DaimlerChrysler lost the trifecta in Masquat v. DaimlerChrysler, __ P.3d __, 2008 WL 2600703 (Okla. July 1, 2008).
Masquat isn’t a drug or device case, but it’s such a run of bad luck in a class action context that we can’t resist mentioning it.
In Masquat, owners of certain Dodge and Chrysler cars built on the LH platform brought a putative class action pleading a defect in the power rack and pinion steering system. DaimlerChrysler had allegedly introduced a newly designed bolt to its LH platform in late 2000 to keep the steering systems from failing, but it never provided the repair to previously-produced vehicles that shared the same platform. Plaintiffs pleaded claims for breach of express and implied warranties on behalf of a putative nationwide class.
To have this class certified against you, you’d have to go 0 for 3.
Guess what DaimlerChrysler went?
Most courts don’t certify nationwide classes because (by definition in a “nationwide” class) plaintiffs bought the product in all 50 states. A trial court would have to do a plaintiff-by-plaintiff analysis to decide which state’s choice-of-law rules applied to each transaction and then, depending on the result of that analysis, might have to apply the substantive law of 50 different states to the various plaintiffs’ claims.
Not in Oklahoma. A few years ago, in Ysbrand v. DaimlerChrysler Corp., 2003 OK 17, 81 P.3d 618 (Okla. 2003), the Oklahoma Supreme Court held that the law of the defendant’s home state had the most significant relationship to all of the plaintiffs’ claims, so an Oklahoma trial court could apply Michigan law to the claims of all plaintiffs in a nationwide class.
Naturally, class action plaintiffs’ counsel now gravitate to Oklahoma as moths to light.
And, naturally, Masquat sued DaimlerChrysler in Oklahoma.
DaimlerChrysler loses on the threshold choice of law question.
That’s 0 for 1.
(As we’ve said before, we really don’t like that choice-of-law analysis. It seems crazy to us that a resident of Tulsa could walk down Tulsa’s auto row, buy a Ford, a Toyota, and a Hyundai on the same day from the same dealership, have the same problem with each car, sue each car manufacturer on the same legal theory — and then learn that the claims were governed not by Oklahoma law, but by the laws of the home jurisdictions of the manufacturers: Michigan, Japan, and South Korea, respectively! But it’s awfully hard to fix what we perceive as the Oklahoma Supreme Court’s error in that regard. Either the Oklahoma Supreme Court must reverse itself to bring Oklahoma law into line with that of most other states or some litigant must entice the U.S. Supreme Court to grant cert and change Oklahoma’s rule as a matter of federal constitutional law. Both of those are pretty tough rows to hoe.)
DaimlerChrysler wasn’t yet out of luck.
In addition to the governing substantive law, the Oklahoma Supreme Court had to decide which state’s statute of limitations (and related requirements for tolling the statute due to fraudulent concealment) would apply to plaintiffs’ claims.
Michigan has a four-year statute of limitations for warranty claims; Oklahoma has a five-year statute.
Oklahoma’s borrowing statute, “the reverse of most ‘borrowing statutes'” (Masquat, para. 16 at n.3) — borrows not the shorter of the two limitations periods, but the longer of the two.
The five-year statute thus applied in Masquat.
0 for 2.
So the trial court will apply Michigan’s substantive law, but Oklahoma’s statute of limitations, to all of the plaintiffs’ claims.
Statute of limitations questions often present individualized issues. It’s possible, of course, that one plaintiff was aware of the defect in a product sooner than some other plaintiff, so the statute of limitations might have expired as to some plaintiffs but not others.
The class thus still couldn’t be certified against DaimlerChrysler if individual issues would predominate — if the court must decide whether each class member individually “exercised reasonable diligence in learning of the allegedly concealed defect.” Id. at para. 19. To have the class certified, a court must hold that “any question of variation in individual reliance is eclipsed by the common questions surrounding the allegation of fraudulent concealment.”
Guess what decision we’re quoting in that last sentence?
Right — Daimler Chrysler goes 0 for 3 and faces a certified class containing over two million members.
The court did “cap” the value of the remedy that DaimlerChrysler would have to pay at $310 for some class members and $400 for others (id. at para. 6), so the maximum possible exposure is only
. . .
wait a second — we’re getting out a calculator.
Shoot! Only eight digits on that calculator. Hang on a second.
Good thing companies don’t lose trifectas like that every day.