No. 22 EAP 2008 Appeal from the Judgment of the Superior Court entered on October 24, 2007, at No. 3048 EDA 2005 (reargument denied January 2, 2008) Affirming the Judgment entered on October 25, 2005, in the Philadelphia County Court of Common Pleas at No. 2199 January Term 2001 ARGUED: April 15, 2009 No. 23 EAP 2008 Appeal from the Judgment of the Superior Court entered on October 24, 2007, at No. 3068 EDA 2005 (reargument denied January 2, 2008) Affirming the Judgment entered on October 25, 2005, in the Philadelphia County Court of Common Pleas at No. 2199 January Term 2001 ARGUED: April 15, 2009 No. 24 EAP 2008 Appeal from the Judgment of the Superior Court entered on February 8, 2008, at No. 537 EDA 2006 from the Order entered on January 23, 2006, in the Philadelphia County Court of Common Pleas at No. 2199 January Term 2001 ARGUED: April 15, 2009
The opinion of the court was delivered by: Mr. Chief Justice CASTILLE*fn1
CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, GREENSPAN, JJ.
Appellant, an automobile manufacturer who unsuccessfully defended a class action lawsuit for breach of express warranty, appeals the Superior Court's decision to affirm the certification of the class by the trial court, and the amount of damages and litigation costs awarded to the class. Costs included a significant legal fee, entered pursuant to the Magnuson-Moss Warranty Improvement Act (the "MMWA"), 15 U.S.C. § 2310(d)(2). For the reasons that follow, we affirm in part and reverse in part, with reversal being limited to the lower courts' approval of an enhancement of class counsel's legal fee by application of a risk multiplier to the amount of the lodestar;*fn2 and we remand to the trial court for adjustment of the attorneys' fee award in accordance with this Opinion.
Appellee Shamell Samuel-Bassett, on behalf of herself and others similarly situated (the "class"), filed this class action lawsuit in January 2001, in the Philadelphia Court of Common Pleas. Bassett alleged that, in October 1999, she purchased a model year 2000 Sephia from appellant Kia Motors America, Inc., ("KMA" or the "manufacturer") with an extended warranty of sixty months or 60,000 miles.*fn3 The purchase contract included the manufacturer's standard warranty clause, which stated that: "[KMA] warrants that your new [Sephia] is free from defects in material and workmanship," subject to several terms and conditions.
According to the complaint, Bassett experienced malfunctioning of her Sephia's brakes within 17,000 miles of use, which manifested as an inability to stop the vehicle, increased stopping distances, unpredictable and violent brake pedal pressures, brake lockup and vibration, and general interference with control of the vehicle. She attributed these manifestations to a defect in the design of the Sephia's brake system causing inadequate heat dissipation, premature wear of the brake pads, and warping of the rotors.*fn4 KMA's authorized dealerships attempted five repairs on Bassett's vehicle between January and October 2000, replacing brake pads and rotors on four of five occasions. According to Bassett, she sought to rescind her purchase contract but KMA refused her demand. Bassett claimed that, although KMA was aware of the defect in the brake system, KMA failed to correct the defect and failed to honor the warranty by charging her for the required repairs and replacements. Further, Bassett alleged that the defect in the brake system's design was common to all model year 1995 to 2001 Sephias. She claimed that all members of the class experienced premature wear and malfunction of the brakes, needing repairs within the first 20,000 miles of purchase. According to the complaint, all repair attempts were ineffective, most were not covered by KMA under the warranty, and the members of the class incurred damages of a similar nature to Bassett's.
The complaint stated four causes of action: breach of express warranty, breach of implied warranty of merchantability, violation of the MMWA, and violation of the Unfair Trade Practices and Consumer Protection Law ("UTPCPL"). Bassett claimed that each member of the class was entitled to compensatory damages for out-of-pocket repair costs, loss of use costs, loss of resale value, funds for permanent repair of the vehicle, treble damages, and costs of litigation, including legal fees. Finally, Bassett requested an injunction compelling KMA to notify all class members of the potential danger for personal injury deriving from the Sephia's brake defect, and to provide free repair and replacement of the affected brake systems.
In February 2001, counsel for KMA filed a notice to remove the action to the U.S. District Court for the Eastern District of Pennsylvania, invoking that court's diversity jurisdiction. The parties then filed an amended complaint and answer with the federal court. Bassett's amended federal court complaint re-stated the allegations in her original state court complaint, and KMA answered denying all allegations and asserting forty-seven boilerplate affirmative defenses. The manufacturer sought dismissal of the amended complaint. In due course, the district court certified the class on all of Bassett's claims except her UTPCPL claim. See Bassett v. Kia Motors Am., Inc., 212 F.R.D. 271 (E.D. Pa. 2002). KMA appealed and the U.S. Court of Appeals for the Third Circuit, which raised the issue of jurisdiction sua sponte, vacated the lower court's certification decision, and remanded for a determination of whether the parties met the amount in controversy required to establish diversity jurisdiction. See Bassett v. Kia Motors Am., Inc., 357 F.3d 392 (3d Cir. 2004). In light of the Third Circuit's decision, the parties agreed that the jurisdictional requirement had not been satisfied and, on April 8, 2004, the district court remanded the case to the Philadelphia County Court of Common Pleas.
Following remand, in May 2004, Bassett filed her motion for class certification with the Philadelphia Court of Common Pleas. Bassett's motion for class certification filed in state court simply incorporated by reference the motion she originally filed in federal court. Compare Pa.R.C.P. Nos. 1702, 1708 with Fed.R.Civ.P. 23(a)-(b). In September 2004, the trial court granted Bassett's motion for class certification in part. The court certified the following class as to the breach of express warranty, breach of implied warranty of merchantability, and MMWA claims:
All residents of the Commonwealth of Pennsylvania who purchased or leased model year 1995-2001 Kia Sephia automobiles for personal, family or household purposes for a period of six years preceding the filing of the complaint in this action.
Certification Order, 9/17/04, at 1. Following discovery, the parties stipulated that KMA did not begin selling the Sephia in the United States until 1997. Bassett also conceded that the 2001 model Sephia had undergone substantial redesign that corrected the alleged brake defect. Consequently, the class was limited to purchasers of 1997 to 2000 Sephias. Class certification was denied as to the UTPCPL claim, and Bassett was permitted to proceed alone on that count. Bassett was designated class representative and her attorneys were appointed counsel for the class. Subsequently, KMA asked the trial court to certify the September 17, 2004, order granting class certification for interlocutory appeal, but its request was denied in November 2004.
Bassett notified the class of the action against KMA. The parties then filed various motions in limine and proposed findings of fact in anticipation of trial. In addition, KMA filed a motion to bifurcate, which the trial court denied. Tr. Ct. Order, 5/16/05. Subsequently, the parties proceeded to trial.
The trial took place between May 16 and May 27, 2005. At the conclusion of Bassett's case, KMA moved for compulsory non-suit, but the court denied the motion. Notes of Testimony ("N.T."), 5/23/05, Vol. 5, at 55-60. KMA renewed its request for summary relief at the end of its case, moving for a directed verdict on the warranty and MMWA claims. After argument, KMA withdrew its request in part, and the trial court denied the remainder of the motion.*fn5 N.T., 5/25/05, Vol. 7, at 13-28. On May 27, 2005, the jury rendered a verdict in favor of the class on the claim for breach of express warranty and awarded damages in the amount of $600 per class member. The court molded the verdict to account for the 9,402 class members to which the parties had stipulated, and recorded a verdict of $5,641,200. Subsequently, the trial court denied the class's request for injunctive relief.
On June 10, 2005, KMA -- represented by new counsel -- filed a post-trial motion for judgment notwithstanding the verdict or, in the alternative, for a new trial. See Pa.R.C.P. No. 227.1. On September 26, 2005, the trial court held a hearing on KMA's motion, at the end of which it directed the manufacturer to file an addendum indicating where issues raised in the motion had been preserved; KMA complied. The trial court issued no further order to dispose of the request for post-trial relief within 120 days of filing and, therefore, upon praecipe of the class, the prothonotary entered judgment on the molded jury verdict on October 25, 2005. See Pa.R.C.P. No. 227.4(1)(b). KMA appealed the judgment to the Superior Court and the class filed a cross-appeal.*fn6 In December 2005, the trial court ordered the parties to file concise statements of matters complained of on appeal. Pa.R.A.P. 1925(b). Both parties complied with the trial court's order in a timely manner and the court issued its Rule 1925(a) opinion on December 29, 2006.
In parallel, on June 6, 2005, Bassett filed a motion for attorneys' fees. After several postponements, the trial court held a hearing on the motion on September 13, 2005. In January 2006, the court granted the motion and awarded class counsel $4,125,000 in fees, and $267,513 in costs and expenses of litigation. KMA separately appealed this order to the Superior Court in February 2006.
In October 2007, the Superior Court addressed the parties' initial cross-appeals, affirming the lower court's decision with respect to the class action verdict on the basis of the trial court's Rule 1925(a) opinion. See Bassett v. Kia Motors Am., Inc., No. 3048 EDA 2005, at *2-5 (Pa. Super. Oct. 24, 2007). However, the Superior Court remanded for a supplemental Rule 1925(a) opinion on KMA's challenge to the award of legal fees. The trial court filed its supplemental Rule 1925(a) opinion in November 2007 and, in February 2008, the Superior Court affirmed in a brief unpublished decision, extensively quoting from the trial court's opinion. See Bassett v. Kia Motors Am., Inc., No. 537 EDA 2006, at *3-7 (Pa. Super. Feb. 8, 2008). KMA filed petitions for allowance of appeal from the Superior Court's October 2007 and February 2008 decisions.
We granted allocatur and consolidated the appeals to address the following issues, as stated by KMA:
1. Whether, in an issue of first impression, the lower courts disregarded class action procedures and fundamental principles of Pennsylvania contract law by presuming that a class action could be pursued based solely on proof of breach of the named plaintiff's individual express limited warranty contract, as evidence of proof of breach as to all other limited warranty contracts for all the other members of the class?
2. Whether long-standing Supreme Court precedent requires reversal of the judgment improperly entered and affirmed in favor of all class members, in circumstances where the trial court accepted proof of breach of the named plaintiff's express limited warranty contract as proof of breach as to all limited warranty contacts as to all other members of the class, even where the only class-wide evidence was that the defendant had honored its express warranty?
3. Whether, in an issue of first impression, the trial court violated the defendant's due process rights by entering judgment for the entire range of class members without requiring proof of breach of all of their express limited warranty contracts?
4. Whether as a matter of first impression, an attorneys' fee award made pursuant to the [MMWA] cannot be entered after entry of judgment where: (i) the MMWA requires that fee awards be entered as "part of the judgment," and where (ii) Plaintiff voluntarily took judgment on the underlying verdict, and thus disposed of all claims (including the Plaintiff's unresolved claim for attorneys' fees) before the trial court entered the fee award?
5. Whether under Pa.R.A.P. 1701, a trial court lacks jurisdiction to enter a fee award after judgment has been entered and a notice of appeal has been filed?
6. Whether, as a matter of first impression, the courts of Pennsylvania are required to follow United States Supreme Court precedent regarding the interpretation of federal fee shifting statutes when interpreting the fee shifting provision of the MMWA, and, if so, whether the trial court's decision to add a $1 million "risk multiplier" bonus to the fee award violates controlling United States Supreme Court precedent?
Bassett v. Kia Motors Am., Inc., 954 A.2d 565 (Pa. 2008); Bassett v. Kia Motors Am., Inc., 954 A.2d 566 (Pa. 2008).*fn7 Shorn of the argumentative framing by KMA, we view these issues as raising five narrow and distinct questions that we will address individually: 1) whether the class was properly certified; 2) whether evidence was sufficient to support the jury's verdict and whether the verdict was against the weight of the evidence; 3) whether the jury's verdict was properly molded to account for the 9,402 members of the class; 4) whether the trial court had authority to award attorneys' fees after Bassett entered judgment on the class verdict; and 5) whether the risk multiplier was properly applied to an award of counsel fees under the MMWA.*fn8
KMA's first claim is that the trial court certified the class in error because Bassett failed to prove: that questions of law and fact were common to the class, that the common questions predominated over individual issues, that Bassett's claims were typical of the class claims, and that Bassett was an adequate class representative.
Class certification presents a mixed question of law and fact. Liss & Marion, P.C. v. Recordex Acquisition Corp., 983 A.2d 652, 663 (Pa. 2009) ("Liss"). The trial court is vested with broad discretion in deciding whether an action may be pursued on a class-wide basis and, where the court has considered the procedural requirements for class certification, an order granting class certification will not be disturbed on appeal unless the court abused its discretion in applying them. Id.; Kelly v. County of Allegheny, 546 A.2d 608, 610 (Pa. 1988). See also In re Community Bank of Northern Virginia, 622 F.3d 275, 290 (3d Cir. 2010). An abuse of discretion will be found if the certifying court's "decision rests upon a clearly erroneous finding of fact, an errant conclusion of law, or an improper application of law to fact;" the trial court must have "exercised unreasonable judgment, or based its decision on ill will, bias, or prejudice." 622 F.3d at 290; In re E.F., 995 A.2d 326, 329 (Pa. 2010). See also Twp. of Exeter v. Zoning Hearing Bd. of Exeter Twp., 962 A.2d 653, 659 (Pa. 2009). The existence of evidence in the record that would support a result contrary to that reached by the certifying court does not demonstrate an abuse of discretion by that court. In re E.F., 995 A.2d at 329. In deciding whether class action procedural requirements were misapplied or "an incorrect legal standard [was] used in ruling on class certification," we review issues of law subject to plenary and de novo scrutiny. See Delaware County v. First Union Corp., 992 A.2d 112, 118 (Pa. 2010).
For the trial court, the question of whether a class should be certified entails a preliminary inquiry into the allegations of the putative class and its representative, whose purpose is to establish the identities of the parties to the class action. Pa.R.C.P. No. 1707 cmt. (certification process "is designed to decide who shall be the parties to the action and nothing more"). See generally Liss, 983 A.2d at 663; Bell v. Beneficial Consumer Disc. Co., 348 A.2d 734, 739 (Pa. 1975). As a practical matter, the trial court will decide whether certification is proper based on the parties' allegations in the complaint and answer, on depositions or admissions supporting these allegations, and any testimony offered at the class certification hearing. See Pa.R.C.P. No. 1707 cmt. The court may review the substantive elements of the case only "to envision the form that a trial on those issues would take." Hohider v. United Parcel Serv., 574 F.3d 169, 175-76 (3d Cir. 2009); Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 165-68 (3d Cir. 2001); Debbs v. Chrysler Corp., 810 A.2d 137, 154 (Pa. Super. 2002) (perceived adequacy of underlying merits of a claim should not factor into certification decision). Any "consideration of merits issues at the class certification stage pertains only to that stage; the ultimate factfinder, whether judge or jury, must still reach its own determination on these issues" at the liability stage. In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305, 320 n.22 (3d Cir. 2008). Even if the class is certified, before a decision on the merits, the certification order "may be revoked, altered or amended by the court on its own motion or on the motion of any party." Pa.R.C.P. No. 1710(d). See Janicik v. Prudential Ins. Co., 451 A.2d 451, 454-55 (Pa. Super. 1982) (court has extensive powers to protect absent class members and to ensure efficient conduct of class action).
Pursuant to Pennsylvania's civil procedure rules, the trial court may allow a representative to sue on behalf of a class if, the class is numerous ("numerosity"); there are questions of law or fact common to the class ("commonality"); the claims of the representative are typical of the class ("typicality"); the representative will fairly and adequately protect the interests of the class ("adequate representation"); and a class action is a fair and efficient method for adjudicating the parties' controversy, under criteria set forth in Rule 1708. Pa.R.C.P. No. 1702. Among the Rule 1708 criteria for determining whether the class action is a fair and efficient method of adjudication is "whether [the] common questions of law or fact predominate over any question affecting only individual members" ("predominance"). Pa.R.C.P. No. 1708(a)(1) (also listing six factors in addition to predominance). The class "is in the action until properly excluded" by, e.g., an order of court refusing certification or an order de-certifying the class. Pa.R.C.P. No. 1701(a) & cmt; Bell, 348 A.2d at 736 (same).
During certification proceedings, the proponent of the class bears the burden to establish that the Rule 1702 prerequisites were met. Kelly, 546 A.2d at 612. The burden is not heavy at the preliminary stage of the case. Clark v. Pfizer Inc., 990 A.2d 17, 24 (Pa. Super. 2010). Indeed, evidence supporting a prima facie case "will suffice unless the class opponent comes forward with contrary evidence; if there is an actual conflict on an essential fact, the proponent bears the risk of non-persuasion." Id.; Debbs,810 A.2d at 153-54; Baldassari v. Suburban Cable TV Co., 808 A.2d 184, 191 (Pa. Super. 2002), appeal denied, 825 A.2d 1259 (Pa. 2003); Cambanis v. Nationwide Ins. Co., 501 A.2d 635, 637 (Pa. Super. 1985). It is essential that the proponent of the class establish requisite underlying facts sufficient to persuade the court that the Rule 1702 prerequisites were met. Kelly, 546 A.2d at 612.
The trial court prepared a certification memorandum dated September 17, 2004, explaining its class certification decision ("Certification Memo."), and addressing each disputed issue, of commonality, predominance, typicality, and adequacy of representation, as follows. First, respecting commonality, the trial court noted that the theory of liability of the putative class centered on KMA selling one vehicle "with a uniformly defective braking system that affected all drivers" and on KMA's unsuccessful attempts to remedy the defective vehicles in a similar manner, i.e., by replacing brake pads and rotors every few thousand miles. The court listed the common questions of law identified in the complaint, which included whether the Sephias possessed the brake system defect alleged; whether KMA lacked the means to repair the defect; whether the defect constituted breach of express and implied warranties and violation of the MMWA; and whether members of the class were entitled to actual damages and/or an injunction. The court found that sufficient evidence of record supported Bassett's allegations that KMA knew its Sephia vehicles required premature and frequent replacement of brake pads and rotors. According to the court, with the evidence offered, Bassett met her burden of proof for class certification with regard to three claims: breach of express warranty, breach of implied warranty, and violation of the MMWA. Certification Memo., 9/17/04, at 7 (citing Weismer v. Beech-Nut Nutrition Corp., 615 A.2d 428, 431 (Pa. Super. 1992); Janicik, supra).*fn9 The trial court was also persuaded that common questions outweighed individual questions of law and fact, and rejected KMA's claims that the proposed class included owners of Sephias with several brake design models, and that individual driving habits, road conditions, and other causes could not be excluded as proximate causes for any harm suffered by the putative class members. See Pa.R.C.P. No. 1708(a)(1); Certification Memo., 9/17/04, at 7-8 (citing Weismer, supra; D'Amelio v. Blue Cross of Lehigh Valley, 500 A.2d 1137 (Pa. Super. 1985)). Respecting the typicality requirement of Rule 1702, the court agreed with Bassett that her claims indeed were typical of the class. Certification Memo., 9/17/04, at 13-14 (citing DiLucido v. Terminix Int'l Inc., 676 A.2d 1237, 1242 (Pa. Super. 1996)).
Finally, with regard to the adequacy of representation prong, the trial court concluded that, contrary to KMA's arguments, Bassett did not have a conflict of interest in the maintenance of the class, and that her financial resources and legal representation were adequate. Specifically, the court rejected KMA's claim that Bassett was an inadequate representative because she had a conflict of interest arising from potential, notyet-asserted Lemon Law and personal injury claims (resulting from a brake-related accident) that other class members did not share. The court concluded that, instead, Bassett's personal injury made her "a more zealous advocate on behalf of the class." Certification Memo., 9/17/04, at 14-16 (citing Janicik, supra).
The trial court further addressed class certification issues in its Pa.R.A.P. 1925(a) opinion. In addition to incorporating by reference its September 2004 certification memorandum, the court stated that the evidence introduced at trial confirmed that a class action was the most appropriate means to present the class's claims, that class counsel was able to present the issues to the jury fully, and that the jury was able to decide all issues before them "sincerely, productively, appropriately and justly." According to the court, separate trials on the 9,402 claims of the class members, claiming damages of only $600 each, would have placed a strain on the courts and effectively "seal[ed] shut" the doors to the courtroom in violation of the Pennsylvania Constitution. The effect would have been a windfall for KMA as numerous class members failed to bring their cases to trial. The court concluded that the class had met the Rule 1702 and 1708 prerequisites for class certification, and relied on its September 2004 opinion for analysis of the individual certification issues.
On appeal to this Court, KMA argues that Bassett failed to establish that common questions of law and fact existed, that these common issues predominated over individual issues, that her experience was typical of the class, and that she was an adequate representative of the class.
A. Commonality and Predominance
KMA claims that Bassett did not meet either the commonality or the predominance prerequisites for certifying the class, raising the same arguments in support of both claims. According to KMA, the trial court certified the class on a record that contained proof of Bassett's "anecdotal" experience but no evidence that KMA had breached its express warranty with respect to all class members or that the class members sustained out-of-pocket costs as a result.*fn10
KMA states that to prove liability for breach of express warranty, Bassett had to submit evidence for each absent class member. KMA states that Bassett's evidence of her personal experience, expert testimony and internal documents regarding a defect present in all 1997-2000 Sephias, and warranty brake repair data were not probative to satisfy Bassett's burden of proof with regard to all the elements of a breach of warranty cause of action for the class. Without specifying whether it is addressing the certification hearing or the trial testimony, KMA attacks Bassett's evidence as not credible and not probative. Thus, KMA challenges the conclusion of Bassett's expert witness that the Sephias suffered from a common defect, on the basis that he personally inspected only two vehicles rather than all the vehicles in the class. According to KMA, warranty repair statistics did not cure any deficiencies in the expert's testimony regarding the existence of a defect and, instead, showed only that "KMA honored its express warranty" by routinely covering brake repairs to Sephia vehicles.
Moreover, KMA argues that reliance, manifestation, notice, and opportunity to cure are elements of proof in a breach of express warranty action, and that Bassett failed to prove them with respect to the class claims. According to KMA, Bassett was required to produce evidence that each absent class member was aware of and relied on KMA's express warranty, yet the record lacks any such proof respecting class members other than Bassett. KMA's Brief at 19-20 (citing Goodman v. PPG Indus., Inc., 849 A.2d 1239, 1245-46 (Pa. Super. 2004), aff'd per curiam, 885 A.2d 982 (Pa. 2005) (buyers could not enforce warranty made by third party to seller)). KMA also argues that Bassett offered no evidence that each class member notified KMA of a covered defect, provided opportunity to cure, or that KMA failed or refused to cure the brake defect. Id. at 20-22 (citing 13 Pa.C.S. § 2607(c)(1) ("buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy")). KMA reiterates that simply proving the existence of a defect based on consumer expectations of brake pad longevity is insufficient evidence that KMA breached its express, rather than an implied, warranty. Id. at 20-21 (citing Olson v. Ford Motor Co., 575 S.E.2d 743, 746 (Ga. Ct. App. 2002) (dealership not liable to plaintiff who refused to let dealership repair vehicle); Hasek v. DaimlerChrysler Corp., 745 N.E.2d 627, 638 (Ill. App. Ct. 2001) (engine noise, without further indication of defect, is not enough to establish liability for breach of express warranty); Poli v. DaimlerChrysler Corp., 793 A.2d 104, 110-11 (N.J. Super. Ct. Law Div. 2002) (buyer's breach of warranty claims did not accrue until manufacturer failed to perform repair within reasonable time)). Finally, KMA argues that Bassett failed to prove that each absent class member sustained damages caused by the defect, or any damages at all. Id. at 22-23 (citing Price v. Chevrolet Motor Div., 765 A.2d 800 (Pa. Super. 2000) (buyer must prove that alleged defect is proximate cause of damages)). According to KMA, Bassett's damages were unique and she did not attempt to extrapolate her experience to the entire class or to prove individual damages. KMA insists that Bassett's evidence on damages was theoretical and focused on the cost of retrofitting all vehicles in the class. KMA concludes that Bassett failed to establish "the critical elements of any breach of express warranty claim" and, therefore, that the class was improperly certified "in the first instance."
Bassett responds first with a waiver argument. Bassett claims that KMA waived all certification issues by failing to object on the trial court record and distinguish express warranty issues from implied warranty issues for certification purposes. According to Bassett, KMA contested certification as to all claims, "hoping as a matter of strategy to obtain the same res judicata benefit it now claims for the implied warranty claim." Our review, however, reveals that KMA raised and preserved issues related to certification of the class with respect to all of Bassett's claims on behalf of the class. Therefore, KMA's claims related to the express warranty were not waived, even if they were not addressed separately from implied warranty claims, and regardless of KMA's strategy.*fn11
On the merits, Bassett argues that consumer product warranty claims are recognized as "particularly suitable" for class litigation. Bassett's Brief at 14 (citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625 (1997) (predominance is "readily met" in certain cases alleging consumer fraud) and 15 U.S.C. § 2310(e) (establishing separate notice and opportunity to cure procedures for class actions)). According to Bassett, warranty data showing high percentage rates of covered brake repairs was prima facie proof that all 1997-2000 Sephias experienced a premature wear defect. Further, deposition testimony from KMA executives, KMA internal documents, and a "coupon" program, through which KMA offered free brake repairs to members of the class, showed that KMA recognized the 1997-2000 Sephias as suffering from a model-wide defect. Bassett states that KMA did not require individual inspections of each Sephia, nor inquiry into individual drivers' habits, as a prerequisite to qualify for its coupon program, proof that KMA discounted their role in revealing the causes of customer complaints. Bassett claims that KMA also did not limit the program to select iterations of the 1997-2000 Sephia models, in recognition that any modifications or "tweaks" of the brake system did not alter the basic defective design.
Bassett argues that she proved that each class vehicle manifested the defect by showing that the abnormal degradation of the brake pads and rotors was measurable.
KMA's business records, i.e., warranty data and internal memoranda, showed that the defect was measured, tested, and ultimately recognized internally by KMA. Thus, Bassett asserts, warranty data supported the commonality and predominance allegations, regardless of whether the same data also showed that KMA complied with its warranty promises, a fact relevant to KMA's liability but not a factor for the court to consider for certification purposes.
According to Bassett, KMA did not object to or introduce evidence to rebut Bassett's commonality evidence. Bassett notes that KMA's appeal strategy is different from its trial argument: at trial, KMA sought to prove that a common defect did not exist but, on appeal, KMA is claiming that existence of a defect is irrelevant. Bassett emphasizes that, at trial, KMA "recognized" that it was replacing one set of defective brakes with another and, therefore, that warranty repairs did not restore the Sephias to a defect-free condition. But, Bassett adds, on appeal, implicit in the jury's verdict is a finding that commonality existed so there is no basis to overturn the certification decision.
Bassett also argues that common issues predominated over any individual issues. Common issues included whether KMA met its express promise to deliver vehicles free from defect; whether the Sephias had a braking system design defect; and whether the design defect manifested as abnormal or premature wear of the brakes. According to Bassett, these issues were essential to proving the warranty claims and were properly supported with generalized proof.
Next, Bassett responds to KMA's assertion that evidence of individual reliance is necessary to prove breach of warranty and is not amenable to generalized proof. According to Bassett, reliance is not an element of proof in a warranty action because the written warranty is an affirmation of fact and part of the basis of the bargain. Bassett's Brief at 29 (citing Liberty Lincoln-Mercury, Inc. v. Ford Motor Co., 171 F.3d 818, 825 & n.7 (3d Cir. 1999) (not all promises are warranties; to be a warranty, promise must be part of basis of bargain and reliance may become factor in determining whether promise is part of basis of bargain)). Bassett states that the burden was, therefore, on KMA to prove that the written warranty was not part of the bargain and did not cover the defective condition of which class members complained. Id. (citing 13 Pa.C.S. § 2313 cmt. 3 (seller's affirmations of fact about goods during bargain become part of description, hence no particular reliance need be shown to weave them into agreement; rather, fact which takes affirmations out of agreement requires clear affirmative proof)). Here, according to Bassett, KMA did not offer any proof that class members disregarded the warranty and reliance was not an issue. Bassett states that the cases cited by KMA in support of a contrary legal conclusion are inapposite because they do not address the issue of reliance but merely whether express warranties existed in fact-specific circumstances. Id. at 30 (citing Goodman, supra).
Bassett also rejects KMA's arguments that each class member was required to provide individual notice of the common defect, opportunity to cure, and to establish failure to repair in order for the class to maintain suit. According to Bassett, KMA "received ample notice" that the Sephias' brakes were defective from consumer complaints, warranty claims, and internal records; thus, individual notice prior to suit was not required. Id. at 31-32 (citing In re Latex Gloves, 134 F. Supp.2d 415, 422 (E.D. Pa. 2001), vacated in part on diff. grounds, Whitson v. Safeskin Corp., 2001 WL 34649695 (E.D. Pa. Apr. 6, 2001) (whether buyer provided notice within reasonable time to seller via complaint, which was filed two years after discovery of injury, is issue for finder of fact)). Indeed, Bassett argues that the MMWA did not require notice to KMA on behalf of the class and an opportunity to cure until after certification of the class. Id. at 32 (citing 15 U.S.C. § 2310(e) (class of consumers may not proceed on breach of warranty claim except to establish representative capacity of named plaintiffs, unless warrantor "is afforded a reasonable opportunity to cure" failure to comply with warranty; named plaintiffs shall notify defendant that they are acting on behalf of class at that time)). Additionally, Bassett claims that she notified KMA of the class's claim in timely fashion, which led KMA's counsel to withdraw a motion for directed verdict after trial. See N.T., 5/25/05, Vol. 7, at 26-27.
Finally, Bassett responds to KMA's argument that her evidence of damages at trial was inadequate because individual out-of-pocket costs of repair were not demonstrated. Bassett states that KMA's current argument on this issue highlights the difference in posture at the time of class certification, when Bassett was asserting that the class action mechanism was appropriate, versus on appeal, when KMA is attacking a completed trial as improper. Bassett emphasizes that her expert's testimony at trial, and KMA's records, substantiated the request for per person damages, to which KMA had a full opportunity to object but did not. Furthermore, according to Bassett, the jury's award was supported by the evidence at trial.
In its reply brief, KMA reemphasizes that the existence of a common defect "is not the answer to the question of whether the class was properly certified" but merely a threshold fact. KMA also states that Bassett's arguments ignore evidence that among the 1997-2000 Sephias, KMA introduced thirteen separate design changes to the brakes and that not simply one automobile model was at issue.
Preliminarily, to better focus the dispute, we address the proper scope of our review of the trial court's decision to certify the class. "Scope of review refers to the confines within which an appellate court must conduct its examination. . . [or] to the matters (or "what") the appellate court is permitted to examine." Morrison v. Commonwealth, 646 A.2d 565, 570 (Pa. 1994); see generally Jeffrey P. Bauman, Standards of Review and Scopes of Review in Pennsylvania--Primer and Proposal, 39 DUQ. L. Rev. 513 (2001). Both parties here offer extensive argument about whether the trial court's decision to certify was proper in view of evidence offered during the liability phase of trial. But, as stated, a certification proceeding is a preliminary inquiry whose purpose is to establish who the parties to the class action are "and nothing more." Pa.R.C.P. No. 1707 cmt. Bassett was not required to prove KMA's liability at the certification stage and the trial court was prohibited from factoring the perceived adequacy of the underlying merits of the class's claims into the certification decision. Debbs, 810 A.2d at 154; see Hohider, 574 F.3d at 175-76.
An appellate court does not second-guess a trial court's discretionary "preliminary" decision to certify the class by considering subsequent case developments of which the trial court could not have been aware at the time of its decision. Thus, arguments regarding subsequent case developments, such as evidence revealed at the liability phase of trial or the jury's verdict, cannot prove an abuse of discretion at the certification stage.*fn12
By the same token, pre-trial class certification proceedings do not require a mini-trial; the class is not obligated to establish liability during the class certification phase. Pa.R.C.P. No. 1707 cmt.; Debbs, 810 A.2d at 154. See Hohider, 574 F.3d at 175-76. The practical consequence here is that we address the first and second questions on appeal, class certification and sufficiency, separately. But, because the parties have unhelpfully addressed the issues together, we have parsed the briefs to separate the arguments relevant to each issue.
For ease of discussion, we will address commonality and predominance together as the parties do, but we emphasize that the Rule 1702(2) commonality requirement and the Rule 1708(a)(1) predominance requirement are distinct prerequisites for class certification, both of which must be established by the class proponent.
To establish the commonality requirement, Bassett had to identify common questions of law and fact -- "a common source of liability." Weismer, 615 A.2d at 431. Simply contending that all putative members of a class have a complaint is not sufficient if the complaints are disparate personal allegations arising from different circumstances and requiring different evidence, i.e., "one requiring less, the other requiring more, the one not indicative of the merits, the other appearing to approach the merits of individual cases." Allegheny County Hous. Auth. v. Berry, 487 A.2d 995, 996-98 (Pa. Super. 1985) (commonality requirement not met with bare allegation that a number of plaintiffs had different verifiable complaints against same defendant); see Eisen v. Indep. Blue Cross, 839 A.2d 369, 372 (Pa. Super. 2003) (same). Commonality may not be established if "various intervening and possibly superseding causes of damage" exist. Weismer, 615 A.2d at 431. The critical inquiry for the certifying court is whether the material facts and issues of law are substantially the same for all class members. Liss, 983 A.2d at 663. The court should be able to envision that the common issues could be tried such that "proof as to one claimant would be proof as to all" members of the class. Id.
Bassett was not required to prove that the claims of all class members were identical; the existence of distinguishing individual facts is not "fatal" to certification. Buynak v. Dep't of Transp., 833 A.2d 1159, 1163 (Pa. Cmwlth. 2003). The common questions of fact and law merely must predominate over individual questions. Pa.R.C.P. No. 1708(a)(1). The standard for showing predominance is more demanding than that for showing commonality, In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 311, but is not so strict as to vitiate Pennsylvania's policy favoring certification of class actions. Eisen, 839 A.2d at 371.
The "predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation." Amchem Prods., 521 U.S. at 623; see In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 310-11. Thus, a class consisting of members for whom most essential elements of its cause or causes of action may be proven through simultaneous class-wide evidence is better suited for class treatment than one consisting of individuals for whom resolution of such elements does not advance the interests of the entire class. See Liss, 983 A.2d at 666 ("[c]lass members may assert a single common complaint even if they have not all suffered actual injury; demonstrating that all class members are subject to the same harm will suffice"); Delaware County v. Mellon Fin. Corp., 914 A.2d 469, 475 (Pa. Cmwlth. 2007) (existence of separate questions "essential" to individual claims does not foreclose class certification) (quoting Weismer, 615 A.2d at 431); Cook v. Highland Water & Sewer Auth., 530 A.2d 499, 505 (Pa. Cmwlth. 1987) (internal citations omitted) ("Where a common source of liability can be clearly identified, varying amounts of damage among the plaintiffs will not preclude class certification. However, where there exist various intervening and possibly superseding causes of the damage, liability cannot be determined on a class-wide basis.")
Here, we do not discern any abuse of discretion in the pre-trial certification decision. The evidence available to the court at the time of certification supported the following findings of fact by the trial court. KMA sold the Sephia to U.S. consumers between 1997 and 2000. N.T., 7/15/04, at 10, 19. Although KMA made several changes to the design of the Sephia's brake system during those years, the modifications did not significantly alter the basic defective design. N.T., 7/15/04, at 86-87, 129; 7/16/04, Vol. 1, at 79-81. According to Bassett's expert, the brake systems of all 1997-2000 Sephias had a common design defect related to heat dissipation in the front brakes, which caused premature wear of the brake pads and rotors. N.T., 7/15/04, at 93, 100-01.*fn13 Bassett showed U.S.consumer expectations and the KMA owner's manual to set the reasonable life expectancy of Sephia brake pads at 20,000 to 30,000 miles. Id. at 94-97. But, the Sephias' brake pads (and, subsequently, rotors) wore prematurely. See Motion for Class Certification, Exh. 2-D-I, K (KMA Technical Service Bulletins dated 1997-1999; Sephia Repair Tips (from Kia Technician Times, Apr. 1998)). Warranty data showed high claim rates related to the premature wear of brake pads and rotors for 1997-2000 Sephias, which indicated, according to Bassett's expert, "extra" or "abnormal" wear independent of factors like driver habits and the environment that normally contribute to brake component wear.*fn14 N.T., 7/15/04, at 98-99, 102, 104. Bassett also offered KMA internal memoranda and evidence of a free brake pad coupon program to confirm the existence of a system-wide brake defect and KMA's knowledge of the defect since 1998. Id. at 132; N.T., 07/16/04, Vol. 1, at 48-49 (quoting quality assurance report of June 8, 1999, in reference to premature brake wear and warping of rotors on the Sephia: "This is a well-known condition and needs to be corrected ASAP."); see also Motion for Class Certification, Exh. 2-D--I, K (KMA Technical Service Bulletins dated 1997-1999; Sephia Repair Tips (from Kia Technician Times, Apr. 1998)). Finally, warranty data, internal memoranda, and KMA's repeated attempts to make minor brake system modifications, as explained by expert testimony, supported the trial court's finding that KMA was unable to effectively repair the defect in the brake system. N.T., 7/15/04, at 88 (brake system defect was "chronic"). Thus, the trial court's findings of fact for the purposes of Bassett's class certification motion are supported by the record.
The findings of fact by the certifying court formed a sufficient basis to conclude that commonality was met, as the class's claims were based on "a common source of liability" and were susceptible to common proof. Liss, 983 A.2d at 663; Weismer, 615 A.2d at 431. KMA warranted Sephias to be "free from defects in material and workmanship." Bassett and the class asserted several causes of action on the basis of the common source of liability (i.e., the defective design of the brake system), including breach of express and implied warranties, and violation of the MMWA. The trial court did not abuse its discretion in concluding that common questions of law and fact existed, such as whether the 1997-2000 Sephias had the common defect alleged, whether KMA had the ability to repair the defect, whether KMA breached the express and implied warranties, and whether KMA violated the MMWA. Based on the same evidence, the certifying court also did not abuse its discretion in concluding that common issues predominated over individual issues of liability.
KMA's arguments on appeal do not prove an abuse of discretion by the trial court. First, the class here was not required to prove "reliance" in order to recover for breach of the express warranty.*fn15 KMA now argues that, to recover, each class member had to prove individually that s/he read the warranty -- a clause of the purchase contract -- and relied on it in seeking brake repairs and, consequently, in bringing an action for failure to repair. But, it is undisputed that the express and implied warranties at issue existed and were terms in each class member's sales contract. See KMA's Warranty ("[KMA] warrants that your new [Sephia] is free from defects in material and workmanship . . . all components of your new [Sephia] are covered for 36 months or 36,000 miles, whichever comes first"); see Keller v. Volkswagen of America, Inc., 733 A.2d 642, 644-45 (Pa. Super. 1999) (breach of warranty is an action for breach of contract). A written express warranty that is part of the sales contract is the seller's promise which relates to goods, and it is part of the basis of the bargain. 13 Pa.C.S. § 2313(a)(1). This statement of law is not qualified by whether the buyer has read the warranty clause and relied on it in seeking its application. See id. General contract law supports this interpretation. "Contracting parties are normally bound by their agreements, without regard to whether the terms thereof were read and fully understood." Simeone v. Simeone, 581 A.2d 162, 165 (Pa. 1990); see Erie Ins. Exchange v. Baker, 972 A.2d 507, 511 (Pa. 2008) (plurality) (plaintiff's failure to read contract not ground to nullify contract terms); Standard Venetian Blind Co. v. Am. Empire Ins. Co., 469 A.2d 563, 566 (Pa. 1983) (same). To adopt KMA's position would essentially require us to abandon this rule with respect to warranties. We decline to do so. Here, KMA cannot avoid its contractual responsibilities pursuant to the class member warranties, regardless of whether individual members read and fully understood the warranty provisions; therefore, to require class members to prove individual reliance on the written warranties is unnecessary. Accordingly, at the class certification stage, Bassett was not required to show that reliance lent itself to class-wide proof. See Liss, 983 A.2d at 665 (reliance is not element of cause of action for breach of contract).*fn16
Second, the trial court did not abuse its discretion in concluding that the issue of proximate cause could be proven by common evidence. The court considered KMA's internal memoranda and expert testimony regarding the brake design defect, in conjunction with warranty claims data, which tended to prove that the brake design defect was the proximate cause of premature wear of brake pads and rotors with respect to the class claims. N.T., 7/15/04, at 88-91, 99-102. On appeal, KMA argues that commonality was not established because evidence of record proved that premature wear could also have other causes, such as environmental conditions, driver habits, or separate defects, id. at 120-23, 148. We reject KMA's implicit invitation to reweigh the evidence on appeal. Commonwealth v. Treiber, 874 A.2d 26, 30 (Pa. 2005). Whether causation could be established on a class-wise basis was an issue for the finder of fact -- the certifying court, in this case -- and contrary testimony in the record is insufficient for reversal on appeal. See Summers v. Certainteed Corp., 997 A.2d 1152, 1163-64 (Pa. 2010) (causation is question for finder of fact; plaintiff need not exclude every possible explanation so long as reasonable minds can conclude that defendant's conduct was proximate cause of harm by preponderance of evidence); Popowsky v. Pa. Pub. Utility Comm'n, 937 A.2d 1040, 1055 n.18 (Pa. 2007) (preponderance of evidence is akin to "more likely than not" inquiry); RESTATEMENT (THIRD) OF TORTS, PRODUCTS LIABILITY § 3 cmt.d (1998) (if plaintiff can prove that most likely explanation of harm involves causal contribution of a product defect, fact that there may be other concurrent causes of harm does not preclude liability).
Third, we also reject KMA's claims that certification was an abuse of discretion because the record was devoid of evidence that class members provided notice of the defect and an opportunity to cure.*fn17 Indeed, the record shows that KMA was on notice since late 1998 (more than two years before this action was filed) that Sephias, beginning with the 1997 model, had defective front brakes. See, e.g., KMA's Opposition to Class Certification, Exh. D2-32 (Tim McCurdy Inter-Office Memorandum to James Lee, 2/03/99; KMC Brake Quality Team Meeting Summary, 2/15/99). KMA had the opportunity (and sought) to repair the defect repeatedly but unsuccessfully during the 1997-2000 production years. On this record, we hold that the trial court did not abuse its discretion by concluding that the class would be able to prove notice and opportunity to cure through common evidence at trial.
As a final matter, KMA argues that common proof for individual class members of the related issues of defect manifestation and amount of damages, see Briehl v. Gen. Motors Corp., 172 F.3d 623, 627-28 (8th Cir. 1999), was not available and that the trial court's decision to certify the class was erroneous on this ground. According to KMA, testimony related to Bassett's repair history was insufficient to prove the damages of the other class members and the trial court should have found commonality lacking on this ground. KMA argues that Bassett "made no attempt to extrapolate her experience to those absent class members and offered no documentary or testimonial evidence to establish that any plaintiff class member other than she [sic] sustained any economic harm." KMA's Brief at 23.
At issue are two different considerations: whether the class could demonstrate the impact of the defective brakes on each member and whether the amount of damages for each class member was provable with common evidence. See Behrend v. Comcast Corp., 655 F.3d 182, 204-06 (3d Cir. 2011) ("At the class certification stage we do not require that Plaintiffs tie each theory of antitrust impact to an exact calculation of damages, but instead that they assure us that if they can prove antitrust impact, the resulting damages are capable of measurement and will not require labyrinthine individual calculations."); Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 188 (3d Cir. 2001) (ability to calculate amount of damages "does not absolve plaintiffs from the duty to prove each investor was harmed by the defendants' practice"); accord Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 565 (1931) ("rule which precludes the recovery of uncertain damages applies to such as are not the certain result of the wrong, not to those damages which are definitely attributable to the wrong and only uncertain in respect of their amount"). The impact of the defect on each class member implicates concepts of manifestation and causation. Impact may be proven with common evidence "so long as the common proof adequately demonstrates some damage to each individual." Bogosian v. Gulf Oil Corp., 561 F.2d 434, 454 (3d Cir. 1977), abrogated on other grounds by Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). The question regarding the impact on each class member turns on the individual facts of a case "rather than upon a rule of law precluding common proof of fact of damage." Id. at 454-55; accord Summers, supra.
The design defect of which the class complained was susceptible to proof on a class-wide basis, and testimony showed that the inability of the Sephia brake system to exhaust heat manifested as premature wear of brake pads and rotors, accompanied by noise and inability to brake, symptoms of which Sephia owners complained. High warranty claims confirmed the impact of the defect on individual members of the class. The fact that the claims rates were not one hundred percent across all models was not dispositive of the issue of manifestation because, as KMA's representative testified, only covered claims were included in the calculations of the warranty rate. Uncompensated claims were not. See N.T., 7/15/04, at 91-92, 97-98. KMA offered testimony that the decision whether to replace brake pads and rotors, wear-and-tear items generally not covered under the warranty, was at the discretion of KMA. Moreover, Bassett's evidence supported the conclusion that, even where KMA replaced brake system components free of charge, the replacement parts were equally defective and required additional repairs, whose replacement at no cost to the Sephia owners would again be subject to KMA's discretion. Notably, at the preliminary stage of trial, the class was pursuing several types of compensation, including out-of-pocket costs, diminished re-sale value of the vehicle, and retrofit costs. The record following the certification hearing contained sufficient evidence to support the trial court's decision that all class members were affected by the defect and sustained some form of damages.
Regarding damage amounts or scope of individual relief, it has been well established that if a "common source of liability has been clearly identified, varying amounts of damages among the plaintiffs will not preclude class certification." Weismer, 615 A.2d at 431; accord 6 Alba Conte & Herbert B. Newberg, NEWBERG ON CLASS ACTIONS § 18:27 (4th ed. 2002) (part of federal approach to class actions is "recognition that individual damages questions do not preclude [certification] when the issue of liability is common to the class."). Indeed, as we have recently held, "demonstrating that all class members are subject to the same harm will suffice" for certification purposes. Liss, 983 A.2d at 666 (quoting Baldassari, 808 A.2d at 191 n.6); accord Int'l Bhd. of Teamsters v. U.S., 431 U.S. 324, 361 (1977) ("Teamsters") (authorizing "additional proceedings after the liability phase of the trial to determine the scope of individual relief"); Smilow v. Southwestern Bell Mobile Sys., Inc., 323 F.3d 32, 40 (1st Cir. 2003) (if "common questions predominate regarding liability, then courts generally find the predominance requirement to be satisfied even if individual damages issues remain"). The class here did not offer testimony of identical damages among members during certification proceedings and, in fact, acknowledged that individual class members paid varying out-of-pocket costs for brake repairs. N.T., 7/15/04, at 22-23.
KMA argued in opposition to certification -- and renews the argument now, on appeal -- that the individual nature of damages proves that the trial court abused its discretion in its finding of commonality and predominance. We disagree. As our previous analysis shows, Bassett and the class adduced sufficient evidence during certification proceedings to show a common source of liability. Any question regarding individual expenditures resulting from varying attempts to repair the defect was not a ground to reject the commonality found on other issues, to defeat the predominance of common issues and, ultimately, to deny certification of the class at the preliminary stages of trial.*fn18 For these reasons, we discern no abuse of discretion by the trial court in concluding that Bassett met the prerequisites of commonality and predominance.
In his dissent, Mr. Justice Saylor addresses damages and observes that class members had "plainly individualized experience[s] with out-of-pocket expenditures," which the trial court "glossed over" both at certification proceedings and at trial. Dissenting Slip. Op., at 13. Justice Saylor criticizes the trial court for failing to manage the class action proceedings fairly and efficiently to account for differences in out-of-pocket damages incurred by the individual class members. Id. at 10. "The looseness of the certification decision ...