Johannessohn et al v. Polaris Industries Inc.
Filing
453
ORDER. Polaris's Motion to Exclude Expert Testimony 371 is DENIED. Polaris's Motion for Summary Judgment 356 is DENIED. Plaintiffs' Motion to Certify Class 332 is DENIED. (Written Opinion) Signed by Judge Nancy E. Brasel on 3/31/2020. (KMW)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
RILEY JOHANNESSOHN, et al.,
Case No. 16‐CV‐3348 (NEB/LIB)
Plaintiffs,
v.
ORDER
POLARIS INDUSTRIES, INC.,
Defendant.
Plaintiffs bring this action under the laws of six states on behalf of a putative class
of all‐terrain vehicle (“ATV”) buyers. They claim that Defendant Polaris Industries, Inc.
omitted material facts about an alleged defect at the time they purchased their Sportsman
ATVs. Fact and expert discovery have now closed. Plaintiffs move for class certification,
and Polaris moves to strike certain of Plaintiffs’ expert opinions and for summary
judgment on the named Plaintiffs’ claims.1
BACKGROUND
The Court draws the following background facts from the summary judgment
record, viewing the evidence in the light most favorable to the Plaintiffs. Torgerson v. City
of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc).
Polaris requested permission to file a Daubert motion in connection with its class
certification motion (ECF No. 321) and Plaintiffs did not object, except with respect to
word limits in the briefing. (ECF No. 322.) The Court granted the request. (ECF No. 323.)
Polaris then filed a motion for summary judgment. (ECF No. 356.) The Court heard oral
argument on all motions together.
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1
Polaris, headquartered in Medina, Minnesota, manufactures recreational vehicles,
such as ATVs and motorcycles. (ECF No. 340‐2 at 23:17–19.) Polaris’s ATVs include the
Sportsman 450, 570, 850, and 1000. (ECF No. 370 (“Dahl Decl.”) ¶¶ 3–4.) The Sportsman
450 and 570 ATVs have smaller single cylinder engines; the Sportsman 850 and 1000
ATVs have larger dual cylinder engines. (Id. ¶ 6.)
As early as 2007, Polaris faced consumer complaints about excessive heat in some
of its ATVs. In 2014, the U.S. Consumer Production Safety Commission (“CPSC”) opened
an investigation in response to reports of several ATV fires. Over the course of that
investigation, the CPSC made the preliminary determination that Polaris MY2015‐16
Sportsman 850 ATVs present “a substantial product hazard” under 15 U.S.C. § 2064(a),
noting that “the right hand side heat shield is in close proximity to, and in some cases
makes contact with [the] exhaust manifold, posing a burn and fire hazard.” (ECF No. 336‐
23 at 2.) The CPSC requested that Polaris voluntarily recall or correct the potentially
hazardous Sportsman 850 ATVs. (Id. at 3.) In March 2017, Polaris issued a recall for
MY2015‐16 Sportsman 850s and 1000 ATVs. (ECF No. 336‐24.) Polaris informed
consumers that it had developed a new exhaust manifold side panel that “significantly
increases the air gap between the exhaust manifold and exhaust manifold side panel and
utilizes a metal heat shield.” (ECF No. 336‐25.)
The CPSC’s investigation also sought information about Polaris’s Sportsman 570s.
(ECF No. 336‐22.) Following the investigation, Polaris issued a service advisory in July
2
2017 offering an “optional Right Hand Side Panel Close Off Kit that will redirect a portion
of the heat produced by the engine and exhaust away from the right hand foot well area”
for MY2016‐17 Sportsman 450s and MY2014‐17 Sportsman 570s. (ECF No. 336‐26.)
Plaintiffs in this case are Sportsman ATV owners Riley Johannessohn, Daniel C.
Badilla, James Kelley, Kevin R. Wonders, William Bates, and James Pinion (collectively,
“Plaintiffs”).2 Their Corrected Second Amended Complaint (“Complaint”) pleads that
Polaris violated the consumer protection laws of Minnesota, California, Florida, Missouri,
New York, and North Carolina by failing to disclose the Sportsman line’s exhaust heat
problems, causing Plaintiffs to suffer injury. (ECF No. 66 (“SAC”) ¶¶ 85–175.) The
Complaint alleges that “Polaris’[s] omissions artificially inflated the market price for the
ATVs” when Polaris “could have and should have warned customers” about what the
Complaint refers to as an “exhaust heat defect.” (Id. ¶ 4.) Plaintiffs now seek to certify a
nationwide class of consumers who purchased new MY2011‐16 Polaris Sportsman 850s,
MY2015‐16 Sportsman 1000s, MY2014‐17 Sportsman 570s, and MY2016‐17 Sportsman
450s (the “Class Vehicles”) from October 4, 2010 to the present. (ECF No. 335 at 1 n.1.) In
the alternative, they seek to certify six statewide classes for Class Vehicle owners in the
states of Minnesota, Florida, California, Missouri, New York, and North Carolina. (Id. at
18–19.) Polaris moves for summary judgment on all claims asserted against it in the
The Second Amended Complaint also includes Plaintiff Ronald Krans, a resident of
Illinois. His claims have been dismissed from the case. (ECF No. 143.)
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Complaint. (ECF No. 356.) Polaris also seeks to exclude the expert testimony of Richard
Eichmann and Sara Butler. (ECF No. 371.) For the reasons discussed below, all three
motions—for summary judgment, for exclusion of expert testimony, and for class
certification—are denied.
SUMMARY JUDGMENT
I.
Choice of Law
To assess Plaintiffs’ claims, the Court must first decide what law applies to them.
This task requires a choice‐of‐law analysis, complex here because Plaintiffs are from six
states, each with its own consumer protection statute or statutes. Plaintiffs contend that
the Minnesota Consumer Fraud Act should apply to the consumer fraud claims of all
plaintiffs, regardless of their state of residence. See Minn. Stat. § 325F.68 et seq. (“MCFA”).
A federal court sitting in diversity applies the choice‐of‐law rules of the forum state where
it sits—here, Minnesota’s choice‐of‐law rules. Highwoods Props., Inc. v. Exec. Risk Indem.,
Inc., 407 F.3d 917, 920 (8th Cir. 2005). In determining if the MCFA can apply
extraterritorially, Minnesota courts apply a multistep analysis. The court first determines
whether an outcome‐determinative conflict exists. Jepson v. Gen. Cas. Co. of Wisc., 513
N.W.2d 467, 469–70 (Minn. 1994); In re St. Jude Med., Inc., 425 F.3d 1116, 1120 (8th Cir.
2005) (“St. Jude I”). If a conflict exists, the court determines whether the law of both states
can be constitutionally applied. Jepson, 513 N.W.2d at 469. If it is constitutionally
permissible for the forum state to apply its laws, the court then considers five factors to
4
determine whether to apply the forum state law. Id. at 470. For the reasons that follow,
the Court concludes that each Plaintiff’s claims are governed by the state in which he
resides.
A.
Application of the MCFA: Outcome‐Determinative Conflicts
The Complaint alleges that Polaris violated the consumer protection laws of
Minnesota, California, Florida, Missouri, New York, and North Carolina, thereby injuring
Plaintiffs and other consumers who reside in those states. Plaintiffs maintain that because
the consumer protection laws of these states do not conflict with the MCFA, the Court
can apply the MCFA to all claims.3
The parties focus their briefs on the requirements of reliance or causation and
scienter under each state’s consumer protection statute or statutes. In doing so, both
Plaintiffs and Polaris refer to tables appended to their briefs.4 Plaintiffs bear the burden
In In re St. Jude, the district court concluded that the consumer protection laws of 32
jurisdictions did not have outcome‐determinative conflicts with Minnesota. No. 01‐CV‐
1396 (JRT/FLN), 2006 WL 2943154, at *5 & n.3 (D. Minn. Oct. 13, 2006), rev’d and remanded
on other grounds, In re St. Jude Med., Inc. (“St. Jude II”), 522 F.3d 836 (8th Cir. 2008). That
court relied on the plaintiffs’ analysis to find no conflicts among certain state consumer
protection laws, including the six states forming the basis of Plaintiffs’ claims here. Id. at
*5. This Court has conducted its own analysis of the consumer statutes at issue and comes
to a different conclusion based on the facts of this case.
4 Polaris submitted a detailed table analyzing state consumer protection statutes in
support of the argument that the laws conflict. (ECF No. 367‐1 (“Polaris App. A”).)
Plaintiffs respond with a much simpler table indicating “yes” or “no” to four questions
about each state’s consumer protection statute: whether a private cause of action exists,
whether scienter is required, whether individual reliance is required, and whether
material omissions are prohibited. (ECF No. 336‐2 (“Pls’ Tab C”).) These four issues were
identified as outcome‐determinative conflicts for the consumer protection statutes. In re
3
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of fully analyzing the law of the jurisdictions whose laws may apply to the putative
class’s claims; it is not Polaris’s burden to prove an outcome‐determinative conflict exists.
See Thompson v. Allianz Life Ins. Co. of N. Am., 330 F.R.D. 219, 223 (D. Minn. 2019). Below,
the Court addresses the six state consumer‐protection laws and their requirements as to
reliance or causation and scienter. Such an analysis is necessary before the Court can
compare each state’s laws against the MCFA to reach the conflicts issue.
1.
Minnesota
The Complaint alleges that Polaris violated the MCFA by omitting material
information regarding the Sportsman ATVs’ exhaust heat defect, thereby injuring
Plaintiff Riley Johannessohn and other purchasers.5 (SAC Count I.) The MCFA prohibits
“[t]he act, use, or employment by any person of any fraud, false pretense, false promise,
misrepresentation, misleading statement or deceptive practice, with the intent that others
rely thereon in connection with the sale of any merchandise.” Minn. Stat. § 325F.69,
subd. 1. A private plaintiff suing for an MCFA violation must prove that “the defendant
engaged in conduct prohibited by the statutes and that the plaintiff was damaged
thereby.” Grp. Health Plan, Inc. v. Philip Morris Inc., 621 N.W.2d 2, 12 (Minn. 2001); see also
St. Jude, 2006 WL 2943154, at *5 n.4. Polaris argues that the states’ consumer protection
statutes also differ on the requirements of the duty to disclose omissions, materiality, and
causation. Plaintiffs address these requirements in summary fashion, asserting that they
are not outcome‐determinative in the context of this case.
5 The injury claimed by Plaintiffs is economic, not physical.
6
Wexler v. Bros. Entmʹt Grp., Inc., 457 N.W.2d 218, 221 (Minn. Ct. App. 1990) (to prevail on
an MCFA claim, a plaintiff must prove that the defendant violated Minn. Stat. § 325F.69
and that the plaintiff “was injured in some way by the violation”). For an MCFA claim
based on an omission, a plaintiff must prove an omission of material fact, as well as
special circumstances that trigger a duty to disclose. Graphic Commcʹns Local 1B Health &
Welfare Fund A v. CVS Caremark Corp., 850 N.W.2d 682, 696 (Minn. 2014).6
a.
Causation under the MCFA
Under the MCFA, a plaintiff need not prove traditional common law reliance. Grp.
Health, 621 N.W.2d at 13. Rather, he or she must establish a causal nexus between the
conduct alleged to violate the MCFA and the damages claimed, which can be proved by
circumstantial evidence. Id. at 4, 14. In Group Health, the Minnesota Supreme Court noted
that an element of individual reliance is embedded in the causal nexus requirement
because a fraudulent or misleading statement cannot by its nature cause harm unless the
Special circumstances triggering a duty to disclose include: (a) one who speaks must say
enough to prevent his words from misleading the other party; (b) one who has special
knowledge of material facts to which the other party does not have access may have a
duty to disclose these facts to the other party; and (c) one who stands in a confidential or
fiduciary relation to the other party to a transaction must disclose material facts. Klein v.
First Edina Nat’l Bank, 293 Minn. 418, 421 (1972); see also Graphic Commcʹns, 850 N.W.2d at
695–98 (citing Klein, 293 Minn. at 421). The parties do not dispute that Polaris had a duty
to disclose the exhaust heat defect. See Johannessohn v. Polaris Indus., Inc., No. 16‐CV‐3348
(PJS/LIB), 2017 WL 2787609, at *4 (D. Minn. June 27, 2017) (“Polaris does not argue that it
lacks a duty to disclose, and Graphic Communications is therefore not relevant.”).
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statement “had some impact on” inducing the individual plaintiff’s actions. State v. Minn.
Sch. of Bus., Inc., 935 N.W.2d 124, 141 (Minn. 2019) (quoting Grp. Health, 621 N.W.2d at 14).
Polaris claims that a causal nexus under Minnesota law cannot be presumed, but
instead must be proved through evidence for each purchaser. It cites Buetow v. A.L.S.
Enterprises, Inc., for the proposition that “[w]hen the plaintiffs are consumers who have
proved no future harm . . . it is an error of law to assume that a false statement materially
deceived and injured the plaintiffs.” 650 F.3d 1178, 1183 (8th Cir. 2011) (emphasis in
original). The Court finds Buetow distinguishable because there, the plaintiffs sought only
injunctive relief without presenting any evidence of a risk of future harm. See id. at 1182,
1185 (explaining that Group Health “requir[es] a private plaintiff seeking injunctive relief
for violations of [MCFA] to prove harm or injury‐in‐fact”). Polaris also relies on the
Minnesota Court of Appeals’ decision in State v. Minnesota School of Business, Inc., which
held that particular students’ testimony that the defendant school’s conduct harmed
them could be not used to presume a causal nexus for non‐testifying students. 915
N.W.2d 903, 911–13 (Minn. Ct. App. 2018). But this holding was recently reversed in State
v. Minnesota School of Business, Inc., 935 N.W.2d 124 (Minn. 2019). In its opinion, the
Minnesota Supreme Court discussed Group Health, and reiterated that “direct proof of
reliance is not required to establish a causal nexus” under the MCFA. Id. at 137. “[W]here
a defendant’s misrepresentations were directed at and affected a broad group of
consumers, proof of direct individual reliance is not required to establish a causal nexus
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between MCFA violations, and the harm suffered by consumers.” Id. at 135 (citing Grp.
Health, 621 N.W.2d at 14–15). The court noted that while “individualized direct proof of
reliance is not necessary in an MCFA damages case,” “there are times when the
materiality and pervasiveness of consumer fraud is relevant to support a court’s finding
that a causal nexus exists between the fraud and the consumer’s decision to purchase the
product.” Id.
In Minnesota, a defendant has a chance to rebut evidence of causation presented
by the plaintiffs. In St. Jude II, the Eighth Circuit explained that “[w]hatever Group Health
means about the need for these plaintiffs to present direct evidence of individual reliance,
it does not eliminate the right of a defendant to present evidence negating a plaintiff’s
direct or circumstantial showing of causation and reliance.” 522 F.3d at 840. The St. Jude
II court found that the defendant had presented evidence concerning the reliance or non‐
reliance of individual physicians and patients on representations made by the defendant,
and held that where the defendant was able to present such evidence, the resolution of
the defendant’s potential liability to each plaintiff under the consumer fraud statutes
would be dominated by individual issues of causation and reliance. Id. at 839–40
(reversing certification of an MCFA class).7 Here, Polaris argues that it will introduce
The recent decision in State v. Minnesota School of Business does not address a defendant’s
ability to negate a plaintiffʹs direct or circumstantial showing of causation and reliance
under the MCFA.
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rebuttal evidence to disprove any connection between an individual plaintiff’s decision
to purchase and the alleged omission.
b.
Scienter under the MCFA
Polaris argues that the MCFA requires proof of scienter, noting that the defendant
must have acted “with the intent that others rely thereon.” Minn. Stat. § 325F.69 subd. 1.
Plaintiffs maintain, without elaboration, that scienter is not required. (Pls’ Tab C at 2 &
n.2.) To the extent the parties read “scienter” to mean intentional misrepresentations,
courts have held that the MCFA “does not require the making of an intentional
misrepresentation.” Freeman v. A & J Auto MN, Inc., No. A03‐153, 2003 WL 22136807, at
*4 (Minn. Ct. App. Sept. 16, 2003); see also Meyer v. Dygert, 156 F. Supp. 2d 1081, 1086 (D.
Minn. 2001) (same).8
In Curtis Lumber Co. v. Louisiana Pacific Corp., the Eighth Circuit considered several state
consumer protection laws, including Minnesota’s, in concluding that Arkansas’s
consumer protection statutes do not require proof of intent to deceive. 618 F.3d 762, 778–
79 (8th Cir. 2010). Like the MCFA, the terms of other state statutes “require[] only that a
violator intend for a purchaser to rely on his acts or omissions.” Id. at 778 (emphasis in
original) (citing Warren v. LeMay, 491 N.E.2d 464, 474 (Ill. App. Ct. 1986)). Despite this
statutory language, the court found that the consumer protection laws of other states,
including Minnesota, do not require intent to deceive. See id. at 778 & n.12 (citing MCFA
and McNamara v. Nomeco Bldg. Specialties, Inc., 26 F. Supp. 2d 1168, 1171 (D. Minn. 1998)
(“Simply stated, one making representations in the sale of consumer goods can be held
liable, even though he had no specific intent to falsely mislead the consumer.”)).
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2.
California
On behalf of Plaintiff Daniel Badilla, the Complaint alleges violations of two
California statutes: the Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200,
and the Consumer Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1770(a)(5), (7). A
plaintiff may base claims under the UCL and CLRA on an alleged omission, “[but] to be
actionable the omission must be contrary to a representation actually made by the
defendant, or an omission of a fact that the defendant was obliged to disclose.” Daugherty
v. Am. Honda Motor Co., 51 Cal. Rptr. 3d 118, 126 (Cal. Ct. App. 2006) (UCL and CLRA);
see also Daniel v. Ford Motor Co., 806 F.3d 1217, 1225 (9th Cir. 2015). The Court will review
the elements of the UCL and CLRA, then address the issues of reliance and scienter under
both statutes.
a.
The UCL
The UCL prohibits “any unlawful, unfair or fraudulent business act or practice.”
Cal. Bus. & Prof. Code § 17200. Because the UCL is “written in the disjunctive, it
establishes three varieties of unfair competition—acts or practices which are unlawful, or
unfair, or fraudulent.” Lippitt v. Raymond James Fin. Servs., Inc., 340 F.3d 1033, 1043 (9th
Cir. 2003), as amended (Sept. 22, 2003) (quoting Cel‐Tech Commc’ns., Inc. v. L.A. Cellular Tel
Co., 20 Cal. 4th 163, 180 (1999)). To prevail on a UCL claim, a plaintiff must prove that the
defendant engaged in a business practice proscribed under one of these three varieties of
unfair competition, and that the plaintiff was injured “as a result of” the business practice.
11
In re Gen. Motors LLC Ignition Switch Litig., No. 14‐MC‐2543 (JMF), 2016 WL 3920353, at *19
(S.D.N.Y. July 15, 2016). The Complaint alleges that Polaris engaged in all three varieties
of unfair competition, resulting in injury to California purchasers. (See SAC ¶ 107 (Badilla
and class members “suffered injury” as a “direct result” of Polaris’s “unlawful, unfair, or
fraudulent business acts and/or practices”).)9
The three varieties of unfair competition—also known as the prongs of the UCL—
have different thresholds. Under the “unlawful” prong, a “violation of another law is a
predicate for stating a cause of action.” Graham v. Bank of Am., N.A., 172 Cal. Rptr. 3d 218,
231 (Cal. Ct. App. 2014) (citation omitted); see also Lazar v. Hertz Corp., 82 Cal. Rptr. 3d
368, 375 (Cal. Ct. App. 1999) (find that under its “unlawful” prong, “the UCL borrows
violations of other laws . . . and makes those unlawful practices actionable under the
UCL.”). The Court presumes that the CLRA forms the basis of the “unlawful” prong of
Plaintiffs’ UCL claim. See Falco v. Nissan N. Am. Inc., No. CV1300686DDPMANX, 2016
WL 1327474, at *9 (C.D. Cal. Apr. 5, 2016) (“Plaintiffs can rely on an underlying CLRA
violation for their UCL claim.”).
In determining whether a business practice is “unfair” under the UCL, California
appellate courts have been split regarding the proper test to employ. See Linde, LLC v.
More specifically, the Complaint alleges Polaris engaged in “unlawful business acts
and/or practices by not informing consumers that [its] Sportsman ATV could cause risks
of product deformation and burns,” (SAC ¶ 102), “unfair business acts and practices” by
“seeking to profit from selling ATVs that possess a latent defect,” and “fraudulent
conduct” based on “fail[ing] to inform customers of exhaust heat defect.” (Id. ¶¶ 104, 105).
9
12
Valley Protein, LLC, No. 116CV00527DADEPG, 2019 WL 3035551, at *21 (E.D. Cal. July 11,
2019) (summarizing split among appellate courts); Zhang v. Superior Court, 304 P.3d 163,
174 n.9 (Cal. 2013) (noting that the standard for determining what business acts or
practices are “unfair” in consumer actions under the UCL is unsettled). Under one line of
cases, an unfair business practice occurs “when that practice offends an established public
policy or when the practice is immoral, unethical, oppressive, unscrupulous or
substantially injurious to consumers.” Graham, 172 Cal. Rptr. 3d at 233 (citation and
quotation marks omitted).
A second line of cases considers the factors for unfairness set forth in section 5 of
the Federal Trade Commission Act: “(1) the consumer injury must be substantial; (2) the
injury must not be outweighed by any countervailing benefits to consumers or
competition; and (3) it must be an injury that consumers themselves could not reasonably
have avoided.” Id. (citation and quotation marks omitted). A third line of cases holds that
“a plaintiff alleging an unfair business practice must show the defendant’s conduct is
tethered to an underlying constitutional, statutory or regulatory provision, or that it
threatens an incipient violation of an antitrust law, or violates the policy or spirit of an
antitrust law.” Id. at 233–234 (cleaned up). The Complaint alleges Polaris engaged in
“unfair” business practices by “seeking to profit from selling ATVs that possess a latent
13
defect.”10 (SAC ¶ 104.) Because the Complaint alleges these practices are “immoral,
unscrupulous, and offends public policy,” Plaintiffs appear to be proceeding under the
first standard for unfairness (and possibly the third).
Finally, a business practice is “fraudulent” under the UCL if “members of the
public are ‘likely to be deceived.’” Graham, 172 Cal. Rptr. 3d at 234 (quoting Buller v. Sutter
Health, 74 Cal. Rptr. 3d 47, 51 (Cal. Ct. App. 2008)).
b.
The CLRA
The CLRA prohibits “unfair methods of competition and unfair or deceptive acts
or practices undertaken by any person in a transaction intended to result or that results
in the sale or lease of goods or services to any consumer.” Cal. Civ. Code § 1770(a). The
CLRA defines “consumer” as “an individual who seeks or acquires, by purchase or lease,
any goods or services for personal, family, or household purposes.” Cal. Civ. Code
§ 1761(d). The Complaint alleges that through fraudulent omissions about the Sportsman
ATVs’ exhaust heat defect, Polaris violated CLRA §§ 1770(a)(5) and 1770(a)(7), which
prohibit representing that goods “have . . . characteristics . . . uses, benefits, or quantities
that they do not have,” id. § 1770(a)(5), and “are of a particular standard, quality, or
grade,” id. § 1770(a)(7). (SAC ¶¶ 115–16.) To prevail under a CLRA claim, a plaintiff must
show that the defendant’s conduct was deceptive and that the deception caused them
Plaintiffs have since abandoned their latent defect theory. Because the parties did not
address the three prongs of the UCL in their briefing, it is not clear whether Plaintiffs
have likewise abandoned their UCL unfairness claim.
10
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harm. Mass. Mut. Life Ins. Co. v. Superior Court, 119 Cal. Rptr. 2d 190, 197 (Cal. Ct. App.
2002) (citing Cal. Civ. Code § 1780(a)).
c.
Reliance under the UCL and CLRA
Reliance is a necessary element of a UCL claim. Backhaut v. Apple, Inc., 74 F. Supp.
3d 1033, 1047–48 (N.D. Cal. 2014) (requiring “actual reliance” for claims under all three
prongs of the UCL) (citing In re Tobacco II Cases, 207 P.3d 20, 39 (Cal. 2009) (fraud prong);
Durell v. Sharp Healthcare, 108 Cal. Rptr. 3d 682, 687–88 (Cal. Ct. App. 2010) (unlawful
prong); Kwikset Corp. v. Superior Court, 246 P.3d 877, 888 (Cal. 2011)). The CLRA also
requires proof of reliance. See Mullins v. Premier Nutrition Corp., No. 13‐CV‐01271‐RS, 2016
WL 3440600, at *3, *5 (N.D. Cal. June 20, 2016). To prove “reliance on an omission” under
both the UCL and CLRA,
a plaintiff must show that the defendant’s nondisclosure was an immediate
cause of the plaintiffʹs injury‐producing conduct. A plaintiff need not prove
that the omission was the only cause or even the predominant cause, only
that it was a substantial factor in his decision. A plaintiff may do so by
simply proving “that, had the omitted information been disclosed, one
would have been aware of it and behaved differently.”
Daniel, 806 F.3d at 1225 (citation omitted) (quoting Mirkin v. Wasserman, 858 P.2d 568, 574
(Cal. 1993)). “That one would have behaved differently can be presumed, or at least
inferred, when the omission is material . . . . An omission is material if a reasonable
consumer ‘would attach importance to its existence or nonexistence in determining his
choice of action in the transaction in question.’” Id. (quoting Tobacco II, 207 P.3d at 39).
15
In the context of a class action, “California . . . requires named class plaintiffs to
demonstrate reliance.” Mazza v. Am. Honda Motor Co., 666 F.3d 581, 591 (9th Cir. 2012)
(emphasis added) (considering UCL and CLRA claims). Under the CLRA, “named and
unnamed plaintiffs must prove the alleged deceptive conduct caused that damage.”
Mullins, 2016 WL 3440600, at *3 (citing In re Steroid Hormone Prod. Cases, 104 Cal. Rptr. 3d
329, 337–38 (Cal. Ct. App. 2010)). “Causation, and an inference of reliance, for the class in
a CLRA claim can be shown as to an entire class by proving materiality.” Falco, 2016 WL
1327474, at *7 (citation and quotation marks omitted); see Edwards v. Ford Motor Co., 603
F. App’x 538, 541 (9th Cir. 2015) (finding that defendant’s failure to disclose information
that would have been material to a reasonable person purchasing defendant’s product
gave rise to a rebuttable inference of reliance as to the class). Courts applying these
statutes have noted that in some cases, “it is fair to assume that all of the purchasers . . .
read some marketing materials regarding the product, [so it is] sufficient to conclude that
[d]efendants’ conduct in omitting information was likely to deceive members of the
public.” McVicar v. Goodman Glob., Inc., No. SACV131223DOCRNBX, 2015 WL 4945730,
at *11 (C.D. Cal. Aug. 20, 2015) (cleaned up). But class certification of UCL and CLRA
claims is inappropriate where the plaintiff “cannot show that members of the class were
exposed to the same misrepresentations or any omissions, for example, . . . where the
misrepresentations or nondisclosures were included (or would have been included) on
the product itself.” Id.; see also Mazza, 666 F.3d at 596 (“A presumption of reliance does
16
not arise when class members were exposed to quite disparate information from various
representatives of the defendant.”) (citation and quotation marks omitted).
Courts applying the CLRA and UCL have also found that the fact that “a
defendant may be able to defeat the showing of causation as to a few individual class
members does not transform the common question into a multitude of individual ones.”
Mass. Mut. Life Ins. Co., 119 Cal. Rptr. 2d at 197. Establishing lack of causation as to a
handful of class members “does not necessarily render the issue of causation an
individual, rather than a common, one.” In re Vioxx Class Cases, 103 Cal. Rptr. 83, 95 (Cal.
Ct. App. 2009). “Plaintiffs may satisfy their burden of showing causation as to each by
showing materiality as to all . . . . [I]f the issue of materiality or reliance is a matter that
would vary from consumer to consumer, the issue is not subject to common proof, and
the action is properly not certified as a class action.” Id. (cleaned up).
d.
Scienter under the UCL and CLRA
California courts applying the UCL and the CLRA have found that neither statute
imposes a scienter requirement. See, e.g., Mazza, 666 F.3d at 591 (stating the UCL and
CLRA “have no scienter requirement”); Cortez v. Purolator Air Filtration Prods. Co., 999
P.2d 706, 717 (Cal. 2000) (“[A] plaintiff need not show that a UCL defendant intended to
injure anyone through its unfair or unlawful conduct.”).11 But Plaintiffs must establish a
At least one court has found that one of the unfair business practice claims under the
CLRA has a scienter requirement. Mullins, 2016 WL 3440600, at *6 (citing Cal. Civ. Code
11
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defendant’s knowledge of an undisclosed defect at the time of sale under the UCL and
CLRA. Wilson v. Hewlett‐Packard Co., 668 F.3d 1136, 1145–46 (9th Cir. 2012); id. at 1145 n.5
(under the UCL, the “failure to disclose a . . . defect of which [a defendant] is not aware,
does not constitute an unfair or fraudulent practice”); Williams v. Yamaha Motor Co. Ltd.,
851 F.3d 1015, 1025 (9th Cir. 2017) (under UCL and CLRA, “a party must allege . . . that
the manufacturer knew of the defect at the time a sale was made.”) (citation omitted).
3.
Florida
The Complaint alleges that Polaris violated Florida’s Deceptive and Unfair Trade
Practices Act (“FDUTPA”), Fla. Stat. § 501.201 et seq., by omitting material information
about the Sportsman ATVs, thus injuring Plaintiff James Kelley and other Florida
purchasers. (SAC ¶¶ 130–32.) FDUTPA provides for a civil cause of action for “[u]nfair
methods of competition, unconscionable acts or practices, and unfair or deceptive acts or
practices in the conduct of any trade or commerce.” Fla. Stat. § 501.204(1). “A consumer
claim for damages under FDUTPA has three elements: (1) a deceptive act or unfair
practice; (2) causation; and (3) actual damages.” City First Mortg. Corp. v. Barton, 988
So. 2d 82, 86 (Fla. Dist. Ct. App. 2008) (citation omitted); see Fla. Stat. § 501.211(2) (“In any
actions brought by a person who has suffered a loss as a result of a violation of this part,
such person may recover actual damages”).
§ 1770(a)(9) (prohibiting “[a]dvertising goods or services with intent not to sell them as
advertised.”)).
18
To satisfy the first element of a FDUTPA claim, a plaintiff “must show that the
alleged practice was likely to deceive a consumer acting reasonably in the same
circumstances.” Carriuolo v. Gen. Motors Co., 823 F.3d 977, 983–84 (11th Cir. 2016) (citation
and quotation marks omitted); see Millenium Commc’ns & Fulfillment Inc. v. Office of the
Attorney Gen, 761 So. 2d 1256, 1263 (Fla. Dist. Ct. App. 2000) (quoting Sw. Sunsites, Inc. v.
Fed. Trade. Comm’n, 785 F.2d 1431, 1434–35) (“[D]eception [occurs] if there is a
representation, omission, or practice that is likely to mislead the consumer acting
reasonably in the circumstances, to the consumer’s detriment.”). This element “is only
satisfied by evaluating a reasonable consumer in the same circumstances as plaintiff.”
Maor v. Dollar Thrifty Auto. Grp., Inc., No. 15‐22959‐CIV, 2018 WL 4698512, at *6 (S.D. Fla.
Sept. 30, 2018) (citation omitted). “The modification of ‘acting reasonably’ by ‘in the same
circumstances’ indicates a hybrid standard that may be objectively established as to
mindset but subjectively established as to context.” Id. (quoting Deere Constr. v. Cemex
Constr. Materials Fla., LLC, No. 15‐24375‐CIV, 2016 WL 8542540, *3 (S.D. Fla. Dec. 1, 2016));
Goldemberg v. Johnson & Johnson Consumer Cos., Inc., 317 F.R.D. 374, 390 (S.D.N.Y. 2016))
(describing FDUTPA’s “hybrid standard” as being “objectively established as to mindset
but subjectively established as to context.”).
a.
Reliance under the FDUTPA
A FDUTPA plaintiff “need not show actual reliance on the representation or
omission at issue.” Davis v. Powertel, Inc., 776 So. 2d 971, 973 (Fla. Dist. Ct. App. 2000); see
19
also Maor, 2018 WL 4698512, at *6 (noting “proof of actual reliance is unnecessary” under
the FDUPTA). A “demonstration of reliance by an individual consumer is not necessary
in the context of FDUTPA.” Turner Greenberg Assocs., Inc. v. Pathman, 885 So. 2d 1004, 1009
(Fla. Dist. Ct. App. 2004); see, e.g., Davis, 776 So. 2d at 974 (holding class members
proceeding under FDUTPA “need not prove individual reliance on the alleged
representation”). Rather, “a plaintiff must simply prove that an objectively reasonable
person [in the same circumstances as the plaintiff] would have been deceived.” Lombardo
v. Johnson & Johnson Consumer Cos., 124 F. Supp. 3d 1283, 1290 (S.D. Fla. 2015) (quoting
Fitzpatrick v. Gen. Mills, Inc., 635 F.3d 1279, 1283 (11th Cir. 2011)).
b.
Scienter under the FDUTPA
While neither the parties nor the Court were able to locate case law addressing
FDUTPA and scienter per se, courts have found that a plaintiff does not need to prove
“the seller’s intent to deceive” under FDUTPA. See, e.g., In re Schurtenberger, No. 12‐17246‐
BKC‐AJC, 2014 WL 92828, at *5 (Bankr. S.D. Fla. Jan. 9, 2014) (citing Davis, 776 So. 2d at
974). Some courts have held that FDUTPA does not require a defendant “to have
subjective knowledge of the alleged defects.” Gavron v. Weather Shield Mfg., Inc., 819 F.
Supp. 2d 1297, 1302 (S.D. Fla. 2011); see also Motorola Mobility, Inc. v. CT Miami, LLC, No.
11‐23753‐CV, 2012 WL 13014338, at *3 (S.D. Fla. May 11, 2012), report and recommendation
adopted, No. 11‐23753‐CIV, 2012 WL 13014339 (S.D. Fla. June 13, 2012) (“FDUTPA focuses
20
on whether an act is deceptive, not whether a defendant knew that the allegedly violative
conduct was occurring.”).
4.
Missouri
The Complaint alleges that Polaris failed to inform consumers of the Sportsman
ATVs’ exhaust heat defect, thereby violating Missouri’s Merchandising Practices Act
(“MMPA”), Mo. Rev. Stat. § 407.010, et seq., and injuring Plaintiff Kevin Wonders and
other Missouri purchasers. (SAC Count VI.) The Complaint alleges that Wonders brings
this claim individually and on behalf of consumers who purchased a Sportsman ATV
“primarily for personal, family or household purposes.”12 (SAC ¶ 145.) The MMPA
prohibits any person from engaging in “any deception, fraud, false pretense, false
promise, misrepresentation, unfair practice or the concealment, suppression, or omission
of any material fact in connection with the sale or advertisement of any merchandise in
trade or commerce . . . in or from the state of Missouri.” Mo. Rev. Stat. § 407.020. To
prevail on an MMPA claim, a plaintiff must prove he or she: (1) purchased merchandise
from the defendant; (2) for personal, family or household purposes; and (3) suffered an
ascertainable loss of money or property; (4) as a result of an act declared unlawful under
the MMPA. Murphy v. Stonewall Kitchen, LLC, 503 S.W.3d 308, 311 (Mo. Ct. App. 2016); see
Mo. Rev. Stat. § 407.025. “[T]he plain language of the MMPA demands a causal
connection between the ascertainable loss and the unfair or deceptive merchandising
12
Plaintiffs do not so limit any of their other state consumer protection claims.
21
practice.” Owen v. Gen. Motors Corp., 533 F.3d 913, 922 (8th Cir. 2008) (citing Mo. Rev. Stat.
§ 407.025.1). Under the MMPA, a “material fact” is “any fact which a reasonable
consumer would likely consider to be important in making a purchasing decision.” Hess
v. Chase Manhattan Bank, USA, N.A., 220 S.W.3d 758, 773 (Mo. 2007) (citing 15 C.S.R. 60–
9.010(1)(C)).
a.
Reliance under the MMPA
The parties agree that a consumer’s reliance on an unlawful practice is not required
under the MMPA. Hess, 220 S.W.3d at 774; Plubell v. Merck & Co., 289 S.W.3d 707, 713 (Mo.
Ct. App. 2009) (The MMPA “eliminat[ed] the need to prove an intent to defraud or
reliance.”).
b.
Scienter under the MMPA
A claim for “omission of a material fact under the MMPA does have a scienter
requirement: it is a failure to disclose material facts that are ‘known to him/her, or upon
reasonable inquiry would be known to him/her.’” Plubell, 289 S.W.3d at 714 n.4 (quoting
15 C.S.R. 60–9.110); Under the MMPA, the plaintiff must show (1) the defendant “was
aware of the alleged defect,” (2) “when [defendant] became aware,” and (3) “that
[defendant] purposefully omitted this fact in representations to each individual class
member.” Hope v. Nissan N. Am., Inc., 353 S.W.3d 68, 84 (Mo. Ct. App. 2011).
22
5.
New York
The Complaint alleges that Polaris violated New York’s General Business Law
(“GBL”), N.Y. Gen. Bus. § 349, by failing to disclose the Sportsman ATVs’ exhaust heat
defect, thereby injuring Plaintiff William Bates and other New York purchasers. (SAC
Count VII.) GBL § 349 prohibits “[d]eceptive acts or practices in the conduct of any
business, trade or commerce or in the furnishing of any service in [New York].” GBL
§ 349(a). To prove a claim under GBL § 349(a), a plaintiff must show that (1) “the
challenged act or practice was consumer‐oriented,”(2) “it was misleading in a material
way,” and (3) “the plaintiff suffered injury as a result of the deceptive act.” Stutman v.
Chem. Bank, 731 N.E.2d 608, 611 (N.Y. 2000). Whether a representation or an omission, the
deceptive practice must be “likely to mislead a reasonable consumer acting reasonably
under the circumstances.” Id. (citing Oswego Laborersʹ Local 214 Pension Fund v. Marine
Midland Bank, N.A., 647 N.E.2d 741, 745 (N.Y. 1995)). To satisfy the GBL’s causation
requirement, “nothing more is required than that a plaintiff suffer a loss because of
defendant’s deceptive act.” Goldemberg, 317 F.R.D. at 392 (cleaned up) (citing, among
others, Stutman, 95 N.Y.2d at 30). A plaintiff seeking compensatory damages must show
that the material deceptive practice caused “actual, although not necessarily pecuniary,
harm.” Catalano v. BMW of N. Am., LLC, 167 F. Supp. 3d 540, 562 (S.D.N.Y. 2016) (citing
Oswego Laborersʹ Local 214 Pension Fund, 647 N.E.2d at 745).
23
a.
Reliance under the GBL
The parties agree that individual reliance is not required under GBL § 349. Oswego
Laborersʹ Local 214 Pension Fund, 647 N.E.2d at 745; Koch v. Acker, Merrall & Condit Co., 967
N.E.2d 675, 676 (N.Y. 2012) (“Justifiable reliance by the plaintiff is not an element” of GBL
§ 349); Small v. Lorillard Tobacco Co., 720 N.E.2d 892, 897 (N.Y. 1999) (“Intent to defraud
and justifiable reliance by the plaintiff are not elements of the statutory claim.”).
b.
Scienter under the GBL
The parties also agree that scienter is not required under GBL § 349. Oswego
Laborersʹ Local 214 Pension Fund, 647 N.E.2d at 745 (“Although it is not necessary under
the statute that a plaintiff establish the defendant’s intent to defraud or mislead, proof of
scienter permits the court to treble the damages up to $1,000.”).
6.
North Carolina
The Complaint alleges that Polaris violated North Carolina’s Unfair and Deceptive
Trade Practices Act (“NCUDTPA”), N.C. Gen. Stat. § 75‐1.1(a), by not disclosing the
defect in the Sportsman ATVs to customers, thereby injuring Plaintiff James Pinion and
other North Carolina purchasers. (SAC ¶¶ 171–74.) Section 75‐1.1 provides in part that
“unfair or deceptive acts or practices in or affecting commerce” are unlawful. N.C. Gen.
Stat. § 75‐1.1(a). “In order to establish a prima facie claim for unfair trade practices, a
plaintiff must show: (1) [the] defendant committed an unfair or deceptive act or practice,
(2) the action in question was in or affecting commerce, and (3) the act proximately caused
24
injury to the plaintiff.” Bumpers v. Cmty. Bank of N. Va., 747 S.E.2d 220, 226 (N.C. 2013)
(brackets omitted) (quoting Dalton v. Camp, 548 S.E.2d 704, 711 (N.C. 2001)). “The
determination of whether an act or practice is an unfair or deceptive practice that violates
[NCUDTPA] is a question of law for the court.” Gray v. N.C. Ins. Underwriting Assʹn, 529
S.E.2d 676, 681 (N.C. 2000).
Courts applying the NCUDTPA have held that “[in] order for silence or an
omission by the defendants to be an actionable fraud, it must relate to a material matter
known by the defendants which they had a legal duty to communicate to plaintiff.”
Resnick v. Hyundai Motor Am., Inc., No. CV1600593BROPJWX, 2017 WL 6549931, at *18
(C.D. Cal. Aug. 21, 2017) (emphasis omitted) (citing Breeden v. Richmond Cmty. Coll., 171
F.R.D. 189, 196 (M.D.N.C. 1997) (finding plaintiff failed to state NCUDTPA claim based
on defendants’ lack of knowledge)).
a.
Reliance under the NCUDTPA
North Carolina courts have held that a plaintiff must prove actual and justifiable
reliance for a NCUDPTA claim based on a misrepresentation. See, e.g., Bumpers, 747 S.E.2d
at 226. Courts have applied this rule to omissions as well. See, e.g., Arnesen v. Rivers Edge
Golf Club & Plantation, Inc., 781 S.E.2d 1, 7 (N.C. 2015) (affirming dismissal of NC § 75‐1.1
claim because “plaintiffs have failed to sufficiently allege justifiable reliance on any
omission” and that any action “was the proximate cause of their harm”); W. Franklin Pres.
Ltd. P’ship v. Nurtur N.C., LLC, No. 14‐CV‐00266, 2016 WL 3039832, at *4 (M.D.N.C. May
25
27, 2016) (explaining that a NCUDTPA claim would fail for lack of proximate cause if the
jury concluded that either (1) the consumer “did not rely on” the concealment of material
fact or a material false statement, or (2) “that its reliance was unreasonable”). This Court
agrees that “reliance on an omission is required to state [a NC] UDTPA claim.” Baranco
v. Ford Motor Co., 294 F. Supp. 3d 950, 970 (N.D. Cal. 2018) (citing Sain v. Adams Auto Grp.,
Inc., 781 S.E.2d 655, 659 (N.C. Ct. App. 2016)).
Plaintiffs note that even if reliance is required under the NCUDTPA, reliance can
be proved by circumstantial evidence that consumers found a misrepresentation material
and relied upon it. (ECF No. 335 (“Pls’ Class Cert. Br.”) at 27 n.109 (citing Rikos v. Procter
& Gamble Co., 799 F.3d 497, 517–18 (6th Cir. 2015) (affirming class certification of
NCDUTPA claim where “classwide proof—that the alleged misrepresentation is material
and was made in a generally uniform manner to all class members—would also suffice
in North Carolina to show actual reliance”))); see, e.g., In re TD Bank, N.A. Debit Card
Overdraft Fee Litig., 325 F.R.D. 136, 162 (D.S.C. 2018) (finding “sufficient evidence of the
uniformity and materiality of the putative misrepresentations and omissions has been
presented to presume class‐wide reliance” under NCUDTPA).
b.
Scienter under the NCUDTPA
The parties agree that scienter is not required under the NCDUTPA. See Marshall
v. Miller, 276 S.E.2d 397 (N.C. 1981) (“If unfairness and deception are gauged by
consideration of the effect of the practice on the marketplace, it follows that the intent of
26
the actor is irrelevant.”). While “it is not necessary for the plaintiff to show fraud, bad
faith, deliberate or knowing acts of deception, or actual deception, plaintiff must,
nevertheless, show that the acts complained of possessed the tendency or capacity to
mislead, or created the likelihood of deception.” Chastain v. Wall, 337 S.E.2d 150, 153 (N.C.
Ct. App. 1985) (citation omitted).
7.
Outcome‐determinative conflicts exist
Based on the assessment of consumer protection statutes above, the Court agrees
that consumer protection laws “vary considerably,” and that “different states have
material variances between their consumer protection laws and Minnesota’s.” St. Jude I,
425 F.3d at 1120. For example, outcome‐determinative conflicts exist between the MCFA
and the three prongs of California’s UCL, which have different thresholds from the
MCFA. The MCFA does not require proof of individual reliance, but it does require a
causal nexus between the violative conduct and damages, such that a defendant’s
conduct had some impact on inducing the individual plaintiff’s actions. In contrast, the
UCL and CLRA require reliance on an omission, which may be proved by showing that
“had the omitted information been disclosed, one would have been aware of it and
behaved differently.” Daniel, 806 F.3d at 1225.
Courts applying the MCFA and the California statutes also differ in their
consideration of proof of non‐reliance in class actions. Courts applying the MCFA have
concluded that where a defendant can present evidence concerning the non‐reliance of
27
individual plaintiffs, the resolution of the defendant’s potential liability to each plaintiff
will be dominated by individual issues of causation and reliance. See, e.g., St. Jude II, 522
F.3d at 839–40. In contrast, courts applying the UCL and CLRA have held that such
evidence would not preclude class certification. Mass. Mut. Life Ins., 119 Cal. Rptr. 2d at
197. This difference is outcome‐determinative here because Polaris has offered evidence
raising individual issues of causation and reliance. (See, e.g., ECF No. 336‐39 (“Pinion
Dep.”) at 85:17–19 (Pinion purchased a second Sportsman ATV for his wife after his first
melted); ECF No. 359‐2 (“Johannessohn Dep.”) at 207:19–22, 209:1–9 (Johannessohn
requested and received a new Sportsman ATV after filing this lawsuit)).
Another conflict exists as to the scope of the laws. Unlike the MCFA, the CLRA
and Missouri’s MMPA are limited to goods or services purchased for “personal, family,
or household purposes.” See Cal Civ. Code § 1761(d), Murphy, 503 S.W.3d at 311. Polaris
offers evidence that a portion of Sportsman ATV purchasers use them for farming,
ranching, and other business purposes. (See e.g., ECF No. 367 (Pixton Decl.) Ex. 8,
(“Flambures Decl.”) ¶ 11 (dealership general manager stating that approximately 30
percent of his buyers purchase for commercial use).) Ignoring this element would allow
some claims under the MCFA which would fail under the CLRA and MMPA.
As to the remaining states, outcome‐determinative differences emerge as well. The
MCFA and Florida’s FDUPTA have outcome‐determinative differences because of
FDUPTA’s “hybrid standard” for determining deceptive acts or unfair practices. See
28
Maor, 2018 WL 4698512, at *6 (explaining the hybrid standard “may be objectively
established as to mindset but subjectively established as to context” (citation omitted)).
The MCFA and New York’s GBL have outcome‐determinative differences because unlike
the MCFA’s causal nexus standard, the GBL requires nothing more than that a plaintiff
suffer a loss because of defendants’ deceptive conduct. Finally, an outcome‐
determinative difference exists between the MCFA and North Carolina’s NCDUPTA
because the NCDUPTA requires actual and justifiable reliance.
Plaintiffs argue that the consumer protection statutes of Minnesota, California,
Florida, Missouri, and New York (1) do not conflict because none of them require proof
of individual reliance, and (2) permit consumers to prove injury and measure of damages
by showing consumers paid a price premium artificially inflated by the seller’s deceptive
conduct. (ECF No. 391 (“Pls’ Class Cert. Reply Br.”) at 25–26.) On this point, the cases
cited by Plaintiffs are unhelpful in determining the choice of law issue, as they do not
consider whether conflicts exist among state laws.13
See, e.g., Gold v. Lumber Liquidators, Inc., 323 F.R.D. 280, 290–91 (N.D. Cal. 2017) (not
addressing conflicts of law; granting certification of multiple classes based on various
consumer protection statutes, including a California class based on the UCL and CLRA,
a class for violations of FDUTPA, and a class for violations of MCFA); In re Kind LLC
“Healthy & All Natural” Litig., 209 F. Supp. 3d 689, 697 & n.4 (S.D.N.Y. 2016) (providing
little analysis of states’ statutes, and not determining which, if any, state’s consumer
protection law would apply to a nationwide class.); Goldemberg, 317 F.R.D. at 386 (not
addressing conflicts of law where plaintiffs moved to certify three classes based on
products purchased in California, Florida, and New York); Khoday v. Symantec Corp., No.
CIV. 11‐180 JRT/TNL, 2014 WL 1281600, *20 n.9 (D. Minn. Mar. 13, 2014) (explaining that
13
29
B.
Constitutionality of Extraterritorial Application
Having determined that outcome‐determinative conflicts exist between the state
consumer protection statutes, the Court considers the constitutionality of applying the
MCFA extraterritorially. The inquiry is into the contacts with Minnesota arising out of
the nonresident‐parties’ claims. St. Jude I, 425 F.3d at 1120. And the analysis begins with
a presumption: “In general, there is a presumption against the extra‐territorial
application of a state’s statutes.” Arnold v. Cargill, Inc., No. CIV. 012086 (DWF/AJB), 2002
WL 1576141, at *2 (D. Minn. July 15, 2002) (citing In re Pratt, 219 Minn. 414, 18 N.W.2d
147, 153 (Minn. 1945)). Polaris argues that the MCFA cannot be applied extraterritorially
because the Minnesota legislature did not specify that it is intended to apply outside
Minnesota. See In re Syngenta AG MIR 162 Corn Litig., 131 F. Supp. 3d 1177, 1232–33 (D.
Kan. 2015) (concluding MCFA “may be applied in this case only to conduct taking place
in Minnesota” where plaintiffs did not point to any statutory language allowing for its
extraterritorial application).
Plaintiffs do not provide any statutory language indicating that the MCFA applies
extraterritorially. Rather, they argue simply that it has been done before; that is, that
courts have applied the MCFA to the claims of parties from other forum states. See, e.g.,
In re St. Jude, 2006 WL 2943154, rev’d on other grounds, St. Jude II, 522 F.3d 836; Mooney v.
the court did not undertake a choice of law analysis because it found that choice‐of‐law
clauses governed the defendants’ contracts with the plaintiffs).
30
Allianz Life Ins. Co. of N. Am., 244 F.R.D. 531, 534–35 (D. Minn. 2007). None of the cases
cited by Plaintiffs holds that the Minnesota legislature intended the MCFA to apply
extraterritorially. Given the presumption against the extraterritorial application of
Minnesota statutes and the lack of any statutory language allowing such an application,
the Court concludes that the MCFA may be applied only to conduct that occurred in
Minnesota. See Syngenta, 131 F. Supp. 3d at 1233.
Even if the Minnesota legislature generally intended the MCFA to apply
extraterritorially, it does not follow that doing so would be constitutionally permissible
in this particular case. See, e.g., Arnold, 2002 WL 1576141, at *4 (noting that even if the
court found the MHRA provided for extraterritorial application, “the Court does not find,
under a due process analysis, sufficient contacts with the state of Minnesota” with respect
to nonresident plaintiffs). “[F]or a State’s substantive law to be selected in a
constitutionally permissible manner, that State must have a significant contact or
significant aggregation of contacts, creating state interests, such that choice of its law is
neither arbitrary nor fundamentally unfair.” Phillips Petroleum Co. v. Shutts, 472 U.S. 797,
818 (1985); Jepson, 513 N.W.2d at 469; see also Shutts, 472 U.S. at 821–22 (holding a state
must have a significant contact or significant aggregation of contacts to the claims
asserted by each member of the plaintiff class to apply that state’s law). When considering
fairness in this context, “an important element is the expectation of the parties.” Shutts,
472 U.S. at 822.
31
Plaintiffs argue that Minnesota has significant contacts with Polaris and with the
facts giving rise to their claims because: (1) Polaris designed, manufactured, and tested
the defective vehicles at issue in Minnesota; (2) Polaris received consumer complaints
and warranty claims in Minnesota; and (3) Polaris is headquartered in Minnesota. See
Mooney, 244 F.R.D. at 535 (“As a Minnesota corporation, Allianz can not claim surprise
by the application of Minnesota law to conduct emanating from Minnesota.”).
The location of a defendant’s headquarters, by itself, is not enough to apply the
law of that state. In St. Jude I, the Eighth Circuit reversed the district court’s decision to
apply Minnesota law to claims of nonresident plaintiffs. There, even though the
defendant had significant contacts with Minnesota, including being headquartered there,
and even though much of the conduct relevant to the claims occurred or emanated from
Minnesota, the Eighth Circuit remanded because the district court failed to conduct a
thorough conflicts‐of‐law analysis with respect to each plaintiff. 425 F.3d at 1119–21. So
even combined with the fact that Polaris’s headquarters are in Minnesota, the fact that
some relevant conduct occurred or emanated from Minnesota may not be sufficient to
apply Minnesota law. See id.; accord Arnold, 2002 WL 1576141, at *4 (holding that the fact
that defendant’s headquarters were located in and its contested policies emanated from
Minnesota was “insufficient to justify extraterritorial application, particularly when there
is no evidence . . . [defendant] could not otherwise be held accountable in the courts of
other states where the named plaintiffs reside and/or work.”).
32
That Polaris designed, manufactured, tested, and received complaints about
Sportsman ATVs in Minnesota certainly supports Polaris’s expectation that the MFCA
would apply. But this evidence does not support the assertion that nonresident Plaintiffs
expected Minnesota law to apply. Plaintiffs claim that consumers expected Minnesota
law to apply based on Polaris’s Minnesota address and phone number in the owner’s
manual. The Court finds this argument unpersuasive, particularly given that the sales
contracts of some Plaintiffs reference the laws of the states in which they purchased their
ATVs. (See, e.g., ECF No. 359‐7 (Bates’s contract referencing “the law of the State of New
York”); ECF No. 359‐9 (Kelley’s contract referencing Florida law); ECF No. 359‐12
(Pinion’s contract “[North Carolina] law does not provide for a ‘cooling off’ or other
cancellation period for this sale”); ECF No. 359‐5 (Badilla’s contract with similar
disclosure under California law)). Indeed, Plaintiff Badilla admitted that he did not know
the location of Polaris’s headquarters when he bought his ATV. See St. Jude I, 425 F.3d at
1120 (reversing choice of law decision where there was “no indication out‐of‐state parties
‘had any idea that Minnesota law could control’ potential claims when they received
their” products). Plaintiffs purchased their ATVs from dealers in their state of residence,
not from Polaris in Minnesota. See Rapp v. Green Tree Servicing, LLC, 302 F.R.D. 505, 517
(D. Minn. 2014) (distinguishing Mooney because there, plaintiffs “purchased a financial
product directly from the defendant” located in Minnesota).
33
Given the dearth of evidence that the parties expected Minnesota law would apply
to the nonresident Plaintiffs’ claims against Polaris, Minnesota does not have contacts
sufficient to create a state interest, and it would be arbitrary and fundamentally unfair to
apply the MCFA to such claims. The Court therefore concludes that extraterritorial
application of the MCFA is not constitutionally permissible in this case.
C.
Five‐Factor Test
Even if applying the MCFA extraterritorially were constitutionally permissible,
the choice‐of‐law factors buttress the Court’s determination not to apply the MCFA to the
nonresident Plaintiffs’ claims. Those choice‐influencing factors are: “(1) predictability of
result; (2) maintenance of interstate and international order; (3) simplification of the
judicial task; (4) advancement of the forumʹs governmental interest; and (5) application
of the better rule of law.” Jepson, 513 N.W.2d at 470. These factors were intended to
“prompt courts to carefully and critically consider each new fact situation and explain in
a straight‐forward manner their choice of law.” Id.
1.
Predictability of Result
The predictability‐of result‐factor “represents the ideal that litigation on the same
facts, regardless of where the litigation occurs, should be decided the same to avoid
forum shopping.” Nodak Mut. Ins. Co. v. Am. Family Mut. Ins. Co., 604 N.W.2d 91, 94
(Minn. 2000). It addresses whether the choice of law was predictable before the time of
the transaction or event giving rise to the claim. Rapp, 302 F.R.D. at 517. This factor applies
34
primarily to consensual transactions where parties “desire advance notice of which state
law will govern in future disputes.” Nodak Mut. Ins. Co., 604 N.W.2d at 94. In most tort
cases, predictability of result is of little relevance. Nesladek v. Ford Motor Co., 46 F.3d 734,
738 (8th Cir. 1995). Consumer protection claims are not based entirely in either tort or
contract law. In re St. Jude, 2006 WL 2943154, at *5.
Plaintiffs argue that this factor favors them because Polaris is headquartered in
Minnesota, where it designed, engineered, manufactured and tested the ATVs, received
consumer complaints, and allegedly decided to conceal the heat exhaust defect from
consumers. But as noted above, Plaintiffs purchased their ATVs from dealers in their
states of residence (not directly from Polaris), and most of the sales contracts with
Plaintiffs provide that the laws of their states of residence apply. These facts indicate that,
before the time of the transaction, the parties would predict that the law of the state of
each plaintiff’s residence would apply.
2.
Maintenance of Interstate Order
The maintenance‐of‐interstate‐order factor is concerned with whether applying
Minnesota law would manifest disrespect for other state sovereignty or impede the
interstate movement of people and goods. In re Baycol Prods. Litig., 218 F.R.D. 197, 207 (D.
Minn. 2003). “An aspect of this concern is to maintain a coherent legal system in which
the courts of different states strive to sustain, rather than subvert, each other’s interests
in areas where their own interests are less strong.” Nodak Mut. Ins. Co., 604 N.W.2d at 95.
35
By considering whether application of Minnesota law would negatively affect the
maintenance of interstate order, “the opportunities for forum shopping may be kept
within reasonable bounds.” Jepson, 513 N.W.2d at 471.
In Hughes v. Wal‐Mart Stores, Inc., the Eighth Circuit explained that where a state
“has little or no contact with a case and nearly all of the significant contacts are with a
sister state,” the factor suggests that a state should not apply its own law to the dispute.
250 F.3d 618, 620–21 (8th Cir. 2001) (citation and quotation marks omitted). In that case,
a Louisiana resident had purchased the product at issue at a Wal‐Mart in Louisiana, the
injury occurred in Louisiana, and the injured party was a Louisiana resident. Id. at 621.
The only contact Arkansas had to the litigation was that the defendant had its principal
place of business in the state. Id. The court found that this contact was insufficient to apply
Arkansas law. Id.; cf. Sportsman for Sportsman v. Cal. Overland, Ltd., No. CV 17‐1064
(DWF/KMM), 2018 WL 1865930, at *5 (D. Minn. Apr. 18, 2018) (concluding that
defendant’s “substantial business operations in Minnesota are the more relevant
contacts” where “relevant conduct by [defendant] that most likely occurred within this
state is central to Plaintiff’s case”).
Plaintiffs maintain that Minnesota has a stronger interest in a case that involves a
remedial statute like the MCFA than one involving common law claims. In support, they
cite Land Oʹ Lakes, Inc. v. Employers Mutual Liability Insurance Company of Wisconsin. 846 F.
Supp. 2d 1007, 1040 (D. Minn. 2012). That case involved insurance claim issues, finding
36
that Minnesota had a strong interest in applying its law to contribution claims against
insurers who write policies in Minnesota. Id. at 1040. The court applied the law of where
the insured was located, i.e., Minnesota, to the contribution claims, rather than the state
law that generally governed the insurer’s policies. Id. No party had argued for the law of
the insurer’s headquarters.
Here, Plaintiffs’ claims are based on Polaris’s failure to disclose the alleged heat
exhaust defect in the Sportsman ATVs. The parties agree that Plaintiffs’ alleged injuries
occurred where each plaintiff resides or purchased a Sportsman ATV. See In re
Bridgestone/Firestone, Inc., 288 F.3d 1012, 1017 (7th Cir. 2002) (“If recovery for . . . consumer
fraud is possible, the injury is decidedly where the consumer is located, rather than where
the seller maintains its headquarters.”); cf. Restatement (Second) of Conflict of Laws
§ 145, subd. 2, cmts. (e), (f) (1971) (noting the location of the injury is “less significant” in
the case of fraudulent misrepresentations). As revealed in the Court’s analysis above,
states have adopted different regulatory regimes to protect consumers within their
borders. Applying the MCFA to the claims of nonresident plaintiffs would demonstrate
disrespect for these regulatory regimes. St. Jude I, 425 F.3d at 1120 (“[S]tate consumer‐
protection laws vary considerably, and courts must respect these differences rather than
apply one state’s law to sales in other states with different rules.”). Given Minnesota’s
limited contact with these claims, particularly as compared with the significant contacts
37
with Plaintiffs’ states of residence, the Court finds that applying the MCFA to the
nonresident Plaintiffs’ claims would subvert the interests of those states.
3.
Simplification of the Judicial Task
In considering the simplification of the judicial task, “the relevant question is not
whether applying the law of one state would be simpler than applying the laws of 50
states. Instead, the question is whether, with respect to any particular claimant, applying
the law of Minnesota would be simpler than applying the law that would otherwise
apply.” Rapp, 302 F.R.D. at 518 (citing St. Jude I, 425 F.3d at 1120). The parties did not
address this factor in any detail, likely because Minnesota courts do not give this factor
much weight. See, e.g., Nodak Mut. Ins. Co., 604 N.W.2d at 95. With respect to any
particular plaintiff, the Court is capable of applying the MCFA or the state law of that
plaintiff’s residence. Thus, this factor is neutral.
4.
Advancement of the Forum’s Governmental Interest
In considering the advancement of the forum’s governmental interest, the Court
must weigh the policy interests of Minnesota with those of a nonresident plaintiff’s home
state. Nesladek, 46 F.3d at 739–40. This factor “generally weighs in favor of application of
the state law in which the plaintiff lives and in which the injury occurred.” In re Baycol
Prod. Litig., 218 F.R.D. at 207 (collecting cases). Plaintiffs claim that Minnesota has a
compelling interest in redressing wrongs committed within its borders because the
reputations of other Minnesota businesses are tarnished. While they cite Boatwright v.
38
Budak for this proposition, the case does not support it. 625 N.W.2d 483, 489 (Minn. Ct.
App. 2001). Boatwright addressed choice of law in the context of vicarious liability for a
car accident that occurred in Iowa and found that Iowa law should apply because it “best
serves Minnesota’s interest in compensating tort victims.” Id. The Eighth Circuit has held
that “[a]bsent some relevant connection between a state and the facts underlying the
litigation,” it “fail[ed] to see how any important [state] governmental interest is
significantly furthered by ensuring that nonresidents are compensated for injuries that
occur in another state.” Hughes, 250 F.3d at 621.
Plaintiffs also rely on Mooney, which found that this factor favored application of
the MCFA to a nonresident’s claim because “[b]y allowing ‘any person’ to sue under the
[MCFA], the Minnesota legislature has evinced a strong policy of providing redress for
fraudulent business practices that occur within Minnesota’s borders, regardless of where
a consumer’s injury occurs.” 244 F.R.D. at 537. But there is no reason to believe that
consumer protection laws of the nonresident Plaintiffs’ states could not equally or more
effectively hold Polaris accountable for its alleged wrongdoing. See Rapp, 302 F.R.D. at
518 (rejecting Mooney). This factor therefore favors applying the laws of the nonresident
Plaintiffs’ states.
5.
Application of the Better Rule of Law
The better‐rule‐of‐law factor is not considered unless the other factors do not
resolve the choice‐of‐law issue. Medtronic, Inc. v. Advanced Bionics Corp., 630 N.W.2d 438,
39
455–56 (Minn. Ct. App. 2001); Nodak Mut. Ins. Co., 604 N.W.2d at 96 (noting that the court
“has not placed any emphasis on this factor in nearly 20 years”). Courts have refrained
from resolving a conflict of law question based on the better‐rule‐of‐law factor,
recognizing that “states often have competing policy considerations for governing similar
transactions or events in different manners such that the laws do not necessarily lend
themselves to being labeled either ‘better’ or ‘worse.’” Hughes, 250 F.3d at 621. The Court
will refrain from determining which state has the “better” rule of law, as the states at
issue have competing policy considerations for crafting their consumer protection laws.
Because most of the five factors do not favor applying the MCFA to the claims of
the nonresident plaintiffs, the Court declines to do so. The law of each Plaintiff’s state will
apply to him.
II.
Summary Judgment
With the choice of law question settled, the Court turns to the summary judgment
motion, beginning with the familiar standard under Rule 56. “Summary judgment is
proper if the pleadings, the discovery and disclosure materials on file, and any affidavits
show that there is no genuine [dispute] as to any material fact and that the movant is
entitled to judgment as a matter of law.” Gannon Int’l, Ltd. v. Blocker, 684 F.3d 785, 792 (8th
Cir. 2012) (citing Fed. R. Civ. P. 56(c)). In assessing whether such a dispute exists, “[a]
court must ‘make all reasonable inferences in favor of the non‐moving party,’ but will
‘not resort to speculation.’” Hill v. Sw. Energy Co., 858 F.3d 481, 487 (8th Cir. 2017) (quoting
40
Solomon v. Petray, 795 F.3d 777, 788 (8th Cir. 2015)). “The burden of demonstrating an
absence of a genuine dispute of material fact is on the moving party.” Farver v. McCarthy,
931 F.3d 808, 811 (8th Cir. 2019). “If the movant does so, the nonmovant must respond by
submitting evidentiary materials that set out ‘specific facts showing that there is a
genuine issue for trial.’” Torgerson, 643 F.3d at 1042 (quoting Celotex Corp. v. Catrett, 477
U.S. 317, 324 (1986)).
Polaris contends that summary judgment is proper and that it is entitled to
judgment as a matter of law because there is no evidence that any of the named Plaintiffs
were injured and because four of the named Plaintiffs cannot establish required elements
of their consumer protection claims. (ECF No. 358 (“Polaris Summ. J. Br.”) at 18–29.) For
the reasons discussed below, Polaris’s arguments are unsuccessful.
A.
Price Premium Theory
Polaris argues that each of the named Plaintiffs “must prove . . . the fact and extent
of their claimed injury” to survive summary judgment. (Polaris Summ. J. Br. at 18.) The
fact of injury must not be “speculative, remote, or conjectural,” but proved “with
certainty.” Storage Tech. Corp. v. Cisco Sys., Inc., 395 F.3d 921, 928–29 (8th Cir. 2005). The
“injury” claimed by Plaintiffs appears to be twofold. First, Plaintiffs argue that they did
not receive the benefit of their bargain because the Sportsman ATVs present a risk of
injury from overheating. Second, Plaintiffs argue that they overpaid for their Sportsman
ATVs because the market would have valued the ATVs for less if consumers had known
41
that the ATVs presented this risk. Polaris focuses on this second prong of the injury in its
summary judgment motion, arguing that the “overcharge” or “price premium” theory
presented by Plaintiffs cannot survive summary judgment.
Polaris’s argument against the price premium theory is that (1) Plaintiffs cannot
use their own testimony, because an individual is not competent to testify about what the
ATV price would have been but for the non‐disclosure; (2) Plaintiffs cannot use their
expert testimony, because the experts have no opinion as to any individual Plaintiff; and
(3) Plaintiffs cannot use their expert testimony for the additional reason that the experts
testify only to aggregate damages for the market.
The first problem with Polaris’s arguments is that Polaris does not tie them to the
state laws governing Plaintiffs’ claims. (Compare Polaris Summ. J. Br. at 18–25 (arguing
simply “no evidence establishes that any plaintiff was injured” without reference to the
state laws at issue) with id. at 26–29 (arguing Johannessohn, Pinion, Kelley, and Bates
cannot survive summary judgment under the MCFA, NCUDPTA, FDUTPA, and GBL,
respectively).) Whether a failure to “prove . . . the fact and extent of [a] claimed injury”
entitles Polaris to judgment as a matter of law depends on the requirements of the state
laws that apply to Plaintiffs’ claims.14 As the Supreme Court explained in Anderson v.
Liberty Lobby, Inc., “the substantive law will identify which facts are material” because
Polaris appears to recognize as much when distinguishing Plaintiffs’ cited authorities.
See Polaris Summ. J. Reply at 16 (arguing Plaintiffs cannot rely on Carriuolo, 823 F.3d 977
in support of their Minnesota law arguments because it applies Florida law).
14
42
“[o]nly disputes over facts that might affect the outcome of the suit under the governing
law will properly preclude the entry of summary judgment.” 477 U.S. 242, 248 (1986). The
Court must then analyze the theory under each state’s law.
1.
The price premium theory is a legally cognizable injury under each state’s law.
Each state statute at issue recognizes, as a general proposition, that a consumer
who pays a premium for a product based on a defendant’s actionable misrepresentations
or omissions has suffered a legally cognizable injury. That is, the MMPA, UCL, CLRA,
FDUTPA, GBL, NCUDTPA, and MCFA each recognize that a consumer who overpays
for an item because the actual value of the item he purchased was less than the value of
the item as represented can establish that he has been injured. See, e.g., Marty v. Anheuser‐
Busch Companies, LLC, 43 F. Supp. 3d 1333, 1347 (S.D. Fla. 2014) (denying motion to
dismiss UCL, CLRA, FDUTPA, and GBL claims, among others, because plaintiffs claimed
that they had paid a premium price for beer based on the mistaken belief that it was
imported from Germany). Courts applying the MMPA have reasoned that “under the
benefit of the bargain rule as applied to MMPA claims, [p]laintiff[s] need only allege that
the actual value of the product as purchased was less than the value of the product as
represented to state a claim for an ascertainable loss.” Kelly v. Cape Cod Potato Chip Co., 81
F. Supp. 3d 754, 758–59 (W.D. Mo. 2015). Similarly, courts applying California’s UCL and
CLRA have determined that paying a price premium attributable to a defendant’s
actionable conduct is a cognizable injury under both of those statutes. See, e.g., In re Gen.
43
Motors LLC Ignition Switch Litig., 2016 WL 3920353, at *21–*22 (denying motion to dismiss
UCL and CLRA claims because plaintiffs alleged “they purchased products that they
otherwise would not have, or paid more than they otherwise would have paid, due to
New GM’s failure to disclose the ignition defects in their cars”).
Courts have also determined that a plaintiff can establish a legally cognizable
injury under the GBL by showing that she “overpaid for the product, or, stated
differently, [that she] paid a premium for a product based on the defendantsʹ inaccurate
representations.” Greene v. Gerber Prod. Co., 262 F. Supp. 3d 38, 68 (E.D.N.Y. 2017) (cleaned
up).15 Similarly, a consumer who has paid a premium attributable to a defendant’s
actionable omissions or misrepresentations has suffered a cognizable injury under the
FDUTPA. See, e.g., Dzielak v. Whirlpool Corp., 26 F. Supp. 3d 304, 341 (D.N.J. 2014) (denying
motion to dismiss where complaint alleged that “plaintiffs paid a price premium for an
Energy Star certified washer, and paid higher energy bills because the machine did not
in fact comply with efficiency standards”).
Although this Court has found few cases addressing the price premium theory of
damages under the NCUDTPA, it finds the reasoning of Suchanek v. Sturm Foods, Inc.,
No. 11‐CV‐565‐NJR‐RJD, 2018 WL 6617106 (S.D. Ill. July 3, 2018) instructive. In Suchanek,
See also Koenig v. Boulder Brands, Inc., 995 F. Supp. 2d 274, 288 (S.D.N.Y. 2014) (collecting
cases); Ebin v. Kangadis Food Inc., No. 13 CIV. 2311 JSR, 2014 WL 737878, at *2 (S.D.N.Y.
Feb. 25, 2014) (denying summary judgment where plaintiffs had adduced evidence that
they had overpaid because they paid the price of olive oil for pomace).
15
44
plaintiffs brought claims under various state consumer fraud statutes, including the
NCUDTPA, asserting that they and their class members were misled into paying the price
of ground coffee for a product that was predominantly instant coffee. Id. at *2. The
Suchanek court directed the parties to submit filings addressing, among other things, the
elements of each statute that could be established using common proof. Id. The court first
noted that under North Carolina law, “[a]ctual injury may include the loss of the use of
specific and unique property, the loss of any appreciated value of the property, and such
other elements of damages as may be shown by the evidence.” Id. at *15 (quoting Coley v.
Champion Home Builders Co., 590 S.E.2d 20, 22 (N.C. Ct. App. 2004)). The court then
determined that the price premium model set forth by the plaintiffs could suffice to show
injury under the NCUDTPA. See id. at *15–16. Based on the reasoning of Suchanek, the
Court concludes that paying a premium attributable to a defendant’s actionable
omissions or misrepresentations is a cognizable injury under the NCUDTPA.
This Court has also found few cases addressing the price premium theory of
damages under the MCFA in similar circumstances. But based on its review of the
relevant authority, it appears that paying a premium attributable to a defendant’s
actionable omissions or misrepresentations is a cognizable injury under the MCFA. See,
e.g., Laughlin v. Target Corp., No. 12‐CV‐489 (JNE/JSM), 2012 WL 3065551, at *5 (D. Minn.
July 27, 2012) (denying motion to dismiss where plaintiff claimed “she would not have
purchased . . . footwear had she known that the shoes did not provide the advertised
45
benefits, that she paid an increased price for the shoes, and that she therefore suffered
injury”).
In addition to the fact of injury, proof of the extent of injury depends on the
substantive laws at issue. Under the applicable state statutes, once the fact of injury is
established, the extent of the injury need not be proved with precision, particularly at the
summary judgment stage. See, e.g., Ebin, 2014 WL 737878, at *2 (“New York . . . law
squarely place[s] the burden of ascertaining the amount of damages, when the existence
of damage is known but its extent is opaque, upon the alleged wrongdoer.”); In re Gen.
Motors LLC Ignition Switch Litig., 407 F. Supp. 3d 212, 231–32 (S.D.N.Y. 2019) (“Although
[p]laintiffs may not need to prove the amount of damages to an absolute certainty to
survive summary judgment, they do — under the law[s] of [California, Missouri, and
Texas] — need some evidence of the fact of damages . . . to create a triable issue on that
element of their claim.”(emphasis omitted)). Polaris’s cited authority is not to the
contrary. See Polaris Summ. J. Br. at 18 (citing Storage Tech. Corp., 395 F.3d at 928–29
(“Under Minnesota law, damages may not be speculative, remote, or conjectural.
However, once the fact of damages is proved with certainty, the extent of damages need
only be shown to have a reasonable basis in the evidence.” (citation omitted))).
2.
Daubert motion.
Having concluded that the price premium theory can establish an injury under the
relevant state consumer protection laws, the Court turns to whether the record contains
46
evidence that would allow a reasonable factfinder to find such injury. Plaintiffs offer the
expert testimony of Richard Eichmann and Sara Butler, who have assessed an 8.8 percent
price premium attributable to Polaris’s failure to disclose the exhaust heat defect. (ECF
No. 385 (“Pls’ Summ. J. Opp.”) at 25–29 (“Plaintiffs’ experts Sara Butler and Richard
Eichmann can provide the injury evidence called for under the applicable state law.”).)
Polaris contends that the opinions and related work of Butler and Eichmann are
inadmissible under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), and
Rule 702 of the Federal Rules of Evidence. “When considering expert testimony, a district
court must ensure that all scientific testimony is both reliable and relevant.” In re
Wholesale Grocery Prod. Antitrust Litig., 946 F.3d 995, 1000 (8th Cir. 2019) (citation and
quotation marks omitted). “To satisfy the reliability requirement, the proponent of the
expert testimony must show by a preponderance of the evidence both that the expert is
qualified to render the opinion and that the methodology underlying his conclusions is
scientifically valid.” Id. (quoting Marmo v. Tyson Fresh Meats, Inc., 457 F.3d 748, 757–58
(8th Cir. 2006)). District courts act as gatekeepers, making “preliminary assessment of
whether the reasoning or methodology underlying the testimony is scientifically valid
and of whether that reasoning or methodology properly can be applied to the facts in
issue.” Daubert, 509 U.S. at 592–93. The Eighth Circuit has cautioned that the “rejection of
expert testimony is the exception rather than the rule.” In re Wholesale Grocery Prod.
47
Antitrust Litig., 946 F.3d at 1001; see also Johnson v. Mead Johnson & Co., LLC, 754 F.3d 557,
562 (8th Cir. 2014) (collecting cases).
a.
Methodology
Butler and Eichmann submitted reports and deposition testimony that Plaintiffs
claim establish evidence of (1) an 8.8 percent price premium attributable to Polaris’s
purported undisclosed exhaust heat defect and (2) cost‐of‐repair damages.
To calculate the price premium attributable to Polaris’s alleged undisclosed
exhaust heat defect, Butler and Eichmann were tasked with determining what the price
of Polaris’s affected ATVs would have been if Polaris had disclosed its existence. Butler
did the first part: she created a conjoint survey to test whether exposure to a warning
about an exhaust heat defect would decrease consumers’ willingness to pay for
Sportsman ATVs. (ECF No. 407‐6 (“Butler 1st Rpt.”) ¶¶ 17, 20.) Survey respondents
completed a questionnaire that showed them various attributes associated with ATVs—
e.g., brand, engine size, front rack/rear rack capacity, suspension travel, ground clearance,
and price. (Id. ¶ 42.) A key feature of Butler’s survey is that those of her respondents who
were sorted into a “Test” group were shown the following statement:
Please note: the design of the Polaris Sportsman ATVs causes
heat from the exhaust that can reach temperatures that exceed
Polarisʹs specifications and can cause discomfort to riders and
melt plastic parts.
(Id. ¶ 21.) Survey respondents who were sorted into a “Control” group were not shown
that statement but were otherwise provided with the same information as members of
48
the “Test” group about ATV brands, attributes, and prices. (Id. ¶ 22.) All survey
respondents were then asked to choose the ATV they preferred after being shown various
brand, attribute, and price combinations. (Id. ¶¶ 48–49.) Using the information from this
survey, Butler calculated an average decline of $1,614 in willingness to pay for a Polaris
Sportsman ATV with the exhaust heat defect. (ECF No. 407‐5 “(Butler 2d Rpt.”) ¶ 92.)
Eichmann used the $1,614 figure calculated by Butler to conduct a market
simulation with the aim of determining the shifts in supply and demand in the market
that would affect pricing had the defect been disclosed. (ECF No. 407‐13 (“Eichmann 2d
Rpt.”) ¶ 22.) He relied on Butler’s calculations to calculate shifts in the demand side of
the market. (Id.). For the supply side, he used historical data of units sold in the “1‐Up
Big Bore” market segment in 2016 (id. ¶ 24), and Manufacturer Suggested Retail Price
(“MSRP”) data. (See, e.g., id. ¶ 43.) Eichmann’s market simulation focused on four types
of ATVs: Polaris, Yamaha, CanAm, and Other (a composite of minor offerings in the
marketplace). (Id. ¶¶ 25–26.) He treated each of these as separate firms in his analysis,
assuming that each firm is profit maximizing. (Id. ¶ 27.) Although there are two
Sportsman ATVs in the “1‐Up Big Bore” market—the Sportsman 850 and the Sportsman
1000—Eichmann created an “average” Sportsman to represent both of these by “taking
the unit sales weighted average of MSRP and physical characteristics across Sportsman
850 and 1000, while using the sum of the unit sales across these models as total sales.”
(Id.) With these inputs on the supply side and Butler’s input on the demand side,
49
Eichmann’s market simulation determined that the price for a Polaris Sportsman after
disclosure of the defect would have been 8.8 percent lower than consumers actually paid.
(Id. ¶ 30.)
b.
Qualifications
“[I]t is the responsibility of the [Court] to determine whether a particular expert
has sufficient specialized knowledge to assist jurors in deciding the specific issues in the
case.” Medalen v. Tiger Drylac U.S.A., Inc., 269 F. Supp. 2d 1118, 1127 (D. Minn. 2003)
(citation and quotation marks omitted). Butler is the Managing Director at NERA
Economic Consulting (“NERA”), where she is Chair of the Survey and Sampling Practice.
(Butler 1st Rpt. ¶ 1.) She has a Master’s degree in sociology from Temple University. (Id.
Ex. A.) To this Court’s knowledge, she has never been deemed unqualified to testify as
an expert. And after the Court’s review of her resume and work as a litigation expert, it
concludes that she has considerable experience designing and implementing conjoint
surveys. (See, e.g., id.) That is what she did here.
Polaris does not appear to dispute Butler’s considerable experience with conjoint
surveys. (See, e.g., ECF No. 406 (“Polaris Daubert Reply”) at 2.) At bottom, it contests
whether Butler has the training and experience to calculate a demand curve. (Id.) But
Butler does not hold herself out to be an economist. Nor is it this Court’s understanding
that, if a trial were held, Butler would be the one to explain to the jury what, if anything,
her survey results have to do with shifts in the demand curve. The Court understands
50
that to be Eichmann’s role. The Court is satisfied that Butler is qualified to testify as to
the design and implementation of her conjoint survey.
Eichmann is a Director for NERA. (ECF No. 407‐9 (“Eichmann 1st Rpt.”) ¶ 1.) He
has a Master’s degree in Applied Economics from the University of Michigan. (Eichmann
First Rpt., App. A.) He has over 20 years of experience as an economics consultant.
(Eichmann 1st Rpt. ¶ 1.) The National Association for Certified Valuators and Analysts
has certified him as a Master Analyst in Financial Forensics and a Certified Valuation
Analysis. (Eichmann 1st Rpt., App. A.) Federal and state courts have deemed him
qualified as an expert to testify to statistical methods, sampling, survey design, business
valuations, and econometrics. (Eichmann 1st Rpt. ¶ 1.) To this Court’s knowledge, he has
never been deemed unqualified to testify as an expert.
Polaris contends that while Eichmann may be qualified to “estimate some types of
alleged damages,” he lacks the training and experience to conduct a market simulation.
(Polaris Daubert Reply at 3.) But Eichmann has testified that while he has never “done [a]
grab‐a‐willingness‐to‐pay figure market analysis the way [he did] here as a testifying
expert on another case before,” he has worked on “at least 20 or so” cases in which he
received the results of a conjoint study and then used a market simulation to compute
market equilibrium prices. (ECF No. 378‐2 (“Eichmann Dep.”) at 16:21–17:5; 18:23–19:2.)
The Court is satisfied that Eichmann has sufficient training and experience to testify as to
the design and results of his market simulation.
51
c.
Scientific Validity
To be admissible, expert testimony must be based on “reliable principles and
methods.” Fed. R. Evid. 702(c). Among the many factors courts consider to determine
whether expert opinions are reliable are: “(1) whether the theory or technique can be (and
has been) tested; (2) whether the theory or technique has been subjected to peer review
and publication; (3) the known or potential rate of error; and (4) whether the theory has
been generally accepted.” Lauzon v. Senco Prod., Inc., 270 F.3d 681, 687 (8th Cir. 2001)
(cleaned up). “As a general rule, the factual basis of an expert opinion goes to the
credibility of the testimony, not the admissibility.” Bonner v. ISP Techs., Inc., 259 F.3d 924,
929 (8th Cir. 2001).
Although it is a close question, the Court determines that Butler’s methodology is
admissible, and that Polaris’s complaints about it go to its weight, not its admissibility. It
is undisputed that conjoint questionnaires are not ordinarily designed to be given to
separate “test” and “control” groups. (See, e.g., Butler 2d Rpt. ¶ 46.) But the Court is
persuaded that sufficiently similar approaches have been tested and subject to peer
review, and thus the Court will allow it to be presented at trial. (See, e.g., ECF No. 407‐6
(“Mizik Supp. Rep.”), App. 3 (listing published articles discussing atypical conjoint
survey designs).)
The Court is also of the view that Butler’s survey is sufficiently representative of
the relevant population. Butler’s sample contained prospective purchasers as well as
52
those who had bought a new ATV within five years of taking Butler’s questionnaire.
(Butler 1st Rpt. ¶ 31.) And it appears that Butler randomly assigned sample members to
the “test” and “control” groups. (Butler 1st Rpt., Exhibit D at 5.) The Court finds the
sample to be sufficiently representative of the relevant population—consumers whose
views would have affected the market price of the Sportsman ATVs had Polaris disclosed
the alleged exhaust heat defect—to be admissible.
Polaris’s myriad arguments to the contrary do not persuade the Court. Among
other things, Polaris contends that Butler’s test and control groups were not properly
randomized because both had too many women (Polaris’s customers are primarily men)
and the control group had too many Polaris owners. The Court is not convinced by
Polaris’s argument that randomization failed because the demographics of Butler’s
survey sample differ from those of actual Polaris buyers. The population of Polaris buyers
is surely smaller than the population of prospective ATV buyers, and thus would be less
reflective of the market. Nor is the Court convinced that the presence of additional
Polaris owners in the control group means that randomization failed.
Polaris also contends that Butler made various mistakes in designing her survey.
Among other things, it argues that the purchasing environment simulated by Butler’s
survey was “divorced from the undisputed facts,” that it made members of the “control”
group pay undue attention to the exhaust‐heat warning, that her survey omitted certain
key attributes that actual ATV purchasers find most important, and that Butler
53
misinterpreted the results from the software she used to generate her findings. (ECF No.
374 (“Polaris Daubert Br.”) at 21.) These are matters for cross‐examination and do not
mandate the exclusion of her opinions and testimony. See, e.g., Murphy v. Wheelock,
No. 16‐CV‐2623 (DWF/BRT), 2019 WL 3719035, at *5 (D. Minn. Aug. 7, 2019) (concluding
that defendant’s criticisms of expert’s methodology were matters to be addressed on
cross examination).
The Court also concludes that Eichmann’s methodology is admissible. There is no
question that a market simulation is a scientifically valid method to determine the market
equilibrium price in a counterfactual world. Polaris’s dispute is over many of the
assumptions Eichmann made before running his market simulation. Among other things,
it argues that Butler’s survey results could not give Eichmann the proper inputs for a
demand curve, that Eichmann should have not assumed that the “1‐Up Big Bore” market
segment was representative of the markets where the Sportsman ATVs are sold, that
Eichmann should not have combined Polaris Sportsman 850 and Polaris Sportsman 1000
data to create an “average” Sportsman, that Eichmann should not have combined the
smaller actors in the “1‐Up Big Bore” market segment into one firm, and that Eichmann
should not have used MSRP for price data. Although it is again a close question, the Court
concludes Polaris’s challenges to Eichmann’s methodology go to the weight, not the
admissibility, of his opinion and testimony.
54
Eichmann’s model is not so disconnected from the facts of the case that his opinion
must be excluded. For example, although Polaris criticizes Eichmann heavily for using
MSRP data when vehicles are ordinarily sold at individually negotiated prices (Polaris
Daubert Reply at 13), Eichmann does not need actual prices to conduct his market
simulation. Eichmann seeks to find the difference between Polaris’s prices in the actual
world (the world in which, according to the Plaintiffs’ theory of damages, Polaris
commanded a price premium) and in the Plaintiffs’ counterfactual world (the world in
which Polaris promptly disclosed the exhaust heat defect). It is not unreasonable to
assume that MSRP data may be used to capture this difference—i.e., the overcharge
percentage—because there is some correlation between MSRP and actual price. That is,
if Eichmann captured an 8.8 percent change in MSRP, then it is reasonable to assume that
mirrors an 8.8 percent change in actual price. Whether changes in MSRP do or do not
track changes in actual price is fodder for cross‐examination.16
In its summary judgment briefing, Polaris argues that because Eichmann’s model relies
on averages, the Plaintiffs offer no evidence that can be used to prove the named
Plaintiffs’ individual damages. (See, e.g., Polaris Summ. J. Reply at 12 (arguing “average
or ‘normalized’ data like Eichmann’s cannot as a matter of law be used to prove
individual (or, for that matter, class‐wide) damages”).) This is another attack on the
assumptions underlying Eichmann’s model and his subsequent calculation of an
overcharge percentage attributable to the alleged defect—more ammunition for cross‐
examination. Polaris’s cited authority stands for the uncontested proposition that
“[w]hether a representative sample may be used to establish class‐wide liability will
depend on the purpose for which the sample is being introduced and on the underlying
cause of action.” Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1049 (2016).
16
55
Polaris also points out that Eichmann did not report the margins of error for his
calculations. Under Daubert, the “known or potential rate of error” is indeed important
to assessing the scientific validity of an expert’s methods. Lauzon, 270 F.3d at 687. The
Court is satisfied that Eichmann’s and Butler’s work papers contained sufficient
information to allow for computation of the potential rate of error, and their testimony
will not be excluded on this basis.
d.
Relevance
“To show that the expert testimony is relevant, the proponent [of the expert
testimony] must show that the reasoning or methodology in question is applied properly
to the facts in issue.” Marmo, 457 F.3d at 758. “Courts should resolve doubts regarding
the usefulness of an expertʹs testimony in favor of admissibility.” Id. Here, Butler opines
that she has calculated an average decline of $1,614 in willingness to pay for Polaris
Sportsman ATV with the exhaust heat defect. And Eichmann opines that, based on the
$1,614 decline in willingness to pay and data he gathered from the “1‐Up Big Bore”
market segment, his market simulation calculates an 8.8 percent price premium that is
attributable to the exhaust heat defect. The Court concludes that this evidence would be
helpful to the jury’s consideration of whether Polaris charged a price premium that can
be attributed to an undisclosed exhaust heat defect.
Polaris disputes the relevance of Butler’s testimony, and thus, the relevance of
Eichmann’s testimony as well. In particular, Polaris argues that Butler tested the wrong
56
proposition because her survey design does not take into consideration disclosures all
ATV manufacturers make in their brochures and owner’s manuals. This is, at bottom, a
factual dispute between the parties as to the purchasing environment that would inform
consumers’ decisions in the counterfactual world. The Court concludes that the
purchasing environment envisioned by Butler’s survey “is sufficiently grounded in the
facts of the case to be helpful to the jury.” Scoular Co. v. Ceres Glob. Ag Corp., No. CV 14‐
1881 (JRT/HB), 2017 WL 3535210, at *17 (D. Minn. Aug. 16, 2017).
e.
Eichmann’s Cost‐of‐Repair Damages
Polaris also seeks to exclude Eichmann’s calculation of cost‐of‐repair damages.
Because Eichmann’s cost‐of‐repair damages model is not relevant to Polaris’s summary
judgment motion, the Court need not opine on its admissibility.
3.
Application of expert testimony to individual claims.
According to Polaris, Plaintiffs’ expert evidence is “irrelevant” because, contrary
to the Plaintiffs’ assertions, it does not prove “that each individual plaintiff was in fact
damaged or that each plaintiff’s damages were the same or similar.” (ECF No. 399
(“Polaris Summ. J. Reply”) at 12.) Polaris contends that the named Plaintiffs cannot rely
on Butler and Eichmann, because the experts did not analyze each Plaintiff’s claims
individually. Rather, Butler and Eichmann opine as to “class‐wide” damages, examining
57
the supply and demand side of the market.17 Thus, Polaris argues, the experts are not
legally competent to testify as to the hypothetical price of any single ATV, because the
experts did not interview any Plaintiff or opine as to any individual’s purported
economic losses. (Id. at 19–20.)
To the extent Polaris argues that market‐based expert evidence can never prove an
individual plaintiff’s overpayment, this contention finds no support in the law. See, e.g.,
Ebin, 2014 WL 737878, at *2 (denying summary judgment on GBL claim after concluding
that plaintiffs’ market‐based expert evidence was sufficient evidence of injury); cf. In re
Gen. Motors LLC Ignition Switch Litig., 407 F. Supp. 3d at 234–40 (concluding that
“[a]lthough the issue [was] a close one,” market‐based expert evidence was insufficient
to establish plaintiffs suffered damages under California, Missouri, and Texas law
because the expert did not account for the interaction of supply and demand in the
relevant hypothetical market conditions). None of the statutes at issue here precludes
individual plaintiffs from relying on expert evidence of the shifts in supply and demand
The Court’s acceptance or rejection of expert testimony to support individual damages
does not inform the Court’s decision on class certification. Though Butler and Eichmann
are referred to as “class‐wide” experts, this term was coined by Plaintiffs, who are moving
for class certification. Butler and Eichmann simply analyze a large base of consumers and
provide a model of damages that Plaintiffs wish to apply to their individual claims. In
general, Butler and Eichmann attempt to capture shifts in the market that would affect
the market equilibrium price at which Sportsman ATVs would have sold had Polaris
disclosed their heat issues, and from there extrapolate the price premium attributable to
the alleged exhaust heat defect. The Court thus uses the term “market‐based” evidence,
rather than “class‐wide” evidence, particularly in view of its decision to deny class
certification.
17
58
affecting pricing if Polaris had disclosed that the Sportsman ATVs are at risk of
overheating. And Polaris cites no case law interpreting any of the statutes in such a
manner. Rather, courts applying these statutes have allowed market‐based evidence to
be used to establish the fact of injury and damages.
Like the Suchanek court, this Court concludes that market‐based evidence may be
used to establish the fact of injury under the CLRA, UCL, GBL, and NCUDTPA. 2018 WL
6617106, at *15–16 (determining that the price premium model set forth by plaintiffs could
suffice to show injury). As to Florida, the Eleventh Circuit found that damages under the
FDUTPA are measured by the difference between the market value of the product as
promised and the market value of the product delivered, explaining that “the FDUTPA’s
‘benefit of the bargain’ model provides a standardized class‐wide damages figure
because the plaintiff’s out‐of‐pocket payment is immaterial.” Carriuolo, 823 F.3d at 986
(noting that “the proper question is not how much the erroneous sticker may have
reduced the vehicleʹs perceived value for any individual purchaser or lessee”). Based on
the reasoning in Carriuolo, this Court concludes that Florida courts would allow an
individual plaintiff’s claim for damages under the FDUTPA to be proved using market‐
based expert evidence. As to Missouri, at least one court has concluded that the plaintiffs’
alleged injury was subject to common proof under the MMPA. See In re McCormick & Co.,
Inc., Pepper Prod Mtk’g & Sales Practices Litig., No. MC 15‐1825 (ESH), 2019 WL 3021245,
at *47 (D.D.C. July 10, 2019). In In re McCormick, the court reasoned that under the
59
plaintiffs’ theory of causation and loss—that the plaintiffs had received less pepper than
they thought they were purchasing—“every purchaser would have suffered the same
loss.” Id. It rejected the argument that individualized inquiries would be necessary to
establish injury, emphasizing “the alleged injury is the difference in value of the pepper
as represented and the value of the pepper as received.” Id. Based on this reasoning, the
Court concludes that market‐based evidence may be used to establish the fact of injury
under the MMPA.
Finally, as to Minnesota, based on the limited authority addressing this issue
under the MCFA, the Court believes that market‐based evidence may also be used to
establish the fact of injury under the MCFA. See, e.g., Khoday, 2014 WL 1281600, at *33
(finding Rule 23(b)(3) predominance satisfied for MCFA claims because plaintiffs
“presented a method that allow[ed] for a determination of the actual value to consumers
of” the product and damages were amenable to common proof).
While the cases above address evidence of injury and damages on a class‐wide
basis, rather than for an individual plaintiff, the Court does not find a compelling reason
to preclude the named Plaintiffs from relying on market‐based evidence of injury and
damages where courts allow such evidence to support class‐wide claims. Polaris’s
argument that the experts did not interview any Plaintiff or opine as to any individual’s
purported economic losses are best left to cross‐examination. It is for a factfinder to decide
whether such evidence proves the named Plaintiffs’ injury and damages.
60
B.
Fact Issues
Having determined the applicable legal standards, the Court turns to whether
summary judgment is proper against any of the named Plaintiffs. It is Polaris’s burden to
show that no genuine dispute of material fact exists, under the law of the state of
residence of each Plaintiff. For the reasons set forth below, it fails to meet that burden.18
1.
Badilla and Wonders
Badilla’s claims are governed by California law and Wonders’s claim is governed
by Missouri law. Polaris contends that Badilla cannot establish that he suffered an injury.
Polaris does not dispute that Badilla can establish the other elements of his UCL and
CLRA claims on the summary judgment record. For example, Polaris does not contest
whether Badilla can establish that Polaris knew of the exhaust heat defect at the time of
sale, as required under both the UCL and CLRA. Nor does Polaris contest whether Badilla
can establish that Polaris’s nondisclosure was an immediate cause of his injury‐producing
conduct, as required by the CLRA. Polaris only disputes whether Badilla has adduced
evidence that he suffered an injury. Badilla has testified that, had he known that the
Sportsman ATV he bought had the heat issues he experienced and learned about after his
purchase, then he would not have bought it at all. (See ECF No 383‐6 (“Badilla Dep.”) at
204–05.) And the Court has concluded that Plaintiffs have adduced admissible evidence
While repetitive, the Court discusses each named Plaintiff individually to emphasize
that each Plaintiff’s claims must be examined under the laws of his state of residence.
18
61
under California law of an 8.8 percent price premium attributable to the exhaust heat
defect. Drawing all reasonable inferences in Badilla’s favor, the summary judgment
record suffices to at least create a genuine dispute of material fact as to whether Badilla
suffered injury under the UCL and the CLRA. Thus, summary judgment as to Badilla will
be denied.
Similar to Badilla, other than the fact and extent of injury, Polaris does not argue
that any disputes exist that can affect the outcome of Wonders’s claim under the MMPA.
For example, Polaris does not dispute that Wonder can establish, on the summary
judgment record, that Polaris failed to disclose to Wonders facts that Polaris knew or
should have known. Again, Polaris only disputes whether Wonders has adduced
evidence that he suffered an injury. Wonders, too, testified that had he known about the
heat problems that he experienced later, he would not have purchased his Sportsman
ATV. (See ECF No. 383‐5 (“Wonders Dep.”) at 235.) And following Missouri law, the
Court will allow evidence of the price premium calculated by Butler and Eichmann to
prove injury. Thus, because genuine disputes of material fact exist as to whether Wonders
suffered an injury, awarding Polaris summary judgment against Wonders is not proper.
2.
Johannessohn
As to Johannessohn, Polaris contests both the causal nexus required by the MCFA
and the evidence of injury. Polaris does not dispute that Johannessohn can establish the
other elements of his MCFA claim on the summary judgment record. For example, Polaris
62
does not dispute that Johannessohn can establish that Polaris omitted a material fact or
that special circumstances triggering a duty to disclose exist.
Polaris claims that Johannessohn cannot show that Polaris’s omission had some
effect on his decision to purchase a Sportsman ATV, because Johannessohn asked for and
received a new ATV after his original Sportsman ATV caught fire. Johannessohn has an
explanation: he testified that he thought his first Sportsman ATV was a lemon, that is,
that the issues that caused that ATV to catch fire were unique to that first ATV. (See ECF
No. 383‐1 (“Johannessohn Dep.”) at 393–400.) And he testified that he is unhappy with
his second Sportsman ATV, too, and purchased a Can‐Am Maverick “[s]o [he] had
something to ride, because [he] couldn’t ride [his] Polaris.” (Id. at 222.) This testimony is
sufficient to generate a genuine dispute as to whether there is a causal nexus between
Polaris’s actions and an injury.
Polaris also disputes whether Johannessohn has adduced evidence that he
suffered an injury. Like the others, Johannessohn testified that, had he known that
Polaris’s Sportsman 1000 ATV had been suffering from heat‐related issues and Polaris
had no plans to fix it until model year 2017, he would not have purchased his Sportsman
1000 in August of 2015. (Id. at 393.) In light of this testimony and the expert evidence of
an 8.8 percent price premium attributable to the exhaust heat defect, the summary
judgment record suffices to create a genuine dispute as to whether Johannessohn suffered
63
an injury under the MCFA. Because genuine disputes of material fact exist, awarding
Polaris summary judgment against Johannessohn is not warranted.19
3.
Kelley
Kelley’s claim is governed by the FDUTPA. As with Johannessohn, Polaris
contends that Kelley cannot establish causation or actual damages. Polaris does not
dispute that Kelley can establish the other elements of his FDUTPA claim on the
summary judgment record. For example, Polaris does not dispute that Kelley can
establish that Polaris committed a deceptive act or unfair practice.
As with Johannessohn, Polaris contests Kelley’s evidence of causation and injury.
Polaris argues that Kelley “already knew about allegedly excessive heat—including
melting parts—from owning prior Sportsman ATVs.” (Polaris Summ. J. Br. at 28.) Kelley
explained that although he had experienced problems with the heat emitted by his prior
Sportsman ATVs, he thought that Polaris had done “some research” and “improved the
design” and that therefore the Sportsman ATVs he purchased later would “stay cooler.”
(ECF No. 383‐3 (“Kelley Dep.”) at 96–98.) Kelley also testified that, had he known that
Polaris’s ATVs exceeded its own 115 degree “comfort threshold,” he would not have
purchased his Sportsman 1000 and 850 in 2016. (Id. at 189–90.) The Court finds this
testimony sufficient to generate a genuine dispute as to causation.
Polaris also argues that Johannessohn continued to drive his ATV after learning of the
alleged exhaust heat defect, a fact which precludes him from demonstrating causation.
See Polaris Summ. J. Reply at 18. This, too, raises an issue for a factfinder to decide.
19
64
Polaris also claims that, because Kelley had heat issues with his prior Sportsman
ATVs, he purchased his Sportsman 1000 and 850 ATVs “with knowledge of their
supposed defects.” (Polaris Summ. J. Br. at 29.) Assuming without deciding that
knowledge of the defects would bar recovery under the price premium theory of
damages, the Court finds that Kelley’s testimony above is sufficient to generate a genuine
dispute as to this issue as well.
Finally, Polaris disputes whether Kelley has offered evidence that he suffered an
injury. But, as noted above, Kelley testified that he would not have purchased his
Sportsman ATVs in 2016 if he had known they suffered from heat issues. And the
Plaintiffs have adduced evidence of an 8.8 percent price premium attributable to the
exhaust heat defect. Thus, under the FDUTPA, drawing all reasonable inferences in
Kelley’s favor, the summary judgment record suffices to prove injury under the FDUTPA.
Because genuine disputes of material fact exist, awarding Polaris summary judgment
against Kelley is not proper.
4.
Bates
As a New York resident, Bates’s claim is governed by the GBL. Polaris contends
that Bates cannot recover because “New York consumers who know of the alleged
omission cannot recover under” the GBL and Bates has adduced no evidence of injury.
Polaris does not dispute that Bates can establish the other elements of his GBL claim on
the summary judgment record. For example, Polaris does not dispute that Bates can
65
establish that the challenged act or practice was consumer‐oriented or that it was
misleading in a material way.
In support of its argument that Bates’s knowledge of the exhaust heat defect prior
to purchase bars his recovery, Polaris points to Bates’s testimony that he had “heard
about this [excessive heat] happening back as far as like 2012” from other consumers.
(Polaris Summ. J. Br. at 29.) Polaris interprets Bates’s statement to mean that Bates knew
about the exhaust heat defect in its Sportsman vehicles as far back as 2012. (See id.)
Plaintiffs disagree and, in light of Bates’s subsequent testimony, interpret this statement
to mean that Bates believes that Polaris should have known about the exhaust heat defect
because many consumers were complaining about excessive heat “back as far as . . . 2012.”
(Pls’ Summ. J. Opp. at 36–37.) Assuming without deciding that under the GBL,
consumers’ knowledge of the defect would bar recovery even under a price premium
theory of damages, the Court finds that there is a genuine dispute as to whether Bates
knew of the exhaust heat defect before purchasing his Sportsman ATV. That is, the Court
finds that “the evidence is such that a reasonable jury could return a verdict for the
nonmoving party,” and thus Bates’s GBL claim is not barred as a matter of law. Anderson,
477 U.S. at 248.
As with the other Plaintiffs, Polaris disputes whether Bates has presented evidence
that he suffered an injury. But Bates, like the others, has testified that, had he known that
Sportsman ATVs suffer from heat issues, he ”probably would have bought another
66
brand.” (See ECF No. 383‐4 (“Bates Dep.”) at 128.) And the Plaintiffs offer expert evidence
of a price premium attributable to the exhaust heat defect. Drawing all reasonable
inferences in Bates’s favor, genuine disputes of material fact exist as to whether Bates
suffered an injury under the GBL, thus precluding summary judgment against Bates. 20
5.
Pinion
Pinion is a North Carolina resident, and thus the NCUDTPA governs his claim.
Polaris contends that Pinion cannot prove reliance and has adduced no evidence of
injury. Polaris does not dispute that Pinion can establish the other elements of his
NCUDTPA claim on the summary judgment record. For example, Polaris does not
contest that Pinion can establish that Polaris committed an unfair or deceptive act or
practice and that the action in question was in or affecting commerce. Nor does Polaris
contest that Pinion can establish an omission relating to a material matter known by
Polaris that it had a legal duty to communicate to Pinion.
Polaris argues instead that Pinion cannot prove actual reliance, which is required
under the NCUDTPA. See Bumpers, 747 S.E.2d at 226 367; Arnesen, 781 S.E.2d at 7. Polaris
maintains that Pinion cannot prove actual reliance because he purchased a used
Sportsman ATV for his wife after experiencing difficulties with his own Sportsman ATV.
But Pinion also testified that he bought the ATV for his wife used for $6,600—less than
the $14,200 Pinion paid for his own Sportsman ATV—“not long after” purchasing his
20
The Court disregards any arguments raised by Polaris for the first time on reply.
67
own Sportsman ATV. (ECF No. 383‐2 (“Pinion Dep.”) at 44, 61–62.) After he testified to
his experience with side pieces melting on his Sportsman ATV, Pinion stated “I don’t
know who would want to buy an ATV that’s having those problems.” (Id. at 162.) The
Court finds Pinion’s testimony sufficient to generate a genuine dispute as to whether
Pinion would have purchased his Sportsman ATV for $14,200 if he had known about the
exhaust heat defect because the evidence is such that a reasonable jury could return a
verdict for the nonmoving party. See Anderson, 477 U.S. at 248.
Polaris also argues that Pinion cannot prove justifiable reliance as required under
the NCUDTPA. See Bumpers, 747 S.E.2d at 226; Arnesen, 781 S.E.2d at 7. Polaris contends
that Pinion must prove that he “inquired, or was prevented from inquiring, about the
allegedly omitted information,” and that he has not done so. (Polaris Summ. J. Br. at 27.)
Assuming without deciding that under applicable North Carolina law Pinion must make
such a showing to prove justifiable reliance, the Court finds that Pinion’s testimony is
sufficient to generate a genuine dispute as to the issue. Pinion testified that, before he
purchased his ATV, he saw a television advertisement released by Polaris, and read the
product brochure published by Polaris. (Pinion Dep. at 50‐51, 67–68.) Considering all
reasonable inferences in Pinion’s favor, there is a genuine dispute as to whether he
inquired about the heat issues.
Finally, Polaris disputes whether Pinion has adduced evidence that he suffered an
injury. But, as noted above, Pinion’s testimony is sufficient to generate a genuine dispute
68
as to whether he would have purchased his Sportsman ATV for $14,200 if he had known
about the exhaust heat defect. Moreover, Plaintiffs have adduced admissible evidence of
an 8.8 percent price premium attributable to the exhaust heat defect. Thus, drawing all
reasonable inferences in Pinion’s favor, the record suffices to create a reasonable inference
that Pinion suffered an injury under the NCUDPTA. Because genuine disputes of
material fact exist, awarding Polaris summary judgment against Pinion is not proper.
In sum, Polaris has not met its burden and there is a genuine dispute as to some
material facts, so summary judgment against Plaintiffs is denied.
CLASS CERTIFICATION
Plaintiffs move for class certification under Rule 23 of the Federal Rules of Civil
Procedure. “To certify a class, a district court must find that the plaintiffs satisfy all the
requirements of Rule 23(a) and one of the subsections of Rule 23(b).” Hale v. Emerson Elec.
Co., 942 F.3d 401, 403 (8th Cir. 2019). The party seeking class certification “must
affirmatively demonstrate his compliance with the Rule.” Stuart v. State Farm Fire & Cas.
Co., 910 F.3d 371, 374 (8th Cir. 2018) (quoting Wal‐Mart Stores, Inc. v. Dukes, 564 U.S. 338,
350 (2011)).
Plaintiffs seek to certify a nationwide class of consumers who purchased Class
Vehicles from October 4, 2010 to the present. In the alternative, they seek to certify six
classes for residents of the states of California, Florida, Minnesota, Missouri, New York,
and North Carolina who purchased Class Vehicles during differing windows of time. (See
69
generally ECF No. 332.) For the reasons below, the Court finds that Plaintiffs do not meet
their burden under Rule 23.
I.
Standing
The Court first addresses Polaris’s argument as to standing, because it is
jurisdictional and therefore foundational. The jurisdiction of federal courts extends only
to actual cases or controversies. U.S. Const. art. III, § 2, cl.1; Neighborhood Transp. Network,
Inc. v. Pena, 42 F.3d 1169, 1172 (8th Cir. 1994). The Eighth Circuit has held that under the
case‐or‐controversy requirement, a “class must be defined ‘in such a way that anyone
within it would have standing.’” Stuart, 910 F.3d at 377 (8th Cir. 2018) (quoting Avritt v.
Reliastar Life Ins. Co, 615 F.3d 1023, 1034 (8th Cir. 2010)). In other words, a “named plaintiff
cannot represent a class of persons who lack the ability to bring a suit themselves.” Avritt,
615 F.3d at 1034.
To understand the standing argument in this case, one must review the Eighth
Circuit’s rules applicable to cases involving “latent” defects. In cases where a physical
defect is alleged, the Eighth Circuit has affirmed dismissal of class action warranty and
consumer protection cases for failure to state a claim under the “manifest defect”
doctrine. Under this doctrine, a plaintiff must establish that the product “exhibited the
alleged defect”—that is, that the defect is not latent, but has manifested itself in the
product. O’Neil v. Simplicity, Inc., 574 F.3d 501, 503 (8th Cir. 2009). “It is well established
that purchasers of an allegedly defective product have no legal recognizable claim where
70
the alleged defect has not manifested itself in the product they own.” Briehl v. Gen. Motors
Corp., 172 F.3d 623, 628 (8th Cir. 1999).
In O’Neil, the Eighth Circuit affirmed dismissal of a class action seeking
overpayment damages because the defect (a malfunctioning drop‐side crib) had not
manifested. 574 F.3d at 503–04. The Eighth Circuit called such suits “no‐injury suits” and
the classes that bring them “no‐injury classes,” citing, among other cases, its opinion in
Briehl: “An overwhelming majority of courts have dismissed these unmanifested defect
claims and rejected the idea that the Plaintiffs can sue manufacturers for speculative
damage.” Briehl, 172 F.3d at 630, quoted in O’Neil, 574 F.3d at 505.
Two years after O’Neil, the Eighth Circuit examined the manifest defect rule in the
context of the Avritt standing analysis. In In re Zurn Pex Plumbing Products Litigation, the
Eighth Circuit observed that “[i]n most cases the question whether a plaintiff has a
cognizable injury sufficient to confer standing is closely bound up with the question of
whether and how the law will grant him relief.” 644 F.3d 604, 616 (8th Cir. 2011) (cleaned
up). The Zurn plaintiffs complained about leaky plumbing systems, and the defendant
argued that the plaintiffs whose plumbing systems have not leaked (the “dry plaintiffs”)
had no standing and could not be represented by class members whose plumbing had
leaked. The Eighth Circuit applied the O’Neil manifest defect rule to its standing analysis:
“it ‘is not enough’ for [the] plaintiff ‘to allege that a product line contains a defect or that a
product is at risk for manifesting this defect; rather, the plaintiffs must allege that their
71
product actually exhibited the alleged defect.’” Id. (quoting O’Neil, 574 F.3d at 503
(emphasis added)); see also Thunander v. Uponor Inc., 887 F. Supp. 2d 850, 864 (D. Minn.
2012). The court determined that the requirements for Article III standing were satisfied
because the plaintiffs had adduced evidence that the defect in the pipes was “already
manifest in all systems” because it would “afflict[] all of the fittings upon use, regardless
of water conditions or installation practices.” Zurn, 644 F.3d at 616–17.
Plaintiffs do not dispute that the manifest defect rule applies to Article III standing
under Zurn; indeed, they argue that Zurn is the proper analogue to this case because they,
too, have presented evidence that the design defect was manifest in all Class Vehicles. In
contrast, Polaris likens this case to O’Neil and Briehl, among others, arguing that Plaintiffs
have not brought forward proof that the alleged exhaust heat defect has manifested itself
in all Class Vehicles.21
Against the landscape of this case law, Plaintiffs’ evidence is insufficient to
establish injury‐in‐fact for the class. This case is unlike Zurn, where the allegations and
evidence did not merely establish pipe fittings that presented a “risk” of developing
Following the Zurn rule, a court in this District recently rejected two claims against
Polaris for allegedly defective ATVs, concluding that the plaintiffs lacked standing to
assert their claims because they did “not allege, directly or by reasonable inference, that
all of the vehicles that contain the defective engine necessarily overheat, catch fire, or
otherwise malfunction.” In re Polaris Mktg., Sales Practices, & Prod. Liab. Litig., 364 F. Supp.
3d 976, 984 (D. Minn. 2019) (“Polaris Mktg. I”) (emphasis in original); see generally In re
Polaris Mktg., Sales Practices, & Prod. Liab. Litig., No. 18‐CV‐0939 (WMW/DTS), 2020 WL
919259, at *1 (D. Minn. Feb. 26, 2020) (“Polaris Mktg. II”).
21
72
harm, which in that case was stress corrosion cracking in the pipes. 644 F.3d at 617.
Rather, the Zurn plaintiffs alleged that stress corrosion cracking was “already manifest in
all systems,” and brough forward expert testimony opining that the stress corrosion
cracking would occur in the pipes “as soon as they [were] exposed to domestic water.”
Id. 22
The Class Vehicles are far more like the cribs in O’Neil and the brakes in Briehl.
Plaintiffs’ experts have opined that many of the Class Vehicles generated temperatures
that caused discomfort, burned riders, and melted parts of afflicted ATVs. But Plaintiffs
have adduced no evidence of a common design that necessarily manifests itself in
discomfort, burns, or melting.
Plaintiffs claim that their expert, Colin Jordan, has identified that the Class
Vehicles have “a common design for thermal management.” (See ECF No. 335 at 15.) They
claim they have “amassed a wealth of evidence that the Class Vehicles have a common
design defect of excessive heat that extends across all versions of all those models,” in
particular, evidence that a “hot exhaust manifold sits obscured beneath a thin plastic side
Because, as Zurn notes, the standing issue is intertwined with an analysis on the merits,
the manifest defect rule has also been analyzed under state law, as was the case in Briehl
and O’Neil. Since the Eighth Circuit addresses this issue as one of constitutional standing,
the Court does so as well. See, e.g., Penrod v. K&N Engʹg, Inc., No. 18‐CV‐02907 (ECT/LIB),
2020 WL 264115, at *3 (D. Minn. Jan. 17, 2020) (“The law is clear in the Eighth Circuit that
a federal court lacks subject‐matter jurisdiction over absent class members’ defective‐
product claims if there is no allegation that the product manifested the defect.”).
22
73
cover, and the high [exhaust gas temperatures] and low clearance create melt risks to the
ATV and burn risks to the rider.” (See id. at 30.)23
A review of the record indicates that Plaintiffs paint with too broad a brush in their
attempt to identify a design defect universal to all Class Vehicles. The Class Vehicles
encompass ATVs with different body architectures and different heat management
systems that pose different melting and burning risks. (See generally ECF No. 368 (filed
under seal).) They include Sportsman 450s, 570s, 850s, and 1000s. These have four
different engine sizes: 499 cubic centimeters, 567 cubic centimeters, 850 cubic centimeters,
and 952 cubic centimeters, respectively. The Sportsman 450s and 570s have single
cylinder engines and the Sportsman 850s and 1000s have dual cylinder engines. They also
differ in engine orientation. The engines in the Sportsman 450s and 570s have an east‐
west orientation while the engines in the Sportsman 850s and 1000s have a north‐south
orientation. These differences result in differences in the ways the Class Vehicles route
exhaust gases. The exhaust pipe in the Sportsman 450s and 570s routes exhaust gases
Plaintiffs presented a similar argument before Judge Schiltz in opposition to Polaris’s
motion to dismiss their amended complaint. Judge Schiltz rejected Polaris’s argument
that Plaintiffs lacked standing to represent class members who had purchased other
Sportsman models or model years because Plaintiffs had “adequately pleaded standing
by alleging that the entire Sportsman line shares the same design defect—the routing of
high‐temperature exhaust next to the rider’s leg and under the rider’s seat.” (ECF No. 42
at 13.) This Court agrees that the Complaint on its face alleges a common design defect.
But in response to Plaintiffs’ motion for class certification, Polaris has presented evidence
that the Class Vehicles differ significantly in their exhaust heat management—the issue
at the very heart of Plaintiffs’ case. As discussed further below, on this record the standing
analysis therefore yields a different outcome.
23
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from the engine toward the front and wraps around the front and side of the engine. The
exhaust pipe in the Sportsman 850s and 1000s routes exhaust gases from the engine
toward the side and back.
These differences appear to result in variations in how riders experienced
problems with the heat emitted by Class Vehicles. For example, Polaris’s riders
complained most heavily that the Sportsman 570 blew hot on air on them, specifically,
their right legs. (See, e.g., ECF No. 340‐26 ¶ 21(a).) In comparison, complaints about the
Sportsman 850s and 1000s center around melting side panels. (See ECF No. 240‐26
¶ 21(b).) Indeed, Polaris has offered different fixes for heat problems associated with the
Sportsman 450s and 570s than those associated with the Sportsman 850s and 1000s. For
the Sportsman 450s and 570s, Polaris offered a right‐hand side panel close‐off kit to block
heat from hitting riders’ right ankles and calves. (See ECF No. 340‐26 ¶ 9(b).) For the
Sportsman 850s and 1000s, Polaris issued a recall and provided dealers with a recall kit.
(See ECF No. 340‐26 ¶ 9(c).) Polaris’s polling data indicates that proportionally fewer
customers accepted the close‐off kit on the Sportsman 450s and 570s than the recall kit on
the Sportsman 850s and 100s.
Plaintiffs’ expert nonetheless contends that the Class Vehicles “had a [common]
design problem, namely[,] the lack of a sufficient air gap and insufficient heat protection
75
for machine, rider, and other critical components.” (See ECF No. 340‐26 ¶ 21.)24 But the
record does not indicate that, as a matter of design, low clearances across the Class
Vehicles rendered them defective. For example, Polaris employee Robin Stroot, himself a
Sportsman ATV owner, testified that while some Polaris employees reported that the side
panels of their Sportsman 850s were melting, he had no such problems. (See ECF No. 340‐
10 at 95.) One of those employees, an engineer, determined that his exhaust pipe was
touching the nylon side panel. (See id. at 97.) Stroot determined that his own Sportsman
850 had a gap between the pipe and the nylon. (See id.) And he testified that the model
used at the time had a six and‐a‐half millimeter gap between the exhaust pipe and side
panel. (See id.) Stroot testified that with the clearance between the exhaust pipe and the
side panel on his vehicle, he never had an issue. (See id. at 240–41.) But he testified that
Polaris is aiming to increase the gap to “make sure” that it is “covered for any kind of
manufacturing tolerances” because six and‐a‐half‐ millimeters “doesn’t suffice for
manufacturing tolerance.” (See id. at 241.) As evidence of consumer complaints bore out,
this means that, as in O’Neil, some Sportsman ATVs will exhibit heat‐related issues
(discomfort, burns, melting), while others will not.
Thus, the allegations and the evidence establish that the vehicles are at risk of
overheating and causing discomfort or injury. Eighth Circuit law is clear that this
As noted above, the record indicates that mechanisms for heat management differ
across the Class Vehicles.
24
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distinction is critical. Briehl, 172 F.3d at 627. Plaintiffs’ inability to bring forward evidence
of a defect that manifested in the Class Vehicles dooms the class on standing grounds.
See, e.g., Penrod, 2020 WL 264115, at *4 (dismissing plaintiffs’ class action complaint on
standing grounds because on its face the proposed class included purchasers of oil filters
that never exhibited a defect); Polaris Mktg. I, 364 F. Supp. 3d at 984.
Plaintiffs argue that their case is different, because their case involves the theory
of economic loss from customer dissatisfaction due to risk of overheating. According to
Plaintiffs, the economic loss allegation is sufficient to confer standing. Eighth Circuit case
law suggests that it is not. Economic loss was also alleged in Briehl and O’Neil, and under
those cases and Zurn, there must be some defect manifested for the class to be dissatisfied.
As noted above, Plaintiffs do not present evidence that all Class Vehicles contained a
defect that actually manifested. In short, the theory Plaintiffs assert—that all Class
Vehicles had a design defect causing “excessive heat” such that customers were
overcharged for their Sportsman ATVs because the ATVs did not perform as expected—
is not borne out by the record before the Court. Because class membership depends on
Class Vehicle ownership, there are members of Plaintiffs’ proposed class who fall outside
of the group of those who experienced excessive heat issues. Those class members do not
have standing, and the class cannot be certified. See, e.g., Phelps v. Powers, 295 F.R.D. 349,
353 (S.D. Iowa 2013) (concluding proposed class could not be certified because it was not
defined to include only class members with Article III standing).
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II.
Rule 23(b)(3): 25 Predominance
Even if the standing issue did not require the Court to deny class certification,
Plaintiffs’ proposed class cannot meet the requirements of Rule 23(b)(3), which is the
alleged vehicle by which they seek certification.26 Under Rule 23(b)(3), “a district court
must find ‘that the questions of law or fact common to class members predominate over
any questions affecting only individual members, and that a class action is superior to
other available methods for fairly and efficiently adjudicating the controversy.” Stuart,
910 F.3d at 374 (quoting Fed. R. Civ. P. 23(b)(3)). “The ‘predominance inquiry tests
whether proposed classes are sufficiently cohesive to warrant adjudication by
representation.’” Id. at 374–75 (quoting Amchem, 521 U.S. at 623 ). It is satisfied “if ‘the
Because the predominance requirement of Rule 23(b)(3) is more demanding than the
commonality and typicality requirements of Rule 23(a), and all four requirements of Rule
23(a) must be satisfied for a proposed class to be certified, the Court need not address
Rule 23(a) to rule on the Plaintiffs’ motion for class certification. See Amchem Prod, Inc. v.
Windsor, 521 U.S. 591 (1997) (“Even if Rule 23(a)’s commonality requirement may be
satisfied by that shared experience, the predominance criterion is far more demanding.”);
see, e.g., Avritt, 615 F.3d at 1029 (“Like the district court, we will assume that the Avritts
could satisfy the prerequisites of Rule 23(a) and will focus our attention on their
arguments that the class should be certified under Rule 23(b)(2) or 23(b)(3).”)
26 In the Order on Defendant’s Motion to Dismiss, Judge Schiltz noted, “The Court tends
to agree with those courts that have found that, in the context of a putative class action,
the question whether a named plaintiff may represent class members who purchased
products that differed in some respect from the product purchased by the named plaintiff
is not an issue of standing, but rather an issue to be resolved at the class‐certification
stage.” (ECF No. 42 at 12.) This Court, too, agrees that the challenge presented here—that
of whether a named plaintiff may represent class members who purchased products
different from the product purchased by the named plaintiff—is better suited for a
predominance inquiry than a standing inquiry. The Court will therefore address both.
25
78
common, aggregation‐enabling, issues in the case are more prevalent or important than
the non‐common, aggregation‐defeating, individual issues.’” Id. at 375 (quoting Tyson
Foods, Inc., 136 S. Ct. at 1045). “The superiority requirement asks whether the class action
is the best available method for resolving the controversy.” Cullan & Cullan LLC v. M‐
Qube, Inc., No. 8:13CV172, 2016 WL 5394684, at *6 (D. Neb. Sept. 27, 2016).
A.
Proposed Nationwide Class
The Eighth Circuit has explained that “an individualized choice‐of‐law analysis
must be applied to each plaintiff’s claim in a class action.” St. Jude I, 425 F.3d at 1120. The
same three‐part test applies to the choice‐of‐law analysis in the context of class
certification. As set forth above, this Court has analyzed the consumer protection laws of
each of the named Plaintiffs’ states of residence and found outcome‐determinative
conflicts. And Plaintiffs acknowledge that the consumer protection laws of 19 other states
conflict with the MCFA. (Pls’ Class Cert. Br. at 33.) This Court has considered the
constitutionality of applying the MCFA extraterritorially, as well as the five‐factor test,
and found that the MCFA should not be applied to the claims of nonresident Plaintiffs.
And as the Eighth Circuit has noted, “‘[s]tate consumer‐protection laws vary
considerably, and courts must respect these differences rather than apply one state’s law
to sales in other states with different rules.” St. Jude I, 425 F.3d at 1120 (quoting In re
Bridgestone/Firestone, Inc., 288 F.3d at 1018). Thus, the Court cannot apply the MCFA to
Plaintiffs’ proposed nationwide class. And, as discussed in detail above, the Court has
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identified various outcome‐determinative differences among Plaintiffs’ states’ consumer
protection statutes. The Court concludes that due to these differences in state law,
“individualized legal issues will substantially predominate over common legal issues in
this litigation.” In re Nat’l Hockey League Players’ Concussion Injury Litig., 327 F.R.D. 245,
266 (D. Minn. 2018) (collecting cases). The Court would be required to apply a wide range
of legal standards to adjudicate class members’ claims. Because these individualized legal
analyses would overshadow the common issues, the Court cannot certify a nationwide
class under Rule 23(b)(3). See id.
Even if the Court could apply the MCFA to Plaintiffs’ proposed nationwide class,
individualized evidence supporting elements of Plaintiffs’ claims would predominate
over common issues. As the Eighth Circuit held in St. Jude II, although individual
plaintiffs may not be required to present direct proof of individual reliance under MCFA,
defendants may “present evidence negating a plaintiff’s direct or circumstantial showing
of causation and reliance.” 522 F.3d at 836. It concluded that given the showing by St.
Jude that it would “present evidence concerning the reliance or non‐reliance of individual
physicians and patients on representations made by St. Jude,” it was clear that there
would be plaintiff‐by‐plaintiff determinations and “common issues [would] not
predominate the inquiry into St. Jude’s liability.” Id. at 840. On remand, the district court
concluded that although the St. Jude II court primarily focused on the plaintiffs’ MCFA
misrepresentation claims, under its reasoning the plaintiffs also could not satisfy the Rule
80
23 requirements with respect to their MCFA material omissions claims. In re St. Jude Med.
Inc. Silzone Hearts Prods. Liab. Litig., No. 01‐CV‐1396 (JRT/FLN), 2009 WL 1789376, at *3–
*5 (D. Minn. June 23, 2009). Like the defendant in St. Jude II, Polaris is prepared to present
evidence to dispute the causal nexus between Polaris’s actions and the alleged injury the
class members suffered. Polaris’s rebuttal opportunity requires plaintiff‐by‐plaintiff
determinations of causation.
The Court is not persuaded by Plaintiffs’ arguments to the contrary. Among other
things, Plaintiffs claim that its evidence of an 8.8 percent price premium can establish the
causal nexus required by the MCFA because “[t]he overcharge theory shows that
everyone who bought overpaid, no matter what they saw or what they knew.” (Pls’ Class
Cert Reply Br. at 13.) In other words, “the overcharge theory makes individual
knowledge (like individual reliance) moot.” (Id. at 14.) As the Court has noted above, the
MCFA still requires a plaintiff to establish that the defendant’s conduct had some impact
on inducing the individual plaintiff’s actions. What Plaintiffs request is for the expert‐
driven overcharge theory to supplant required showings of causation, injury and
damages. No court considering the MCFA has allowed such an expansive use of this
theory, and it is not appropriate in this case either.
For these reasons, Plaintiffs cannot satisfy the Rule 23(b)(3) predominance
requirements with respect to their proposed nationwide class, and class certification will
be denied.
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B.
Proposed Statewide Classes
Each of proposed statewide classes must also satisfy the requirements of Rule
23(b)(3).27 Stuart, 910 F.3d at 374. Here, too, individualized issues as to injury and
causation or reliance would predominate in the proposed California and North Carolina
classes, in addition to their proposed Minnesota class. As explained above,
individualized issues predominate for claims governed by Minnesota law. Because the
UCL, CLRA, and NCDUTPA all require actual reliance, individualized issues would also
predominate as to claims governed by these laws.
III.
Superiority
To determine whether a class action is the best available method to resolve a
dispute, courts examine whether a class action would be manageable. In re Baycol Prods.
Litig., 218 F.R.D. at 209. One of the Court’s considerations is whether variations in state
law render class action unmanageable. See, e.g., id. at 209–10; Bridgestone/Firestone, 288
F.3d at 1018 (“Because these claims must be adjudicated under the law of so many
jurisdictions, a single nationwide class is not manageable.”).
Nationwide class treatment would not be a superior method of adjudication here.
As explained above, the Court cannot apply the MCFA extraterritorially to Plaintiffs’
As to statewide classes, because of the Court’s determination on predominance, the
Court again does not reach the Rule 23(a) factors.
27
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proposed nationwide class, and class treatment is not appropriate under the laws of so
many different states. Bridgestone/Firestone, 288 F.3d at 1018.
That leaves the only logical alternative to be six statewide classes. Proceeding in
such a manner would present a significant risk of jury confusion and would create
enormous challenges to trial management. Individual issues would dominate the trial,
including the different Sportsman ATV models and mechanisms for routing heat exhaust,
the issue of causation, and individualized inquiries into each Plaintiff’s knowledge and
experience with the Sportsman ATV, where necessary under applicable state law. The
management of such a trial is not superior to more individualized methods of
adjudication. Thus, the Court declines to certify subclasses as well. See
Bridgestone/Firestone, 288 F.3d at 1018‐19 (noting the variability in proof for each claim
and concluding that “this litigation is not manageable as a class action even on a
statewide basis”); In re Tetracycline Cases, 107 F.R.D. 719, 733 (W.D. Mo. 1985) (declining
to certify subclasses where keeping track of each subclass would likely confuse the jury
and complicate structuring and managing trial).
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CONCLUSION
Based on the foregoing and on all the files, records, and proceedings herein, IT IS
HEREBY ORDERED THAT:
1.
Polaris’s Motion to Exclude Expert Testimony (ECF No. 371) is DENIED;
2.
Polaris’s Motion for Summary Judgment (ECF No. 356) is DENIED; and
3.
Plaintiffs’ Motion to Certify Class (ECF No. 332) is DENIED.
Dated: March 31, 2020
BY THE COURT:
s/Nancy E. Brasel
Nancy E. Brasel
United States District Judge
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