American Honda Wins Over Class Action Suit

First appeared in Insurance Journal

American Honda Motor Co. won a legal victory as a divided U.S. appeals court on Thursday said a nationwide lawsuit over a brake system used in some Acura RL vehicles should not have been certified as a class-action.

The 2-1 decision by the 9th U.S. Circuit Court of Appeals in Pasadena, California, is a fresh setback for consumers, who have seen their ability to sue collectively curtailed after a U.S. Supreme Court ruling last June in favor of Wal-Mart Stores Inc. that narrowed class-action litigation.

The 9th Circuit said a Los Angeles district court judge erred in finding that California’s tough consumer protection laws should apply to a nationwide class of consumers who bought or leased Acura RLs equipped with the optional Collision Mitigation Braking System from Aug. 17, 2005 to Dec. 16, 2008.

It also said the lower court wrongly found that consumers could have relied on advertising by American Honda about the system, part of a $4,000 technology package.

Lawyers for the roughly 2,000 plaintiffs did not immediately respond to requests for comment. American Honda, which is part of Japan’s Honda Motor Co. Ltd, had no immediate comment.

The brake system was designed to warn Acura RL drivers with an alarm and flashing indicator that a crash may be imminent, and tighten seat belts and apply brakes automatically if a frontal crash appeared unavoidable.

But drivers claimed that the system might deploy or fail to warn too slowly, and would shut off in bad weather.

NO COMMON ISSUES OF FACT

The lower court found enough in common among the claims to certify a class. It also said American Honda failed to show why other states’ laws should prevail, even though the purchases and leases took place in 44 U.S. states.

But writing for the 9th Circuit majority, Judge Ronald Gould said it was unfair to apply California law everywhere.

Gould said other states had strong interests in regulating similar transactions, often under materially different consumer protection laws.

He also said there were no “common issues of fact” because drivers nationwide could not have relied on Honda’s “small scale” advertising for the brake system.

Circuit Judge Dorothy Nelson dissented, citing California’s “compelling interest” in regulating the conduct of American Honda, which has headquarters in Torrance, California.

The 9th Circuit returned the case to the Los Angeles district court for further proceedings.

Gould and U.S. District Judge James Gwin, who normally works in Cleveland, comprised the majority. Both were appointed to the bench by President Bill Clinton. Nelson was appointed by President Jimmy Carter.

The case is Mazza et al v. American Honda Motor Co., 9th U.S. Circuit Court of Appeals, No. 09-55376.