Amato v. General Motors Corp. , 11 Ohio App. 3d 124 ( 1982 )

In my view the majority approves a provisional class certification order when the class proponent has failed to demonstrate the requisites specified in Civ. R. 23(A). Certification of a class requires factual findings from evidentiary sources that the prerequisites have been satisfied. Since I believe that the class certification order was premature, even though it may be supportable at a later time, I respectfully dissent.

The trial court's certification order rests almost entirely on the allegations in plaintiff's complaint. As summarized in the trial court's opinion, the significant allegations are as follows:

"Amato alleges that General Motors and its Olsmobile [sic] dealers represented to buyers that the 1977 Oldsmobiles had Oldsmobile engines, but that in fact five thousand Ohio purchasers received 1977 Oldsmosbiles [sic] equipped with Chevrolet engines. These representations, the complaint states were made by means of mass media advertisements, sample showroom automobiles, sales brochures and oral statements. The Chevrolet engines, plaintiff avers, were inferior to Oldsmobile engines."

No factual finding was made that the alleged representations in a wide variety of circumstances were identical, or even that they were substantially similar. Apparently no evidence was submitted to the trial court which would support that conclusion. Obviously the degree of similarity of the alleged representations bears directly on the class-action requirements of commonality and typicality.

While the broad, general allegations of the complaint would suffice to state an individual claim by this plaintiff, it fails to demonstrate class-action requirements with sufficient precision. Thus, representations may not be sufficiently similar to support class-action treatment if some stated the engines were "manufactured by the Olds Division," while others stated that the engines were "similar to Olds engines," or "as good as Olds engines," or "engines usually supplied with Olds automobiles." Before we can determine the propriety of class certifications, the trial court must determine the precise nature of the representations involved in the various forms of their communication.

The majority opinion also modifies important substantive rules to facilitate or accommodate class-action treatment. In my judgment, changes in substantive law are not justified for procedural convenience in these circumstances. The majority permits an inference or a presumption that the unspecified representations were communicated to every potential class member and were affirmatively relied upon by every potential class member, simply because those unspecified representations or some other similar unspecified representations were included in a variety of mass advertising formats. Use of such inferences or presumptions in class actions is inappropriate unless similar inferences or presumptions are adopted for individual claims. The individual plaintiff may well complain that he has been denied equal protection by an evidentiary rule applicable only when he can gather numerous other claimants to assert the same rights.

Further, the class-action defendant is placed in the difficult or impossible position of disproving the facts peculiarly within the knowledge of his multitudinous adversaries, particularly when those adversaries are not easily accessible for traditional discovery procedures. It is not clear that General Motors can submit written interrogatories to the 5,000 alleged class members, some of whom may be difficult to locate for investigation or deposition purposes. Class members may not be considered traditional parties within the meaning of the discovery rules. The burden of demonstrating the propriety of a class falls on the party proposing the class certification. The proponent's difficulties should not justify elimination of that burden, any more than the opponent's difficulties in disproving class characteristics justify lightening its burden to demonstrate grounds for decertification.

If we assume communication of the same representation to each class member and affirmative reliance by each class member, we might equally assume knowledge and reliance by each class member of any later representations which would eliminate any misunderstanding. Ordinarily the claimant has the burden of proving that the defendant's representation reached the claimant and was relied upon by him. Ordinarily, the defendant has the burden of proving that any subsequent clarification was communicated to the claimant so as to eliminate any further justifiable reliance. There appears to be no good reason to change one rule while retaining the other. In general, substantive and evidentiary rules should not be adjusted to facilitate a procedural device.

In some statutory actions based on fraud, the element of reliance may be inferred or presumed rather than proven by direct evidence. For example, in class actions for securities fraud, individual questions of reliance and the amount of damages are not grounds for refusing to certify a class. Courts focus their inquiry on the materiality of the misstatements made, and if the misstatements are material, the causal relation between the violation and the injury is established. See, e.g., Mills v.Electric Auto-Lite Co. (1970), 396 U.S. 375; Affiliated UteCitizens v. United States (1972), 406 U.S. 128.

The majority creates an inference or presumption of reliance in class actions for common-law fraud, relying on Vasquez v.Superior Court of San Joaquin Cty. (1971), 4 Cal.3d 800,94 Cal. Rptr. 796, 484 P.2d 964. However, there is a significant distinction between Vasquez and the present case. In Vasquez, the named plaintiffs in a consumer class action alleged that the defendants recited a standard memorized sales statement to every member of the class which contained the misrepresentations upon which they relied. In contrast, the named plaintiff in this case claims that a variety of materials (including sales brochures, models, ownership manuals, and gasoline mileage publications) contained material misrepresentations about the product purchased. It is certainly less clear that every member of the proposed class saw these materials and relied upon them in purchasing defendant's automobiles than that customers heard and accepted a standard memorized sales statement made to every potential purchaser.

Thus, the creation of an inference of reliance in the present case more significantly alters the substantive law of fraud than the California court's action in the Vasquez situation. The limits on Vasquez were emphasized by the subsequent ruling of the same court in San Jose v. Superior Court of Santa Clara Cty. (1974), 12 Cal.3d 447, 115 Cal.Rptr. 797, 525 P.2d 701. In theSan Jose case, the California court made clear that substantive rules would not be altered to facilitate class actions.

Other courts have been unwilling to create an inference or presumption in order to permit class certification. In Edelman v.Lee Optical Co. (1974), 24 Ill. App.3d 216, 320 N.E.2d 517, an Illinois court denied certification of a class, stating at 219:

"In the instant case, * * * plaintiffs and the members of the class they seek to represent failed to share a requisite common question of fact. Specifically, each count of their complaint is dependent upon proof of reliance by purchasers of single-vision glasses on defendants' alleged misrepresentations. The claim of each member of the class is dependent upon a demonstration that he had knowledge of defendants' advertisements and was led into believing he could purchase any style of single-vision glasses for one low price. Clearly, where plaintiffs' class claims are essentially predicated on an allegation of false and misleading advertising, reliance is an essential element of their case, yetthe class they seek to represent includes persons who may nothave relied upon, or even seen, defendants' advertisements. We believe that a determinative question of fact is not common to the class and therefore this action is not properly maintainable as a class action." (Emphasis added.)

See, also, Hoffman v. Charnita (M.D. Penn. 1973), 58 F.R.D. 86.

In Tober v. Charnita (M.D. Penn. 1973), 58 F.R.D. 74, the named plaintiffs in a class action alleged that the defendants violated the Federal Securities Act and committed common-law fraud in the sale of real estate. The court held that the securities fraud action could be maintained as a class action, since individual reliance is not an element which must be separately alleged and proven in such cases. The court then refused certification of the class for the common-law fraud claim, even though separate trials for each class member on the reliance issue would be unmanageable and time-consuming. The court said at 85:

"Nor are we willing to avoid the problem by removing individual reliance as an essential element of common law fraud. To do so, in our opinion, would not only subvert the substantive principles of law involved, but would merely achieve economies of time at the expense of procedural fairness. This latter result is directly contradictory to the purpose of Rule 23(b)(3) as expressed by its authors."

See, also, Ballen v. Anne Storch Internatl. Asti Tours, Inc. (1974), 46 App. Div. 2d 643, 360 N.Y.S.2d 436.

In my opinion, these cases express the better view, and therefore I disagree with the creation of an inference of reliance in class actions for common-law fraud. I would deny certification of the class in the action for fraud.

I do not dissent from that portion of the opinion in which the majority determined that a class action could be maintained under R.C. 1345.09 of the Consumer Practices Act, if a specific administrative regulation is shown to have been violated by the defendant. Like actions under the federal securities laws, proof of each class member's reliance does not appear to be an essential element of an action under this Act. I agree with the analysis regarding actions brought under the Consumer Sales Practices Act in Brown v. Market Development (1974), 41 Ohio Misc. 57, at 62 [68 O.O.2d 276]:

"It is significant that it is the activity of the supplier that is pivotal in making the determination of unconscionability, and not the character or nature of a completed transaction with a consumer, nor the actual mental state of the consumer."

For the preceding reasons, I believe that certification of the stated class is premature on this record, and that class certification for common-law fraud actions should not be premised on changes in substantive or evidentiary rules, whether they are designated as special assumptions, inferences, or presumptions.