Huu Nguyen v. Nissan North America, Inc.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
HUU NGUYEN, individually, and on No. 18-16344
behalf of a class of similarly situated
individuals, D.C. No.
Plaintiff-Appellant, 5:16-cv-05591-
LHK
v.
NISSAN NORTH AMERICA, INC., a OPINION
California Corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of California
Lucy H. Koh, District Judge, Presiding
Argued and Submitted June 11, 2019
San Francisco, California
Filed July 26, 2019
Before: MARY M. SCHROEDER and MILAN D.
SMITH, JR., Circuit Judges, and DOUGLAS L. RAYES, *
District Judge.
Opinion by Judge Milan D. Smith, Jr.
*
The Honorable Douglas L. Rayes, United States District Judge for
the District of Arizona, sitting by designation.
2 NGUYEN V. NISSAN NORTH AMERICA
SUMMARY **
Class Certification
The panel reversed the district court’s denial of class
certification in an action against Nissan North America
pursuant to state and federal warranty laws arising from an
allegedly faulty hydraulic clutch system in plaintiff’s 2012
Nissan vehicle.
The district court denied plaintiff’s motion for class
certification on the ground that he failed to satisfy the
predominance requirement of Federal Rule of Civil
Procedure 23(b)(3) due to what the district court viewed as
an inappropriate measure of damages.
The panel held that plaintiff’s causes of action under
California’s Consumers Legal Remedies Act, the Song-
Beverly Consumer Warranty Act, and the Magnuson-Moss
Warranty Act were all viable. The panel held that plaintiff
sufficiently demonstrated a nexus between his legal
theory—that Nissan violated California law by selling
vehicles with a defective clutch system that was not reflected
in the sale price—and his damages model—the average cost
of repair. The panel determined that plaintiff did not seek
damages for the faulty performance of the clutch system,
which as the district court concluded, would require an
individualized analysis that might defeat predominance.
Instead, plaintiff’s theory was that the allegedly defective
clutch was itself the injury, regardless of whether the faulty
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
NGUYEN V. NISSAN NORTH AMERICA 3
clutch caused performance issues. The panel concluded that
the district court abused its discretion when it denied class
certification based on a misconception of plaintiff’s legal
theory.
COUNSEL
Ryan Wu (argued) and John E. Stobart, Capstone Law APC,
Los Angeles, California, for Plaintiff-Appellant.
Alan J. Lazarus (argued) and Matthew J. Adler, Drinker
Biddle & Reath LLP, San Francisco, California; Zoë K.
Wilhelm and Adam J. Thurston, Drinker Biddle & Reath
LLP, Los Angeles, California; Sherman Vance Wittie and E.
Paul Cauley Jr., Drinker Biddle & Reath LLP, Dallas, Texas;
for Defendant-Appellee.
Kathy A. Wisniewski and Stephen A. D’Aunoy, Thompson
Coburn LLP, St. Louis, Missouri, for Amicus Curiae FCA
US LLC.
Philip S. Goldberg, Shook Hardy & Bacon LLP,
Washington, D.C.; Andrew J. Trask, Shook Hardy & Bacon
LLP, San Francisco, California; for Amici Curiae Alliance
of Automobile Manufacturers and Association of Global
Automakers.
Ashley C. Parrish, Jesse Snyder, and Jacqueline Glassman,
King & Spalding LLP, Washington, D.C.; Jonathan D. Urick
and Steven P. Lehotsky, U.S. Chamber of Litigation Center,
Washington, D.C.; Leland P. Frost and Peter C. Tolsdorf,
Manufacturers’ Center for Legal Action, Washington, D.C.;
4 NGUYEN V. NISSAN NORTH AMERICA
for Amici Curiae Chamber of Commerce of the United
States and National Association of Manufacturers.
OPINION
M. SMITH, Circuit Judge:
When Plaintiff Huu Nguyen purchased a new 2012
Nissan 370Z as a college graduation present for his son, he
was unaware of what he alleges was a potentially
catastrophic design defect hidden in the vehicle’s hydraulic
clutch system. After the clutch purportedly malfunctioned—
and Plaintiff spent more than $700 replacing it—he filed a
putative class action against Defendant Nissan North
America, Inc. (Nissan), asserting causes of action under state
and federal warranty laws.
The district court denied Plaintiff’s motion for class
certification, concluding that he failed to satisfy the
predominance requirement of Federal Rule of Civil
Procedure 23(b)(3) due to what it viewed as an inappropriate
measure of damages. Because we conclude that, following
Comcast Corp. v. Behrend, 569 U.S. 27 (2013), Plaintiff’s
proposed damages model is consistent with his theory of
liability, we reverse the district court’s denial of class
certification and remand.
NGUYEN V. NISSAN NORTH AMERICA 5
FACTUAL AND PROCEDURAL BACKGROUND
I. Factual Background
A. Alleged Defect
This case involves an allegedly faulty hydraulic clutch
system in various vehicles manufactured by Nissan (the
Class Vehicles). 1
The typical components of a hydraulic clutch system
include a fluid reservoir, a clutch master cylinder (CMC),
and a clutch slave cylinder (CSC), which is sometimes
referred to as the release bearing. 2 As explained by
Plaintiff’s expert, Michael Stapleford, P.E., the clutch
system is a dry friction system that uses brake fluid in a
discrete reservoir to transfer heat from the clutch
components through the base of the CSC to the attached
transmission front cover and the surrounding atmosphere.
Such a system routinely generates heat ranging from 200 to
300 degrees Celsius, with hard use resulting in temperatures
as high as 400 degrees Celsius.
1
Specifically, the Nissan 350Z, model years 2007–09; the Nissan
370Z, model years 2009–15; the Infiniti G35, model years 2007–08; the
Infiniti G37, model years 2008–14; and the Infiniti Q60.
2
A properly functioning hydraulic clutch system is engaged when
the driver depresses the clutch pedal, which causes a piston in the CMC
to push fluid through the steel hydraulic line to the CSC and against the
integrated release bearing, pressurizing the system. This in turn causes
the clutch kit (pressure plate, clutch disc, and flywheel) to disengage the
engine from the transmission. Releasing the clutch pedal releases the
fluid pressure, which allows the gears to engage smoothly and
efficiently.
6 NGUYEN V. NISSAN NORTH AMERICA
Plaintiff alleges that, in reconfiguring the Class
Vehicles’ factory-installed clutch system in 2007, Nissan
failed to properly account for heat transfer and produced a
defective aluminum/plastic composite CSC that causes the
system to overheat. Consequently, the clutch fluid boils and
generates air that causes failure of the clutch pedal, such that
it sticks to the floor and prevents a driver from shifting gears.
A “sticky” clutch can make it difficult to control a vehicle’s
speed, presenting both safety and performance issues.
B. Nissan’s Response
A consumer complaint submitted as evidence by
Plaintiff indicates that the Class Vehicles began to
malfunction as early as June 2007, while Nissan’s own
records identified the issue starting in October of that year.
An internal Nissan report suggested that “abnormal high-
temperature [during] continued use of partial clutch
engagement might be the cause.” Emails exchanged
between Nissan employees in 2012 further discussed the
sticky clutch problem and its potential causes, and in July
2012, a Nissan project engineer wrote,
This issue is great enough that it warrants a
serious look by R&D as to how we can
improve the feel, and function of the clutch
system. . . . Customers are universally
dissatisfied with the feel and performance of
the system even when it is performing as
designed. . . . Combine that with the frequent
claims of clutch pedal sticking to floor and
you’ve taken a dissatisfaction item and made
it into a breakdown item. I think a wholesale
approach to a whole new hydraulic system,
including a new pedal, is warranted.
NGUYEN V. NISSAN NORTH AMERICA 7
Plaintiff claims that “[d]espite its investigations and
testing, or even the change to a higher quality hydraulic fluid
in the Class Vehicles, Nissan never informed consumers that
the clutch system in the Class Vehicles had an inherent
defect that made it prone to heat-related problems.” In his
complaint, Plaintiff asserted that if he and the other putative
class members “knew about these defects at the time of sale
or lease, [they] would not have purchased or leased the Class
Vehicles or would have paid less for them.”
C. Plaintiff’s 2012 Nissan 370Z
Plaintiff purchased a new 2012 Nissan 370Z from an
authorized Nissan dealer in Santa Clara County, California,
as a college graduation present for his son, Michael. In
March 2014, Michael was driving the 370Z on the freeway
when the clutch pedal lost pressure and did not return to its
depressed position; Michael had to pull over to the shoulder
of the freeway and slow down until the clutch allowed him
to shift into second gear. The Nissan dealership replaced the
CSC at no charge because the vehicle was still under
warranty. When a similar situation developed two years
later, however, the 370Z was no longer under warranty, and
so Plaintiff had the CSC replaced by an auto repair shop for
$721.75.
II. Procedural History
Plaintiff’s first amended complaint alleged five causes of
action against Nissan: (1) violations of California’s
Consumers Legal Remedies Act (CLRA); (2) violations of
California’s Unfair Competition Law (UCL); (3) breach of
implied warranty pursuant to the Song-Beverly Consumer
Warranty Act (Song-Beverly Act); (4) breach of implied
warranty pursuant to the Magnuson-Moss Warranty Act
(Magnuson-Moss Act); and (5) unjust enrichment. The
8 NGUYEN V. NISSAN NORTH AMERICA
district court granted in part Nissan’s motion to dismiss,
removing Plaintiff’s UCL and unjust enrichment claims, and
his request for injunctive relief under the CLRA.
Plaintiff moved for class certification pursuant to Federal
Rule of Civil Procedure 23(b)(3) (or, in the alternative, under
Rule 23(c)(4) for liability only), seeking to certify (1) a class
of “[a]ll individuals in California who purchased or leased,
from an authorized Nissan dealer, a new Nissan vehicle
equipped with a FS6R31A manual transmission”; and (2) a
CLRA subclass of “[a]ll members of the Class who are
‘consumers’ within the meaning of California Civil Code
§ 1761(d).” Although Nissan opposed class certification for
various reasons—including that Plaintiff was not an
adequate class representative, that individual issues
predominated due to the varying types of automobiles
included in the Class Vehicles, and that Nissan’s purported
knowledge of the defect changed over the course of the class
period—a major point of dispute, and the issue on which the
district court’s eventual order hinged, concerned Plaintiff’s
damages model.
According to Plaintiff, his “damages model is based on
the economic principle of benefit-of-the-bargain and is
consistent with [his] theory of liability.” Assuming that class
members would have either paid less than sticker price or
not purchased a defective vehicle at all had the nature of the
clutch system been divulged by Nissan, Plaintiff seeks “to
recover the difference in value between the non-defective
vehicles Nissan promised and the defective vehicles that
were delivered based on the cost[] to replace the composite
CSC with one that is solid cast-aluminum.” Nissan
challenges this proposed damages model, citing the report of
an expert who, in its words, “rejected the notion that
NGUYEN V. NISSAN NORTH AMERICA 9
average-cost-of-repair represented the amount that informed
consumers would discount the price of the [Class] Vehicles.”
The district court agreed with Nissan and denied
Plaintiff’s motion for class certification. It concluded that
“Plaintiff [] failed to satisfy the predominance requirement
of Rule 23(b)(3),” based on what the court viewed as a
“problematic” damages model. The court explained,
Under the proposed benefit of the bargain
model, damages are the difference between
the value Nissan represented and the value
class members received, measured at the time
of purchase. However, the difference
between value represented and value
received only equals the cost to replace the
defective CSC if consumers would have
deemed the defective part valueless.
(citation omitted). The court reasoned that, under Plaintiff’s
proposed model, if a class member “derived value from the
defective CSC—be it by selling it, repurposing it, or simply
driving a ways before replacing it—the class member will
have received the full benefit of the bargain and the
monetary value of the defective part. That is not an
appropriate measure of damages.” Because the record
contained no evidence that the defective clutch was
valueless—but did contain evidence to the contrary, since
“Plaintiff’s vehicle was driven for approximately 26,629
miles before the original CSC malfunctioned”—the court
rejected Plaintiff’s damages model as being an improper
measure of the benefit of the bargain. Therefore, the district
court concluded that Plaintiff could not satisfy the
predominance requirement of Rule 23(b)(3).
10 NGUYEN V. NISSAN NORTH AMERICA
We subsequently granted Plaintiff’s timely petition for
permission to appeal the denial of class certification pursuant
to Rule 23(f).
JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction pursuant to 28 U.S.C. § 1292(e)
and Rule 23(f). See Chamberlan v. Ford Motor Co.,
402 F.3d 952, 955 (9th Cir. 2005).
“A district court’s order denying class certification is
reviewed for abuse of discretion.” Civil Rights Educ. &
Enf’t Ctr. v. Hosp. Props. Tr., 867 F.3d 1093, 1103 (9th Cir.
2017). “A district court would necessarily abuse its
discretion if it based its ruling on an erroneous view of the
law.” United States v. Hinkson, 585 F.3d 1247, 1259 (9th
Cir. 2009) (en banc) (quoting Cooter & Gell v. Hartmarx
Corp., 496 U.S. 384, 405 (1990)). But, if the district court
“applied the correct legal standard,” then we will “set aside
its decision only if the court’s reasoning was ‘illogical,
implausible, or without support in inferences that may be
drawn from the facts in the record.’” Civil Rights Educ. &
Enf’t Ctr., 867 F.3d at 1103 (quoting Jimenez v. Allstate Ins.
Co., 765 F.3d 1161, 1164 (9th Cir. 2014)).
ANALYSIS
The central issue before us is whether Plaintiff’s
proposed damages model—specifically, a benefit-of-the-
bargain model as measured by the average cost of replacing
the allegedly defective clutch system—satisfies Rule
23(b)(3)’s predominance requirement.
In order to certify a class under Rule 23(b)(3), a court
must find that “questions of law or fact common to class
members predominate over any questions affecting only
NGUYEN V. NISSAN NORTH AMERICA 11
individual members, and that a class action is superior to
other available methods for fairly and efficiently
adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3); see
also Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180,
1189 (9th Cir. 2001), as amended, 273 F.3d 1266 (9th Cir.
2001). Although uncertain damages calculations do not
alone defeat certification, Yokoyama v. Midland Nat’l Life
Ins. Co., 594 F.3d 1087, 1094 (9th Cir. 2010), the Supreme
Court has emphasized that “at the class-certification stage
(as at trial), any model supporting a ‘plaintiff’s damages case
must be consistent with its liability case.’” Comcast,
569 U.S. at 35 (emphasis added) (quoting ABA Section of
Antitrust Law, Proving Antitrust Damages: Legal and
Economic Issues 57, 62 (2d ed. 2010)); see also id. at 38
(“The first step in a damages study is the translation of the
legal theory of the harmful event into an analysis of the
economic impact of that event.” (quoting Fed. Judicial Ctr.,
Reference Manual on Scientific Evidence 432 (3d ed.
2011))).
Comcast did not alter our holding that individualized
damages issues do not alone defeat certification. See Pulaski
& Middleman, LLC v. Google, Inc., 802 F.3d 979, 988 (9th
Cir. 2015) (“Yokoyama remains the law of this court, even
after Comcast.”); see also Jimenez, 765 F.3d at 1168 (“So
long as the plaintiffs were harmed by the same conduct,
disparities in how or by how much they were harmed did not
defeat class certification.”). But Comcast requires that
“plaintiffs [] be able to show that their damages stemmed
from the defendant’s actions that created the legal liability.”
Leyva v. Medline Indus. Inc., 716 F.3d 510, 514 (9th Cir.
2013); see also Just Film, Inc. v. Buono, 847 F.3d 1108,
1120 (9th Cir. 2017) (“[P]laintiffs must show that ‘damages
are capable of measurement on a classwide basis,’ in the
sense that the whole class suffered damages traceable to the
12 NGUYEN V. NISSAN NORTH AMERICA
same injurious course of conduct underlying the plaintiffs’
legal theory.” (quoting Comcast, 569 U.S. at 34)). In short,
“[u]ncertainty regarding class members’ damages does not
prevent certification of a class as long as a valid method has
been proposed for calculating those damages.” Lambert v.
Nutraceutical Corp., 870 F.3d 1170, 1182 (9th Cir. 2017),
rev’d on other grounds, 139 S. Ct. 710 (2019).
I. Plaintiff’s Causes of Action
We must first consider Plaintiff’s causes of action in
order to determine whether they permit recovery based on
the benefit of the bargain. Following the district court’s
partial grant of Nissan’s motion to dismiss, Plaintiff was left
with three viable causes of action at the time of class
certification: claims under the CLRA, the Song-Beverly Act,
and the Magnuson-Moss Act. 3
A. The CLRA
The CLRA “shall be liberally construed and applied to
promote its underlying purposes, which are to protect
consumers against unfair and deceptive business practices
and to provide efficient and economical procedures to secure
such protection.” Cal. Civ. Code § 1760; see also Hinojos
v. Kohl’s Corp., 718 F.3d 1098, 1108 (9th Cir. 2013) (“[T]he
3
The Magnuson-Moss Act incorporates the substantive provisions
of state warranty laws. See Clemens v. DaimlerChrysler Corp., 534 F.3d
1017, 1022 (9th Cir. 2008) (“[T]his court’s disposition of the state law
warranty claims determines the disposition of the Magnuson-Moss Act
claims.”); Walsh v. Ford Motor Co., 807 F.2d 1000, 1012 (D.C. Cir.
1986) (“[E]xcept in the specific instances in which Magnuson-Moss
expressly prescribes a regulating rule, the Act calls for the application of
state written and implied warranty law, not the creation of additional
federal law.”). Accordingly, we focus only on Plaintiff’s causes of
action under California law—the CLRA and Song-Beverly Act.
NGUYEN V. NISSAN NORTH AMERICA 13
CLRA’s ‘any damage’ requirement is a capacious one that
includes any pecuniary damage as well as opportunity costs
and transaction costs that result when a consumer is misled
by deceptive marketing practices.”); Wilens v. TD
Waterhouse Grp., Inc., 15 Cal. Rptr. 3d 271, 274 (Ct. App.
2003) (noting that “[i]f the consumer suffers damage as a
result of an unlawful act” under the CLRA, then “the
consumer can bring an action against the defendant for
actual damages, punitive damages, injunctive relief or
restitution”). We have noted that “[c]lass wide damages
calculations under the . . . CLRA are particularly forgiving.
California law ‘requires only that some reasonable basis of
computation of damages be used, and the damages may be
computed even if the result reached is an approximation.’”
Lambert, 870 F.3d at 1183 (quoting Pulaski, 802 F.3d
at 989).
Here, we are satisfied that Plaintiff’s proposed benefit-
of-the-bargain measure of damages is both cognizable under
the CLRA and a reasonable basis of computation. Courts
have viewed similar models of recovery favorably in the
past. See, e.g., Colgan v. Leatherman Tool Grp., Inc.,
38 Cal. Rptr. 3d 36, 42–43 (Ct. App. 2006) (describing a
“market approach” for “determin[ing] the amount of actual
damages for a CLRA award,” which provides that “[o]ne
defrauded in the purchase, sale or exchange of property is
entitled to recover the difference between the actual value of
that with which the defrauded person parted and the actual
value of that which he received, together with any additional
damage arising from the particular transaction” (quoting Cal.
Civ. Code § 3343)); see also Astiana v. Kashi Co.,
291 F.R.D. 493, 506 (S.D. Cal. 2013) (“A court awarding
restitution under the California consumer protection laws
has ‘“very broad” discretion to determine an appropriate
remedy award as long as it is supported by the evidence and
14 NGUYEN V. NISSAN NORTH AMERICA
is consistent with the purpose of restoring to the plaintiff the
amount that the defendant wrongfully acquired.’” (quoting
Wiener v. Dannon Co., 255 F.R.D. 658, 670 (C.D. Cal.
2009))). 4 Nissan has cited no authority, and we are not
aware of any, precluding Plaintiff’s theory of recovery under
the CLRA.
B. The Song-Beverly Act
Plaintiff’s damages model is similarly cognizable under
the Song-Beverly Act, which provides that “[t]he measure of
the buyer’s damages in an action . . . shall include the rights
of replacement or reimbursement.” Cal. Civ. Code
§ 1794(b); see also id. § 1794(b)(2) (“Where the buyer has
accepted the goods, Sections 2714 and 2715 of the
Commercial Code shall apply, and the measure of damages
shall include the cost of repairs necessary to make the goods
conform.”). California Commercial Code section 2714
provides that “[t]he measure of damages for breach of
warranty is the difference at the time and place of acceptance
between the value of the goods accepted and the value they
would have had if they had been as warranted, unless special
circumstances show proximate damages of a different
amount.” Cal. Com. Code § 2714(2); see also S. M. Wilson
& Co. v. Smith Int’l, Inc., 587 F.2d 1363, 1375 (9th Cir.
1978) (explaining that section 2714(2) entitles a plaintiff “to
recover the monetary equivalent of the benefit of his
4
We further note that Plaintiff’s damages model is consistent with
the CLRA’s safe harbor provision, which requires that a customer
“[n]otify the person alleged to have” employed unlawful practices and
“[d]emand that the person correct, repair, replace, or otherwise rectify
the goods or services.” Cal. Civ. Code § 1782(a) (emphasis added).
NGUYEN V. NISSAN NORTH AMERICA 15
bargain”). 5 Accordingly, “[u]nder California law the
remedies for breach of the implied warranty include ‘benefit
of the bargain’ damages.” Ironshore Specialty Ins. Co. v.
23andMe, Inc., No. 14-cv-03286-BLF, 2015 WL 2265900,
at *4 (N.D. Cal. May 14, 2015).
II. Plaintiff’s Theory of Liability
Having determined that recovery based on the benefit of
the bargain is cognizable under Plaintiff’s causes of action,
we must now determine whether this damages model flows
from his theory of liability. See Comcast, 569 U.S. at 35.
In his motion for class certification, Plaintiff asserted
that he
has alleged, and can prove through common
evidence, that the Class Vehicles were sold
with defective CSCs. That allegation is
susceptible to common proof regarding the
design of the CSC, which is substantially the
same for all Class Vehicles, and individual
factors do not affect whether the Class
[V]ehicles were sold with a defective CSC.
(citation omitted). This characterization is crucial.
Plaintiff’s legal theory is not based on the performance of
the allegedly defective clutch system, but instead the system
itself, which he claims is defective. Had Plaintiff alleged
that performance problems constituted the defect and caused
his and the class members’ injuries, then the benefit of the
bargain would not be the appropriate measure of damages
5
Section 2715 provides for incidental and consequential damages,
which are not at issue here.
16 NGUYEN V. NISSAN NORTH AMERICA
because, as the district court noted, class members might
have received varying levels of value based on if and when
they experienced a sticky clutch problem. But Plaintiff’s
theory is that Nissan knowingly designed a defective clutch
system and did not inform consumers of the defect. His
expert explained that the CSC “is defectively designed
because its wrought aluminum cylinder and plastic base
assembly does not provide enough thermal conductivity to
effectively transfer heat from the clutch components to the
transmission front cover and surrounding air during clutch
engagement.” This allegedly defective clutch system “is the
same or substantially similar in all of the Class Vehicles.”
Accordingly, as Plaintiff argues, “under [his] theory, the
defect exists—and must be remedied—whether or not the
symptoms have manifested yet.”
Both Nissan and the district court mischaracterized
Plaintiff’s theory as being centered on performance issues,
rather than the defective system itself. Nissan argues that
Plaintiff’s “model assumed that 100% of the vehicles would
manifest a clutch assembly defect, and none of them would
malfunction but for the design flaw.” But this is not
accurate; Plaintiff’s theory is that the defect was inherent in
each of the Class Vehicles at the time of purchase, regardless
of when and if the defect manifested. He alleges that Nissan
violated the CLRA because it knew about the defective
clutch system and failed to disclose it at the point of sale,
that “a reasonable person would have considered [the fact of
the alleged defect] to be important in deciding whether to
purchase or lease Class Vehicles,” and thus that Plaintiff and
class members “would not have purchased or leased Class
Vehicles equipped with transmissions, or would have paid
less for them.” See Soule v. Gen. Motors Corp., 882 P.2d
298, 308 n.3 (Cal. 1994) (“[T]he ordinary consumers of
modern automobiles may and do expect that such vehicles
NGUYEN V. NISSAN NORTH AMERICA 17
will be designed so as not to explode while idling at
stoplights, experience sudden steering or brake failure as
they leave the dealership, or roll over and catch fire in two-
mile-per-hour collisions.”). Plaintiff further alleges that,
under the Song-Beverly Act, the Class Vehicles “suffered
from an inherent defect at the time of sale.” Plaintiff
correctly contends that “under both causes of action, the sale
of the vehicle with the known defect is the liability-
triggering event, not when the overheating manifests.” See
Daniel v. Ford Motor Co., No. 2:11-02890 WBS EFB, 2016
WL 2899026, at *7 (E.D. Cal. May 18, 2016) (“[A]
reasonable jury could conclude that a consumer would
demand that the purchase price of a vehicle with a defect be
reduced by the cost of remedying that defect.”); Kearney v.
Hyundai Motor Co., No. SACV 09-1298 DOC (MLGx),
2010 WL 9093204, at *5 (C.D. Cal. June 4, 2010)
(determining that if “the receipt of a vehicle whose alleged
defects reduced the car’s value and deprived the consumer
of the benefit of the bargain, even when the alleged defects
did not later materialize,” then “the loss was suffered ‘at the
moment’ of purchase” (citing Cole v. Gen. Motors Corp.,
484 F.3d 717, 723 (5th Cir. 2007))).
Plaintiff’s theory is consistent with our opinion in Wolin
v. Jaguar Land Rover North America, LLC, in which we
concluded that “[t]he district court erred when it concluded,
without discussion, that certification is inappropriate
because [the plaintiffs] did not prove that the defect
manifested in a majority of the class’s vehicles.” 617 F.3d
1168, 1173 (9th Cir. 2010). We explained that the plaintiff
alleges breach of implied warranty because
the vehicles were defective and not of
merchantable quality at the time they left
Land Rover’s possession. Common issues
18 NGUYEN V. NISSAN NORTH AMERICA
predominate such as whether Land Rover
was aware of the existence of the alleged
defect, whether Land Rover had a duty to
disclose its knowledge and whether it
violated consumer protection laws when it
failed to do so. . . . [W]e have held that proof
of the manifestation of a defect is not a
prerequisite to class certification.
Id. Moreover, in Pulaski, we clarified that a restitution
calculation under California law
need not account for benefits received after
purchase [where] the focus is on the value of
the service at the time of purchase. Instead
. . . the focus is on the difference between
what was paid and what a reasonable
consumer would have paid at the time of
purchase without the fraudulent or omitted
information.
802 F.3d 989. 6 Here, in denying Plaintiff’s motion for class
certification, the district court focused on potential post-
purchase value, suggesting that “the difference between
value represented and value received only equals the cost to
replace the defective CSC if consumers would have deemed
6
Pulaski dealt with claims under the UCL and California’s False
Advertising Law, not the CLRA. See 802 F.3d at 983. But although
“[d]amages under the CLRA on the one hand and restitution under the
False Advertising and Unfair Competition Laws on the other hand are
different remedies,” the CLRA contemplates restitution, and that concept
is treated similarly under the three laws. Colgan, 38 Cal. Rptr. 3d at 58–
59; see also Cortez v. Purolator Air Filtration Prods. Co., 999 P.2d 706,
713 (Cal. 2000) (discussing the overlap of “restitution” and “damages”).
NGUYEN V. NISSAN NORTH AMERICA 19
the defective part valueless.” Given Plaintiff’s theory of
liability, this conclusion was inconsistent with Wolin and
Pulaski. 7
7
That conclusion was also inconsistent with the holdings of other
circuits, which have described benefit-of-the-bargain recovery much as
we did in Pulaski. In Carriuolo v. General Motors Co., for example, the
Eleventh Circuit cited with approval a Florida state case that asked, “Is
a car with defective seatbelt buckles worth less than a car with
operational seatbelt buckles? Common sense indicates that it is[.]”
823 F.3d 977, 987 (11th Cir. 2016) (alteration in original) (quoting
Collins v. DaimlerChrysler Corp., 894 So. 2d 988, 991 (Fla. Dist. Ct.
App. 2004)). The Carriuolo court determined that it confronted a
“similar question” that was also “amenable to classwide resolution,”
explaining that
a manufacturer’s misrepresentation may allow it to
command a price premium and to overcharge
customers systematically. Even if an individual class
member subjectively valued the vehicle equally with
or without the accurate [safety information] sticker,
she could have suffered a loss in negotiating leverage
if a vehicle with perfect safety ratings is worth more
on the open market.
Id. The court therefore rejected the defendant’s argument that “the
liability determination will be highly individualized because the buying
and leasing experiences of each proposed class member were not
uniform.” Id. at 985. Instead, the court concluded that “damages should
reflect the difference between the market value” of what was promised
and what was delivered; “[u]nlike the calculation of an individual
consumer’s direct pecuniary loss, which would limit the plaintiff to the
difference of what she paid and the actual value received, the [applicable]
‘benefit of the bargain’ model provides a standardized class-wide
damages figure because the plaintiff’s out-of-pocket payment is
immaterial.” Id. at 986; see also In re Whirlpool Corp. Front-Loading
Washer Prods. Liab. Litig., 722 F.3d 838, 856–57 (6th Cir. 2013)
(“Because all Duet owners were injured at the point of sale upon paying
a premium price for the Duets as designed, even those owners who have
20 NGUYEN V. NISSAN NORTH AMERICA
Plaintiff alleges that Nissan concealed the clutch
system’s defects from consumers, that the defect was
material because it adversely affected the “safety and
reliability” of the Class Vehicles, and that he did not get what
he bargained for—a transmission “fit for [its] intended use.”
A benefit-of-the-bargain model of damages aligns with this
legal theory; that measure
is concerned with satisfying the expectancy
interest of the defrauded plaintiff by putting
him in the position he would have enjoyed if
the false representation relied upon had been
true; it awards the difference in value
between what the plaintiff actually received
and what he was fraudulently led to believe
he would receive.
Stout v. Turney, 586 P.2d 1228, 1232 (Cal. 1978). Plaintiff
seeks to recover damages equaling the amount he
purportedly overpaid in purchasing a vehicle with a
defective clutch; he “is not seeking a full refund for the
vehicle purchase, but for the cost of replacing [] a defective
component, which is a proxy for [his] overpayment of the
vehicle at the point of sale.” Whether his proposed
calculation of the replacement cost is accurate, whether the
clutch was actually defective, and whether Nissan knew of
the alleged defect are merits inquiries unrelated to class
certification. For now, it is sufficient that Plaintiff has
demonstrated the nexus between his legal theory—that
Nissan violated California law by selling vehicles with a
not experienced a mold problem are properly included within the
certified class.”).
NGUYEN V. NISSAN NORTH AMERICA 21
defective clutch system that was not reflected in the sale
price—and his damages model—the average cost of repair.
In response, Nissan maintains that “[t]he manifestation
requirement [] impacts the damages analysis.” It cites
Cardinal Health 301, Inc. v. Tyco Electronics Corp., in
which the California Court of Appeal noted that “[u]nless a
product actually manifests an alleged defect, the plaintiff has
not suffered damages with respect to an implied warranty
claim.” 87 Cal. Rptr. 3d 5, 33 (Ct. App. 2008); see also
Hicks v. Kaufman & Broad Home Corp., 107 Cal. Rptr. 2d
761, 772–73 (Ct. App. 2001) (“If the defect has not
manifested itself . . . the buyer has received what he
bargained for.”). Nissan’s argument, however, conflates
cases where a defect causes an injury, and those, like this
one, where the defect itself is the injury. As the Court of
Appeal has explained, describing the facts of Anthony v.
General Motors Corp., 109 Cal. Rptr. 254 (Ct. App. 1973),
There the plaintiffs did not seek to recover for
physical injury or property damage caused by
the defect in the truck wheels. Rather, they
sought to recover the cost of replacing the
defective wheels. The primary right alleged
to have been violated in Anthony, as in the
case before us, was the right to take a product
free from defect. The defect did not cause the
plaintiffs’ injury; the defect was the injury.
Hicks, 107 Cal. Rptr. 2d at 771–72.
This distinction is key, and it underscores the
fundamental disconnect between Plaintiff’s damages theory
and Nissan’s mischaracterization of what it entails. As we
have explained, Plaintiff does not seek damages for the
faulty performance of the clutch system; such a theory of
22 NGUYEN V. NISSAN NORTH AMERICA
liability would, pursuant to Cardinal Health, Hicks, and the
district court’s analysis, require individualized analysis that
might defeat predominance. Instead, Plaintiff’s theory is
that the allegedly defective clutch is itself the injury,
regardless of whether the faulty clutch caused performance
issues. Accordingly, Nissan’s argument is unavailing. 8
CONCLUSION
Plaintiff’s theory of liability—that Nissan’s manufacture
and concealment of a defective clutch system injured class
members at the time of sale—is consistent with his proposed
recovery based on the benefit of the bargain. We conclude
that the district court abused its discretion when it denied
class certification based on a misconception of Plaintiff’s
legal theory. We therefore REVERSE the district court’s
denial of class certification and REMAND for further
proceedings.
8
Nissan also argues that the district court’s denial of class
certification is supported by other grounds in the record, but we observe
that at least some of these additional contentions—for example, that
Plaintiff’s “model misperceives the bargain” because Nissan did not
promise that the Class Vehicles were free of defects—are merits
arguments, and beyond the scope of our review. See Stockwell v. City
and County of San Francisco, 749 F.3d 1107, 1113 (9th Cir. 2014)
(“Under Rule 23(f), the limitation on consideration of the merits to the
relevant class certification questions is of jurisdictional significance.”).