United States: Class Actions: California District Court Denies Class Certification Citing Plaintiff's Inappropriate Damages Model

In April, Judge Lucy Koh of the Northern District of California denied a plaintiff's motion to certify a class of consumers who alleged that certain Nissan manual transmissions suffered from design defects that caused "the clutch to lose hydraulic pressure and fail to engage/disengage gears." In Nguyen v. Nissan North America, Inc., Case No. 16-CV-05591-LHK (N.D. Cal. Apr. 9, 2018), the plaintiff alleged violations of California's Consumers Legal Remedies Act, Song-Beverly Act, and Magnusson-Moss Act.

The Court declined to certify the putative class under Federal Rule of Civil Procedure 23(b)(3), holding that the plaintiff's proposed "benefit of the bargain" damages model was not an appropriate measure of damages. In particular, the plaintiff's damages theory—which set damages as equal to the cost of replacing the defective part with a working part—was problematic because it assumed that not a single class member received any benefit from the allegedly defective manual transmissions. Noting that the named plaintiff had driven more than 26,000 miles before the part malfunctioned, the Court recognized that under the plaintiff's model, "if the class also derived value from the defective [part]—be it by selling it, repurposing it, or simply driving a ways before replacing it—the class member will have received the full benefit of the bargain and the monetary value of the defective part."

The Court also criticized the plaintiff's damages expert for failing to state any basis for his assumption that the part was actually valueless. Hence, "[a]bsent any justification for this assumption, the benefit of the bargain damages model fails to 'measure only those damages attributable to' Plaintiff's theory of liability because it awards damages equal to the value of a non-defective [product] (the benefit of the bargain) without deducting the value of the defective [product]."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.