Federal Court Denies Certification of Warranty Class Action Based on Ascertainability and Lack of a Common Defect
Sometimes I feel like I'm beating a dead horse. But can the horse really be that dead when a subject continually bears repeating?
Even though it's not written in the rule, one prerequisite to class certification is that the class has a definition that makes class membership objectively ascertainable at the outset of the litigation. If you can't figure out who will be bound by a final judgment until after the merits are determined, then the class is not properly defined. Judge Jeremy Fogel recently reiterated this fact in his denial of class certification in Heisler v. Maxtor Corp., 2010 WL 4788207 (N.D. Cal. Nov. 17, 2010).
Heisler involved a series of complaints about Maxtor's manufacturing and warranty service procedures. Plaintiffs moved for certification of two classes; one was comprised of California residents and purchasers, while the other was comprised of non-California U.S. residents. The class definition required merits determinations, and was defined as:
All end-user persons or entities who purchased in the United States, excluding consumers who either lived in or purchased in California, a [Maxtor Hard Drive] sold by Maxtor Corporation or an authorized Maxtor retailer or distributor that have experienced a failure and (a) reported the failure to Maxtor and/or Seagate (the "Reporting" Class) and (b) who did not report the failure to Maxtor and/or Seagate (the "Non-Reporting" Class).
Id. at *1.
The plaintiffs moved for certification. The trial court first considered and rejected their argument that the court could not reach the merits when deciding the motion, quoting Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 590 (9th Cir. 2010): "A district court must sometimes resolve factual issues related to the merits to properly satisfy itself that Rule 23's requirements are met."
Next, the court moved to the Rule 23(a) requirements, beginning with numerosity. It was here that the court addressed the class definition issue:
Here, the ascertainability of the proposed classes is questionable. Plaintiffs' definition fails to explain clearly what causes a 'failure' of the subject hard drives; and no relevant date range is provided to exclude individuals who may have experienced a failure after expiration of the [one-year] warranty. . . .
Moreover, there is a real concern that the term ["failure"] could be interpreted too broadly, encompassing even hard drive problems resulting from operator error. . . .
Neither the list [of customer complaints] nor the Plaintiffs' proposed class definition includes objective limitations that would exclude temporary failures or failures occurring as a result of factors other than manufacturing defects.
Heisler, 2010 WL 4788207 at *2-*3.
The court also concluded that there was no commonality because plaintiffs could not point to one particular defect. Rather, they had broad-ranging criticisms of Maxtor's processes, any one of which might have resulted in various kinds of problems. For example, they claimed Maxtor employees did not employ adequate electrostatic discharge prevention measures. But they also criticized the defendant's pre-sale testing methods, its procedures for diagnosing returned hard drives, and the hard drives' component parts. Id. at *3-*4. The court held that plaintiffs had failed to identify a common specific defect in the manufacturing process, and thus failed the commonality test.
The court observed that plaintiffs also had serious typicality problems, particularly on the issue of whether they had made a timely claim under the warranty. One plaintiff couldn't locate his receipt. Another testified that he was aware he was out of warranty when his hard drive failed. Another broke the seal on the hard drive with knowledge that doing so would void the warranty. And yet another returned the hard drives for a full refund and suffered no data loss. The court noted that even though "injury within the warranty period is a threshold requirement in order to bring a claim based upon warranty," it was "far from clear that the named Plaintiffs have suffered a cognizable injury, let alone an injury that is common to the class." Id. at *5.
The court gave the plaintiffs the benefit of the doubt on the adequacy of representation requirement, it concluded, when analyzing the predominance requirement of Rule 23(b), that "[p]laintiffs cannot meet this standard if issues common to the class are lacking at the outset, as is the case here." Id. at *6. The court denied the class certification motion without prejudice to plaintiffs later renewing it.
Heisler is an important reminder that warranty class actions must have objective, ascertainable class definitions at the outset, and that they must be based upon a theory of defect that is truly common to the whole class.
