[00:00:00] Speaker 00:
Good afternoon, Your Honor.

[00:00:02] Speaker 00:
May it please the Court, Amir Nasihi on behalf of Nissan North America, and I'll save three minutes for a bottle that I'll keep track of.

[00:00:09] Speaker 00:
And I did want to just thank the panel for the special setting today.

[00:00:14] Speaker 00:
Thank you.

[00:00:14] Speaker 00:
Your Honors, this case involves an alleged failure to warn that Nissan's panoramic sunroofs may break more frequently from external impacts when compared to non-defective sunroofs.

[00:00:25] Speaker 00:
The District Court here incorrectly certified a 10-year class

[00:00:28] Speaker 00:
of hundreds of thousands of current and former owners and laces of cars with large sunroofs across four states, even though 499 out of 500 drivers never ever had a failure.

[00:00:41] Speaker 00:
The district court's order rests on three pillars, each of which here is broken.

[00:00:45] Speaker 00:
First, the expert evidence failed to identify a common defect, to unite highly individual complaints, or a damages model aligned to the facts of this case.

[00:00:55] Speaker 00:
Second, individual standing issues predominate, especially for former owners, like the Colorado and New York class representatives who passed on any alleged overpayments.

[00:01:07] Speaker 00:
Last, the district court expanded state law to make common issues predominate, and I'll address each of those in turn.

[00:01:14] Speaker 00:
Starting with the expert evidence, plaintiffs claim the class members overpay due to an undisclosed risk that external impacts cause panoramic sunroofs to break more easily

[00:01:25] Speaker 00:
than non-defective sunroofs.

[00:01:27] Speaker 00:
They speculate that design features like size, frit, and glass thickness may be the culprits.

[00:01:34] Speaker 00:
But Grodzicki recognizes that it's insufficient for an expert to give a comparative opinion merely stating a broad theory of insufficient durability without any comparative evidence of what constitutes adequate durability.

[00:01:48] Speaker 00:
Here, plaintiffs presented no comparative evidence.

[00:01:51] Speaker 00:
The only survey came from Nissan, and it considered warranty data, contacts with Techline, and complaints made to NHTSA National Highway Traffic Safety Administration.

[00:02:02] Speaker 00:
Nissan's data showed the per sold vehicle year rate was point zero two percent Council are you arguing the merits?

[00:02:11] Speaker 02:
one of the uses we're up here on on review of the class certification order and our cases say you don't Class certification doesn't require proof of proof of the defect just that it's susceptible to class-wide treatment so why isn't

[00:02:29] Speaker 02:
the theory here that this spontaneous shattering happenings because of the type of design of the tempered glass and different elements.

[00:02:37] Speaker 02:
Why isn't that susceptible to common proof one way or the other, whether you're right or not?

[00:02:42] Speaker 00:
Well, the issues here are

[00:02:46] Speaker 00:
not pure merits issues.

[00:02:47] Speaker 00:
There's an overlap here, and the expert evidence here is needed by plaintiffs to show a common defect to unite highly individual complaints.

[00:02:56] Speaker 00:
Otherwise, there's a given that plaintiff's position is that external impacts cause these breaks, the sunroofs would be breaking for any number of reasons, trees falling on them, rocks hitting them.

[00:03:08] Speaker 00:
to try and unify all of these disparate complaints, plaintiffs need to present evidence of a common defect, just like in Grodzicki, just like in... Well, Grodzicki was about a claim that this regulator should last the life of the car.

[00:03:27] Speaker 02:
And so that, you know, in that posture, we dismissed or we affirmed the exclusion of the expert's report.

[00:03:34] Speaker 02:
Here, the district court found tribal questions on these defect claims.

[00:03:41] Speaker 02:
So if we're just focusing on the certification side, why isn't that something that's subject to class treatment?

[00:03:49] Speaker 00:
Well, Grodzicki involved essentially the same theory here, that the window regulators should last the life of the vehicle.

[00:03:56] Speaker 00:
Here, the plaintiff's position is that the sunroofs should last the life of the vehicle.

[00:04:02] Speaker 00:
It's the same claim, essentially, as Grodzicki.

[00:04:08] Speaker 02:
Ultimately, the theory presented in Grodzicki is no different than... I thought the plaintiff's theory was a number of these sunroofs, these panoramic ones, just spontaneously shatter.

[00:04:21] Speaker 02:
And I think the agencies look at this with, correct me if I'm wrong, maybe 4,000 of these cases that have occurred.

[00:04:29] Speaker 02:
And so it's just for different reasons that the plaintiffs say is a design flaw in the thinness of the glass, different aspects of it.

[00:04:40] Speaker 02:
Those aren't allegations that they should last forever.

[00:04:43] Speaker 02:
Those are allegations that, due to different reasons, they just spontaneously burst.

[00:04:51] Speaker 00:
And that's where the theory in the complaint is divorced from the theory presented in the class certification.

[00:04:57] Speaker 00:
Now, in the memorandum of disposition, the Ninth Circuit issued in the BTV Fort case, the theory presented in the Ninth Circuit there was just that.

[00:05:06] Speaker 00:
It was just that these sunroofs were breaking for no external reason, no external cause, hence the materiality analysis there.

[00:05:13] Speaker 00:
focused on that issue.

[00:05:15] Speaker 00:
By the time we got to the class certification here, both the agency and plaintiffs acknowledged that that theory was entirely wrong.

[00:05:23] Speaker 00:
The entire theory that this complaint had been filed upon, every single iteration of the six versions of a complaint that were filed, and all the allegations made here

[00:05:34] Speaker 00:
were wrong, that the sunroofs were breaking because of external impacts, but the theory kind of boiled down to the less should have broken from external impacts.

[00:05:48] Speaker 00:
So by its very nature, Planevsk presented a comparative defect theory to try and tie together all these individual complaints that they... But if you're right and there is no common defect, that will resolve the case in one fell swoop for the entire class.

[00:06:07] Speaker 02:
So it seemed to me that even if you're correct, that would resolve the claims on a class-wide basis.

[00:06:15] Speaker 02:
So for purposes of our review, whether the certification order was properly granted, doesn't that suggest that it was?

[00:06:24] Speaker 00:
No, it does not, for the exact same reasons as Grodzicki.

[00:06:28] Speaker 00:
And let's not forget that the Beattie v. Ford case went to class certification, and it was on this ground, on a Rule 23 ground, based on the absence of proper comparative defect evidence, that Judge Zilli

[00:06:43] Speaker 00:
in the Western District of Washington denied certification in a very thoughtful order.

[00:06:48] Speaker 00:
That's the exact same reason that the Condash District Court in the Southern District of Ohio denied certification was the absence of this common defect evidence to unite the disparate class members.

[00:07:00] Speaker 00:
That went up to the Sixth Circuit, and in a speaking denial of the 23F there, the Sixth Circuit said the same thing there.

[00:07:07] Speaker 00:
So here, the comparative data

[00:07:11] Speaker 00:
was an essential component of plaintiff's claims.

[00:07:15] Speaker 00:
And I mean, without that comparative defect and comparative data to support a comparative defect, there's just no baseline with which to measure what the plaintiff's claims here are as to any potential defect.

[00:07:30] Speaker 00:
And I'll just give a hypothetical on this, and that's suppose, for example, the panoramic sunroofs were thicker

[00:07:38] Speaker 00:
Suppose that they were smaller.

[00:07:42] Speaker 00:
There's no dispute they'd still break from external impacts.

[00:07:46] Speaker 00:
So whether you go from the 450 breaks out of 300,000 units out there in the class states to 350.

[00:07:54] Speaker 03:
I guess I'm having the same problem as Judge Sanchez.

[00:07:56] Speaker 03:
That's not what they're alleging.

[00:07:58] Speaker 03:
They're alleging that they spontaneously and explosively shatter.

[00:08:04] Speaker 03:
It's not from something hitting them or whatever.

[00:08:08] Speaker 03:
These are just spontaneous shattering of windows that are sunroofs that are alleged.

[00:08:16] Speaker 00:
That's correct that that's what's alleged.

[00:08:18] Speaker 03:
And we were- They're not alleging design defect.

[00:08:21] Speaker 03:
They're saying it should have been something that was disclosed.

[00:08:25] Speaker 00:
I should have been clear.

[00:08:26] Speaker 00:
That's correct that that's what's alleged in all six versions of the complaint, but that's not the theory presented at class certification.

[00:08:33] Speaker 00:
That's the issue here.

[00:08:35] Speaker 00:
Um, and, uh, we raised this with Judge Oreck and said, look, they've changed their theory wholesale.

[00:08:40] Speaker 00:
This needs to be looked at differently.

[00:08:42] Speaker 00:
We also raise this exact same issue with Judge Martinez in the Western District of Washington.

[00:08:47] Speaker 00:
in the identical lore case, which was traveling at the same time as this case, with the same expert submissions, same depositions, everything coordinated between the two, and Judge Martinez there observed that yes, plaintiffs had done a 180 degree turn at class certification.

[00:09:04] Speaker 00:
That's no longer their theory.

[00:09:06] Speaker 00:
And that changes the whole materiality analysis here, because there's a difference between

[00:09:11] Speaker 00:
a consumer being told that a sunroof may spontaneously break for no external reason whatsoever versus a consumer being told that if a rock hits it, it may be more likely to break versus these kinds of sunroofs.

[00:09:31] Speaker 00:
So that, I think, crystallizes the issue here.

[00:09:35] Speaker 00:
Now, plaintiffs here, their theory

[00:09:40] Speaker 00:
is essentially a circular theory.

[00:09:43] Speaker 00:
And just to paraphrase Judge Wilson from Grodzicki, they're essentially saying the sunroofs here are defective because they don't last as long as they should.

[00:09:51] Speaker 00:
And because they're defective, we don't need to show that they don't last as long as they should.

[00:09:56] Speaker 00:
Now, that's a circular theory that Judge Zilli rejected in Beattie.

[00:10:00] Speaker 00:
It was rejected in Condash.

[00:10:03] Speaker 00:
But here,

[00:10:05] Speaker 00:
The district court failed to apply Grudzicki 702 to the expert evidence and then failed entirely to take that second step, which led to reversal in LSV Costco of thereafter, once it deemed the evidence admissible, doing the rigorous analysis to determine the persuasiveness of both sides' evidence.

[00:10:23] Speaker 00:
Now, I did also want to focus on the expert issue with respect to damages model here, which only addressed price premium for new cars at the very first sale.

[00:10:37] Speaker 00:
As a district court put it, the number is tied entirely to new sales Nissan itself made without penalizing it for any used car sale.

[00:10:46] Speaker 00:
But this gerrymandered damages model really heightens the mismatch here, as it means that the California named plaintiff and the New York named plaintiff are no longer part of the classes they seek to represent.

[00:10:58] Speaker 00:
Both of them bought used cars and both are cars.

[00:11:00] Speaker 02:
But aren't those evidentiary weight issues as opposed to something for class certification?

[00:11:07] Speaker 02:
One of your initial arguments was that you couldn't perform a conjoined analysis, and I think that LIDL sort of resolves that issue.

[00:11:14] Speaker 02:
But it seems as if what you're describing now is something that would go to, you know, how meaningful the damages model will be at trial as opposed to whether it's sufficient for purposes of class certification.

[00:11:27] Speaker 00:
And that's an important point, Judge Sanchez, on LIDL.

[00:11:30] Speaker 00:
LIDL, we think, supports this.

[00:11:32] Speaker 00:
That is an important issue I'd like to come back to.

[00:11:35] Speaker 00:
But to this point, Your Honor, this isn't an evidentiary abuse of discretion issue.

[00:11:41] Speaker 00:
It's undisputed.

[00:11:43] Speaker 00:
It is undisputed that Ms.

[00:11:45] Speaker 00:
Johnson, the California class representative, that her vehicle was first sold new in a non-class state in Nevada.

[00:11:52] Speaker 00:
Second sale happened in Nevada, too.

[00:11:54] Speaker 00:
with plaintiff Chirone in New York, undisputed the first sale of that vehicle.

[00:12:00] Speaker 00:
The new sale happened in a non-class state of Tennessee.

[00:12:03] Speaker 00:
Second sale happened there too.

[00:12:05] Speaker 00:
That's, I mean, abuse of discretion is automatic.

[00:12:08] Speaker 02:
Well, the district court said that that would not be something that would preclude class certification because that might result in a lesser damages award or something else or a lower expectation, consumer expectation.

[00:12:22] Speaker 02:
than for other class members, but that doesn't defeat class certification.

[00:12:26] Speaker 02:
Why is that analysis wrong?

[00:12:29] Speaker 00:
Judge Wardlow was on the Sally panel.

[00:12:30] Speaker 00:
Sally panel reinforced the Supreme Court's Falcon decision, which says that named plaintiffs have to have the same injury and damages as the members of the class they seek to represent.

[00:12:43] Speaker 00:
They don't.

[00:12:44] Speaker 00:
It's a fundamental part of class certification.

[00:12:49] Speaker 00:
It goes all the way back to 1983 with Falcon, that class members have to be part of the classes they seek to represent.

[00:12:58] Speaker 00:
Judge Orrick here specifically made clear that the damages model is only going to measure and punish Nissan for new car vehicle sales, presumably in class states.

[00:13:11] Speaker 00:
But these vehicles were sold new in different states, in other states, not the class states.

[00:13:18] Speaker 00:
That's a fundamental issue here.

[00:13:20] Speaker 00:
That's a pure Comcast issue.

[00:13:22] Speaker 00:
That's a Falcon issue.

[00:13:23] Speaker 00:
I mean, that in itself warrants reversal.

[00:13:28] Speaker 00:
Now, former owners, they created another issue here, too.

[00:13:33] Speaker 00:
passed on any overpayments, and the majority of district courts to address this have made that clear.

[00:13:40] Speaker 00:
Quock and Bush, we had Judge Olsup there just a couple of months ago, Judge Karney in the Gonzales case.

[00:13:46] Speaker 00:
That's a majority view of all district courts.

[00:13:48] Speaker 00:
This district court here is an outlier in essentially deferring the issue to say that

[00:13:55] Speaker 00:
essentially adopting an aggregate disgorgement model where the district court would then parcel out different numbers out of some giant number.

[00:14:03] Speaker 00:
And that's just not how it works.

[00:14:04] Speaker 00:
That's inconsistent with this court's kind of directives.

[00:14:08] Speaker 00:
Then we have the class members whose sunroofs never broke.

[00:14:13] Speaker 00:
That's 99.85% of individuals whose sunroofs never broke their 15-year lifetime of the vehicle.

[00:14:22] Speaker 02:
But the theory of injury here is, because, correct me if I'm wrong, you have to opt into the panoramic summer if you have to pay more for it, is that right, for these vehicles?

[00:14:34] Speaker 02:
No, I guess, so here's my question.

[00:14:37] Speaker 02:
If you have to opt in and pay more for a panoramic sunroof vehicle, was the buyer injured at the point of sale by not being told that the type of sunroof they're purchasing might spontaneously burst at some point in time, or maybe it might spontaneously burst because external, you know, flex or something else, weaken it more than other panoramic sunroofs or other sunroofs?

[00:15:02] Speaker 02:
So that would cover the whole class, doesn't it?

[00:15:06] Speaker 00:
Well, if I could just push back on that, when someone buys a car and our damages expert set this out, multiple factors go into it.

[00:15:19] Speaker 00:
And when you're buying a specific model because of different features, and that model happens to have a panoramic sunroof, that's one thing.

[00:15:26] Speaker 02:
But I did want to say- But I'm asking about whether this affects only 2% of the class.

[00:15:30] Speaker 00:
or the whole class?

[00:15:32] Speaker 02:
That was the point that you were raising.

[00:15:33] Speaker 00:
This affects 0.15% of the class, and here's why.

[00:15:36] Speaker 00:
The 99.85% of the class got a sunroof that fully functioned the entire lifetime of their vehicles, and the district court here relied solely on WEN versus Nissan in determining that all of that's irrelevant, that it needs to look at the point of sale.

[00:15:57] Speaker 00:
and you don't look at anything after, and that's just wrong.

[00:15:59] Speaker 02:
So would it be different if it were 10% of sunroofs that spontaneously burst?

[00:16:05] Speaker 02:
So if it's only 10% and I'm a buyer and I go and purchase, maybe I spend $1,000 more on a sunroof, I'm not injured as a consumer that I'm buying something that might, I have a 10% chance that it spontaneously bursts.

[00:16:20] Speaker 00:
Well, that plays into the materiality analysis as well.

[00:16:25] Speaker 02:
Well, I'm just trying to drill down on why you think class injury is wholly related to the percentage of people where it has actually burst as opposed to the theory that's being presented.

[00:16:34] Speaker 00:
The when plaintiffs theory, fundamental theory is that 99.8, that people are not getting, have overpaid because they've bought a sunroof that's not gonna last a full 15 years of a vehicle.

[00:16:50] Speaker 03:
So that it might spontaneously burst.

[00:16:52] Speaker 00:
Right.

[00:16:53] Speaker 00:
And again, a theory that's out the window.

[00:16:55] Speaker 00:
I did just want to flag for the court that Pinsight 819 of when is on point here.

[00:17:01] Speaker 00:
And it specifically says that in performance, and here is a Sunroof performance claim, in performance claims, the district court has to consider differing levels of value based on when and if the issue manifests.

[00:17:16] Speaker 00:
And that's important.

[00:17:18] Speaker 00:
Aside from that, there's also issues with respect to when as to whether it's

[00:17:22] Speaker 00:
It's even binding at this point because it relies on outdated case law.

[00:17:30] Speaker 00:
But once again, WEN also involved an undisputed defect with a common repair solution.

[00:17:35] Speaker 00:
Now I do wanna just highlight why that performance aspect of WEN is important.

[00:17:40] Speaker 00:
And that's because plaintiff's claims here, durability, performance, prone to very small chance, all of those are tethered to

[00:17:50] Speaker 00:
the performance of the sunroofs.

[00:17:53] Speaker 00:
Now, Judge Martinez, when he looked at the identical body of evidence, essentially said that plaintiffs here are saying they suffered injury because they overpaid for their vehicles when the cost failed to include the risk of injury, that risk of injury being the risk of overpaying.

[00:18:07] Speaker 00:
So I did also want to raise on damages that while damages calculations alone typically don't defeat certification, here we have a different situation.

[00:18:22] Speaker 00:
And this court has repeatedly admonished that the existence of damages and the necessity for plug and play system are important factors to consider there when trying to rely on that maxim to excuse a flawed damages model.

[00:18:37] Speaker 00:
I have two more important issues to address.

[00:18:41] Speaker 00:
One is standing.

[00:18:42] Speaker 00:
All former owners here got full value.

[00:18:46] Speaker 00:
We have the diminution in value claim here was the one pleaded in the complaints talking about the host of negative publicity.

[00:18:56] Speaker 00:
way back in 2017 that caused delay, caused diminution in value for the plaintiffs, well that kind of counteracts materiality and the fact that this information was public according to them has a big impact.

[00:19:13] Speaker 00:
On the cause of action on materiality and reliance, the advisory committee notes for Rule 23 make clear that class cases with differing levels of reliance and materiality are ill-suited for certification.

[00:19:30] Speaker 00:
Claims here, again, in public domain, bears on materiality.

[00:19:33] Speaker 00:
Claims never disclose what should have been said, where, and by whom, and how.

[00:19:37] Speaker 00:
On the CLRA claim, we did ask for certification of that.

[00:19:40] Speaker 00:
I see that I have just a short period of time left, so I'll save the rest of my time for rebuttal.

[00:19:46] Speaker 03:
All right.

[00:19:46] Speaker 03:
Thank you, Council.

[00:20:02] Speaker 01:
May it please the court, Matthew Wessler for the plaintiff's appellees.

[00:20:06] Speaker 01:
I think I'd like to start just by picking up on Judge Sanchez, your series of questions to my opposing counsel about the argument that Nissan leads with, which is that there's no defect at issue here.

[00:20:19] Speaker 01:
And we think that's wrong, and the experts in this case testified specifically and in detail about the nature of the defect in this case.

[00:20:30] Speaker 03:
Can you elaborate to me on what actually is the defect?

[00:20:35] Speaker 01:
Sure, Your Honor.

[00:20:37] Speaker 01:
In essence, it's what Judge Orrick said, which is that the panoramics on roofs that Nissan used were designed by using large thermally tempered glass.

[00:20:47] Speaker 01:
And the size of those panels coupled with the process for making them, this thermally tempered process, makes them prone to spontaneous shattering.

[00:21:00] Speaker 01:
because the pressures that exist with the glass as you expand it, as it gets thinner, the pressures become greater on the inside of the glass, and then they can explode unexpectedly.

[00:21:14] Speaker 01:
That can be true as someone's driving down the highway.

[00:21:17] Speaker 01:
It can be true as customers testified the car is parked in a driveway.

[00:21:23] Speaker 01:
And what happens is not just that they spontaneously shatter,

[00:21:27] Speaker 01:
The way that they shatter is that the glass explodes and little pieces rain down on the passenger and the driver and in the backseat because of the size of these sunroofs.

[00:21:37] Speaker 02:
Did the theory change at class certification?

[00:21:41] Speaker 01:
No, Your Honor.

[00:21:42] Speaker 01:
It's been consistent throughout the entire life of this case.

[00:21:45] Speaker 01:
It's what Judge Orrick recognized.

[00:21:46] Speaker 01:
It's the same theory that this court took up in Beatty, which was, albeit a different manufacturer, the same kind of manufactured process to design these sunroofs.

[00:21:58] Speaker 01:
And what you heard in the first part of this argument was Nissan attempting to either reframe the nature of that defect or argue that it doesn't exist because it says, you know, other aspects create the problem, whether it's

[00:22:17] Speaker 01:
you know, rocks kicking up or debris or attachment points.

[00:22:21] Speaker 01:
It's free to argue that to a jury on the merits, but what Judge Orrick recognized in this case is that at Rule 23, the only relevant question is whether the questions in the case can be susceptible to proof

[00:22:36] Speaker 01:
on a class-wide basis and that expert testimony coupled with the overwhelming evidence from those who purchase these vehicles about their experiences coupled with Nissan's own employee testimony about the nature of this design

[00:22:52] Speaker 01:
is all evidence that can be shown that this defect existed throughout all of the class vehicles.

[00:22:59] Speaker 02:
So are you arguing that the panoramic sunroof is not living a long enough life?

[00:23:09] Speaker 01:
No, it's not that that and I understand, you know, there's been a lot of argument about on the other side about Grodzicki and its connection with this case.

[00:23:17] Speaker 01:
This is not a life of the vehicle kind of theory that was at issue there.

[00:23:21] Speaker 01:
Instead, as one of the experts testified, actually both of them testified in this case, the problem with these sunroofs is that they don't operate.

[00:23:31] Speaker 01:
prone to spontaneous shatter under normal driving conditions.

[00:23:35] Speaker 01:
I think that's a significant difference between what you've got here and what you've got in Grazinski.

[00:23:41] Speaker 01:
There's another significant difference between this case and that case, which is that in Grazinski, the expert in that case didn't provide any actual details or explanation for why there was a supposed defect.

[00:23:52] Speaker 01:
All the expert in that case said was, well, you know, these things are supposed to last the life of the car,

[00:23:57] Speaker 01:
You know, they didn't didn't provide any specific explanation for why that would be true or why there was a problem with the with the particular feature.

[00:24:07] Speaker 01:
But here you have pages and pages from multiple experts.

[00:24:10] Speaker 01:
Dr. Read Dr. Hanneman explaining in detail exactly why

[00:24:15] Speaker 01:
this precise way of manufacturing these sunroofs posed this problem.

[00:24:20] Speaker 01:
And not only that, but one of the things that Nissan says in this case is, oh, well, there's another issue here with proving the defect, which is there's no, the experts didn't testify to an alternative and cites to Grudzinski for that proposition.

[00:24:34] Speaker 01:
But the experts here, there's a whole section in Dr. Reed's report identifying alternative methods of manufacture that would have eliminated this problem.

[00:24:42] Speaker 01:
There are other car manufacturers

[00:24:44] Speaker 01:
that sell these kinds of broad panoramic sunroofs that don't employ this tempered glass design.

[00:24:53] Speaker 01:
Instead, they use other processes for connecting the glass panels.

[00:24:58] Speaker 02:
Was that part of the record before the district court?

[00:25:00] Speaker 01:
Absolutely, Your Honor.

[00:25:01] Speaker 02:
You're saying there was evidence of comparison to other?

[00:25:04] Speaker 01:
I just point you right to the record.

[00:25:06] Speaker 01:
It's in our supplemental excerpts of record at 685.

[00:25:09] Speaker 01:
The whole section, there's a title of that section, the extra report called Alternative Design Choices.

[00:25:14] Speaker 01:
So the expert did all of those things to demonstrate the existence of a defect here and compared it with the way that other manufacturers have done it.

[00:25:23] Speaker 01:
But just to step back for one second, we're all talking right now about is there a design problem, a defect, or not?

[00:25:31] Speaker 01:
That is a merits question.

[00:25:33] Speaker 01:
The only question at issue in front of Judge Oreck and in front of this court on appeal now is whether that question is susceptible to proof class-wide.

[00:25:44] Speaker 01:
And Judge Oreck looked at all of this and assessed the evidence in the record and said, yes, it is.

[00:25:50] Speaker 01:
And this court's standard of review is really quite circumscribed in this context.

[00:25:55] Speaker 01:
It's whether Judge Oreck abused his discretion in balancing the common questions at issue in this case with the potentially individualized ones.

[00:26:05] Speaker 01:
And he did that.

[00:26:07] Speaker 01:
He balanced them.

[00:26:08] Speaker 01:
And he reached the conclusion that there was no predominance problem here.

[00:26:12] Speaker 01:
And this court, Nissan hasn't cited a single case in which this court has reversed a district court's exercise of its discretion to balance those factors for predominance in the face of actual evidence demonstrating that the issue can be established on a class-wide basis, even if ultimately a jury ends up believing Nissan

[00:26:35] Speaker 01:
when it says that there is no defect here or the nature of this problem that these sunroofs are prone to shattering is somehow caused by another factor.

[00:26:45] Speaker 02:
Now, I know you dispute Nissan's claim about the percentage of people that are affected by this, but if you have a small enough percentage, doesn't Grodzinski allow us to then start to question whether there is, in fact, a common design defect?

[00:27:02] Speaker 02:
If it's only 0.4% or something, or some very, very small number, it does lead to a question of, is there a common defect that most consumers have faced?

[00:27:12] Speaker 01:
So I want to just draw what I think is a pretty important distinction before I answer that question, if you'll permit me, which is we're not talking about, in this case, the actual number of cars in which a shattering occurred.

[00:27:27] Speaker 01:
What we're talking about is a design problem that makes these sunroofs prone to spontaneous shattering.

[00:27:36] Speaker 01:
And a feature here that is a premium feature contained in luxury vehicles for which the consumers would have paid less.

[00:27:45] Speaker 01:
And so it doesn't matter whether the breakage rate, which there is a dispute.

[00:27:52] Speaker 01:
No one is really certain about what the breakage rate is.

[00:27:54] Speaker 01:
Is it 2%, 10%, 15%, whatever?

[00:27:58] Speaker 01:
It doesn't actually address the specific theory in this case, which isn't about those cars that actually

[00:28:05] Speaker 01:
are those consumers who actually experienced a shattered sunroof.

[00:28:10] Speaker 01:
It's about the diminution in value of the price that a consumer would have been willing to pay for a sunroof that is prone to spontaneous shatter under normal driving circumstances.

[00:28:22] Speaker 01:
And so I think that takes us out of a situation where you need to be concerned about whether there were any uninjured class members like in a case in which it is actually about whether the defect manifested itself.

[00:28:37] Speaker 01:
That isn't what we've got here.

[00:28:39] Speaker 01:
But even if you were in a situation, Your Honor, where that question was relevant, it is still something that's committed

[00:28:47] Speaker 01:
I think to the sound discretion of the district judge to balance, remember this is a predominance inquiry.

[00:28:53] Speaker 01:
How are the common questions in this case going to line up or be addressed and how are some of the individualized issues in this case going to be addressed?

[00:29:03] Speaker 01:
That's a question that is committed to the discretion of the district court and here Judge Orrick balanced

[00:29:08] Speaker 01:
those questions and reach the conclusion that this case was properly certified under Rule 23.

[00:29:16] Speaker 01:
And in Grudzinski, one thing I think is notable about that case is the district judge in that case reached different conclusions about whether the experts were

[00:29:26] Speaker 01:
you know, should be admitted under Daubert, whether the class should be certified.

[00:29:30] Speaker 01:
It came to the conclusion that the experts should not be admitted.

[00:29:33] Speaker 01:
It came to the conclusion that the class should not be certified.

[00:29:37] Speaker 01:
And what this court said is we think there was no abuse of discretion

[00:29:42] Speaker 01:
in the district court's assessment of those questions.

[00:29:46] Speaker 01:
The same kind of standard of review applies here.

[00:29:50] Speaker 01:
Neeson is understandably upset that Judge Oreck reached opposite conclusions regarding the nature of these experts and the suitability of this case for treatment under Rule 23, but it doesn't change the fact that the question is whether the district judge abused its discretion and how it balanced those questions.

[00:30:10] Speaker 02:
Council, can you address Mr. Nassihie's point about vehicles sold out of state or in non-class states?

[00:30:18] Speaker 02:
Sure.

[00:30:19] Speaker 02:
He was bringing it up in the context of a damages bond, but it almost sounded more like a class representative issue.

[00:30:27] Speaker 01:
I think it's a little hard to pin down exactly where Nissan locates that argument.

[00:30:31] Speaker 01:
If it's just a damages question, it doesn't impact Rule 23 analysis in any meaningful way.

[00:30:37] Speaker 01:
It's a question that just is ministerial at the end of a case how much any individual class member would recover.

[00:30:46] Speaker 01:
There is, I don't think, a dispute that

[00:30:49] Speaker 01:
The way that Judge Orrick assessed the damages question in this case was to say, I'm only evaluating, and this is how our experts did it, only evaluating damages based on the first point of sale for used and new cars.

[00:31:04] Speaker 01:
And that sets a uniform way of measuring damages.

[00:31:08] Speaker 01:
Whether an individual class member would be entitled to something less because of what happened down the line isn't an individualized issue that affects how this case gets tried to a jury.

[00:31:20] Speaker 01:
It only affects a claims processing question about how much any individual will recover.

[00:31:25] Speaker 03:
From the class representative problem, if you're arguing that this

[00:31:32] Speaker 03:
tendency toward shattering should have been disclosed.

[00:31:37] Speaker 03:
There's no duty, right, on the person, not Nissan, but the person who's selling the car, the third party, to disclose.

[00:31:48] Speaker 03:
So I don't understand.

[00:31:52] Speaker 03:
how they could adequately represent the other class.

[00:31:56] Speaker 01:
Sure.

[00:31:56] Speaker 01:
So I think the way that this would work, and this court addressed something similar in its en banc decision in Olin, the price premium, that's what we're talking about here, is that the initial failure to disclose allowed Nissan to charge more for the vehicle than it otherwise would have.

[00:32:12] Speaker 01:
That carries through

[00:32:14] Speaker 01:
all the way down the line.

[00:32:16] Speaker 01:
And so it sets an artificially high baseline for the price of a particular car.

[00:32:22] Speaker 03:
Right, but if someone knew that it was a fact that the sunroof that they're buying for their car was going to shatter or was more likely to shatter possibly while they were in it, why would they buy a car at all?

[00:32:42] Speaker 01:
Well, I mean, I don't disagree with that.

[00:32:45] Speaker 01:
I think they may choose to purchase a different vehicle.

[00:32:49] Speaker 01:
What Nissan argues is that the likelihood is so low that people wouldn't care about it.

[00:32:56] Speaker 01:
And what we say is the way you evaluate whether somebody would care about this and the amount that a person would attach to a luxury feature like a sunroof can be calculated through this conjoint analysis.

[00:33:10] Speaker 01:
And the failure to disclose here allowed Nissan to set a higher price than it would have otherwise paid.

[00:33:17] Speaker 01:
Now, the question I think I hear you asking, Your Honor, is why would anybody purchase one of these cars?

[00:33:24] Speaker 01:
I think that goes to materiality, which is another element that Nissan challenges in this case.

[00:33:31] Speaker 01:
I think your instinct aligns with

[00:33:34] Speaker 01:
uh... the the the instinct that the panel had in in baby when it looked at the exact same question albeit under merits question to the right sorry your honor that could be a man merits question to absolutely could be something that nissan would raise in and and and argue to a jury one way or the other but in in baby this court looked at this materiality question it it it was

[00:33:58] Speaker 01:
It was a different manufacturer, but the manufacturer there argued much the same way that Nissan is arguing here, that because this is an unlikely event according to the manufacturer, people don't care about it.

[00:34:12] Speaker 01:
And what Beatty said about that, it said two things about materiality.

[00:34:15] Speaker 01:
The first thing it said was,

[00:34:17] Speaker 01:
This is absolutely material because it's a luxury item that consumers would attach importance to.

[00:34:23] Speaker 01:
It's something that they buy over and above something else.

[00:34:26] Speaker 01:
And for that reason, if they were to know that it's prone to spontaneous shattering, that is going to affect their purchasing decision.

[00:34:34] Speaker 01:
The second thing that Beatty said on materiality is this is a safety issue.

[00:34:41] Speaker 01:
And there's expert testimony in the record in this case from Dr. Hanneman that this poses

[00:34:47] Speaker 01:
a safety concern for both passengers and drivers when they're driving.

[00:34:52] Speaker 01:
And in Beatty, the court said, look, consumers care about safety issues.

[00:34:56] Speaker 01:
There's almost no safety issue that a consumer isn't going to attach importance to.

[00:35:00] Speaker 01:
And both of those factors are present in this case, supported by the record evidence.

[00:35:07] Speaker 01:
They were identified by Judge Oreck in support of his class certification.

[00:35:12] Speaker 01:
And, you know, I think one thing that, Judge Sanchez, you flagged LIDL as a decision that came out after the parties had briefed this appeal.

[00:35:21] Speaker 01:
But in addition to, I think, making clear that the kind of conjoint damages analysis that the experts here proposed and that Judge Oreck said was a perfectly legitimate way to measure damages across the class.

[00:35:35] Speaker 01:
The other, I think, notable aspect of this court's decision in LIDL is that it takes on many of the same arguments that Nissan is making here about materiality, which is, you know, it says, look, people just don't care about this, and we have evidence in the record to support that.

[00:35:50] Speaker 02:
And what LIDL... But can I, actually, I wanted to ask you about that, because in LIDL, plaintiffs there did present evidence of materiality about this Neutromax product, and... But I don't think there was any evidence of materiality in this case.

[00:36:04] Speaker 01:
And is that a problem for you?

[00:36:06] Speaker 01:
So I think there absolutely was evidence of materiality in this case.

[00:36:10] Speaker 01:
And let me point you just specifically to where it is.

[00:36:13] Speaker 01:
First of all, one of the things that this court relied on in LIDL for support of or to identify evidence was testimony from the named plaintiffs saying, this mattered to me.

[00:36:24] Speaker 01:
That was one, I guess, bucket of evidence you could say in LIDL.

[00:36:29] Speaker 01:
Here you have every single one of the named plaintiffs in this case saying,

[00:36:33] Speaker 01:
exactly the same thing about the importance of this issue and how much it mattered.

[00:36:37] Speaker 01:
That's number one.

[00:36:38] Speaker 01:
Number two, the other bucket of evidence that Lytle identifies is expert testimony about materiality.

[00:36:44] Speaker 01:
Well, here you have that too.

[00:36:45] Speaker 01:
Dr. Hanneman testifies, he's one of the experts, testifies in this case

[00:36:52] Speaker 01:
that this issue is a safety concern.

[00:36:55] Speaker 01:
So that's the expert testimony.

[00:36:56] Speaker 01:
And Judge Orrick flags this.

[00:36:58] Speaker 01:
He says, look, that is expert testimony demonstrating materiality.

[00:37:03] Speaker 01:
It's the same kind of evidence, again, that this court in Beatty identified as demonstrating materiality.

[00:37:09] Speaker 01:
But to just take a step back from that, Your Honor, I think the problem with Nissan's argument is it fails to grapple with the fact that materiality is an objective inquiry.

[00:37:20] Speaker 01:
which is why this court has said on multiple occasions, it's almost like the perfect kind of question that's suitable for class-wide treatment because it asks an objective question whether a reasonable consumer would care about the particular defect or whether it would matter to them in some way, not whether there's any subjective individualized question about whether this particular consumer or that particular consumer cares.

[00:37:48] Speaker 01:
It's an objective inquiry.

[00:37:50] Speaker 01:
And because it's objective, and this gets us back, I think, to where we started, because it's objective, it can be decided one way or the other on a class-wide basis.

[00:37:58] Speaker 01:
And so Nissan, again, would be free to come in in front of a jury and say, you know what?

[00:38:05] Speaker 01:
People don't care about this.

[00:38:07] Speaker 01:
It's so unlikely, or we can show you the breakage rates, and it doesn't happen that often.

[00:38:14] Speaker 01:
And, you know, for that reason, no one should care about it.

[00:38:16] Speaker 01:
And a jury would be free to reach conclusion that actually this is not material to most consumers.

[00:38:22] Speaker 01:
And if it were to do that, what you'd have here would be a case that would fail class-wide.

[00:38:28] Speaker 02:
If safety is not an issue, do you have a tougher argument to make for materiality?

[00:38:33] Speaker 02:
Because we can't also presume that it's material simply because it's an objective standard, right?

[00:38:39] Speaker 02:
Or that it's automatic, rather.

[00:38:43] Speaker 01:
You might be able to presume it, but... Well, so two things to say on that.

[00:38:47] Speaker 01:
First, now, again, we're at the Rule 23 stage, so all that Judge Oreck was permitted to ask is whether it's susceptible to comment proof, not did you prove it.

[00:38:58] Speaker 01:
That's a question for the merits.

[00:39:00] Speaker 01:
So we're not really in a world in which it matters if there was a safety concern or not, but here I don't think this court really needs to reach that question.

[00:39:08] Speaker 01:
And I'll just give you the, I was looking for the pin site earlier, but this is at SER, so our supplemental excerpts of record, 696 to 710, that's Dr. Hanneman's report.

[00:39:19] Speaker 01:
And what he says is that these moon roofs, their propensity to spontaneously shatter

[00:39:24] Speaker 01:
I'm just going to quote here, is dangerous for drivers and passengers.

[00:39:28] Speaker 01:
It's not only potentially likely to injure them, but it can startle them when they're on the road.

[00:39:33] Speaker 01:
And he identifies that specifically as a safety concern.

[00:39:36] Speaker 01:
So I think, you know, regardless of whether in a different case, in the absence of, you know, a potential safety issue, is this a material thing?

[00:39:43] Speaker 01:
Here you have that in the record.

[00:39:45] Speaker 01:
It is evidence that can establish materiality on a class-wide basis.

[00:39:49] Speaker 01:
And that is all that's necessary at this stage to affirm Judge Oreck's exercise of discretion to certify the class, unless the court has any further questions.

[00:39:58] Speaker 01:
Thank you.

[00:40:00] Speaker 03:
OK.

[00:40:00] Speaker 03:
Thank you very much.

[00:40:01] Speaker 03:
Johnson?

[00:40:02] Speaker 03:
Oh, I'm sorry.

[00:40:04] Speaker 03:
You wanted to have some rebuttal.

[00:40:08] Speaker 03:
I'll give you a couple of minutes, because you were already.

[00:40:13] Speaker 00:
Thank you, Your Honor.

[00:40:15] Speaker 00:
So I'll just pick off right where Council left off on materiality.

[00:40:22] Speaker 00:
As Judge Sanchez observed, there was no evidence of materiality presented in this case.

[00:40:28] Speaker 00:
And evidence of materiality is needed to get any kind of inference.

[00:40:35] Speaker 00:
We've presented the Vizcar versus Unilever case, which sets out the reason, rationale, and background to that.

[00:40:40] Speaker 00:
council did reference that name plaintiffs deposition testimony supports materiality and that's just incorrect I'll just give one example plaintiff Patricia Sullivan of Florida

[00:40:56] Speaker 00:
and this is at volume six excerpts of record 1304 to 1305, her focus on materiality is based solely on whether there was an external cause, an external impact, and that was a debate she had at deposition.

[00:41:14] Speaker 00:
And at this point it's undisputed that there is an external cause

[00:41:19] Speaker 00:
for all of these.

[00:41:20] Speaker 00:
That's in the Reid report that this court has.

[00:41:23] Speaker 00:
That's in the Hanneman report.

[00:41:25] Speaker 00:
Plaintiffs did a 180-degree turn, and they had to.

[00:41:29] Speaker 00:
There is unrefuted evidence from our expert, Paul Verghese, who's the only one to have inspected the class-named plaintiffs' vehicles, the four that were available, and every one of those showed evidence of hard external impacts.

[00:41:43] Speaker 00:
And so that's key to materiality analysis.

[00:41:49] Speaker 00:
I think the damages issue in relation to the sales that happened, the overpayment that's alleged to have happened on first sale, that's a standing issue as much as a damages issue.

[00:42:03] Speaker 00:
If you have, you're essentially punishing Nissan for the first sale for the Johnson vehicle in Nevada and the first sale of the New York plaintiff Michelanin's vehicle in Tennessee and the second sales that happened in those respective states too.

[00:42:22] Speaker 00:
That's what's being punished here for the overpayment.

[00:42:24] Speaker 00:
Now, it's interesting that Council referenced their diminution model, diminution in value model, and I just like to hone in on that because plaintiffs did not present a diminution in value model.

[00:42:37] Speaker 00:
And that's key here.

[00:42:38] Speaker 00:
That breaks the entire chain of causation there.

[00:42:42] Speaker 00:
Now, on Friday, Plaintiff submitted a 28-J letter response, relying on and raising with his court the Spearley v. GM case out of the Sixth Circuit.

[00:42:52] Speaker 00:
That case supports us entirely, and here's why.

[00:42:55] Speaker 00:
In that case, there was an overpayment theory that was presented for just current owners.

[00:43:01] Speaker 00:
And to support that overpayment theory,

[00:43:03] Speaker 00:
and get standing for that class of current owners, plaintiffs presented evidence of 100% manifestation, likelihood of 100% manifestation.

[00:43:16] Speaker 00:
Now, and spirally, they also presented a separate model, a reduced resale value model for former owners.

[00:43:25] Speaker 00:
to give them standing.

[00:43:28] Speaker 00:
We don't have that here.

[00:43:30] Speaker 00:
That knocks out the Colorado plaintiff and also the New York plaintiff or former owners who got full value for their vehicles.

[00:43:35] Speaker 00:
So this is standing issues here and there was legal error committed here on that.

[00:43:44] Speaker 00:
I did just wanna just hit two more points and that is plaintiffs were asked to describe the defect here and all they are able to focus on

[00:43:55] Speaker 00:
is that the panoramic sunroofs are prone to spontaneous shattering.

[00:44:00] Speaker 00:
Compare to what?

[00:44:03] Speaker 00:
There's no baseline here, and this court will hear in the next argument in relation to Judd-Staten and her ruling in the Sonnevelt case, which also is directly on point.

[00:44:16] Speaker 00:
It was a summary judgment decision, but that led to decertification

[00:44:19] Speaker 00:
And the issues there were highlighted as kind of materiality issues based on the absence of comparative data.

[00:44:28] Speaker 00:
And at the same time, the need for comparative data was explained there.

[00:44:35] Speaker 00:
And that does apply for Rule 23 as well.

[00:44:38] Speaker 00:
That applies because you have to have

[00:44:41] Speaker 00:
a common defect to unite all these class members to be able to show that the prone to spawning, tainty shattering, that there is something there when you compare it against regular sunroofs.

[00:44:54] Speaker 00:
Let's not forget that plaintiffs and Judge Oreck relied upon consumer complaints and reports in the complaints and elsewhere.

[00:45:01] Speaker 00:
And more than a third of those involved regular sunroofs, which plaintiffs take no issue with.

[00:45:10] Speaker 00:
And once you proportionalize them, it ends up being about even.

[00:45:14] Speaker 00:
But we need to remember that.

[00:45:16] Speaker 00:
We're the only ones, Nissan's the only ones who presented comparative data.

[00:45:20] Speaker 00:
It wasn't under inclusive.

[00:45:21] Speaker 00:
That's why there is no 702 challenge to it.

[00:45:25] Speaker 00:
And it included things beyond warranty.

[00:45:27] Speaker 00:
It included Techline, it included NHTSA complaints.

[00:45:29] Speaker 00:
But don't just take our word for it.

[00:45:31] Speaker 00:
NHTSA did the longest investigation in its history on this issue.

[00:45:37] Speaker 00:
And they did a thorough survey.

[00:45:39] Speaker 00:
And their survey identified of 13 automakers, their survey identified the 12 vehicles which had high incident rates.

[00:45:50] Speaker 00:
Not a single one of them was a Nissan vehicle.

[00:45:53] Speaker 00:
And I see my time is almost up.

[00:45:59] Speaker 03:
Your time is entirely up.

[00:46:03] Speaker 00:
And if there are any other questions?

[00:46:06] Speaker 03:
OK, thank you, counsel.

[00:46:09] Speaker 03:
Johnson versus Nissan North America will be submitted and we will hear from Sonnenfeld versus Mazda Motor of America.

[00:46:18] Speaker 00:
Thanks for your time.