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The Oklahoma Supreme Court recently handed down a decision upholding the certification of a nationwide class action against DaimlerChrysler Corporation involving state-law breach of warranty claims brought on behalf of approximately one million minivan owners. The court’s ruling makes it easier to maintain nationwide class actions alleging warranty theories. In reaching its result, the court held that in a nationwide breach of warranty class action, Oklahoma’s choice of law rules provide that the law of the state where the manufacturer resides will govern all claims, without regard to where the products were purchased or the claimants live. This holding is a unique development, and a petition for rehearing is pending before the Oklahoma court.

In the late 1990s, several law firms filed three class actions against automobile manufacturers and dealers, including DaimlerChrysler, contending that certain minivan airbags are defective. Those cases involved allegations that the propensity of the airbags to deploy with undue force and in collisions at lower than appropriate speeds caused the plaintiffs economic injury in the form of reduced vehicle value. Those cases were consolidated before a federal judge in Louisiana, who in 1998 rejected each of the cases on the merits.

Rather than appealing in those cases, several of the law firms involved, as well as a three-lawyer plaintiffs’ firm from Sallisaw, Oklahoma, recruited two plaintiffs, including one from Oklahoma, to serve as named plaintiffs in a new round of litigation raising the same claims as in the earlier cases. In August 2000, these lawyers filed a nationwide class action against DaimlerChrysler in Sallisaw, in Sequoyah County District Court, contending that the airbags in certain 1996 and 1997 DaimlerChrysler minivans are defective. None of the roughly one million vehicles at issue was sold in Sequoyah County. The case was assigned to Judge John Garrett, who is currently presiding over approximately one dozen other nationwide class actions involving the same tiny Sallisaw law firm. 

In February 2002, the trial court certified a nationwide class as to all claims brought by the plaintiffs: breach of express warranty, breach of implied warranty of merchantability, breach of implied warranty of fitness, and fraud and deceit. In response to DaimlerChrysler’s argument that the laws of all fifty states and the District of Columbia would apply to the case, based on where the claimants’ vehicles were purchased, Judge Garrett relied primarily on the July 2001 decision of the federal district court in Indiana in In re Bridgestone/ Firestone, Inc. Tires Products Liability Litigation, 155 F. Supp. 2d 1069 (S.D. Ind. 2001), where, among other things, the court certified a nationwide class action alleging similar “no injury” warranty claims based on the purported propensity of certain vehicles to roll over. In May 2002, the Seventh Circuit reversed that decision, holding that the laws of all fifty states would have to be applied to the breach of warranty claims. 288 F.3d 1012 (7th Cir. 2002), cert. denied, 123 S. Ct. 870 (2003).

On February 25, 2003, the Oklahoma Supreme Court issued its decision reversing certification of the fraud and deceit claim, but affirming certification of the nationwide class as to the various warranty claims. Ysbrand, et al. v. DaimlerChrysler Corp., et al., No. 97,469, 2003 OK 17. The main issue was whether the commonality element of the class certification inquiry could be satisfied with respect to state-law warranty claims arising from vehicle purchases made throughout the country. The court rested its decision on the class action nature of the litigation, seeking to distinguish Oklahoma’s “most significant relationship” test set forth in the Restatement (Second) of Conflicts of Law, and the Restatement presumption that normally the state where a purchase is made provides the governing law in warranty actions. The court also opined that the Seventh Circuit’s reversal of the district court’s ruling in Bridgestone/Firestone, upon which the trial court had relied in granting certification, was not dispositive and that the district court’s analysis “remains persuasive.”

The court acknowledged that “[a]ll 50 states and the District of Columbia bear some relationship to the parties and transactions in this dispute by virtue of the nationwide sales of the minivans.” According to the court, “[t]he question becomes whether the relationship of each state where the vehicles were purchased is more significant to the parties and this litigation than that of Michigan, the principal place of business of DaimlerChrysler.” The court focused on the fact that “Michigan is the only state where conduct relevant to all class members occurred.” Further buttressing this lowest-common-denominator approach to choice of law analysis, as the court saw it, was the inconvenience caused by variations in states’ laws. “The needs of the interstate system and the basic policies of predictability and uniformity of result require that the issue of product defect be determined in one forum with one result rather than in 51 jurisdictions with the very real possibility of conflicting decisions.” Rejecting DaimlerChrysler’s constitutional and common-law arguments, the court held that “Michigan law applies” to all warranty claims. Thus, in the court’s view, there was no obstacle to class certification. DaimlerChrysler has petitioned for rehearing, arguing that the Oklahoma Supreme Court’s decision is at odds with precedent under the Due Process, Commerce, and Full Faith and Credit Clauses of the United States Constitution. The parties have squared off regarding two cases--Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985), and Allstate Insurance Co. v. Hague, 449 U.S. 302 (1981)--which hold that the Constitution requires an individualized analysis of choice of law issues that focuses on which state’s law should apply to each class member’s claims. The Oklahoma courts have taken an approach that identifies the jurisdiction with the most significant relationship to the class action as a whole, which in the case of products liability actions will generally, if not always, be the defendant’s home state. Thus, there will almost always be a state with some contact to all class members’ claims. Under Oklahoma’s rule, that state’s law governs all claims nationwide, thereby permitting a class action to proceed. 

Another point of contention will be how other jurisdictions that have considered the question have rejected the “no injury” claims that the plaintiffs assert against DaimlerChrysler. Daimler has suggested that, in most states, if an alleged defect has not actually materialized and caused harm, and the product has functioned properly at all times, then there has been no cognizable injury, and no claim will lie in tort or warranty. Michigan law appears to be unsettled as to whether such “no injury” claims are cognizable, and the State of Michigan has joined as amicus curiae supporting DaimlerChrysler’s petition for rehearing. Michigan has argued that for an Oklahoma court to apply Michigan law nationwide under these circumstances “violates basic constitutional principles of State sovereignty and comity.”

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