In Mazza v. American Honda Motor Company, Inc., 666 F.3d 581 (9th Cir. 2012), the Ninth Circuit reversed certification of a nationwide class of automobile consumers, rejecting the district court’s choice of law and predominance analyses.  Though a split-decision, the Mazza majority reinforced states’ individual interests and ability to regulate consumer transactions occurring within their borders, thereby preserving the effectiveness of individual states’ consumer protection laws.  Moreover, Mazza provides additional precedent under which to oppose application of a presumption of class-wide reliance for purposes of determining predominance under Rule 23(b)(3).

The plaintiffs in Mazza sued Honda under California law, alleging that Honda’s advertising and owners’ manuals had misrepresented the characteristics of a braking system in Acura RLs.  In addition to misrepresentations, the plaintiffs also claimed that the advertisements and manuals failed to disclose important limitations to the braking system, including that the braking system could shut off in certain severe weather conditions.  Upon plaintiffs’ renewed motion to certify a class, the district court certified a nationwide class of all consumers who purchased or leased Acura RLs within a specific three-year period.  The court found that common issues predominated over individual issues and determined that California law should apply to the claims of all class members.

The Ninth Circuit vacated and remanded the district court’s certification order, finding that the district court had erred in:  (1) holding that California law could be applied to all class members, even though class members included citizens of 44 different states with materially different consumer protection laws; and (2) deciding that plaintiffs were entitled to a presumption that all consumers relied on Honda’s allegedly misleading advertisements.  As to the district court’s first error, the Ninth Circuit stated that the district court had failed to weigh the interests of California law and the law of the implicated foreign jurisdictions.  The Ninth Circuit determined that failure to engage in this analysis was reversible error, as the various consumer protection laws differed materially.  For instance, while California’s laws imposed a reliance element on plaintiffs’ claims, other states’ laws did not require proof of reliance.  Because these differences could mean the difference between success or failure of plaintiffs’ claims, and because each state had a strong interest in governing how business is conducted in its state, the Ninth Circuit remanded the case to the district court to consider whether to certify a California only class, or a broader class with state-specific sub-classes.

The Ninth Circuit also found that the district court had misapplied a class-wide presumption of reliance in determining that issues common to the class predominated over individual issues.  Unlike the advertising campaigns in cases that appropriately applied such a presumption, the advertisements at issue in this case were not extensive and long-term fraudulent advertisement campaigns.  Rather, Honda’s advertisements were sparse and shown over short periods of time in various jurisdictions.  The Ninth Circuit reasoned that the limited scope of Honda’s ads made it unreasonable to assume that all class members viewed them, and therefore disallowed a presumption of reliance.  Because the class certified included all purchasers, the Ninth Circuit held that the certified class could include only those members absolutely exposed to the allegedly misleading advertising.  This, though, creates a separate problem – how to identify class members when it is only those who saw the advertising.  A petition for re-hearing en banc is pending.