Eastern District of Virginia Denies Motion to Certify Class, Sheds Light on Rule 23(b)(3) Predominance and Superiority Requirements for Class Actions


The U.S. District Court for the Eastern District of Virginia analyzed Federal Rule of Civil Procedure 23(b)(3)’s predominance and superiority requirements for class actions in a recent decision denying a motion to certify a purported class of motor vehicle purchasers.  The decision underscores that plaintiffs seeking to certify classes asserting claims that will render the process of identifying class members to be a mere series of individualized inquiries will not pass muster under Rule 23.

The Facts in Dispute

Garcia, et al. v. Volkswagen Group of America, Inc., et al. involved a purported class of plaintiffs residing in multiple states who purchased vehicles manufactured by defendants within the last 14 years.  The plaintiffs sued a group of auto manufacturers alleging damages resulting from defendants’ alleged fraudulent misrepresentations about the vehicles, and asserting claims for violations of the Federal Odometer Act, fraud, breach of contract, and unjust enrichment, in addition to state law claims under the laws of California, Colorado, Florida, Illinois, New Jersey, and Washington.

Many, but not all, of the vehicles purchased by the proposed class members were designated as “Certified Pre-owned” (“CPO”).  CPO generally indicated that the vehicles met certain federal safety standards.  The plaintiffs asserted that three categories of defendants’ corporate practices rendered the vehicles’ CPO designations fraudulent.

The first category of practices involved so-called “pre-production vehicles,” or prototypes that defendants utilized for various functions such as testing vehicles prior to mass production.  Pre-production vehicles may have different component parts than the later mass-produced, series-production vehicles.  The second category of practices involved defendants’ leasing of pre-production vehicles to employees and members of the press, and then later selling those vehicles to the public.  The final category of practices involved defendants’ title applications for vehicles registered in Michigan, for which defendants reported each car had a default mileage of 10 miles.  Plaintiffs alleged this practice was “a deliberate obfuscation of the mileage history” of the vehicles, which was allegedly compounded by defendants’ transmission of the “false mileage history” date to third party Carfax, Inc., which was used in reports viewed by consumers.

The Purported Class

The plaintiffs asserted that the proposed class could be separated into three subclasses, including plaintiffs who purchased:

  1. vehicles with incorrect mileage resulting from the 10-mile mileage default used when defendants registered their vehicles (the “mileage fraud subclass”);
  2. vehicles improperly certified as compliant with federal safety standards because they were originally pre-production vehicles which were later sold containing different component parts than mass-produced, series production vehicles (the “certification subclass”); and
  3. vehicles that sustained damage not properly documented because repairs were made to the vehicles before they were sold to the public (the “alterations certification subclass”).

Plaintiffs sought certification of the class pursuant to Federal Rule of Civil Procedure 23(b)(3), which requires plaintiffs to show that “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.”  Rule 23(b)(3) has two key components:  Predominance and superiority.

The Court Refuses to Certify the Class

The Eastern District of Virginia held that the plaintiffs failed to satisfy the key components required by Rule 23(b)(3), stating that these requirements are “more stringent” than the commonality requirement of Rule 23(a).  Largely focusing on the predominance requirement, the court held that none of the purported subclasses should be certified.

Regarding the “mileage fraud subclass’s” claims, reliant on the Carfax reports, the court held that certification of this subclass would “lead to highly individualized questions as to each member of the supposed subclass,” and there would be “inherent difficulties in even obtaining Carfax reports as they appeared on the date the vehicles were purchased” because such reports are continually updated.

The court similarly held that to even identify members of the “certification subclass,” a factfinder would “need to perform an individual inquiry to decide if every purported class vehicle fell within the subclass.”  This individualized process would involve comparing all of the allegedly non-conforming parts in every pre-production vehicle to the federal safety standards.

Finally, the court was not persuaded that evaluation of members in the “alterations subclass” would not be an individualized procedure either, despite a methodology provided by plaintiffs’ expert who suggested the at-issue cars could be “graded” based on damage in a way that would reflect diminution in value for each vehicle.  The court held “it immediately becomes clear that identifying which vehicles had sustained damage and what the nature of that damage would be, by the Plaintiffs’ own definition, is an individualized inquiry.”

The court held that individual questions of fact would predominate the proceedings if any of the three purported subclasses were certified.  The court noted that these individual inquiries would be further complicated because defendants indicated an intention to raise affirmative defenses to many of plaintiffs’ claims.  The court held that certification and management of the proposed class action “would be unwieldly and improper due to the multitude of predominant individual questions that would need to be addressed for each proposed class member,” and denied Plaintiffs’ Motion to Certify Class.

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