The opinion of the court was delivered by: Conti, District Judge.
Pending before the court is a motion for class certification (Doc. No. 30) filed pursuant to Federal Rule of Civil Procedure 23(b)(3) in the above-captioned civil action by David Zeno ("plaintiff" or "Zeno"). Plaintiff seeks statewide class certification of a single claim of breach of contract for persons who purchased or leased from defendant Ford Motor Company, Inc. (the "defendant" or "Ford"), a new model year 2000 or 2001 F-150 truck with either the Heavy Duty Electrical Cooling Group option or the Class III Trailer Towing option and who did not receive a new upgraded radiator (1.42 inches thick) either at the time of purchase or lease or as a free replacement thereafter. See Pl.'s Mot. for Class Certification ("Pl.'s Mot.") ¶2.*fn1
On April 28, 2006, the court held a class certification hearing. On May 26, 2006, the parties submitted proposed findings of fact and conclusions of law (Doc. Nos. 77, 78). For the reasons set forth herein, the court will grant plaintiff's motion.
Pursuant to Federal Rule of Civil Procedure 52, this court makes the following findings of fact and conclusions of law.
Plaintiff seeks in his motion the certification of a state-wide class limited to the Commonwealth of Pennsylvania. Plaintiff seeks certification of a class defined as follows:
All persons who purchased or leased in the Commonwealth of Pennsylvania a new model year 2000 or 2001 F-150 truck with either the Heavy Duty Electrical Cooling Group option or the Class III Trailer Towing option and did not receive a new upgraded radiator (1.42" (36mm) in thickness) from Ford Motor Company, Inc., either at the time of the purchase or lease, or as a free replacement thereafter.
A. Plaintiff's Purchase of a Ford F-150 Truck with a Towing Option
1. Plaintiff purchased a new Ford F-150 truck in May 2001 from Lake View Ford in Conneaut Lake, Pennsylvania. Pl.'s Proposed Findings of Fact ("PFF") ¶59; Def.'s Proposed Findings of Fact ("DFF") ¶1. Lake View Ford is an authorized Ford Dealer. PFF ¶59; Complaint ("Compl.") ¶11; see also Pl.'s Mot., Ex. A (Deposition of David Lenz ("Lenz Dep.") at 211-12.*fn2
2. At or around the time of purchase, plaintiff received a window sticker describing the vehicle that he purchased. PFF ¶60. Ford makes and attaches a window sticker to every F-150 truck that it manufactures. Id. ¶3; see Lenz Dep. at 39-40. Ford's window stickers generally list, among other things, the vehicle identification number (commonly known as the "VIN"), the options included on the vehicle, and the Manufacturer's Suggested Retail Price ("MSRP") for the vehicle and various options. Id. ¶¶5-7.
3. The window sticker on plaintiff's F-150 truck indicated that it included a Class III Trailer Towing option (the "towing option"). PFF ¶59; DFF ¶8. The window sticker showed that the total MSRP for plaintiff's F-150 truck was $29,625.00 and that this total MSRP included a MSRP of $350.00 for the towing option. DFF ¶7 (citing DFF Exhibit ("Ex.") D (Plaintiff's window sticker));*fn3 PFF 60 (citing Deposition of David Zeno "Zeno Dep.") at 30-31; Comp. ¶12. Plaintiff testified that he initially was not looking for a towing package, but when offered a vehicle with a towing package he figured it would be better for him. Zeno Dep. at 23-25.
4. The purchase agreement for plaintiff's vehicle was signed by plaintiff and an authorized representative of Lake View Ford. DFF, Ex. F. It indicated the price of plaintiff's vehicle, the VIN number, warranty information, and other information but did not include whether the vehicle was equipped with options or what type of radiator the vehicle included. Id. It reflected, and the parties stipulated, that plaintiff paid $29,125 for his vehicle, $500.00 less than the MSRP. Id. The purchase agreement reflects this $500.00 difference in price as code "#1110." Id.
5. Plaintiff testified that there was no negotiation over the price. Zeno Dep. at 26-27.
6. Ford maintains that dealerships have discretion with respect to pricing options on the vehicles that they sell and pricing for options varies significantly depending on the individual negotiations between the sales person and customer for any sale. DFF, Ex. F (Affidavit of Gregg Ciocca) ("Ciocca Aff.") ¶2.*fn4 Gregg Ciocca, president of a dealership in Quakertown, Pennsylvania, with thirty years of experience, stated that a sales department could charge the suggested retail price, some other price, or no price, for a given option such as the towing and cooling options relevant in this lawsuit. Id.
7. Mr. Ciocca stated that in some cases a sales representative may use and even provide the customer with certain sales and marketing literature about a particular model vehicle. In other cases, a customer, however, may not look at any marketing literature at the dealership. Id.
¶3. He further acknowledged that:
In addition to the marketing literature that may be reviewed by the customer, Ford Motor Company provides the dealership with a dealer order guide, which contains detailed information about particular options. Few customers ask to see the dealer order guide, and the sales person would generally not show the dealer order guide to the customer. During a typical sales transaction, our salespeople do not make representations to customers about the specifications of the radiator that comes with a particular vehicle or option package.
8. Plaintiff did not recall seeing the 2001 F-150 Sales Brochure that references "Super Engine Cooling." He, however, did recall that he "perused the marketing pamphlets that were available" and even took one with him, although he no longer possessed it at the time of his deposition. Zeno Dep. at 10, 28. Plaintiff did not recall whether any literature he looked at referenced an upgraded radiator. Id. at 28. Plaintiff testified that while he knew he was purchasing a towing package, there were no discussions about the radiator when he purchased the vehicle. Id. at 59. He recalled the marketing materials he saw as follows:
[I]t said there was a trailer towing package and there was several components. I can't remember specifically what they were. In other words, when I looked at the truck, I looked at it, "This is better than getting an aftermarket towing hitch because the truck is equipped to handle it."
9. When asked whether his complaint was based upon his vehicle not being equipped to handle the towing hitch, over objection, plaintiff responded that his "complaint is that I purchased a towing package, I paid a premium for it, and I did not get the complete package." Id. Plaintiff testified that he was generally satisfied with the performance of his vehicle, he never towed anything with his vehicle, and he never experienced any problems with his vehicle's radiator or the towing package. Id. at 44-46. In particular, he testified that the engine never overheated, the engine temperature gauge never registered in the red zone, and the radiator never caused any damage to his vehicle. Id. at 46.
10. Plaintiff's window sticker did not specify the type of radiator installed in plaintiff's vehicle or the component parts included in the towing option package. DFF ¶8. There is other evidence in the record, however, as recounted below, that suggests that the towing option and another option package which was a component of the towing option, the Heavy Duty Electrical/Cooling Group option (the "cooling option"), were supposed to include, among other things, an upgraded radiator. Plaintiff maintains that references to "Super Engine Cooling (radiator upgrade)," "radiator upgrade," and "upgraded radiator" for the towing and cooling options entail that plaintiff and others who purchased these options paid for 1.42" radiators and received standard 1.02" radiators instead.*fn5 Defendant maintains that plaintiff and others received the functionality for which they had paid.
11. Plaintiff's window sticker showed that his vehicle included the towing option. Plaintiff's vehicle, however, was built with the standard 1.02" thick radiator and not the 1.42" radiator which plaintiff alleges is the upgraded radiator to which he was entitled. PFF ¶¶60, 63. Plaintiff never received an upgraded radiator from Ford. Id. ¶64. Plaintiff was never mailed a letter and never received any of the customer satisfaction options from Ford. Id. ¶65. Several years later, plaintiff resold his vehicle to a Chevrolet dealership as a trade-in on a Chevy truck. Zeno Dep. at 34.
B. Ford Learns of Potential Radiator Issues with F-150 Trucks in September 2000
12. On September 29, 2000, Ford's radiator supplier Visteon Climate Control Systems notified Ford that all Ford F-150 trucks equipped with the towing option and cooling option mistakenly had been built with the "standard radiator" instead of the "upgraded radiator described in the ordering guide." See Lenz Dep., Ex. A3.*fn6 Peter Kanefsky, who was at the time Ford's Manager of Global Core Engineering and was responsible for vehicle cooling, prepared a confidential evaluation entitled "Field Service Evaluation Paper (14D) Transmittal" (the "14D Report") with subject line "2000-01 MY F150 Wrong Radiator -- Class III Trailer Tow Opt." See Lenz Dep., Ex. A3. Two directors indicated their concurrence with and two vice presidents indicated their approval of this report by signing the front cover. Id.; see also Lenz. Dep. at 20-21. Two of these individuals dated their signatures September 4, 2001 and September 7, 2001. Lenz Dep., Ex. A3.*fn7
13. The 14D Report described the problem as follows:
On September 29th 2000, Visteon Climate Control Systems reported to Ford that all F150 vehicles with standard payload, built since 8/2/99 and equipped with the Heavy Duty Electrical/Cooling Group (Option #531) or Class III Trailer Towing Group (Option #535), had been built with the standard radiator rather than the "upgraded radiator" described in the vehicle ordering guide. . . .
Id. at 1. The 14D Report further described the problem stating that "[i]n 2000-2001MY a standard performance radiator was released in place of the upgraded performance radiator specified in the PDL and marketing literature for Option #531 or #535, except on vehicles with the 7700# payload upgrade Option 627." Id.
14. With respect to the description of the "root cause" of the problem, the 14D Report further indicated that "[t]he F150/250 program offers two levels of cooling performance; a base performance and a customer purchased upgrade to Super-Duty, for trailer towing and heavy duty operation." Id. at 2. As described, the root cause was the result of misunderstandings concerning certain Product Direction Letters ("PDL") for the F150/F250. See id. "Due to a misunderstanding of this PDL" and a problem with feature codes, an "error compounded by the fact that Standard performance radiator was release [sic] against the [Trailer Tow Prep Pack (Option 531)] feature code rather than the Super performance radiator as required by the PDL," "all derivatives ordered with the Heavy Duty Electrical/Cooling Group (Option 531) or the Class III Trailer Towing Group (Option 535) were built without the upgraded radiator, unless they also had a payload upgrade package." Id. at 3.
C. Ford Investigates the Functional Performance of the Released Radiators
15. Ford, upon learning about the issue, tested 2000 and 2001 F-150 vehicles equipped with the cooling or the towing options. Id. at 3; see DFF ¶¶ 34-37; DFF, Ex. E (Declaration of Peter Kanefsky)("Kanefsky Decl.")) ¶¶4-5. Ford investigated whether 2000 and 2001 F-150 trucks with the towing and cooling options met performance requirements for "Super-Duty Engine Cooling" even though they had been built with the standard radiator and not the upgraded radiator. Id. Ford maintained that even without the upgraded radiator, "the cooling system in 2000 and 2001 F-150 vehicles fully meets and exceeds Ford's Super-Duty Engine Cooling specifications." Kanefsky Decl. ¶9.
16. After the testing was completed on October 27, 2000, and after a technical review meeting on November 2, 2000, Ford "determined that there was no engineering justification or benefit to the customer to place a radiator with more cooling capacity than a 26 millimeter single row radiator [i.e., the "standard radiator"] in 2000 and 2001 F-150 vehicles with the [cooling option] or [towing option]." Id. ¶12. The technical review committee "decided that since the released radiator met all the performance requirements of Super-Duty cooling it was unnecessary, from a functional perspective, to change the radiator either in production, or in any vehicle already built." 14D Report at 3.
17. Ford maintains that Super-Duty Engine Cooling "is really about the performance of the vehicle, not necessarily what components are included on that vehicle." Lenz. Dep. at 45. Ford's corporate designee, however, emphasizing that the 1.02" radiator met all functional requirements, acknowledged that the 1.42" radiator did produce different results than the 1.02" radiator, and that it, in particular, the 1.42" radiator kept the coolant temperature eight degrees cooler and the engine and transmission oil temperatures six degrees lower under certain conditions. Id. at 45, 48-50.
18. Ford's corporate designee, Mr. Lenz, testified in his deposition that the phrase "upgraded radiator" used in Ford's communications with dealers is ambiguous. Id. at 29, 92-93. He testified, for example:
The phrase upgraded radiator is really ambiguous. It's a possible interpretation that that could mean a different piece of equipment, or it could mean something else entirely, but that's really the ambiguous phrasing that was present in some of our dealer communications. Again, the dealer order guide, which is the document that contained the verbiage upgraded radiator is really a document that few customers are actually going to get a chance to see.
That document is used for communications just strictly with our dealers, and it's possible that during the sales process -- it's possible that during the sales process it could have been shown to a small number of customers, but really that would be the exception. So the phrase upgraded radiator is really ambiguous, I think.
Id. at 29-30; see also DFF, Ex. E. Tab G (Deposition of Mark Grueber) ("Grueber Dep.") at 28. Mr. Lenz later added:
It could be interpreted by some people to mean an additional or different piece of equipment, and it could be interpreted by some people to mean a change in specification. It could be interpreted by any number of people in any number of different ways. That's why I said ambiguous.
Id. at 92-93. Ford through its corporate designee Mr. Lenz maintained that, although the towing and cooling options were separate options with component MSRPs, "it's really impossible to know what any customer paid for any individual option" because "it's a very common practice in the sales process where our dealerships really negotiate the final price with the customer." Id. at 33. "Ford establish[ed] the suggested retail price, but the dealer again doing that individual negotiation, the dealer could choose to say throw in that package [even for zero dollars] to close the deal." Id.
D. Ford's Customer Satisfaction Program
19. At the meeting in November 2000 and beyond, Ford considered customer satisfaction responses. Kanefsky Decl. ¶13. In March 2001 there were an "extensive series of discussions about a possible customer satisfaction program" in response to the radiator issue. Id.
Ford conducted customer satisfaction surveys and determined that customers had different levels of knowledge and concern about the radiator. "Most customers were not aware of any radiator issue," and customers had different preferences about what Ford should do to satisfy any concerns. Id. ¶14. Ford ultimately designed and initiated a customer satisfaction program that allowed certain affected F-150 customers to receive $100.00 cash, a $500 coupon toward the purchase of a new Ford vehicle, or a free replacement radiator. Id. ¶15. Before this program was initiated, warranty data showed that Ford had already paid to replace more than 200 radiators. Id.
20. During discussions about the customer satisfaction program, Pamela Fitzgerald of Ford's F-150 Marketing Team wrote the following in an email entitled "RE: Suggestion for wording of F150 Wrong Radiator - Customer Letter":
Please do not explain this situation as a marketing literature error. The radiator was incorrectly released. These vehicles . . . were in fact supposed to receive the upgraded radiator. We did not false advertise, we mis-built.
Lenz. Dep., Ex. A10 ("Fitzgerald email"). Ms. Fitzgerald proposed a strategy for a customer satisfaction program:
In an attempt to move our efforts forward, I would like to obtain concurrence from everyone on the following offer to the customers:
Option #1: Check for $200 (This includes $100 they paid for radiator upgrade and $100 goodwill)
Option #2: Retro-fit the upgraded radiator.
Id. This strategy was not adopted. Instead, the $100.00 cash, $500 coupon, or a free replacement radiator strategy was adopted. See Kanefsky Decl. ¶15. Ford's corporate designee, Mr. Lenz, testified in his deposition that the Fitzgeral email was the impression of one individual early in the evaluation process, and that it was later determined by Ford engineering testing that the vehicles were not misbuilt. Lenz Dep. at 114-15. Mr. Lenz went on to explain that "[t]he 1.02 inch radiator which was released by engineering for these vehicles was, in fact, built into the vehicles, and those vehicles do, in fact, exceed our super cooling performance specifications."
Id. at 115. He indicated his opinion that the statement in the Fitzgerald email -- "[w]e did not false advertise, we mis-built" -- was not correct. Id.
21. Ford initiated an owner notification program concerning the radiator situation as part of the customer satisfaction program, and sent out letters to original current owners or lessees of the 2000 and 2001 F-150 truck who had purchased their vehicles prior to May 5, 2001, the date on which Ford believed that it had removed the last reference to the upgraded radiator from its website. Lenz. Dep. 68-70. The record suggests that owner notification letters were sent out beginning in November 2001. Id. at 73; see Castleberry Aff. ¶6. Ford publicized these letters on its dealer databases. Castleberry Aff. ¶3-5. The customer letter offered owners the option of a $100.00 check, $500.00 discount, or installation of a 1.42" radiator to replace the 1.02" radiator. Lenz Dep. at 174-75. Ford determined that over four- hundred-fifty thousand (457,117) 2000 and 2001 F-150 trucks were affected. Lenz Dep., Ex. A18.*fn8
22. Ford eliminated approximately 83,676 vehicles from this group due to (1) warranty start dates after May 5, 2001 (Ford's cutoff date based upon its removal of information from its dealer order websites) (55,577 vehicles); (2) vehicles still in dealers' stocks as of May 5, 2001 (13,355 vehicles); (3) vehicles that no longer belonged to the original owner (14, 540 vehicles); and (4) vehicles which were company cars (204 vehicles). Id.; see Lenz Dep. at 190-94. Ford did not mail owner notification letters to individuals whose warranty start dates came after May 5, 2001, to individuals who purchased vehicles that were still in dealers' stocks as of May 5, 2001, to individuals who no longer owned their car, or to company owners.
23. Ford mailed 349,929 letters in the United States. Lenz Dep. at 178. 183,193 customers (79%) cashed checks for $100.00. Ex A17; Lenz Dep. at 179. 25,102 customers (11%) requested the $500.00 coupon or "owner loyalty certificate" ("OLC"). Ex A17; Lenz Dep. at 196. 22,523 customers (10%) ...