Tershakovec v. Ford Motor Co.

79 F.4th 1299

George TERSHAKOVEC, Diana Tershakovec, Jacques Rimokh, Herbert Alley, individually and on behalf of all others similarly situated, Michael Delagarza, et al., Plaintiffs-Appellees, v. FORD MOTOR COMPANY, INC., Defendant-Appellant.

No. 22-10575

United States Court of Appeals, Eleventh Circuit

Filed: July 7, 2023

Appeal from the United States District Court for the Southern District of Florida, D.C. Docket No. 1:17-cv-21087-FAM

Steve Berman, Catherine Gannon, Jerrod C. Patterson, Shelby R. Smith, Nicholas Styant-Browne, Garth Daniel Wojtanowicz, Hagens Berman Sobol Shapiro, LLP, Seattle, WA, Rachel Wagner Furst, Maderal Byrne & Furst, PLLC, Stuart Z. Grossman, Grossman Roth Yaffa Cohen, PA, Coral Gables, FL, for Plaintiffs-Appellees George Tershakovec, Diana Tershakovec, Jacques Rimokh, Herbert Alley, Eric Kamperman, John Aubrey, Eric Evans, Byron Harper, Todd Newton, Stephen Kelly, Jill Kelly, Frank Porter, Ernesto Larios, Shaunti Yanik-Larios, Josh Long.

Rachel Wagner Furst, Maderal Byrne & Furst, PLLC, Stuart Z. Grossman, Grossman Roth Yaffa Cohen, PA, Coral Gables, FL, for Plaintiffs-Appellees Michael Delagarza, Michael McCurry,

Steve Berman, Catherine Gannon, Shelby R. Smith, Nicholas Styant-Browne, Garth Daniel Wojtanowicz, Hagens Berman Sobol Shapiro, LLP, Seattle, WA, Rachel

Wagner Furst, Maderal Byrne & Furst, PLLC, Stuart Z. Grossman, Grossman Roth Yaffa Cohen, PA, Coral Gables, FL, for Plaintiff-Appellee Attila Gondan.

Steve Berman, Jerrod C. Patterson, Shelby R. Smith, Nicholas Styant-Browne, Garth Daniel Wojtanowicz, Hagens Berman Sobol Shapiro, LLP, Seattle, WA, Rachel Wagner Furst, Maderal Byrne & Furst, PLLC, Stuart Z. Grossman, Grossman Roth Yaffa Cohen, PA, Coral Gables, FL, for Plaintiffs-Appellees Greg Roberts, Richard Kowalchik, Travis McRae, Mark Hochsprung.

Rachel Wagner Furst, Maderal Byrne & Furst, PLLC, Stuart Z. Grossman, Grossman Roth Yaffa Cohen, PA, Coral Gables, FL, Jerrod C. Patterson, Shelby R. Smith, Nicholas Styant-Browne, Garth Daniel Wojtanowicz, Hagens Berman Sobol Shapiro, LLP, Seattle, WA, for Plaintiffs-Appellees Jose Cruz, Wayne Linn.

John H. Beisner, Geoffrey M. Wyatt, Skadden Arps Slate Meagher & Flom, LLP, Washington, DC, Jessica Davidson, Skadden Arps Slate Meagher & Flom, LLP, New York, NY, Sean Hernandez, Henry Salas, Cole Scott & Kissane, PA, Miami, FL, John Mark Thomas, Dykema Gossett, PLLC, Ann Arbor, MI, for Defendant-Appellant.

Brian David Schmalzbach, McGuireWoods, LLP, Richmond, VA, for Amici Curiae.

Before Newsom, Luck, and Tjoflat, Circuit Judges.

Newsom, Circuit Judge:

Ford Motor Company advertised its Shelby GT350 Mustang as "track ready." But some Shelby models weren't equipped for long track runs, and when the cars overheated, they would rapidly decelerate. A group of Shelby owners sued Ford on various state-law fraud theories and sought class certification, which the district court granted in substantial part. Ford challenges class certification on the ground that proving each plaintiff's reliance on the alleged misinformation requires individualized proof and, therefore, that common questions don't "predominate" within the meaning of Federal Rule of Civil Procedure 23(b)(3).

For reasons we will explain, the predominance inquiry turns on the specifics of the state laws under which plaintiffs have sued—and, in particular, on (1) whether those laws require proof of reliance, (2) if so, whether they permit reliance to be presumed, and (3) if so, under what circumstances. Having considered those questions, we hold that some of plaintiffs' claims may be certified for class treatment, that others may not, and that some require the district court to take a closer look at applicable state-law requirements.

I

A

The putative class representatives hail from seven states—California, Florida, Missouri, New York, Tennessee, Texas, and Washington. Each purchased one of two models of Ford's Shelby GT350 Mustang.

The Shelby is an upgrade of the standard Mustang and, importantly here, was advertised as "an all-day track car that's also street legal."¹ Track-capability refers to the vehicle's capacity to perform at higher-than-normal speeds in a controlled environment—like, say, on a racetrack. Track-readiness was a central theme in Ford's Shelby advertising. For example, in a race-day invitation to Shelby owners, Ford's marketing manager touted the Shelby's "exceptional racetrack capabilities" and said that he was "sure" they were "one of the reasons you purchased your GT350—perhaps the main reason." Other Shelby ads included descriptions like "track capable," "track ready," and "tested endlessly on the most challenging roads and tracks in the world," as well as statements like, "[W]e wanted to build the best possible Mustang for the places we most love to drive—challenging back roads with a variety of corners and elevation changes—and the track on weekends."

The Shelby comes in five trims. Plaintiffs are purchasers of the "Base" and "Technology" trims. Those trims lack "transmission and differential coolers," a feature—originally included as standard on all Shelbys—that is designed to prevent engine overheating. Without these coolers, the Shelbys compensate at high RPMs by reverting to "limp mode," a self-preservation status that reduces the vehicle's power, speed, and performance to avoid engine damage. "Limp mode" presents a problem for car enthusiasts who want to take Ford up on its promise of "track capab[ility]."

One way that Shelby owners indulge their need for speed is by participating in "Track Days," organized events at which drivers can take their Shelbys around controlled racetracks at triple-digit clips. According to some plaintiffs, though, "limp mode" set in after six or seven laps—about ten minutes of track time—resulting in rapid deceleration and rendering the vehicles "essentially unusable for sustained track driving," which, they say, was "the main reason many [of them] bought the car."

B

Plaintiffs filed this putative class action alleging, among other things, common-law fraud claims and state-specific statutory violations. Plaintiffs alleged that Ford falsely advertised all Shelbys as being track-capable, that those representations induced them to buy Shelbys, but that their Shelbys couldn't perform as billed.

Following discovery and a hearing, the district court granted plaintiffs' request for class certification. In particular, the court chose to create multiple state-law classes within a single class-action case. Although it acknowledged that, as thus structured, the case "look[ed] more like a Multi-District Litigation than a standard class action," the court thought that this framework would "avoid the choice of law issues concomitant with a proposed nationwide class (an issue that would almost certainly defeat [Rule 23(b)(3)] predominance)." The district court separately dismissed Ford's concerns about "the ... difficulties in managing a class action," Fed. R. Civ. P. 23(b)(3)(D), on the grounds that the proposed classes were "small enough" and that variations among state laws could be addressed through "appropriate jury instructions" and "multiple verdict forms that tick[ed] through the elements of the nine certified state class[es'] statutory and common law fraud claims."

The district court certified classes of plaintiffs whose claims arose under the common and/or statutory law of California, Florida, Illinois, Missouri, New York, Oregon, Tennessee, Texas, and Washington.²

The district court also certified two classes—one in California and another in Texas—stemming from alleged breaches of implied warranties and violations of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq. On appeal, twelve separate claims remain, arising under the laws of seven states: California, Florida, Missouri, New York, Tennessee, Texas, and Washington.³

We granted Ford's Rule 23(f) petition to appeal the district court's class-certification order.

II

We review a district court's decision granting or denying class certification for abuse of discretion. See Local 703, I.B. of T. Grocery & Food Emps. Welfare Fund v. Regions Fin. Corp., 762 F.3d 1248, 1253 (11th Cir. 2014). The district court abuses its discretion if it "applies the wrong legal standard, follows improper procedures in making its determination, bases its decision on clearly erroneous findings of fact, or applies the law in an unreasonable or incorrect manner." Id. At the class-certification stage, "the trial court can and should consider the merits of the case to the degree necessary to determine whether the requirements of Rule 23 will be satisfied." Valley Drug Co. v. Geneva Pharms., Inc., 350 F.3d 1181, 1188 n.15 (11th Cir. 2003).

III

Federal Rule of Civil Procedure 23 governs class actions. In addition to satisfying Rule 23(a)'s four familiar "[p]rerequisites"—numerosity, commonality, typicality, and adequacy of representation—a proposed class must fit within one of the three "[t]ypes" specified in Rule 23(b). Plaintiffs here sought class certification under Rule 23(b)(3), which requires both that "questions of law or fact common to class members predominate over any questions affecting only individual members" and that a class action be "superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b)(3).

We must decide whether plaintiffs' proposed class satisfies Rule 23(b)(3)'s requirements. We'll consider in turn 23(b)(3)'s two prongs—predominance and superiority, the latter of which entails an inquiry into a class action's manageability.

A

First, predominance. Common questions "predominate" within the meaning of Rule 23(b)(3) when the substance and quantity of evidence necessary to prove the class claims won't vary significantly from one plaintiff to another. See Brown v. Electrolux Home Prods., 817 F.3d 1225, 1234 (11th Cir. 2016). The first step in assessing predominance is to "identify the parties' claims and...