Publications

18 Jan 2012

Ninth Circuit issues ruling vacating nationwide class certification in Mazza v. American Honda Motor Co. Inc.

Class Action Alert

Shirli Fabbri Weiss
Julie L. Hussey
Katherine J. Larson
Aimee A. Parmley

In a recent 2-1 decision, Mazza v. American Honda Motor Co., Inc., --- F.3d ---, 2012 WL 89176 (9th Cir. 2012), the Ninth Circuit Court of Appeals vacated an order issued by the United States  District Court for the Central District of California, which had certified a nationwide class in an action brought under California’s consumer protection laws, holding that California’s consumer protection laws could not be applied to a nationwide class. 

The court further held that a California class could not be certified because individualized issues of reliance on the challenged advertising  predominated over common issues; reliance could not be presumed where it was likely that many class members were never exposed to, and therefore could not have relied on, the allegedly misleading advertising because the challenged advertising was limited.

The court declined to apply the class wide presumption of reliance relied upon in the California Supreme Court’s decision in Tobacco II, finding that case to be limited to cases involving a “massive” or “extensive and long term advertising campaign.”   

Factual and procedural background

Beginning in 2005, Honda released a line of Acura vehicles equipped with a collision mitigation braking system (CMBS).  From 2006 to 2008, Honda advertised the CMBS program in its owners’ manuals, product brochures and through television commercials, magazine advertisements and in-store videos.  The advertisements were limited in scope and were not widely disseminated. 

The plaintiffs in Mazza were purchasers of Acura vehicles equipped with CMBS.  The plaintiffs brought a putative class action against Honda alleging that Honda had misrepresented and concealed material information in connection with the marketing and sale of the Acura vehicles.  Specifically, the plaintiffs alleged that Honda misrepresented or failed to disclose that the CMBS system did not deploy in time to prevent an accident and might not function in bad weather.  They brought claims under California’s consumer statutes, alleging violations of the California Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200 et seq., False Advertising Law (FAL), Cal. Bus. & Prof. Code § 17500 et seq., the Consumer Legal Remedies Act (CLRA), Cal. Civ. Code § 1750 et seq. and a claim for unjust enrichment.

The district court initially denied but ultimately granted certification under Federal Rule of Civil Procedure 23(b)(3) of a nationwide class of individuals who purchased or leased new or used Acura vehicles equipped with CMBS.  The district court concluded that class members’ claims presented common issues.  These included whether Honda had a duty to disclose the limitations of the CMBS system and whether the omitted information was material to consumers and that such common issues predominated over individualized questions.  The district court ruled that California law could be applied to the nationwide class, finding that Honda had not shown how the differences in the various state consumer laws were material, how the other states have an interest in applying their laws or how those interests were implicated.  It also ruled that class members were entitled to an inference of reliance under California law. 

Honda requested, and the Ninth Circuit granted permission under Fed R. Civ. Proc. 23(f), to file an appeal upon certification and prior to judgment.  Honda then based its appeal on two arguments: (1) that California law could not be applied to a nationwide class and (2) that the class lacked commonality under Rule 23(a)(2), contending that an inference of reliance was improper where evidence demonstrated that many class members were not exposed to the CMBS advertising.  The court considered the issues de novo. 

Ninth Circuit holds California consumer law could not be applied to nationwide class

While the Ninth Circuit agreed with the district court that California had constitutionally sufficient contacts to class members’ claims to exercise jurisdiction, given that Honda’s corporate headquarters, the advertising agency that produced the alleged misrepresentations and one-fifth of the proposed class were located in California, the Ninth Circuit held that a nationwide class could not be certified.  Under California’s choice-of-law rules, California law may only be applied on a class-wide basis where differences between California law and that of the other states exist and are material if those interests do not outweigh California’s interest in having its own law applied.  Applying California’s three-part governmental interest test, the Ninth Circuit found that material differences existed regarding the elements for proving liability and remedies involved in the consumer laws at issue.  The court found that the nationwide application of California law would impair other states’ interests in calibrating the balance in those states between consumer protection and fostering commerce.  Accordingly, the court concluded that the other states’ interests in having their own laws applied to conduct in their respective states outweighed California’s interest and vacated certification of the nationwide class. 

Ninth Circuit holds that reliance cannot be inferred and California class cannot be certified

The Ninth Circuit further found that a California class could not be certified because a presumption of reliance was not warranted where many class members would not have been exposed to the allegedly misleading advertisements; thus, individualized issues of exposure and reliance would predominate over common issues. 

The Ninth Circuit reiterated that no class may be certified that contains members lacking Article III standing but it agreed with plaintiff’s contention that the class had Article III standing because class members allegedly had been “relieved of money” by Honda’s deceptive conduct.  Notwithstanding Article III standing, however, the court concluded that class certification was inappropriate because the facts did not justify a presumption of the element of reliance and without such presumption, individual issues of reliance predominated over common issues.  In so finding, the court distinguished In re Tobacco II Cases, 46 Cal. 4th 298 (2009), in which a presumption of reliance as to the class was permitted, on the grounds that Tobacco II involved a “decades-long advertising campaign” with advertisements that were broadly disseminated.  In contrast, Honda’s allegedly misleading advertisements were limited in dissemination and time period; thus, the court found that it was unlikely that that many class members were exposed to or relied on the advertisements prior to purchasing a vehicle with the CMBS system.  The court rejected plaintiff’s contention that because he had alleged that Honda had made material omissions in connection with advertising of the CMBS system, that reliance on material omissions could be presumed class wide.  The court tied the allegations of omissions to the advertising in question and found that since the scope of the advertising was limited, the class members who could be held to have relied on the omissions was also limited to those who viewed the advertising, disagreeing on this point with the dissent.  The court further held that any relevant class would also have to exclude members who learned of CMBS’s allegedly omitted limitations.  The court concluded that the class certified by the district court was overbroad and vacated certification of the class. 

Impact of decision

After the Ninth Circuit’s decision in Mazza, plaintiffs will have a difficult time certifying a nationwide class under California’s consumer protection laws.  The Ninth Circuit recognized that consumer protection laws must strike a balance between protecting consumers and encouraging an attractive business climate and that state legislatures may choose to balance those competing interests differently.  The decision has a decidedly strong pro-business bent and is a fresh setback for consumers who have seen their ability to sue collectively curtailed after the United States Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). 

In addition, the court clarified that under California’s UCL and CLRA, the presumption of reliance permitted in Tobacco II cannot properly be applied absent a “massive” and long term advertising campaign because the class must be viewed to include only, or at least predominantly, members who were exposed to the allegedly misleading advertising.  This decision also reaffirms that class members must have been exposed to and relied on the alleged false advertising in order to recover under California’s consumer protection statutes. 

Another important aspect of the decision is that the court refused to recognize generalized allegations of omissions as sufficient grounds on which to presume reliance.  The court viewed omissions as tethered to the challenged advertising in question and found that if it cannot be presumed that the class relied on the advertising, it also cannot be presumed that the class relied on omissions.

Finally, it is noteworthy that the court rejected, albeit in a footnote, plaintiff’s argument that because Honda had settled other cases brought under California’s consumer statutes as nationwide class settlements, it was precluded from arguing that nationwide class certification was improper in this case.  The court noted that Honda had settled before an answer had been filed and without addressing the appropriateness of applying of California law to a nationwide class.    

For more information on this decision, please contact:

Shirli Fabbri Weiss

Julie L. Hussey

Katherine J. Larson
Aimee A. Parmley