza, Ford’s argument is more properly considered
in the context of Plaintiffs’ reliance than Ford’s knowledge. See Mazza, 666 F.3d at 596
(considering the defendant’s disclosures as part of the reliance inquiry). Therefore, as discussed
above, the Court considers Ford’s argument in the context of the reliance inquiry.

27
28

34
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

(C.D. Cal. 2012) (“Applying Wolin, and having considered the analysis in . . . American Honda

2

Motor Co., the court cannot discern why, at the class certification stage, plaintiffs must adduce

3

evidence that a defect is substantially certain to arise in all class vehicles during the vehicles’

4

useful life.”). However, as Plaintiffs agree, even under Wolin, the Court must still decide whether

5

the “substantial certainty” question “c[an] be shown with common proof, which is the correct

6

focus of Rule 23.” Reply at 8 n.6.
Plaintiffs have produced evidence showing that “substantial certainty” will be a common

8

question. For example, Dr. van Schoor’s expert report states that “the EPAS systems used in the

9

Class Vehicles are essentially the same. . . . Specifically, the electromechanical Link Relays in the

10

Class Vehicles’ EPAS system[s] are identical and the electromechanical Motor Relays (Star Point

11
United States District Court
Northern District of California

7

Relays) in the Class Vehicles’ EPAS systems are identical.” Ex. 2, at 9–10. Additionally, Ford’s

12

own engineer has admitted that the relays are essentially the same throughout the Class Vehicles,

13

and that any differences between them are not material. See Deposition of Matthew Surrella, Ex. G

14

to Opp., at 180 (“Q: . . . [F]or purposes of this relay issue, to the extent there are differences,

15

they’re not material to the issue, correct? MR. KELLY: Object to the form. THE WITNESS: The

16

relays are the same, right? The relays, I’ve said multiple times, the relays are the same.”).

17

Furthermore, Ford has argued that the Class Vehicles’ owner’s manuals contained consistent

18

warnings about the risk of a sudden failure in the Class Vehicles’ EPAS systems. Opp. at 5–6, 17.

19

Thus, the evidence suggests that the relays and the EPAS systems are likely to function and fail in

20

the same way, and thus the “substantial certainty” of manifestation of a defect is an issue

21

susceptible to common proof.

22

Ford seeks to undermine this evidence by suggesting that even if the “part numbers of the

23

relays” are the same for all Class Vehicles, variations in the specifications of the EPAS systems in

24

class vehicles and changes in procedure over time will present numerous individual issues in

25

determining “the life of the relays and the probability of their failures in the field.” Ex. B to Opp.,

26

at 60, 64. However, most of the variations and changes in procedure would have only a minor

27

effect on manifestation. For example, Ford argues that the EPAS systems in the Focus and Fusion

28

35
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

are aligned slightly differently and have different sized motors. However, Ford has not explained

2

how these differences might affect the probability of manifestation of a defect, and Ford’s

3

supplier’s Rule 30(b)(6) representative described these differences between Fusion and Focus

4

vehicles as “minor.” TRW 30(b)(6) Deposition, Ex. 3 to Mot., at 54. Similarly, changes in

5

procedure—such as the use of gloves to prevent contamination and spot inspections for cracks in

6

certain relay parts—may slightly affect defect manifestation, but the effect is likely to be small.

7

Ex. 2, at 24–25.

8

Ford points to only one difference between Class Vehicles that may be significant.

9

Specifically, Ford states that in 2012, Ford’s supplier began using solid silver contacts instead of
silver-plated contacts in the relays to reduce failures due to corrosion. Id. at 25. According to

11
United States District Court
Northern District of California

10

Ford’s documents, and as Plaintiffs’ expert agrees, short-term warranty returns for steering issues

12

in Focus Vehicles were somewhat reduced after this change. Id. However, Plaintiffs’ expert states

13

that these measures were “inadequate” and Ford’s Electric Power Steering Supervisor admitted

14

that there was never a time during the class period “when the relay issues went away.” Mrozek

15

Depo. at 152. Thus, even if the issue of solid silver contacts does make a difference in whether

16

there was a “substantial certainty” or defect manifestation, this one issue is unlikely to

17

predominate over common issues, such as the function of the relays, which were “the same” for all

18

Class vehicles. Ex. G to Opp., at 180.

19

In short, the variations that Ford points out, either individually or taken together, may have

20

some effect on the likelihood that a defect would manifest in the Class Vehicles. However, it

21

appears based on the evidence produced at this stage of the litigation that the most important issue

22

regarding manifestation is the basic function of both link relays and motor relays, which is a

23

common issue. See Keegan, 284 F.R.D. at 537 (certifying a class asserting a claim under the Song-

24

Beverly Act because although the vehicles at issue had somewhat different specifications, these

25

differences “did not necessarily lead to tremendous variation in the way in which class vehicles

26

manifested the alleged defect”). Indeed, one of Ford’s own engineers conceded that the differences

27

between the EPAS systems in Class Vehicles are “not material” for “the purposes of this relay

28

36
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1

issue.” Ex. G to Opp. at 180. Thus, it appears that although individual issues will exist in

2

determining merchantability, common issues will predominate.
v. Damages Model (CLRA, Fraudulent Concealment, and Implied Warranty
Claims)

3
4
5
6
7
8
9
10

Finally, Ford argues that although Plaintiffs seek damages as part of all three of their
CLRA, fraudulent concealment, and implied warranty claims, Plaintiffs have failed to “offer a
damages model capable of measuring, on a common basis, only the economic harm actually
caused to class members by alleged misconduct.” Opp. at 20. Specifically, Ford claims that the
damages model offered by Plaintiffs’ expert Dr. Arnold does not provide a model of damages that
conforms to Plaintiffs’ legal theory. For the reasons discussed below, the Court agrees with Ford’s
argument.

United States District Court
Northern District of California

11
12
13
14
15
16
17
18
19
20
21
22
23

Although individual damages calculations alone do not make class certification
inappropriate, see Leyva v. Medline Indus., Inc., 716 F.3d 510, 514 (9th Cir. 2013) (“[T]he amount
of damages is invariably an individual question and does not defeat class action treatment.”),
the United States Supreme Court has held that Plaintiffs have the burden to offer a damages model
showing that “damages are susceptible of measurement across the entire class for purposes of Rule
23(b)(3).” Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1433 (2013). Such a damages model “must
measure only those damages attributable to” Plaintiffs’ theory of liability. Id. If Plaintiffs do not
offer a plausible damages model that matches their theory of liability, “the problem is not just that
the court will have to look into individual situations to determine the appropriate measure of
damages; it is that Plaintiffs have not even told the Court what data it should look for.” In re
MyFord Touch Consumer Litig., Case No. 3:13-cv-03072-EMC, Dkt. 279 (N.D. Cal. Sept. 14,
2016). Thus, the Court can certify the proposed classes only if Plaintiffs offer a model of damages
for each class that matches Plaintiffs’ legal theory of liability.11

24

The theory of damages that Plaintiffs offer is the theory described by their expert witness

25
26
27
28

11

The Court need not address the Current Owner/Lessee Class, because for the class Plaintiffs
seek only injunctive relief and certification under Rule 23(b)(2).
37
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1

Dr. Arnold. As Dr. Arnold explains, and as Plaintiffs state explicitly in their motion for class

2

certification, “Plaintiffs’ theory of harm is that because Ford failed to disclose known defects in

3

the vehicles’ EPAS system to Class members, which put their safety at risk, Ford unlawfully

4

forced Class members to accept a risk they did not bargain for.” Ex. 43 to Mot., at 297. Dr. Arnold

5

states that “[f]rom an economics perspective, [members of the New Vehicle Class] were injured at

6

the time of purchase because they were not informed about the known defects in the accused

7

EPAS system,” and therefore are entitled to “the amount they paid for a defective EPAS system,

8

as a component of the overall price of a Class vehicle.” Id. at 293.

9

Because Plaintiffs’ theory of harm is that Ford forced class members to accept a risk they
did not bargain for, Dr. Arnold states that an “expected utility” framework is the proper model for

11
United States District Court
Northern District of California

10

class members’ damages. Id. at p. 294. In explaining this framework, Dr. Arnold states that

12

consumers discount the amount they are willing to pay for a product based on their perception of

13

how likely the product is to be defective. Id. at 294. For example, if consumers know that a

14

product is 60% likely to fail, then consumers will discount the amount they would be willing to

15

pay for the product if it were certain not to fail by 60%. Id. at 294–95. An “expected utility”

16

framework measures consumers’ perceptions of the risk of failure and calculates consumers’

17

willingness to pay based on these measurements.

18

Thus, Dr. Arnold concludes, class members would not have agreed to pay full price for an

19

EPAS system in their vehicles if class members had known that there was a likelihood that the

20

EPAS systems would fail. Id. at 293. Instead, class members would have discounted the price they

21

were willing to pay by the probability that the EPAS systems would fail and paid only for the

22

“expected utility” of the EPAS systems. Id. at 294.

23

Dr. Arnold then goes further and states that class members would likely have been willing

24

to pay less than this “expected utility” for two reasons. First, Dr. Arnold points out that if an EPAS

25

system fails, a consumer suffers “more than simply the failure to receive the value the consumer

26

places on the product.” Id. at 296. Instead, the consumer also faces added “disutility” because

27

when an EPAS system fails, it may endanger the consumer’s safety. Id. Second, Dr. Arnold states

28

38
Case No. 14-CV-02989-LHK
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1

that because most consumers are “risk averse,” consumers would pay less than the “expected

2

utility” because they are forced to take on risk. Id. (“[A] risk-averse customer would prefer to

3

obtain $40 with certainty instead of assuming a risk that may yield $100 with 40 percent chance

4

and $0 with 60 percent chance.”).

5

Ford agrees that calculating damages based on expected utility and disutility because of

6

safety concerns and risk aversion is economically sound. However, as Ford points out, although

7

Dr. Arnold states that expected utility is the correct model to apply, Dr. Arnold does not apply the

8

expected utility model at all. Indeed, in his deposition testimony, Dr. Arnold explicitly stated, “I’m

9

not calculating the expected value.” Deposition of Dr. Jonathan Arnold, Ex. R to Opp., at 75.
Instead, Dr. Arnold’s report “quantif[ies] damages in this case based on the amount Ford charged

11
United States District Court
Northern District of California

10

its dealers for the EPAS systems.” Ex. 43 to Mot., at p. 298. In other words, Dr. Arnold’s report

12

offers the total price of a new EPAS system as the only measure of damages.

13

As Plaintiffs concede, this conclusion assumes that “the average reasonable consumer

14

would ascribe $0 value to the defective [EPAS] system.” Reply at 13. Plaintiffs attempt to defend

15

this conclusion by arguing that, “as Dr. Arnold explains in his report,” valuing the EPAS system at

16

$0 is reasonable “given the ‘disutility’ associated with the risk of a dangerous, sudden failure of

17

the EPAS system.” Id.

18

However, contrary to Plaintiffs’ assertion, Dr. Arnold’s report never states that an average

19

consumer would value the EPAS system at $0. Instead, Dr. Arnold states only that an average

20

consumer would discount the price for an EPAS system by some unspecified amount because of

21

the risk of a failure and the disutility associated with safety concerns and risk aversion. Dr. Arnold

22

never attempts to quantify any of those factors—the risk of failure or the disutility associated with

23

safety concerns—and never concludes that discounting the price of an EPAS system for all of

24

those reasons yields a value of $0. See Caldera v J.M Smucker Co., 2014 WL 1477400, at *4

25

(C.D. Cal. Apr. 15, 2014) (“[A] full refund would only be appropriate if not a single class member

26

received any benefit from the products.”).

27
28

Moreover, Ford has produced evidence showing that the expected failure rate for the Class
39
Case No. 14-CV-02989-LHK
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1

Vehicles due to the use of electro-mechanical relays was at most “approximately 1 percent” and

2

that when accidents did occur due to EPAS system failures, “[n]one of the injury claims indicated

3

medical attention was required.” National Highway Transportation Safety Administration, ODI

4

Closing Resume, Ex. J to Opp., at 2. In these circumstances, it is unlikely that “not a single class

5

member received any benefit from” the EPAS systems. Caldera, 2014 WL 1477400, at *4.

6

The Court faced a similar situation in Brazil v. Dole Packaged Foods, LLC, 2014 WL

7

2466559 (N.D. Cal. May 30, 2014). In Brazil, the plaintiffs argued that Dole had made false and

8

misleading statements on food labels. In support of their motion for class certification, the

9

plaintiffs submitted an expert damages report that concluded that the plaintiffs should receive a
full refund for the “entire purchase . . . price of the challenged product.” Id. at *15. The Court

11
United States District Court
Northern District of California

10

rejected this model, finding that the proper measure of damages was “[t]he difference between

12

what the plaintiff paid and the value of what the plaintiff received.” Id. The Court concluded that

13

the “full refund model is deficient because it is based on the assumption that consumers receive no

14

benefit whatsoever from purchasing the identified products.” Id. The plaintiffs in Brazil had given

15

no reason to believe that this assumption was correct, and therefore the Court determined that a

16

damages model based on that assumption could not carry the plaintiffs’ burden to show that

17

damages could be measured on a class-wide basis. Id. The Ninth Circuit affirmed this aspect of the

18

Court’s decision and held that because damages are properly measured as “the difference between

19

the prices customers paid and the value of the fruit they bought . . . , a plaintiff cannot be awarded

20

a full refund unless the product she purchased was worthless.” Brazil v. Dole Packaged Foods,

21

2016 WL 5539863, at *2 (9th Cir. Sept. 30, 2016). Therefore, the Ninth Circuit found that

22

“[b]ecause Brazil did not explain how this [price] premium could be calculated with proof

23

common to the class, the district court did not abuse its discretion by granting Dole’s motion to

24

decertify.” Id. at *3.

25

The same is true in the instant case. As Plaintiffs recognize, Dr. Arnold’s calculation of

26

damages relies on the assumption that the true value of the EPAS systems was $0. However, Dr.

27

Arnold never even states, let alone justifies, the conclusion that this assumption is correct.

28

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Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

Plaintiffs have stated that at trial, they “will show that each class member was injured at the point

2

of sale upon paying a premium price.” Reply at 13. However, neither Plaintiffs nor their expert

3

make any attempt to demonstrate what this “premium” is, or how the “premium” could be

4

determined on a class-wide basis. See also Vaccarino v. Midland Nat. Life Ins. Co., 2014 WL

5

572365, at *10 (C.D. Cal. Feb. 3, 2014) (denying class certification on a Unfair Competition Law

6

claim because “plaintiffs’ damages model . . . does not compare what the [products at issue] were

7

worth to what plaintiffs paid.”).

8
9

Plaintiffs argue that another court recently accepted this same damages methodology in
another report by Dr. Arnold. In re MyFord Touch Consumer Litig., Case No. 3:13-cv-03072EMC, Dkt. 279 at 8 (N.D. Cal. Sept. 14, 2016). However, the MyFord Touch court only accepted

11
United States District Court
Northern District of California

10

Dr. Arnold’s report in conjunction with a second report by another expert that faithfully measured

12

class members’ expected utility. In the instant case, in contrast, Plaintiffs have not submitted any

13

damages report that even attempts to measure consumers’ expected utility, which is the basis of

14

Plaintiffs’ theory of liability. Additionally, MyFord Touch involved an alleged defect that caused

15

the onboard computer system to freeze and crash. Id. at 3. This is the type of defect that is visible

16

to consumers and about which consumers are likely to have preferences. In the instant case, in

17

contrast, consumers are probably not aware of the use of electro-mechanical relays in their

18

vehicles’ EPAS systems, and thus expected utility will be significantly more difficult to measure.

19

Thus, the Court finds that MyFord Touch is not persuasive precedent showing that damages can be

20

measured on a class-wide basis using only Dr. Arnold’s unstated and unexplained assumption that

21

the EPAS systems are worth $0.

22

Thus, Plaintiffs have failed to produce a damages model that is “consistent with [their]

23

liability case.” Comcast, 133 S. Ct. at 1433. Ironically, Dr. Arnold’s report itself accurately

24

describes what such a theory might look like. As Dr. Arnold states, a damages model consistent

25

with Plaintiffs’ theory of harm in the instant case would attempt to measure the expected utility of

26

a defective EPAS system, as well as the disutility that an average consumer attributes to safety

27

issues and risk aversion. As in MyFord Touch, Plaintiffs could have used survey data and other

28

41
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

empirical studies to show how consumers value the EPAS systems with and without the alleged

2

defect. See Case No. 3:13-cv-03072-EMC, Dkt. 279 at 8. (“Dr. Boedeker conducted a survey and

3

employed a conjoint analysis to infer the value customers placed on the [computer system] at the

4

time of purchase, how this value would have changed had customers known of the [computer

5

system]’s defects, and how this value would have changed if customers knew these defects may

6

affect their ability to safely operate their vehicles.”). However, Dr. Arnold offers no such data.

7

Instead, after stating what a proper damages model would look like, Dr. Arnold then offers an

8

entirely different model that does not attempt to measure expected utility, but instead assumes

9

without even explicitly stating that the expected utility is $0.
Plaintiffs have only produced one damages model in support of class certification, and that

10

United States District Court
Northern District of California

11

model “falls far short of establishing that damages are capable of measurement on a classwide

12

basis.” Id. Therefore, plaintiffs “cannot show Rule 23(b)(3) predominance: Questions of

13

individual damage calculations will inevitably overwhelm questions common to the class.”

14

Comcast, 133 S. Ct. at 1433. For this reason, the Court finds that Plaintiffs’ New Vehicle Class

15

does not meet Rule 23(b)(3)’s predominance requirement.

16

Similarly, the Out-of-Pocket Class seeks reimbursement of the full amount paid for

17

replacement or repair of Class Vehicles’ EPAS systems. Reply at 11; Hr’g Tr. at 30:11–12 (“The

18

damages model is, what you pay is what you get.”). However, as with the New Vehicle Class, a

19

damages model based on full reimbursement assumes that the replacement EPAS systems or the

20

repairs were completely valueless. Hr’g Tr. at 32:1 (explaining that Plaintiffs’ theory of harm for

21

the Out-of-Pocket Class is essentially “the same thing” as Plaintiffs’ theory of harm for the New

22

Vehicle Class). Recovering the full amount of replacement and repair costs would be justified only

23

“if not a single class member received any benefit” from those replacements or repairs. Caldera,

24

2014 WL 1477400, at *4. Plaintiffs provide no support, either in Dr. Arnold’s report or elsewhere,

25

for the unstated assumption that no class member received any benefit from the replacements or

26

repairs.

27
28

Similarly, Plaintiffs stated at the December 8, 2016 hearing that the theory of liability for
42
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

the Out-of-Pocket Class is “the same thing” as Plaintiffs’ theory of liability for the New Vehicle

2

Class, which was based on consumers’ expected utility. Hr’g Tr. at 32:1. As explained above, a

3

damages model based on full reimbursement does not match a theory of liability based on

4

expected utility. Therefore, as with the New Vehicle Class, Plaintiffs have not offered a model for

5

the Out-of-Pocket Class that “even attempts” to “measure only those damages attributable to

6

[Plaintiffs’] theory” of liability. Comcast, 133 S. Ct. at 1433. The failure of Plaintiffs’ damages

7

model alone warrants denial of Rule 23(b)(3) class certification.
vi. Summary

8

Under Mazza a presumption of reliance is inappropriate because an unknown number of

9

class members saw warnings regarding EPAS system failure in the owner’s manual for Class

11
United States District Court
Northern District of California

10

Vehicles. Thus, the Court would be forced to conduct individual inquiries to discover which class

12

members read the owner’s manual and which did not. Moreover, Plaintiffs’ damages model is

13

inconsistent with their theory of liability and thus Plaintiffs “cannot possibly establish that

14

damages are susceptible of measurement across the entire class for purposes of Rule 23(b)(3).”

15

Comcast, 133 S. Ct. at 1433. Because Plaintiffs’ proposed New Vehicle Class and proposed Out-

16

of-Pocket Class do not meet Rule 23(b)(3)’s predominance requirement, the Court DENIES

17

Plaintiffs’ motion for class certification under Rule 23(b)(3).12
C. Rule 23(b)(2)

18

Plaintiffs also move for class certification under Rule 23(b)(2). Plaintiffs seek to certify

19
20

under (b)(2) only the “Current Owner/Lessee Class,” which consists of California residents who

21

currently own or lease a 2010-2012 Ford Fusion or 2012-2014 Ford Focus Vehicle that the

22

individual purchased new in California for personal, family, or household purposes. See supra at

23

10; Mot. at 35. Moreover, Plaintiff asserts that they only move to certify this class’s claims for

24

injunctive relief. Reply at 21. Specifically, “Plaintiffs seek a mandatory injunction requiring Ford

25

to uniformly repair and/or replace the defective EPAS system in each of the Class Vehicles of the

26
27
28

12

Because Plaintiffs have not met the predominance requirement under Rule 23(b)(3), the Court
need not consider whether Plaintiffs have met Rule 23(b)(3)’s superiority requirement.
43
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

Current Owner/Lessee Class.” Mot. at 35.
1. Standard for Class Certification Under Rule 23(b)(2)

2

“Rule 23(b)(2) allows class treatment when ‘the party opposing the class has acted or

3
4

refused to act on grounds that apply generally to the class, so that final injunctive relief or

5

corresponding declaratory relief is appropriate respecting the class as a whole.” Dukes, 564 U.S. at

6

360 (quoting Fed. R. Civ. P. 23(b)(2)). “[U]nlike Rule 23(b)(3), a plaintiff does not need to show

7

predominance of common issues or superiority of class adjudication to certify a Rule 23(b)(2)

8

class.” In re Yahoo Mail Lit., 308 F.R.D. 577, 587 (N.D. Cal. 2015). Rather, “[i]n contrast to Rule

9

23(b)(3) classes, the focus [in a Rule 23(b)(2) class] is not on the claims of the individual class

10

members, but rather whether [Defendant] has engaged in a ‘common policy.’” Id. at 599.
2. Analysis

United States District Court
Northern District of California

11

Ford’s primary argument in response to Plaintiffs’ motion to certify a Rule 23(b)(2) class

12
13

is that class certification is inappropriate under Rule 23(b)(2) because this Court has already

14

dismissed Plaintiffs’ claims for equitable and injunctive relief based on the fact that Plaintiffs have

15

an “adequate remedy at law.” Opp. at 33; ECF No. 48, at 10. In their Reply, Plaintiffs admit that

16

the Court previously dismissed all of Plaintiffs’ UCL, FAL, CLRA, and unjust enrichment claims

17

for equitable relief because Plaintiffs had an “adequate remedy at law.” However, Plaintiffs assert

18

that this is not fatal to their motion for class certification because Plaintiffs are now seeking

19

injunctive relief under the Magnusson-Moss Act and the Song-Beverly Act, as alleged in

20

Plaintiffs’ TAC, and the Court has not ruled yet on whether Plaintiffs have an adequate remedy at

21

law for these Magnusson-Moss Act and Song-Beverly Act claims. Reply at 21; see TAC ¶¶ 140–

22

170.

23

However, the Magnusson-Moss Act claim in Plaintiffs’ TAC contains no allegations

24

regarding injunctive or equitable relief. See generally TAC ¶¶ 140–153. Instead, Plaintiffs allege

25

in their Magnusson-Moss Act claim only that “California Plaintiffs, individually and on behalf of

26

the members of the California Class, seek all damages permitted by law, including diminution in

27

value of their vehicles.” TAC ¶ 153. Accordingly, the Court finds that Plaintiffs have not asserted

28

44
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

under the Magnusson-Moss Act any entitlement to injunctive relief, but have rather alleged only

2

Plaintiffs’ entitlement to monetary relief. See id. Plaintiffs thus cannot rely on the Magnusson-

3

Moss Act thus in seeking class certification for injunctive claims.

4

In contrast, the Song-Beverly Act claim in Plaintiffs’ TAC does mention “legal and
equitable relief.” Id. ¶ 169. At the December 8, 2016 hearing on Plaintiffs’ motion for class

6

certification, Plaintiffs stated that this portion of the TAC was the ground for Plaintiffs’ request for

7

an injunction requiring Ford to “institute a recall or free replacement program and/or otherwise

8

repair the Defective Vehicles.” TAC at 39; Hr’g Tr. at 25–27. However, for the reasons discussed

9

below, the Court finds that Plaintiffs have not met their burden to show that Rule 23(b)(2)

10

certification is warranted for the Current Owner/Lessee Class’s Song-Beverly Act claim.

11
United States District Court
Northern District of California

5

Most importantly, as the Court held with regards to Plaintiffs’ other equitable and

12

injunctive claims, Plaintiffs have an “adequate remedy at law” for Ford’s alleged violation of the

13

Song-Beverly Act. See ECF No. 48, at 10. This is shown by Plaintiffs’ own complaint, which

14

seeks damages as a remedy for the same Song-Beverly Act violations for which Plaintiffs’ seek an

15

injunction.

16

Specifically, the Song-Beverly Act claim in Plaintiffs’ TAC alleges that Defendant

17

“breached the implied warranty of merchantability” and that this has caused “California Plaintiffs

18

and members of the California Class to not receive the benefit of their bargain.” TAC ¶ 165.

19

Plaintiffs further allege that “members of the California Class received goods whose dangerous

20

condition substantially impairs their value.” TAC ¶ 167. In order to remedy these alleged

21

violations, Plaintiffs allege that “members of the California Class are entitled to damages . . . .”

22

TAC ¶ 169. However, in their class certification briefing, Plaintiffs argue that in addition to

23

damages, they are also entitled to an injunction granting them replacement EPAS systems because

24

they did not receive the “benefit of their bargain” when they purchased vehicles with defective

25

EPAS systems. This is the same theory and cause of action as Plaintiffs’ request for damages.

26

Thus, as these allegations show, Plaintiffs have an obvious “adequate remedy at law” for

27

Defendant’s breach of implied warranty: “benefit-of-the-bargain” damages as requested in the

28

45
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1
2

TAC.
Indeed, not only do Plaintiffs have an adequate remedy at law, Plaintiffs are seeking to

3

certify a class asserting that adequate remedy at law. As discussed above, Plaintiffs are seeking to

4

certify under Rule 23(b)(3) the “New Vehicle” Class’s Song-Beverly Act claim for “benefit of the

5

bargain” monetary damages. As Plaintiffs conceded at the hearing on Plaintiffs’ class certification

6

motion, the “Current Owner/Lessee Class” is a subclass of the “New Vehicle” class. Hr’g Tr. at

7

13:8–11. Thus, Plaintiffs contend that the same individuals who are entitled to a “mandatory

8

injunction requiring Ford to uniformly repair and/or replace the defective EPAS system” are

9

simultaneously entitled to monetary damages that remedy Plaintiffs’ claimed harm of “not
receiv[ing] the benefit of their bargain.” TAC ¶ 165. In fact, Plaintiffs have admitted that the

11
United States District Court
Northern District of California

10

damages that they seek and the injunction that they seek are “alternative forms of relief.” Hr’g Tr.

12

at 25:14–15. Thus, Plaintiffs’ own arguments demonstrate that the “Current Owner/Lessee” Class

13

has an “adequate remedy at law,” just as the Court held in dismissing Plaintiffs’ other claims for

14

injunctive and equitable relief. See ECF No. 69, at 30.

15

At the class certification hearing, the only authority that Plaintiffs offered in support of the

16

proposition that they can receive a mandatory injunction requiring repair or replacement, despite

17

having an adequate remedy at law, is the Song-Beverly Act’s language that “[a]ny buyer of

18

consumer goods who is damaged by a failure to comply with any obligation under this chapter . . .

19

may bring an action for the recovery of damages and other legal and equitable relief.” Cal. Civ.

20

Code § 1794 (emphasis added); Hr’g Tr. at 28. However, Plaintiffs point to no caselaw, and the

21

Court is aware of none, granting an injunction for a recall under similar circumstances. See also

22

McManus v. Fleetwood Enterpr., Inc., 320 F.3d 545, 554 (5th Cir. 2003) (noting, where a

23

proposed Rule 23(b)(2) class sought an injunction for supplemental braking equipment as a

24

remedy for breach of an implied warranty, that the court “could find no case where injunctive

25

relief was awarded under comparable circumstances”). To the contrary, California caselaw

26

suggests that, because Plaintiffs’ allege only breach of an implied warranty, Plaintiffs are not

27

entitled under the Song-Beverly Act to have Ford replace their EPAS systems. Specifically, the

28

46
Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

1

California Supreme Court has explained that a buyer’s “right to replacement or restitution is

2

qualified [in § 1794 of the Song-Beverly Act] by the phrase ‘as set forth in subdivision (d) of

3

section 1793.2” of the Song-Beverly Act, which states that “replacement/restitution remedy is

4

available only for breach of an express warranty.” Gavaldon v. DaimlerChrysler Corp., 90 P.3d

5

752, 804 (Cal. 2004) (emphasis added).

6

Class certification under Rule 23(b)(2) is inappropriate where, as here, “the ordinary relief
for [plaintiff’s] lawsuit would be money damages, not injunctive relief.” McManus, 320 F.3d at

8

554; see also Walsh v. Ford Motor Co., 130 F.R.D. 260, 266 (D.D.C. 1990) (refusing to certify a

9

(b)(2) class for a “recall and retrofit” of Ford vehicles because “monetary damages are more

10

suitable in this litigation, particularly in view of the practical limitations which the proposed

11
United States District Court
Northern District of California

7

equitable relief presents”). As discussed above, Plaintiffs’ TAC and class certification motions

12

demonstrate that “the ordinary” and more appropriate relief for Plaintiffs’ Song-Beverly Act claim

13

is monetary damages, not a mandatory injunction requiring “Ford to uniformly repair and/or

14

replace the defective EPAS system in each of the Class Vehicles.” Mot. at 35; see also McManus,

15

320 F.3d at 554 (“[O]therwise inappropriate injunctive relief does not become appropriate for

16

class treatment merely because the more permissive Rule 23(b)(2), as opposed to (b)(3),

17

contemplates injunctive relief.”); Walsh , 130 F.R.D. at 266.

18

Indeed, it is also unclear why Plaintiffs ask Ford to “uniformly repair and/or replace the

19

defective EPAS system in each of the Class Vehicles,” Mot. at 35, when Ford has already

20

conducted a safety recall. In fact, Plaintiff Philips and Plaintiff Goodman both had their EPAS

21

systems replaced as part of Ford’s recall. ECF No. 97-5 at 192; ECF No. 95-4 at 2. Plaintiffs

22

contend that Ford’s recall is insufficient because “the recall simply replaces the defective relays”

23

with “updated” electromechanical relays “which are equally defective.” Reply at 16.

24

Accordingly, Plaintiffs state that Ford should place “next generation systems” into their Class

25

Vehicles. Id. However, Plaintiffs do not define “next generation systems.” Id. Additionally,

26

Plaintiffs provide no indication that their request that Ford place undefined “next generation”

27

power-steering systems into older model vehicles is feasible. Thus, the Court finds that Plaintiffs

28

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Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

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have not met their burden to establish that certification of an injunctive class under Rule 23(b)(2)

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is appropriate. Therefore, the Court DENIES Plaintiffs’ motion for class certification under Rule

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23(b)(2).

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IV.

DAUBERT MOTIONS

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Defendants move to exclude the expert report and testimony of Dr. Arnold and the expert

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report and testimony of Dr. van Schoor in support of Plaintiff's Motion for Class Certification for

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failing to meet the standards required by Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S.

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579 (1993), and Rule 702 of the Federal Rules of Evidence. ECF Nos. 196–97. The Court

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GRANTS Ford’s motion to exclude the expert report and testimony of Dr. Arnold and DENIES

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United States District Court
Northern District of California

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Ford’s motion to exclude the expert report and testimony of Dr. van Schoor.
When considering expert testimony offered pursuant to Rule 702, the trial court acts as a

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“gatekeeper” by “making a preliminary determination of whether the expert’s testimony is

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reliable.” Elsayed Mukhtar v. Cal. State Univ., Hayward, 299 F.3d 1053, 1063 (9th Cir. 2002)

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(overruled on other grounds by Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457, 467 (9th

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Cir. 2014)); see Kumho Tire Co. v. Carmichael, 526 U.S. 137, 150 (1999); Daubert, 509 U.S. at

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597. Expert testimony is admissible if: (1) “the expert’s scientific, technical, or other specialized

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knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;” (2)

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“the testimony is based on sufficient facts or data;” (3) “the testimony is the product of reliable

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principles and methods;” and (4) “the expert has reliably applied the principles and methods to the

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facts of the case.” Fed. R. Evid. 702. “Shaky but admissible evidence is to be attacked by cross

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examination, contrary evidence, and attention to the burden of proof, not exclusion.” Primiano v.

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Cook, 598 F.3d 558, 564 (9th Cir. 2010) (citing Daubert, 509 U.S. at 594, 596). The Ninth Circuit

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has approved of the application of the standard in Daubert to expert reports in support of or in

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opposition to motions for class certification. See Ellis v. Costco Wholesale Corp., 657 F.3d 970,

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982 (9th Cir. 2011) (“In its analysis of Costco’s motions to strike, the district court correctly

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applied the evidentiary standard set forth in Daubert.”).

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Case No. 14-CV-02989-LHK
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Ford does not argue that Dr. Arnold is unqualified to offer an expert opinion.13 Instead,

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Ford moves to exclude the expert report of testimony of Dr. Arnold because Dr. Arnold has failed

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to apply valid economic methodology in calculating damages. As discussed above, the Court finds

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that the “expected utility” model that Dr. Arnold describes is economically sound. Nevertheless,

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the Court agrees with Ford that after describing an economically sound “expected utility” model,

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Dr. Arnold offers an analysis that does not apply this model. As Dr. Arnold stated in his

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deposition, he was “not calculating the expected value” of the allegedly defective EPAS systems,

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but instead was merely calculating “the amount that consumers paid for the EPAS.” Deposition of

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Dr. Jonathan Arnold, Ex. 1 to ECF No. 196, at 74. As discussed above, the Court finds that this
calculation does not follow the model that Dr. Arnold describes and therefore does not offer a

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United States District Court
Northern District of California

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theory of damages consistent with Plaintiffs’ theory of liability in the case. Therefore, the Court

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GRANTS Ford’s motion to exclude the expert report and testimony of Dr. Arnold. As a practical

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matter, however, the Court has already considered Dr. Arnold’s report. 14

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Ford does not argue that Dr. van Schoor is unqualified to offer an expert opinion.15 Ford

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moves to exclude the expert report and testimony of Dr. van Schoor for two reasons. First, Ford

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argues that Dr. van Schoor’s opinions are not based on “scientific, technical, or otherwise

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specialized knowledge” as required by Rule 702, because Dr. van Schoor has relied solely on his

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interpretations of statements in documents produced by Ford. ECF No. 197, at 1. However, at this

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stage of the litigation, the Court needs only to understand Plaintiffs’ theory of the case and the

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evidence Plaintiffs intend to use to prove that theory. As Ford concedes, Dr. van Schoor has

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examined electro-mechanical relays and understands their basic function. Id. at 2. The Court finds

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Dr. Arnold’s expert report contains a list of his qualifications, which include a Ph.D, M.B.A.,
and B.A. from the University of Chicago, as well as a long career in economic analysis. Ex. 43, at
288.
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Excluding the report at this stage means that Plaintiffs may not rely on it for the remainder of
the litigation.
15
Dr. van Schoor’s expert report contains a list of his qualifications, which include a Ph.D and
Master’s degree from the Massachusetts Institute of Technology, extensive work in mechanical
engineering, and a patent in the field of electro-mechanical hydraulic power assist steering. Ex. 2,
at 7.
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Case No. 14-CV-02989-LHK
ORDER DENYING MOTION FOR CLASS CERTIFICATION

that Dr. van Schoor’s technical expertise is helpful in explaining how the relays function and why

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a power steering system incorporating those relays may be defective. In other words, Dr. van

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Schoor helps to explain the technical details of Plaintiffs’ theory of the case and what evidence

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Plaintiffs might use to prove that theory; this is all that the Court needs to decide at the class

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certification inquiry. Second, Ford states that “[t]o the extent Dr. van Schoor does rely on data,” he

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has analyzed the data incorrectly and his conclusions are therefore unreliable. Id. at 4. Ford’s

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arguments on this point refute Dr. van Schoor’s diagnosis of certain fault codes. The Court has

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reviewed Ford’s objections to Dr. van Schoor’s methodology and finds that they are not so serious

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as to warrant exclusion, but instead should be “attacked by cross examination, contrary evidence,

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and attention to the burden of proof.” Primiano, 598 F.3d at 564. Thus, the Court DENIES Ford’s

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United States District Court
Northern District of California

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Motion to Exclude the Report and Testimony of Dr. van Schoor.

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V.

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CONCLUSION
For the foregoing reasons, the Court finds that although Plaintiffs have satisfied all of the

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requirements of Rule 23(a), Plaintiffs have not satisfied the requirements of Rule 23(b)(2) with

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respect to the proposed Current Owner/Lessee Class and have not satisfied the requirements of

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Rule 23(b)(3) with respect to the proposed New Vehicle Class or the proposed Out-of-Pocket

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Class. Accordingly, the Court DENIES Plaintiffs’ Motion for Class Certification.

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IT IS SO ORDERED.

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Dated: December 22, 2016
______________________________________
LUCY H. KOH
United States District Judge

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