Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Volkswagen’s attempt to strike nationwide class premature, (Aug 12, 2015)

By Michael Menzhuber, J.D., LL.M.

A motion by Volkswagen Group of America, Inc. to strike nationwide class allegations, brought by California residents seeking recovery under California’s consumer protection laws, was denied by the federal district court in San Francisco. The court denied the motion after determining that it was premature to speculate about whether the difference in various states’ consumer protection laws would be material in the case (Valencia v. Volkswagen Group of America, Inc., August 11, 2015, Gilliam, H.).

Background. Ernesto Valencia, Adelina Duncan, Lorenzo Sava, Michelle Savage, Margarito De La Rosa, and Lenelyn De La Rosa alleged that their 2009 to 2012 model year Volkswagen Routan minivans were manufactured with defective brake pads. The plaintiffs, on behalf of themselves and a nationwide class, asserted: (1) claims under California’s Unfair Competition Law (UCL) and California’s Legal Remedies Act (CLRA); (2) breach of implied warranty pursuant to the Song-Beverly Consumer Warranty and the Magnuson-Moss Warranty Acts; and (3) unjust enrichment. Volkswagen moved to strike the nationwide class allegations.

Nationwide Class. In support of its motion to strike the plaintiffs’ nationwide class allegations, Volkswagen cited Mazza v. American Hondo Motor Co., Inc., 666 F.3d 581 (2012) which, according to Volkswagen, held that class certification is not appropriate where a trial court will have to apply different laws of the fifty states. The court agreed with the plaintiffs that Volkswagen was overreading the case. It found that the court in Mazza, after performing a detailed choice-of-law analysis, determined that where the laws of the state differ, California law should not be applied to non-California residents. As such, “Mazza did not purport to hold that nationwide classes are, as a matter of law, uncertifiable under California’s consumer protection laws.” Forcellati v. Hyland’s Inc., 876 F. Supp.2d 1155 (2012).

The court concluded that whether California law differed from the laws of other states in a way that was material to the present case was not a proper inquiry at the pleading state. According to the court, a deeply factual inquiry was more appropriately addressed at the class certification state. The court also noted that, on appeal, this was the posture of the Mazza action.

The case is No. 15-cv-00887-HSG.

Attorneys: Cody Robert Padgett (Capstone Law, APC) for Ernesto Valencia. Mary Elizabeth Buckley (Sedgwick, LLP) for Volkswagen Group of America Inc.

Companies: Volkswagen Group of America Inc.

Cases: StateUnfairTradePractices CaliforniaNews