Opinion
NO. CIV. S-06-1947 LKK/GGH.
June 23, 2008
ORDER
Plaintiff Romeo Bravo is an aircraft owner who brought suit against defendants, aircraft engine manufacturers, for damages associated with the defendants' recall of a faulty engine part. Pending before the court is plaintiffs' motion to stay the case while they appeal the court's March 28, 2008 order decertifying the plaintiff class.
The court resolves the motion on the papers. For the reasons stated herein, the court grants the motion.
I. BACKGROUND AND FACTS
This action stems from defendants' recall, or "retirement," of a defective crankshaft that had been installed in many of its engines. After having concluded that a particular type of crankshaft was experiencing failures, the defendant issued service bulletins recommending the crankshafts' replacement. Subsequently, the FAA reviewed the problems surrounding these crankshafts and issued an Airworthiness Directive, requiring that the crankshafts be replaced within twelve years, or at the time of next engine separation for other maintenance.Plaintiffs, under California's Unfair Competition Law and Consumer Legal Remedies Act, seek recovery for the damages they incurred as a result of the faulty crankshafts. The court subsequently certified the plaintiff class under Federal Rule 23(b)(3). See Order, June 15, 2007, at 6; Order, Sept. 11, 2007, at 4-5.
After the close of discovery, defendants moved for summary judgment or, alternatively, to decertify the class on the grounds that the plaintiffs had insufficient evidence of class-wide damages. The court granted the motion, decertifying the class as to all issues, because there appeared insufficient evidence that the class had actually suffered harm as required under the UCL and the CLRA. On April 25, 2008, the court denied plaintiffs' motion for reconsideration of that order. On May 9, 2008, the plaintiffs appealed the court's decertification order to the Ninth Circuit. Plaintiffs now move to stay the court's proceedings while their appeal is resolved by the Circuit Court. Defendants "do not take a position" on the request for stay and have filed no opposition to it. Response of Lycoming Engines To Plaintiffs' Motion for Stay, May 6, 2008, at 1.
II. STANDARD
A district court has discretion to stay its order, pending appeal, upon consideration of, "(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies." Hilton v. Braunskill, 481 U.S. 770, 776 (1987). The Ninth Circuit conceives this standard as "two interrelated legal tests" operating along a continuum. Lopez v. Heckler, 713 F.2d 1432, 1435 (9th Cir. 1983). At one end of the continuum, the moving party may succeed if it shows that there is a probability of success on the merits as well as a possibility of irreparable injury. Golden Gate Restaurant Ass'n. v. City and County of San Francisco, 512 F.3d 1112, 1115-16 (9th Cir. 2008). At the other end, the moving party may succeed if it shows that it has raised "serious legal questions" and that "the balance of hardships tips sharply in its favor." Id. at 1116 (quoting Lopez, 713 F.2d at 1435). Finally, the district court must consider the public interest implicated by the grant of the stay; this consideration is distinct from the harm to the parties in the court's grant or denial of a stay.Natural Resource Defense Council, Inc. v. Winter, 502 F.3d 859, 863-64 (9th Cir. 2007).
III. ANALYSIS
A. Plaintiffs' Likelihood of Success on the Merits
In order to succeed in its motion, the defendants must show at least the potential for success on the merits of its appeal. See Golden Gate, 512 F.3d at 1115-16; Lopez, 713 F.2d at 1435. In other words, if the defendants have no possibility of obtaining a favorable ruling in the appellate court, a stay is improper. Here, the plaintiffs have met their burden to show that they present "serious legal questions" in their appeal.
In their motion for reconsideration, plaintiffs raised the argument that certification would be proper on the liability issues common to all plaintiffs, even if there was no showing of actual damages suffered by each class member. See Motion for Reconsideration, April 10, 2008, at 4-6. The court disagreed, holding that both the UCL and CLRA require proof that the plaintiff has actually suffered harm. See Order, April 25, 2008, at 6; Order, March 28, 2008, at 16 (citing Caro v. Proctor Gamble, Co., 18 Cal. App. 4th 644, 669 (1993); Wilens v. TD Waterhouse Group, Inc., 120 Cal. App. 4th 746, 756 (2003); andAbuan v. General Electric, Co., 3 F.3d 329, 333-34 (9th Cir. 1993)). Because plaintiffs' evidence was insufficient to make this showing, decertification was proper.
Although the court adheres to this view, it recognizes that the Circuit Court may hold that partial certification on liability issues under the CLRA may be appropriate. See, e.g., Chamberlan v. Ford Motor Co., 402 F.3d 952 (9th Cir. 2005) (holding district court did not commit manifest error by certifying a CLRA class based upon allegations of common liability issues). It is possible that the Circuit Court may extend its holding inChamberlan to encompass not only the showing plaintiffs must make at the class certification stage, but also the evidence they must tender at the summary judgment stage. This suffices to create a "serious legal question" for appellate review. The law does not so clearly favor the plaintiffs, however, to permit the court to conclude that it is probable that they will succeed on the merits of their appeal. Therefore, in order for the stay to be granted, the plaintiffs must show that "the balance of hardships tips sharply in [their] favor." Golden Gate Restaurant Ass'n., 512 F.3d at 1116.
B. The Balance of Hardships
Plaintiffs assert that denial of a stay will create a hardship, by placing them in the position of continuing to litigate a case on behalf of the named plaintiffs only. This may force the plaintiffs to "abandon the case, or settle for a pittance." Plaintiffs' Motion to Stay, April 29, 2008, at 2 (quotingCarpenter v. Boeing Co., 456 F.3d 1183 (10th Cir. 2006)). Defendants assert no hardship to them if the stay were granted.
The court is cognizant of the hardship faced by the plaintiffs in litigating their individual claims in this court while also seeking review of the decertification order in the Circuit Court. Certainly, it would be a tremendous injury to plaintiffs to reach the trial or post-trial stage on their individual claims, only then to win the relief they seek in the Circuit Court. Further, there appears no harm to defendants in granting the stay.
Accordingly, the court concludes that the balance of hardships sharply favors plaintiffs.
C. The Public Interest
Finally, the court considers whether the public interest lies in granting the stay or denying it. Hilton, 481 U.S. at 776;Golden Gate Restaurant Ass'n., 512 F.3d at 1126-27. This inquiry considers the hardship to individuals not party to the suit.Golden Gate Restaurant Ass'n., 512 F.3d at 1126. Here, the public generally has an interest in accuracy of judicial proceedings and in efficient use of government resources. Neither of these interests would be served by the court proceeding to trial on plaintiffs' individual claims when the Circuit Court may rule that the court's decertification order was in error. Additionally, the unnamed class members have an interest in resolution of their claims. This interest would be served by staying the case pending the resolution of the appeal, in order for the unnamed class members' claims to be resolved should the Circuit Court reverse the decertification order. The court perceives of no countervailing public interest that would be harmed by the grant of a stay.
IV. CONCLUSION
Accordingly, the court orders as follows:
1. The plaintiffs' motion for a stay of the proceedings (Doc. 217) is GRANTED.
2. The parties are to inform the court promptly upon the resolution by the Circuit Court of plaintiffs' Petition For Permission to Appeal Class Certification Decision Pursuant to Fed.R.Civ.P. 23(f).
3. The Pretrial Conference currently set for July 25, 2008 is VACATED.
IT IS SO ORDERED.