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GM Class Action Defense Cases–General Motors v. Bryant: Arkansas Supreme Court Affirms Class Action Certification Of Nationwide Class Action Alleging Product Defect Holding Variations In State Laws May Be Addressed By Decertification of Class Action

Trial Court did not Err in Granting Class Action Treatment to Nationwide Product Defect Class Action Against General Motors because Choice-of-Law Analysis Irrelevant to Class Action Certification Determination Arkansas Supreme Court Holds

In September 2006, plaintiff filed a class action against General Motors in Arkansas state court. The first amended class action complaint alleged that GM sold 4,000,000 pickup trucks and SUVs with defectively designed parking brakes; specifically, the class action alleged that GM discovered the defect in 2000, redesigned the defective part in October 2001, but “withheld from dealers admission of responsibility for the defect until January 28, 2003.” General Motors Corp. d/b/a/ Chevrolet, GMC, Cadillac, Buick, and Oldsmobile v. Bryant, ___ S.W.3d ___ (Ark. June 19, 2008) [Slip Opn., at 1-2]. According to the class action, this scheme permitted GM “to avoid paying millions of dollars in warranty claims.” Id., at 2. Plaintiff alleged further that GM’s 2005 recall involved only about 60,000 of the 4 million vehicles affected, id. Plaintiff filed a motion for class action certification; the trial court granted the motion in a 51-page order. Id., at 2-3. GM sought interlocutory review of the class action certification order, challenging predominance, superiority, and the definition of the class, id., at 3. The Arkansas Supreme Court affirmed.

The primary issue on appeal concerned GM’s challenge to the applicable choice of law. Defense attorneys argued that “the significant variations among the fifty-one motor-vehicles product-defect laws defeat predominance,” and that the trial court was required to perform a choice-of-law analysis before granting class action treatment to the lawsuit. Bryant, at 4. Plaintiff argued that Arkansas law does not require such an analysis prior to class action certification, id. The Arkansas Supreme Court agreed with plaintiff: because if found that a “predominating questions” exists – specifically, “[w]hether or not the class vehicles contain a defectively designed parking-brake system and whether or not General Motors concealed that defect,” id., at 6 – it found that the trial court did not err. In the Court’s words, “That various states’ laws may be required in determining the allegations of breach of express warranty, breach of implied warranty, a violation of Magnuson-Moss Warranty Act, unjust enrichment, fraudulent concealment, damages, and restitution does not defeat predominance in the instant case.” Id., at 7. (The author confesses that he finds this reasoning difficult to follow: legal claims do not exist in a vacuum, and it does not seem “judicially efficient” to try a case on a class-wide basis simply to determine one or two common facts, regardless of how important those facts may be, and then decertifying the case for apparently millions of trials to be held on a case-by-case basis focusing on the various claims of individual class members based on the particular state laws governing those claims.) The Arkansas Supreme Court recognized that other courts have held that choice-of-law “is crucial in making a class-certification decision,” id., at 8 (citation omitted), and indeed cited cases from California, New Jersey and Texas to that effect, see id., at 8-9. Nonetheless, it rejected this approach in favor of the “certify now, decertify later” approach followed in Arkansas, id., at 9-10.

We do not discuss in detail GM’s challenge that “factual variations preclude a finding of predominance.” Bryant, at 11. In brief, the defense argued that numerous individual issues exist that “can be better resolved on a case-by-case basis,” while plaintiff argued that the “central common issues in the case can be decided first” and that the individualized issues could be addressed later. Id., at 11. The trial court found that resolution of the common issues would achieve judicial efficiency, see id., at 11-12; the Supreme Court agreed, holding that bifurcation was perfectly acceptable as it “allow[s] circuit courts to divide a case into two phases: (1) certification for resolution of the primary, common issues; and (2) decertification for the resolution of the individual issues.” Id., at 12 (citation omitted). The Court concluded that the trial court did not abuse its discretion in finding that the predominance test was satisfied, id., at 13.

With respect to superiority, defense attorneys argued that putative class members should be required to proceed by way of petition to the National Highway Traffic Safety Administration (NHTSA). Bryant, at 13-14. Plaintiff’s lawyer countered that NHTSA “has already denied relief to the proposed class members” so that process “can in no way be superior to a class action.” Id., at 14. The Supreme Court agreed, noting that “NHTSA has twice rejected petitions dealing with the allegations made in the instant case.” Id., at 16. The Supreme Court also held that under Arkansas law, if “a cohesive and manageable class exists,” then “real efficiency can be had if common, predominating questions of law or fact are first decided, with cases then splintering for the trial of individual issues, if necessary.” Id. (citation omitted). In addition, the number of putative class members “makes it at least likely that without a class action, numerous meritorious claims might go unaddressed,” which the Arkansas Supreme Court has held is a legitimate factor for determining superiority. See id., at 15 (citation omitted).

Finally, we briefly discuss GM’s challenge to the definition of the class. See Bryant, at 17-19. Suffice it to say that the Arkansas Supreme Court found the challenged language – “owners” and “subsequent owners” to be both “precise” and “objective,” and that GM could not challenge the terms as “amorphous” or “imprecise” because “[the] terms were taken from General Motor’s [sic] own warranty publications,” id., at 18. Accordingly, the Court affirmed the trial court order granting plaintiff’s motion for class action treatment. Id., at 19.

NOTE: We do not here discuss the concurring opinion, which addresses GM’s choice of law argument. See Bryant, at 19-25

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