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Parks v. General Motors Class Action Defense Case: South Carolina Federal Court Agrees With GM Defense Team That Class Action Should Not Be Certified Because Car Dealership Failed To Meet Commonality And Predominance Requirements

Court Holds that Affirmative Defenses Preclude Finding of Commonality and Alternatively Finds that Determination of Liability and Damages would Involve Individual Issues of Fact and Law Thereby Defeating Commonality and Predominance Requirements of Rule 23

Plaintiff car dealership filed a putative class action against General Motors seeking injunctive relief and damages arising out of the allegation that GM cleaned a shipment of 2500 vehicles that arrived in the U.S. “covered in a foreign substance” resulting in damage to parts of the vehicles, and then sought to “conceal the extent of the damages from its dealers and the public by making cosmetic repairs and by disposing of the more severely damaged vehicles by auction in Florida.” Parks Auto. Group, Inc. v. General Motors Corp., 237 F.R.D. 567, 569 (D. S.C. 2006). Dealers were not permitted to unilaterally refuse shipment of the repaired vehicles. Moreover, “It is uncontested that GM did not provide a uniform, total repurchasing program for these vehicles. Dealerships were told that any such repurchasing requests would be directed to the regional level on a case by case basis.” Id. Defense attorneys argued that the lawsuit should not be certified as a class action because the complaint did not present common questions of law or fact as required by Rule 23(a)(2). Id., at 570. The district court agreed and denied plaintiff’s motion for class certification. Id., at 573.

The federal court noted that the plaintiff bears the burden of establishing each of the required elements for certification of a class action under Rule 23. Parks, at 570. Plaintiff argued that GM had engaged in a pattern of conduct that was applicable to all class members, id.; but even though the district court recognized that there need only be a single common question of law or fact, id., the court found this argument insufficient to establish commonality. First, the court agreed that GM’s affirmative defenses of accord and satisfaction peculiar to plaintiff defeats commonality, as does its affirmative defenses of release, waiver and comparative negligence as to the remaining putative class members, as the defenses “would require individualized inquiry for each class member.” Id., at 570. As the district court observed, Fourth Circuit case law holds that “where individual affirmative defenses may be asserted against one plaintiff, but not the entire class, class certification is precluded.” Id. As the court explained at page 570, “Although it is difficult to determine with any precision, the court finds that GM’s affirmative defenses are not without merit and would require individualized inquiry in at least some cases. Accordingly, the court finds that class certification would be erroneous.”

Second, GM’s conduct would have to be analyzed separately with respect to each dealership. Parks, at 571-72. This is particularly true in light of the fact that GM handled repurchase requests on a case-by-case basis, id., at 569. “Because GM zone managers had the discretion to address any dealer issues regarding these vehicles, it cannot be supposed that Plaintiff’s experience was typical or common to the experience of other dealerships.” Id., at 571.

Finally, the district court also found that plaintiff had failed to establish any of the required elements under Rule 23(b). Plaintiff claimed the action satisfied Rule 23(b)(2) and (b)(3), but plaintiff mainly sought monetary relief, thereby rendering Rule 23(b)(2) “inappropriate.” Parks, at 573 n.4. Rule 23(b)(3) requires a showing of predominance and superiority, and because the predominance requirement is “more stringent” than Rule 23(a)(2)’s commonality test, “the court’s finding that no commonality exists under Rule 23(a)(2) precludes a finding that the requirements of Rule 23(b)(3) have been satisfied.” Id. The court summarized its holding at page 572 as follows: “Given the need for individual inquiry into these issues, the court must hold that this case does not meet the commonality and predominance requirements of Rule 23.”

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