Pa. Justices Uphold $5.6 Mil. Brake Class Action Against Kia (The Legal Intelligencer)December 9, 2011
By: Amaris Elliott-Engel
The Legal Intelligencer
Pa. Supreme Court Justice Ronald Castille
The state Supreme Court has upheld a Philadelphia Common Pleas Court class action verdict awarding $5.6 million to owners of Kia sedans with faulty braking systems.
The court voted 6-1 in favor of upholding the verdict in an 80-page majority opinion written by Pennsylvania Chief Justice Ronald D. Castille on Dec. 2. The justices opined that the class was properly certified, that the evidence was sufficient to support the jury's verdict, the verdict was not against the weight of the evidence, and that the verdict was properly molded to account for a class of plaintiffs with over 9,000 members.
In an issue of first impression, the court said it was deciding on narrow grounds that testimony in S amuel-Bassett v. Kia Motors America Inc. about aggregate damages was "probative to calculate the amount of damages" in the case.
Kia Motors America Inc. did not challenge the calculation of damages in the aggregate and waived that argument, Castille said.
But Castille emphasized in a footnote because of "the narrow nature of our holding in this regard ... we need not ... express a definitive view on the question of whether proving damages in the aggregate in a class action is 'lawful and proper' in Pennsylvania, and of whether the methodology ... in estimating individual damages was sound."
The class, led by class representative Shamell Samuel-Bassett, said that Kia Motors America Inc. breached its express warranty to its customers. The jury awarded $600 per class member for the breach of express warranty, and there were 9,402 class members.
"KMA knew that the 1997-2000 Sephias were not performing up to the expectations of KMA and the American market, and that the transactions were troublesome well before this lawsuit was filed," Castille said. "Although KMA sometimes covered the repairs under the warranty or offered free repairs under other consumer satisfaction programs, members of the class also paid for repairs out-of-pocket. Testimony supported a verdict of up to $1,005 per class member for out-of-pocket costs over the life of a Kia Sephia. The evidence was sufficient to establish the breach of warranty claim with respect to the entire class."
Samuel-Bassett purchased a 2000 Kia Sephia with an extended warranty of 60 months or 60,000 miles, but she experienced brake problems within 17,000 miles of use, according to the opinion in Kia. The brake systems, according to Samuel-Bassett's expert, "had a common design defect related to heat dissipation in the front brakes, which caused premature wear of the brake pads and rotors," Castille said.
In a 16-page dissent, Justice Thomas G. Saylor said that the differences in the class members' individual experiences with their brakes were glossed over.
The "record of this case creates the impression that purchasers of Sephias in the relevant time period sustained injury on account of a poor brake design and that the amount of the damages awarded to each individual class member appears to be modest," Saylor said. "Thus, there may be a sense that the jury verdict in this case serves a 'rough justice' and, as such, should not be disturbed. Result orientation in the law, however, yields its own set of perverse consequences, not the least of which is the silent dilution of the consistency, predictability, and fundamental fairness which are aspirations of the American judicial system."
Reduced Attorney Fees
The only issue on which the class lost was the enhancement of the class counsel's legal fee by a risk multiplier.
Philadelphia Common Pleas Court Judge Mark I. Bernstein had awarded a risk multiplier of 1.375 times the $3 million lodestar, for a total of $4.125 million, Castille said.
The federal statute under which the class won its verdict — the Magnuson-Moss Warranty Act — explicitly states that attorney fees are to be based on actual time expended and does not "provide for a discretionary fee enhancement," Castille said.
"Pennsylvania generally adheres to the 'American Rule,' under which 'a litigant cannot recover counsel fees from an adverse party unless there is express statutory authorization, a clear agreement of the parties, or some other established exception,'" Castille said.
William H. Lamb of Lamb McErlane argued on behalf of Kia Motors America Inc. at oral argument, while Michael D. Donovan of Donovan Axler argued on behalf of appellee and class representative Samuel-Bassett.
Class co-counsel include James A. Francis of Francis & Mailman and
Alan M. Feldman of
Feldman Shepherd Wohlgelernter Tanner Weinstock & Dodig.
Lamb said that Kia, his co-counsel and he are disappointed in the court's decision, including that the majority relied upon a waiver argument.
"We also think the decision is inconsistent with the U.S. Supreme Court decision" in Wal-Mart Stores Inc. v. Dukes , in which that court reversed a grant of class certification for allegations of discrimination against women because, the court said, the case involved too many individual issues, Lamb said.
Kia is considering whether it will file a petition for certiorari with the U.S. Supreme Court, Lamb said.
Kia honored all the warranty claims, he said.
The state Supreme Court's order shows that class actions can be tried effectively in Pennsylvania, Francis, Feldman and Donovan all said.
Donovan said that the defense and Saylor's dissent conflates contract damages and tort damages.
The dissent "mixed tort causation and proximate causation doctrine with contract foreseeability loss doctrine," Donovan said.
There are more individual issues with tort damages, Donovan said.
Even with the fee reduction, Feldman said the attorney fees award would probably be close to the original award because of interest and the appellate work done by plaintiffs counsel.
Because the U.S. Supreme Court has ruled against multipliers in a class action case, the state Supreme Court's ruling makes it unlikely that Kia could challenge the attorney fees because of the application of a multiplier, Donovan said.
"A class action is the only way people who suffer a common harm who have a modest value can achieve justice," Feldman said.
