Opinion
[Copyrighted Material Omitted] [Copyrighted Material Omitted]
Adam J. Levitt, Daniel R. Ferri, DiCello Levitt Gutzler, LLC, Edmund S. Aronowitz, Pro Hac Vice; Grant & Eisenhofer, P.A., Chicago, IL, Andrew E. Brashier, Archie Irwin Grubb, II, Pro Hac Vice; H. Clay Barnett, Leslie L. Pescia, Pro Hac Vice; W. Daniel Miles, III, Beasley Allen Crow Methvin Portis & Miles, Montgomery, AL, Kenneth S. Canfield, Doffermyre Shields Canfield & Knowles, LLC, Atlanta, GA, for Plaintiffs.
Clare Tian Zhang, Frederick Lamback Cooper, IV, Frederick Newman Sager, Jr., Gary James Toman, Jennifer A. Adler, Mark R. Johnson, Weinberg Wheeler Hudgins Gunn & Dial, LLC-Atl, Atlanta, GA, for Defendants.
ORDER
HONORABLE STEVE C. JONES, UNITED STATES DISTRICT JUDGE
This matter comes before the Court on Plaintiffs’ Motion for Class Certification (Doc. No. [153] ). Plaintiffs seek to certify a nationwide class for their claims of breach of express warranty, breach of implied warranty of merchantability, fraudulent misrepresentation, negligent misrepresentation, fraudulent concealment, unjust enrichment, and violation of state consumer protection statutes. Doc. No. [153-1], pp. 14-20.
I. BACKGROUND
The Terex Hi-Ranger XT Series ("Hi-Ranger XTs") is a line of "articulating over-center aerial devices," which are "used to elevate workers or equipment to inaccessible areas, usually at heights exceeding dozens of feet." Doc. No. [105], p. 2, ¶ 1. These devices are usually "mounted onto vehicles such as commercial truck chassis." Id. The combination of the aerial device and vehicle is sometimes called a "Cherry Picker" or "Bucket Truck." Id. Defendant Terex South Dakota and its predecessors designed, manufactured, marketed, and sold Hi-Ranger XTs from 1996 until they discontinued production of the line in 2015. Id. ¶ 2; Doc. No. [118], p. 6, ¶ 2.
Plaintiffs allege that: (1) "Defendants failed to comply with relevant industry design principles, and the Hi-Ranger XTs thus suffer from dangerously high stress levels," and (2) "Defendants knew of the high stress levels and dangerous cracking that resulted therefrom, but failed to disclose that information to Class members." Doc. No. [153], p. 2. Plaintiffs seek to certify a nationwide class of "all persons and entities who purchased, not for resale, or leased a vehicle equipped with a Terex Hi-Ranger XT (‘the Class’)." Id.
II. LEGAL STANDARD
The party seeking class certification must satisfy each of the elements of Rule 23(a) and at least one of the provisions of Rule 23(b). Fed.R.Civ.P. 23. "Rule 23 does not set forth a mere pleading standard." Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011). Rather, a party seeking to certification must "affirmatively demonstrate his compliance with the Rule." Id.
Rule 23(a) establishes four prerequisites for maintaining any claim as a class action:
(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.
Id. These prerequisites are commonly referred to as: (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation. See In re Atlas Roofing Corp. Chalet Shingle Prod. Liab. Litig., 321 F.R.D. 430, 437 (N.D.Ga. 2017). Failure to establish any one of the four factors precludes certification. Id. Additionally, Rule 23(b) requires that plaintiffs seeking to certify a class show one of the following:
(1) prosecuting separate actions by or against individual members of the class would create a risk of prejudice to the party opposing the class or to those members of the class not parties to the subject litigation; (2) the party opposing the class has refused to act on grounds that apply generally to the class, necessitating final injunctive or declaratory relief; or (3) questions of law or fact common to the members of the class predominate over any questions affecting only individual members and that a class action is superior to other available methods for fair and efficient adjudication of the controversy.
"The decision to grant or deny class certification lies within the sound discretion of the district court." Armstrong v. Martin Marietta Corp., 138 F.3d 1374, 1386 (11th Cir. 1998) (en banc). The Supreme Court held in General Telephone Co. of Southwest v. Falcon that certification is proper only if "the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied." 457 U.S. 147, 161, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982). In conducting this analysis, the Court is permitted to look beyond the pleadings to determine if certification is appropriate. See id. ; Nat’l Air Traffic Controllers Ass’n v. Dental Plans, Inc., No. 1:05 CV 882 TWT, 2006 WL 1663286, at *3 (N.D.Ga. June 12, 2006).
III. DISCUSSION
A. Class Definition
"Before a district court may grant a motion for class certification, a plaintiff ... must establish that the proposed class is adequately defined and clearly ascertainable." In re Atlas Roofing Corp., 321 F.R.D. at 438 (quoting Little v. T-Mobile USA, Inc., 691 F.3d 1302, 1304 (11th Cir. 2012)). "An identifiable class exists if its members can be ascertained by reference to objective criteria." Bussey v. Macon Cnty. Greyhound Park, Inc., 562 Fed.Appx. 782, 787 (11th Cir. 2014). Applying the objective criteria must be "administratively feasible," meaning identifying class members is a "manageable process that does not require much, if any, individual inquiry." Id. (quoting Newberg on Class Actions § 3.3 (5th ed.)).
Plaintiffs seek to certify a "nationwide class of all persons and entities who purchased, not for resale, or leased a vehicle equipped with a Terex Hi-Ranger XT." Doc. No. [153], p. 2. Defendants argue that Plaintiffs have failed to show that the proposed class is adequately defined and clearly ascertainable. Doc. No. [158], p. 14. Plaintiffs respond that Defendants "maintain[ ] a database of original owners" of Hi-Ranger XTs, and that the persons or entities that purchased a High-Ranger XT from Defendants or their distributors can be "easily identified" during the remaining discovery period. Doc. No. [159], p. 14. They further assert that class members who purchased their Hi-Ranger XTs on the secondary market can "reliably self-identify through affidavit and/or purchase documentation." Doc. No. [159], p. 15.
"A proponent of class certification may rely on the defendant’s business records to identify prospective class members, but it is not enough to simply allege that the defendant’s records will allow for identification." In re Atlas Roofing Corp., 321 F.R.D. at 438 (citations omitted). "[T]he plaintiff must also establish that the records are in fact useful for identification purposes and that identification will be administratively feasible." Id. (quoting Karhu v. Vital Pharms., Inc., 621 Fed.Appx. 945, 947 (11th Cir. 2015)). Similarly, a plaintiff "cannot satisfy the ascertainability requirement by proposing that class members self-identify (such as through affidavits) without first establishing that self-identification is administratively feasible and not otherwise problematic." Karhu, 621 Fed.Appx. at 949 (rejecting plaintiff’s claims that class members could be relied upon to self-identify and noting that most of defendant’s sales records reflected third party retailers, not class members). Even assuming, as Plaintiffs do, that Defendants’ databases are maintained in a way that would make identification of class members administratively feasible, many of Defendants’ sales were to third party retailers. Secondary purchasers would not be listed. Doc. No. [158], p. 14. While Plaintiffs allege secondary purchasers could reliably self-identify, "[a] plaintiff proposing ascertainment via self-identification ... must establish how the self-identification method proposed will avoid [ ] potential problems" such as reliability issues and procedural infirmities. Karhu, 621 Fed.Appx. at 949. Other than wishful thinking that class members may have kept purchase records, Plaintiffs provide no evidence that self-identification would be administratively feasible. Because Plaintiffs have not shown that Defendant’s database coupled with self-identification can identify class members without mandating individual inquiries or raising issues of reliability, the Court finds the proposed class is not adequately defined and clearly ascertainable.
"On the one hand, allowing class members to self-identify without affording defendants the opportunity to challenge class membership ‘provide[s] inadequate procedural protection to ... [d]efendant[s]’ and ‘implicate[s their] due process rights.’ On the other hand, protecting defendants’ due-process rights by allowing them to challenge each claimant’s class membership is administratively infeasible, because it requires a ‘series of mini-trials just to evaluate the threshold issue of which [persons] are class members.’ " Karhu, 621 Fed.Appx. at 949 (quoting Perez v. Metabolife Intern. Inc., 218 F.R.D. 262, 269 (S.D. Fla. 2003); Fisher v. Ciba Specialty Chem. Corp., 238 F.R.D. 273, 302 (S.D. Ala. 2006)).
Plaintiffs argue that secondary purchasers would have retained purchase documentation because a Hi-Ranger XT is a "bigticket item." Doc. No. [159], p. 15.
Without a clearly ascertainable class, the Court cannot grant class certification. Still, because the Court’s Order is subject to immediate appeal under Rule 23(f), the Court will address the requirements of Rules 23(a) and 23(b)(3) to determine whether the Plaintiff would otherwise be entitled to class certification.
B. Rule 23(a)
1. Numerosity
To satisfy the numerosity requirement, Plaintiffs must show that joinder of all members of the putative class would be "impractical." Fed.R.Civ.P. 23(a)(1). "Practicability of joinder depends on many factors, including, for example, the size of the class, ease of identifying its numbers and determining their addresses, facility of making service on them if joined and their geographic dispersion." In re Atlas Roofing Corp., 321 F.R.D. at 439 (quoting Kilgo v. Bowman Transp., Inc., 789 F.2d 859, 878 (11th Cir. 1986)). "[W]hile there is no fixed numerosity rule, generally less than twenty-one is inadequate, more than forty adequate, with numbers between varying according to other factors." Cox v. Am. Cast Iron Pipe Co., 784 F.2d 1546, 1553 (11th Cir. 1986).
Plaintiffs assert that Defendants sold "at least 9,194 Hi-Ranger XTs in the United States during the relevant time period." Doc. No. [153-1], p. 10. Obviously, joinder of this many individuals would be impossible. The defendants have not objected to class certification on numerosity grounds. Accordingly, the court finds that the proposed class meets the numerosity prerequisite of Rule 23(a).
2. Commonality
The commonality requirement is satisfied if the named plaintiff demonstrates the presence of questions of law or fact common to the entire class. Fed.R.Civ.P. 23(a)(2). It is not necessary that all questions of law and fact be common. Dukes, 564 U.S. at 359, 131 S.Ct. 2541. Indeed, "[e]ven a single [common] question" satisfies the commonality requirement. Id.
Some common issues to all putative class members in this case include: (1) whether the Hi-Ranger XTs complied with the relevant industry safety standard, ANSI A92.2, (2) whether Defendants expressly warranted that the Hi-Ranger XTs did comply with ANSI A92.2, and (3) whether any non-compliance rendered the Hi-Ranger XTs unfit for their ordinary use or reduced their value. Therefore, Plaintiffs have demonstrated that there are issues common to all putative class members. Whether common issues predominate over individual ones, however, is addressed in Section C. 1.
3. Typicality
The typicality requirement mandates that the claims of the representative plaintiffs are typical of the claims of the class. Fed.R.Civ.P. 23(a)(3). This requirement is satisfied when "a plaintiff’s injury arises from or is directly related to a wrong to a class, and that wrong includes the wrong to the plaintiff." In re Atlas Roofing Corp., 321 F.R.D. at 440 (citations omitted).
Here, the Plaintiffs’ claims arise from the same allegations of wrongful conduct as the claims of the putative class members. Specifically, all the claims are based on the sale of Hi-Ranger XTs which allegedly suffer from the same defect. Defendants argue that Plaintiff Brown’s Tree Service ("Plaintiff Brown’s") is not typical of the putative class because its Hi-Ranger XT never cracked or failed, and it purchased two Hi-Ranger XTs after the lawsuit was filed. Doc. No. [158], p. 30. However, neither of these facts speak to the common issues of whether the Hi-Ranger XTs were in fact ANSI complaint at the time of sale, and whether any non-compliance reduced their value or rendered them unfit for their ordinary use. The Plaintiffs’ claims as to these issues arise from the same legal theories, including breach of express warranty and breach of implied warranty of merchantability. Because the Court is satisfied that a "sufficient nexus exists between the claims of the named representatives and those of the class at large," typicality is met. Id. (citations omitted).
4. Adequacy of Representation
To prove adequacy of representation, a plaintiff must demonstrate that the class representatives "fairly and adequately protect the interests of the class." Fed.R.Civ.P. 23(a)(4). The purpose of this requirement is to prevent conflicts of interest between named representatives and other class members. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997).
Defendant argues that Plaintiff Ace Tree Surgery ("Plaintiff Ace") is not an adequate representative because it allegedly misused its Hi-Ranger XT, resulting in the machine cracking. Doc. No. [158], p. 14. Defendants argue this misuse puts Plaintiff Ace in conflict with the interests of other putative class members who did not misuse their machines. Id. However, Plaintiff Ace’s use of its Hi-Ranger XT is not relevant to the question of whether the XTs failed to meet the relevant industry standard at the time of sale. Because this is the question relevant to all putative class members, there is no evidence Plaintiff Ace is not adequately representative of the putative class.
C. Rule 23(b)(3)
Plaintiffs seek to certify the proposed class under Rule 23(b)(3). To certify a Rule 23(b)(3) class, the Plaintiff must demonstrate two prerequisites: predominance and superiority. Fed.R.Civ.P. 23(b)(3).
1. Predominance and Superiority
To meet the predominance requirement, "the issues in the class action that are subject to generalized proof and thus applicable to the class as a whole, must predominate over those issues that are subject to individualized proof." Cooper v. Southern Co., 390 F.3d 695, 722 (11th Cir. 2004) (quoting Kerr v. City of W. Palm Beach, 875 F.2d 1546, 1558 (11th Cir. 1989)). If the "plaintiffs must still introduce a great deal of individualized proof or argue a number of individualized legal points to establish most or all of the elements of their individual claims," then predominance is not met. In re Atlas Roofing Corp., 321 F.R.D. at 442 (citations omitted).
In Brown v. Electrolux Home Products, Inc., the Eleventh Circuit provided a three-step approach for evaluating predominance: (1) identify the parties’ claims and defenses and their elements, (2) determine whether these issues are common questions or individual questions by analyzing how each party will prove them at trial, and (3) determine whether the common questions predominate. 817 F.3d 1225, 1234 (11th Cir. 2016). In addition, the Eleventh Circuit noted that "[d]istrict courts should assess predominance with its overarching purpose in mind— namely, ensuring that ‘a class action would achieve economies of time, effort, expense, and promote ... uniformity of decision as to persons similarly situated, without sacrificing procedural fairness or bringing about other undesirable results.’ " Id. at 1235 (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 615, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997)).
To meet the superiority requirement, the Court must conclude "that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed.R.Civ.P. 23(b)(3). The factors relevant in determining superiority include:
the class members’ interests in individually controlling the prosecution or defense of separate actions; the extent and nature of any litigation concerning the controversy already begun by or against class members; the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and the likely difficulties in managing a class action.
Fed. R. Civ. P. 23(b)(3). The Court must weigh "the relative advantages of a class action suit over whatever other forms of litigation might be realistically available to the plaintiffs." Klay v. Humana, Inc., 382 F.3d 1241, 1269 (11th Cir. 2004).
2. Choice of Law
Because Plaintiffs seek to certify a nationwide class, the Court must turn to controlling choice of law principles to determine the relevant elements of each claim. Class actions are improper unless all litigants are governed by the same law— "otherwise, the class representative cannot meet his burden" of predominance and superiority under Rule 23(b)(3). Siegel v. Shell Oil, 256 F.R.D. 580, 583 (N.D.Ill. 2008), aff’d, 612 F.3d 932 (7th Cir. 2010).
The parties agree that, because this action was filed in Connecticut, Connecticut choice of law principles govern. See Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Plaintiffs argue that these principles point to the application of Connecticut law, as the alleged deceptive conduct occurred in Connecticut, the location of Defendant Terex Corporation’s principle place of business. Doc. No. [159], p. 4. Defendants counter that choice of law directs the Court to apply the laws of the state where each purchaser resides, noting that "the only connection with Connecticut is that TSD’s parent Terex Corporation is located there." Doc. No. [158], pp. 10, 16.
When a class representative proposes to certify a class to pursue state-law claims, a court must ensure that its choice of state law "is not arbitrary or unfair." Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 814-16, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985). In Shutts, the Supreme Court reviewed a Kansas state court’s decision to apply Kansas law "to every claim in [the multi-state class action], notwithstanding that ... some 97% of the plaintiffs in the case had no apparent connection to the State of Kansas except for this lawsuit." Id. The Supreme Court held that, because Kansas lacked interest in claims unrelated to that state, and the substantive law conflicted with that of with other jurisdictions, the application of Kansas law to every claim was "sufficiently arbitrary and unfair as to exceed constitutional limits." Id.
Consistent with Shutts, the first step in determining whether a nationwide class may be certified is to determine whether the proposed state’s law "conflicts in any material way with any other law which could apply," as "[t]here can be no injury in applying [a state’s] law if it is not in conflict with that of any other jurisdiction connected to this suit." 472 U.S. at 816, 105 S.Ct. 2965. However, as detailed in Defendants’ Exhibit C, Doc. No. [158-5], there are material variations in the relevant state laws. One need only look to Plaintiff’s state consumer protection claims to recognize that application of one state’s laws would be inappropriate in this action, as state consumer protection laws vary considerably. See BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 568-73, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996) ("The result is a patchwork of rules representing the diverse policy judgments of lawmakers in 50 States.").
See Doc. No. [158-5] for a summary of the varying elements of breach of express warranty, breach of implied warranty of merchantability, unjust enrichment, negligent misrepresentation, fraud, and consumer protection statutes. For example: some states require actual reliance in breach of express warranty and fraud claims while others do not; some states require vertical privity in breach of implied warranty of merchantability claims while others do not; some states do not recognize a separate cause of action for unjust enrichment or negligent misrepresentation at all; and some consumer protection statutes require a showing of the defendant’s intent while others do not.
Because there are significant differences between Connecticut law and the laws of other states implicated in this action, Connecticut choice of law directs the Court to apply the "most significant relationship" test of the Restatement (Second) of Conflicts of Laws. See W. Derm. Consultants, P.C. v. VitalWorks, Inc., 322 Conn. 541, 558, 143 A.3d 564 (2016). The threshold issue is which state has "the most significant relationship to the occurrence [at issue] and the parties under the principles stated in § 6." Restatement (Second) of Conflict of Laws § 6 (1971). Section 6 of the Restatement states:
the factors relevant to the choice of the applicable rule of law include (a) the needs of the interstate and international systems, (b) the relevant policies of the forum, (c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue, (d) the [protection] of justified expectations, (e) the basic policies underlying the particular field of law, (f) certainty, predictability and uniformity of result, and (g) ease in the determination and application of the law to be applied.
Id. For tort cases, the § 6 factors should viewed with attention to the following contacts:
(a) the place where the injury occurred, (b) the place where the conduct causing the injury occurred, (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered.
Id. § 145(2). For contract cases, the § 6 factors should viewed with attention to the following contacts:
(a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter of the contract, and (e) the domicile, residence, nationality, place of incorporation and place of business of the parties.
Id. § 188(2).
Defendants argue that, applying the § 6 factors in light of the relevant contacts, "the protection of consumers located in the particular state is the most significant interest implicated." Doc. No. [158], p. 12. The Court agrees. For the claims sounding in tort, the place where the injury occurred and the place where the relationship between the parties is centered will be the place of purchase. Similarly, for the claims sounding in contract, the place of contracting, negotiation, and performance will all be the place of purchase. Each state of purchase is the place where each putative class member received and relied upon any misrepresentations or omissions, and each state therefore has an interest in having its own consumer protection laws applied.
Because applying Connecticut choice of law rules leads to the application of many state’s laws, individual issues will predominate in this litigation. "Because these claims must be adjudicated under the law of so many jurisdictions, a single nationwide class is not manageable." Siegel, 256 F.R.D. 580 at 585 (quoting In re Bridgestone/Firestone, Inc., 288 F.3d 1012, 1018 (7th Cir. 2002)). As a result, Plaintiffs have failed in their burden of establishing the requirements of predominance and superiority under Federal Rule of Civil Procedure 23(b)(3).
3. Certification of Sub-Classes
"When appropriate, a class may be divided into subclasses that are each treated as a class under this rule." Fed.R.Civ.P. 23(c)(5). Anticipating that the Court might find, as it has, that the laws of each state of purchase should govern, Plaintiffs have alternatively moved the Court to certify "the proposed Indiana and Georgia subclasses" instead of the nationwide class. Doc. No. [159], p. 5. "The district court has no sua sponte obligation to subclassify; it is the plaintiff’s burden to designate an appropriate class." Heaven v. Trust Co. Bank, 118 F.3d 735, 738 (11th Cir. 1997). "Plaintiffs must come forward with the exact definition of each subclass, its representatives, and the reasons each subclass meets the prerequisites of Rule 23(a) and (b)." Ann. Manual Complex Lit. § 21.28 (4th ed.) (quoting In re Telectronics Pacing Sys., Inc., Accufix Atrial J Leads Prod. Liab. Litig., 168 F.R.D. 203 (S.D. Ohio 1996)). Other than noting that these subclasses meet the numerosity requirement, Plaintiffs have failed to address the Rule 23(a) and (b) requirements for the proposed Indiana and Georgia subclasses.
Furthermore, "redefinition of the class [into subclasses] would involve fact finding difficulties similar to those associated with maintaining the class action." Id. Plaintiffs would still need to rely upon Defendants’ business records and self-identification to identify putative subclass members— a method which, as discussed supra, they have failed to show is administratively feasible.
Finally, even if the Indiana and Georgia subclasses met the requirements of Rule 23(a), individual issues would still predominate under Rule 23(b). Applying Indiana or Georgia law to the Plaintiffs’ claims results in too many individual inquiries. For example, in Indiana, "vertical privity is required for claims of breach of express warranty," meaning the Court would need to separate original purchasers from secondary ones. Atkinson v. P&G Clairol, Inc., 813 F.Supp.2d 1021, 1026 (N.D. Ind. 2011). In Georgia, a claim for fraud requires a showing of justifiable reliance, which would need to be assessed individually. See Engelman v. Kessler, 340 Ga.App. 239, 797 S.E.2d 160, 166 (2017). The consumer protection acts of both states would also require individual inquiries into elements like reliance and actual damages. See Ind. Code. 24-0.5-4(a) ("A person relying upon an uncured or incurable deceptive act may bring an action for the damages actually suffered as a consumer as a result of the deceptive act."); O.C.G.A. § 10-1-391(a); Jenkins v. BAC Home Loan Servicing, LP, 2011, 822 F.Supp.2d 1369, 1375 (M.D. Ga. 2011) (noting that "courts have implied a reliance component into the causation element of the prima facie case under the Georgia Fair Business Practices Act"). The Court therefore finds that the Indiana and Georgia subclasses likewise fail to meet the predominance and superiority requirements of Rule 23(b)(3).
IV. CONCLUSION
Because it finds that Plaintiffs have failed to meet their burden under Rules 23(a) and 23(b), the Court holds that class treatment of these claims is not appropriate. Plaintiffs’ Motion for Class Certification, Doc. No. [153], is therefore DENIED.
IT IS SO ORDERED.