Adam Schell v. Volkswagen Ag

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JAN 20 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ADAM SCHELL; ANDREW M. OLSON; No. 20-17480
ANGELA MATT ARCHITECT INC.;
BENJAMIN TYLER DUNN; BRADLEY D.C. Nos. 3:17-cv-04372-CRB
CONNER; BRENDAN DALY; BRYAN 3:15-md-02672-CRB
SHEFFIELD; CATHERINE LAMENZO;
DARRYL LECOURS; DEREK
WINEBAUGH; EDDIE FIELD; GISBEL MEMORANDUM*
DE LA CRUZ; INGRID SALGADO;
JENNIFER NEMET; JOHN KUBALA;
KEN GALLUCCIO; MARK MILLER;
MELISSA ST. CROIX; MICHAEL
BOWMAN; MICHAEL SKENA;
NORBERT KAHLERT; STEPHEN
FRANCK; STEVEN FERDINAND;
STEVEN RAWCZAK; SVEN HOFMANN;
THOMAS SIEHL III; TONYA DREHER,
Plaintiffs-Appellants,
v.
VOLKSWAGEN AG; VOLKSWAGEN
GROUP OF AMERICA, INC.; AUDI OF
AMERICA, INC.; AUDI
AKTIENGESELLSCHAFT, (Audi AG);
AUDI OF AMERICA, LLC; ROBERT
BOSCH, LLC, a Michigan limited liability
company; ROBERT BOSCH GMBH, a
German corporation,
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of California
Charles R. Breyer, District Judge, Presiding
Argued and Submitted December 10, 2021
San Francisco, California
Before: GOULD and COLLINS, Circuit Judges, and EZRA,** District Judge.
Plaintiffs-Appellants Adam Schell, et al., filed this suit on behalf of a putative
class of consumers who bought or leased “clean diesel” automobiles from
Volkswagen but disposed of these vehicles before Volkswagen’s “clean diesel”
emissions fraud was publicized. See In re Volkswagen “Clean Diesel” Mktg. Sales
Prac. & Prods. Liab. Litig., 895 F.3d 597, 603 (9th Cir. 2018) (discussing the nature
and extent of this emissions fraud). Plaintiffs appeal from the district court’s order
dismissing this case for lack of evidence of an Article III injury. We have
jurisdiction under 28 U.S.C. § 1291. Reviewing the issue of Article III injury de
novo, Deschutes River All. v. Portland Gen. Elec. Co., 1 F.4th 1153, 1158 (9th Cir.
2021), and the underlying exclusion of an expert opinion offered by Plaintiffs for
abuse of discretion, United States v. Telles, 6 F.4th 1086, 1096 (9th Cir. 2021); see
also Lust v. Merrell Dow Pharms., 89 F.3d 594, 597 (9th Cir. 1996), we affirm.
**
The Honorable David A. Ezra, United States District Judge for the
District of Hawaii, sitting by designation.
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This appeal concerns Defendant-Appellant Volkswagen’s “factual challenge
to standing under Rule 12(b)(1).” Friends of the Earth v. Sanderson Farms, Inc.,
992 F.3d 939, 944 (9th Cir. 2021). Once Volkswagen disputed the truth of Plaintiffs’
factual allegations as to Article III standing, Plaintiffs could “no longer rest on mere
allegations [regarding] the existence of such standing.” Gerlinger v. Amazon.com
Inc., 526 F.3d 1253, 1255–56 (9th Cir. 2008). Plaintiffs instead “had the burden to
support their jurisdictional allegations with competent proof, and, of course, had the
burden of establishing subject matter jurisdiction.” Friends of the Earth, 992 F.3d
at 944 (cleaned up).
Even assuming Plaintiffs correctly asserted at oral argument that the theory of
Article III injury before the district court was that Volkswagen fraudulently induced
Plaintiffs into paying a “clean diesel premium” for their cars, Plaintiffs still had to
offer evidence that this price premium exists. See Friends of the Earth, 992 F.3d at
944; Gerlinger, 526 F.3d at 1256. Plaintiffs contend that the expert opinion of Ted
Stockton is sufficient proof of this injury such that their case should have survived
Volkswagen’s factual challenge to standing, and that the district court erred in ruling
otherwise. We disagree.
Stockton admitted in his deposition that he did not calculate the “clean diesel
premium” that was necessary to support Plaintiffs’ theory for the Article III injury
alleged by Plaintiffs. He instead assumed that his calculation of “excess
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depreciation” based on the post-emissions-fraud-disclosure decrease in the value of
used Volkswagens was a “reasonable proxy for overpayment at the time of initial
purchase.” This method captures ancillary post-disclosure factors as to the price of
used Volkswagen “clean diesel” vehicles, such as fear of regulatory action, loss of
brand reputation, and uncertain resale value. The district court did not abuse its
discretion in concluding that, because Stockton’s method relied on such post-
disclosure factors, it was irrelevant to Plaintiffs’ clean-diesel-premium theory of
Article III injury. See United States v. Hinkson, 585 F.3d 1247, 1263 (9th Cir. 2009)
(en banc) (holding that no abuse of discretion exists if the district court ruling is
logical and supported by inferences which may be drawn the record); see also
Comcast Corp. v. Behrend, 569 U.S. 27, 35 (2013) (“[A] model purporting to serve
as evidence of damages in this class action must measure only those damages
attributable to [the pertinent] theory [of liability in the case].”); Bricklayers &
Trowel Trades Int’l Pension Fund v. Credit Suisse Sec. (USA) LLC, 752 F.3d 82, 96
(1st Cir. 2014). Plaintiffs’ argument is unavailing even under their own legal
standard. They did not prove the only Article III injury that they alleged, and that
failure of proof ends the case. See Gerlinger, 526 F.3d at 1256.
Plaintiffs argue that the district court erred in obliging them to prove damages
with certainty via Stockton’s opinion, and conditioning standing on whether they
mitigated their injuries. They are incorrect because the district court did neither. It
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excluded Stockton’s opinion, not for imprecision, but because it was irrelevant, and
the district court declined to analyze mitigation because Plaintiffs offered no proof
of a “clean diesel premium.”
Because the district court properly exercised its discretion when it excluded
Stockton’s opinion, and Plaintiffs had neither offered in the district court nor
discussed in their Opening Brief any other supportive evidence of damages, we
conclude that they lack any admissible evidence of Article III injury. Plaintiffs’
allegations that they overpaid for “clean diesel” vehicles due to fraud are insufficient
because the district court dismissed the case at the post-pleading stage after fact and
expert discovery had occurred and Plaintiffs had a failure of proof as to standing.
See Friends of the Earth, 992 F.3d at 944. Dismissal was appropriate here. See
Gerlinger, 526 F.3d at 1256.
AFFIRMED.
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