Commercial Litigation and Arbitration

Class Action Fairness Act If Federal Jurisdiction Is Based Only on CAFA, Which Provides Jurisdiction Only for “Class Action[s],” Does Denial of Class Certification Divest Court of Jurisdiction? — No

 Coba v. Ford Motor Co., 2019 U.S. App. LEXIS 20183 (3d Cir. July 8, 2019):

Problematic as a lemon of a vehicle may be, the problem becomes more complex when it is peeling. This appeal involves a putative consumer class action seeking damages resulting from the delamination, i.e., peeling and flaking, of the lining of certain Ford truck fuel tanks between 2001 and 2010—a problem that plagued numerous Ford F-Series and E-Series vehicles in multiple countries and that, according to Appellant Galo Coba, Ford knew stemmed from a defect. It requires us to resolve two open questions for our Court: first, whether a district court's denial of class certification divests the court of jurisdiction in a case where its jurisdiction was predicated solely on the Class Action Fairness Act, 28 U.S.C. § 1332(d); and second, whether [*2]  a warranty that covers only defects in "materials or workmanship" extends to design defects under New Jersey common law. We must also evaluate whether a reasonable jury could conclude on this record that Ford knew the alleged fuel-tank defect was the cause of the delamination problem at the relevant time.

Because we conclude that the District Court properly exercised its jurisdiction, that the materials-or-workmanship warranty did not cover design defects, and that the record evidence of Ford's knowledge about the defect does not create a triable issue, we will affirm the District Court's entry of summary judgment in favor of Ford on all of Coba's claims.

I. Background

A. Ford's Fuel Tank Troubles

Beginning in 2001 and continuing over the decade that followed, Ford received waves of complaints from customers who purchased certain F-Series and E-Series vehicles reporting similar types of malfunction related to their vehicles' fuel tanks. The fuel tanks used in certain vehicle models were susceptible to a problem known as "delamination," whereby particles of the tank lining would separate from the underlying metal and mix with the vehicle's fuel. As the fuel carrying those particles makes [*3]  its way through the vehicle's fuel system, the particles can clog the fuel filter, which constrains fuel flow to the engine and reduces power. The particles can also damage fuel-system components, such as injectors. If left untreated, the problem eventually may lead to difficulties starting the engine or keeping the vehicle running.

In 2001, when Ford first received reports that some of its vehicles were exhibiting fuel-tank delamination problems, the complaints came exclusively from customers in Brazil. Over the next few years, cases of delamination cropped up in the United States, though they were largely clustered in certain regions. For example, as of January 2004, forty-three of the eighty-six warranty claims submitted to Ford that related to delamination had come from customers in Ohio. Because of the geographically concentrated occurrence of the delamination complaints, both Ford and the supplier of its fuel-tank coatings, Magni Industries, Inc., suspected that unique qualities in regional fuel supplies were to blame for delamination. In particular, as Ford investigated, its suspicions gravitated toward fuel containing excessive concentrations of biodiesel, which Ford recommended [*4]  against using because its tanks were not authorized to withstand biodiesel concentrations over 5%. That theory was consistent with Ford's data in some respects because Brazil, where the problem started, did not have established biodiesel regulations until 2005.

Although Ford could not confirm that biodiesel was the culprit—and Ford's engineers sometimes questioned the biodiesel hypothesis in light of inconclusive testing—Ford's leads were compelling enough that it started working with Magni in 2005 to develop a more biodiesel-resistant coating. And by February 2007, Ford released an improved coating, called "A35," to replace the prior "A36" coating in F-Series Super Duty trucks. Around the same time, Ford sent a message to dealers notifying them about the release of the new tank coating and explaining that fuel tanks in certain Ford trucks had delaminated, which Ford attributed to "the use of fuels containing concentrations of bio-diesel greater than recommended by Ford (5%)." App. 86.

Ford's warranty claims did drop after the release of the A35 coating, but some reports of delamination persisted. Having not fully solved the problem, Ford continued its investigation. And by 2010, Ford's [*5]  Materials Engineering department came to believe that biodiesel was not the root cause after all; instead, acetic and formic acids—which Ford discovered in fuel samples from service station pumps near a dealer that encountered numerous delamination complaints—were more likely the cause all along.

B. Coba's Lawsuit

Galo Coba, the plaintiff in this case, is one of the Ford-vehicle customers whose fuel tanks delaminated. He purchased two Ford 2006 F-350 Super Duty 6.0L diesel dump trucks for his landscaping business, Coba Landscaping and Construction, Inc. He bought the first in October of 2006 and the second in March of 2007. By March of 2009, both trucks began exhibiting signs of tank delamination. According to Coba, the engines would misfire, the trucks lacked power when driven up hills, the fuel filters were contaminated with fuel-tank debris, and the fuel systems rusted.

He brought the trucks into a Ford dealership, which replaced the fuel tanks and fuel filters in both trucks at no cost to Coba. Despite the repairs, Coba had the same problems over and over again, needing additional replacements each time. Altogether, Coba replaced the fuel tank twice in his older truck and three times [*6]  in his newer truck. Because several of the replacements occurred after the trucks' warranties had expired, Coba spent several thousand dollars on the fixes.

Coba filed this class-action lawsuit against Ford Motor Company in March of 2012. As amended, the operative complaint asserts claims for breach of express warranty, violation of the New Jersey Consumer Fraud Act (NJCFA), and breach of the duty of good faith and fair dealing.1 Although Ford had replaced several of Coba's fuel tanks under warranty, Coba alleges that Ford breached its written warranty—the New Vehicle Limited Warranty (NVLW)—by failing to adequately repair and replace his tanks, as the replacements turned out to have the same defects as his original tanks. The thrust of the implied-covenant-of-good-faith-and-fair-dealing claim is that when Ford repaired Coba's vehicles, it knew that the repairs would not solve Coba's delamination problems. Finally, Coba's NJCFA claim rests on allegations that Ford purposefully failed to disclose to Coba and other customers the defect in its fuel tanks.

The District Court entered summary judgment in Ford's favor on all of Coba's claims. See Coba v. Ford Motor Co., No. 12-1622, 2016 U.S. Dist. LEXIS 136283, 2016 WL 5746361, at *13-14 (D.N.J. Sept. 30, 2016); Coba v. Ford Motor Co., No. 12-1622, 2017 U.S. Dist. LEXIS 123546, 2017 WL 3332264, at *11 (D.N.J. Aug. 4, 2017). This appeal followed.

II. Discussion

A. Jurisdiction [*7] 

We address a threshold issue of jurisdiction before turning to the merits of the District Court's decision. While our jurisdiction to hear Coba's appeal is clear under 28 U.S.C. § 1291, the propriety of the District Court's jurisdiction is less straightforward and an issue we must address at the outset.

The District Court initially exercised jurisdiction over Coba's suit—a class action asserting state-law claims—pursuant to the Class Action Fairness Act (CAFA), which gives district courts "original jurisdiction of any civil action in which the matter in controversy exceeds . . . $5,000,000 . . . and is a class action in which . . . any member of a class of plaintiffs is a citizen of a State different from any defendant." 28 U.S.C. § 1332(d) (emphasis added). But when the District Court entered summary judgment on three of Coba's four claims in September of 2016, it simultaneously denied Coba's motion for class certification as moot even though it had not yet disposed of the NJCFA claim. Because § 1332(d) provides original jurisdiction only over "class action[s]," that ruling raises the question whether the District Court still had jurisdiction when it entered its final summary judgment order in August of 2017. Thus, before we [*8]  address the merits of this appeal, we must consider an issue of first impression for our Court: If a federal court properly exercises jurisdiction pursuant to § 1332(d) at the time a claim is filed or removed, does a subsequent denial of class certification divest the court of subject-matter jurisdiction?

In accordance with every other Circuit Court to address this question, we conclude that it does not.2 We start with the text: District courts have "original jurisdiction" over "class action[s]," 28 U.S.C. § 1332(d)(2), which the statute defines as "civil action[s] filed under [R]ule 23 . . . or [a] similar State statute or rule of judicial procedure authorizing an action to be brought . . . as a class action," id. § 1332(d)(1)(B) (emphasis added). This conferral of jurisdiction plainly encompasses a suit like Coba's, which was "filed under [R]ule 23," notwithstanding its eventual failure to become certified under Rule 23. See Metz v. Unizan Bank, 649 F.3d 492, 500 (6th Cir. 2011) ("The 'filed under' language shows that it is the time of filing that matters for determining jurisdiction under CAFA."); Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806 (7th Cir. 2010) (noting that § 1332(d)(1)(B) "defines class action as a suit filed under a statute or rule authorizing class actions, even though many such suits cannot be maintained as class actions because the judge refuses [*9]  to certify a class"). Indeed, "[h]ad Congress intended that a properly removed class action be remanded if a class is not eventually certified, it could have said so." United Steel, Paper & Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int'l Union, AFL-CIO, CLC v. Shell Oil Co., 602 F.3d 1087, 1091 (9th Cir. 2010).

True, § 1332(d)(8) states that CAFA "shall apply to any class action before or after the entry of a class certification order by the court with respect to that action," but, as the Seventh Circuit has aptly noted, that subsection refers to "a" certification order, not "the" certification order, and the former connotes an indefinite expectation that a certification order may issue. Cunningham, 592 F.3d at 806 (explaining that subsection (d)(8) at most suggests that a class "may be certified eventually" (emphasis added)). Moreover, unlike subsection (d)(2), subsection (d)(8) omits reference to "jurisdiction," indicating it pertains not to the scope of jurisdiction conferred by the statute, but to the timing of certification in relation to removal. See id.

Beyond CAFA's text, general jurisdictional principles also support our conclusion that the denial of class certification did not divest the District Court of jurisdiction over the NJCFA claim. Typically, "[j]urisdictional facts are determined at the time of removal [or filing], not by subsequent events." Louisiana v. Am. Nat'l Prop. Cas. Co., 746 F.3d 633, 635 (5th Cir. 2014); accord Cunningham, 592 F.3d at 807; Metz, 649 F.3d at 500-01; United Steel, 602 F.3d at 1091-92. Of course, that principle is not [*10]  absolute. See Cunningham, 592 F.3d at 807 (discussing exceptions, such as mootness doctrine); United Steel, 602 F.3d at 1092 n.3 (same). However, as Congress did not make any exception here, it seems "likely that Congress intended that the usual and long-standing principles apply—post-filing developments do not defeat jurisdiction if jurisdiction was properly invoked as of the time of filing." Id. at 1091-92.

Assured of the District Court's jurisdiction, we turn to the merits of the District Court's summary judgment ruling.


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