I first blogged about the Lycoming Engines class action case back in April 2009, when the Third Circuit reversed Judge Savage’s order granting certification on plaintiffs’ unjust enrichment and implied warranty of merchantability claims. As I wrote then:
A model of efficiency, class actions are not.
I don’t have an easy answer for how class actions should be prosecuted and evaluated. Judge Savage and the Appellate Judges (Ambro, Weis and Van Antwerpen) clearly did the best they could; fact is, class actions are complicated, time-consuming, expensive and just plain hard to litigate and to decide. It’s not uncommon to bounce back and forth between the trial court and the appellate court several times prior to even beginning discovery, much less trial. Then comes the "real" post-trial appeal from a final order.
Plaintiff’s complaint was filed July 10, 2006, more than two-and-a-half years ago. Plaintiff and his lawyers have gone essentially nowhere since then, and still have years of litigation ahead, all at substantial time and expense to the plaintiff’s counsel, who likely represents plaintiff on a contingent fee, a fee that will depend not only on winning, but on the judge’s own evaluation of whether the claimed fee is fair and reasonable. All years down the road.
The plaintiffs alleged that their airplane engines were manufactured by Lycoming Engines with defective crankshafts that can cause a total loss of engine power and in-flight engine failures, and that Lycoming knew of and concealed the defect that prevents the crankshafts from functioning as intended. The Third Circuit reversed
Here we are, almost two years later, and Judge Savage has finally finished the Herculean task given to him by the Third Circuit of surveying the laws of all fifty states with regard to unjust enrichment and breach of the implied warranty of merchantability, determining whether there were actual or real conflicts between those laws, where there was such a conflict, assess which state has the greater interest in the application of its law to determining the liability for defective aircraft crankshafts that were allegedly more vulnerable to stresses in their ordinary and foreseeable use, and considering whether applying that law to all plaintiffs and class members violates the Due Process and Full Faith and Credit Clauses through individualized scrutiny of the claims asserted by each member of the plaintiff class.
The class action attorneys representing the plaintiffs saw the writing on the wall, so voluntarily dropped their unjust enrichment claims. Unjust enrichment is a strange claim even within one state, much less across all fifty.
As I noted back in my original post, I thought that the implied warranty of merchantability claims would survive the second trip through the District Court. After all, as the Court noted last week,
All states, except Louisiana, have adopted § 2-314 of the Uniform Commercial Code (‘U.C.C.’), which provides that unless excluded or modified, a warranty that the goods are merchantable is implied in a contract for sale. 10 U.C.C. § 2-314 (2003). There are, nevertheless, significant differences among the states regarding the application of implied warranty of merchantability law. The most significant is the privity requirement. 11 Thirty-one states, including Pennsylvania, and the District of Columbia, do not require privity of contract to recover for breach of the implied warranty of merchantability where only economic damages are involved. 12 Eighteen states require privity between the parties in cases involving purely economic loss. 13 Thus, we must analyze whether this conflict between the laws of the privity states and Pennsylvania is true or false.
FOOTNOTES …11 In addition to privity, there are differences among the states regarding the application of implied warranty of merchantability law with respect to disclaimer requirements, limitation of liability and available defenses. We address these differences in the later section discussing manageability of this case as a class action.
Powers v. Lycoming Engines, 2011 U.S. Dist. LEXIS 12946, at *14–16 (E.D. Pa. Feb. 9, 2011)(some footnotes omitted).
There are differences, sure, but not irreconcilable ones, except for the privity states, since the plaintiffs here weren’t in privity with the defendant, a manufacturer of aircraft parts rather than the actual seller of the airplanes. The plaintiffs tried to deal with that by recommending the Court split the case into privity and non-privity classes.
But the District Court thought otherwise:
Dividing the plaintiffs into two subclasses, one for plaintiffs from privity states and another for those from non-privity states, does not solve the problem. There are various differences among the states’ laws affecting entitlement to disclaim the warranty, the extent of the warranty, limitation of liability defenses and damages. Thus, the need for individual inquiry will remain.
For example, class members who purchased the aircraft or engines in states requiring notice of breach as a prerequisite to suit must establish that they provided notice to Lycoming. Even though most states require notice, what suffices as notice is not the same among the states. For instance, those who purchased their planes in Alaska and Arizona will satisfy the notice requirement by the filing of the complaint. Those who purchased their planes in Alabama, Arkansas and Illinois must establish notice by informing the manufacturer of the defect by writing a letter or calling its place of business or corporate headquarters because later filing a complaint will not suffice.
There are multiple defenses, such as assumption of the risk, hindrance of the contract, misuse of the product, and the validity of the warnings, that exist in some states and not others. In some cases, these defenses will be available to Lycoming. In others, they will not. Because not all the states recognize the same defenses, determining whether the defense applies to a particular class member and whether the defense bars the class member’s action is necessarily individualized.
Even though we know little about the individual named plaintiffs, we can be certain that there are factual circumstances and legal differences among them and the putative class members that preclude a finding of predominance. The plaintiffs in these cases share the same law with some class members who purchased their planes or engines in states with similar merchantability laws, but do not share the law with those class members who bought their planes or engines in states that have conflicting laws.
In short, there are a multitude of legal standards that must be applied to each class member. Factual differences are innumerable. Where each putative class member resides is not known. Where they purchased the aircraft or engine is not known. Thus, without engaging in an individual fact-finding inquiry, we cannot determine which state’s law applies to each putative class member.
Powers v. Lycoming Engines, 2011 U.S. Dist. LEXIS 12946, at *33–35 (E.D. Pa. Feb. 9, 2011). Certification of class action status thus denied.
Nearly five years after it was filed, and after a trip up to and down from the appellate court, the case is effectively over, without a dime to the plaintiffs’ attorneys and without even beginning an investigation into the merits of plaintiffs’ claims. Maybe a handful of aircraft owners will bring direct claims, but that’s doubtful: given the six figures or more it would take to prosecute the case, it’s likely not worth bringing the case at all.
I suppose the plaintiffs’ attorneys could appeal — and I think the District Court gave plaintiffs the short shrift in discussing those "multitude of legal standards" that supposedly would apply — but the odds of that winning are virtually nil. It’s usually a one-way street to the appellate court: they’ll happily reverse a district court granting certification, but rarely reverse a district court denying it.
Like I’ve written before, we have a lot of consumer protection laws on the books, but outside California they’re often hollow promises, since they’re unenforceable.