Ninth Circuit Curtails Consumers’ Class Claims Under the Magnuson-Moss Warranty Act

Resolving an issue of first impression before it, the United States Court of Appeals for the Ninth Circuit held that the Class Action Fairness Act of 2005 (CAFA) “may not be used to evade the specific numerosity requirement” of the Magnuson-Moss Warranty Act” (MMWA). The decision was in Floyd v. Svw As Am. Honda Motor Co.

The holding follows the growing consensus among district courts in the Ninth Circuit holding that an MMWA claim, a fee shifting cause of action common to warranty class actions, cannot be asserted on a classwide basis unless a plaintiff satisfies the enumerated jurisdictional requirement of at least 100 named plaintiffs.

In Floyd, the plaintiffs asserted several claims arising from a parking brake defect alleged to have plagued a class of certain Honda vehicles, including state law claims for breach of express and implied warranties as well as a claim for violation of the MMWA. Honda moved to dismiss, and in 2018, the district court dismissed the plaintiffs’ MMWA claim for lack of subject matter jurisdiction and declined to exercise supplemental jurisdiction over the remaining state law claims. The Court of Appeals, after undertaking a detailed analysis of text of the two statutes and case law counseling against repeal by implication, affirmed the dismissal of the MMWA claims but remanded to the district court the question of whether the state law claims are properly asserted under CAFA’s expanded diversity jurisdiction.

Whether CAFA enables a putative class representative to assert claims under the MMWA without satisfying that MMWA’s express jurisdictional requirements is a question that has divided federal district courts since CAFA went into effect in 2005. Courts largely have adopted one of two approaches: (1) a broad view of Congress’s authorization of jurisdiction through CAFA, which permitted MMWA class claims to proceed with little scrutiny, or (2) a more narrow view based on the distinction between the MMWA’s status as a federal cause of action and CAFA’s grant of diversity jurisdiction over state-law based claims.

In reaching the opposite conclusion to the Sixth Circuit’s decision in Kuns v. Ford Motor Co., the court created a circuit split on the question. The issue had previously reached the Fourth Circuit in 2017, but that court declined to reach the issue. That case was Scott v. Cricket Communs. Cognizant of that split, the Ninth Circuit undertook a qualitative analysis of the interplay between CAFA, and the MMWA took care to distinguish the reasoning in Kuns.

As the most recent appellate authority on point, the Floyd decision is likely to have a far reaching impact on MMWA class claims currently pending in district courts across the nation. The decision is certainly welcome news to manufactures and distributors who are frequent targets of warranty class claims. The ruling limits the ability of a small number of plaintiffs to pursue claims with onerous fee shifting implications. Ballard Spahr’s Product Liability and Mass Tort Group has substantial experience representing companies that make and sell products in a wide range of litigation and counseling matters, including the defense of class actions and related opt-out group claims, as well as regulatory compliance.

Copyright © 2020 by Ballard Spahr LLP.
www.ballardspahr.com
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.