Ballard Spahr acted as co-counsel in a successful defense of Kia Motors America in a four-week New Jersey trial ending in a rare post-trial class decertification. Little v. Kia Motors America, Inc., illustrates how a trial can expose the potential for class decertification and why defense counsel should focus on individual issues of fact that might overtake common issues.
The case, decided in June 2008, began more than seven years ago when Kia defeated a request for national certification of a class of more than 250,000 members. The plaintiff then pursued a statewide class of approximately 8,000 New Jersey vehicle owners, claiming that the brakes on several model years of the Kia Sephia were defective in design, causing premature wear, vibration, and the need for frequent repairs. The plaintiff argued that Kia's alleged knowledge of the problems, and its practice of administering the warranty, represented a breach of warranty and violated the New Jersey Consumer Fraud Act.
The plaintiff pursued two categories of damages. First, the class counsel argued that there had been a common diminution in vehicle value because of the alleged defects. An expert economist testified regarding accelerated depreciation rates triggered by market perception of the vehicle's reliability. Second, the plaintiff argued that the class had suffered out-of-pocket costs because of an excessive number of brake repairs and retained a second expert to testify to the aggregate amounts the class would unnecessarily spend on repairs.
The jury reached a no cause verdict on the consumer fraud claim. In addition, the jury rejected in its entirety the argument that there had been a common diminution in vehicle value—leaving only the out-of-pocket measure of damages to uphold the jury’s award of $600 per class member and exposing a lack of commonality. In post-verdict motions before the trial court, Ballard Spahr attorneys argued that the plaintiff's proofs—relating only to an average or "aggregate" of out-of-pocket costs—failed to support the finding that any given class member had suffered damages. The court agreed. It decertified the class on damages, vacated the damages verdict, and ordered claims proceedings.
UPDATE: In later proceedings, a new trial judge appointed a special master who attempted to resurrect a claim the jury had rejected. The trial court agreed, enabling claimants to seek substantial diminished-value damages. Ballard Spahr opposed the order and, in a rare development, convinced the New Jersey Appellate Division to hear an interlocutory appeal. Within three weeks of oral argument, the Appellate Division reversed the trial court and the special master’s rulings and reinstated the claims proceedings to follow the protocol Kia had presented. As a practical matter, the appeal saved the matter from proceeding on an improper course and protected Kia against substantial, additional claims.