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CLASS PRODUCT LIABILITY SUIT AGAINST FORD REMANDED TO ALABAMA STATE COURT

Mar 14, 2003

A federal court in Alabama Feb. 3 remanded a product liability class action against Ford Motor Co., rejecting Ford's arguments that the plaintiffs' claims should be aggregated to satisfy the amount-in-controversy requirement for diversity jurisdiction (McGettigan v. Ford Motor Co., S.D. Ala., No. 02-0849-CB-M, 2/3/03).

The U.S. District Court for the Southern District of Alabama said aggregation was not appropriate in this case because the plaintiffs did not have a "common and undivided interest" in a common fund or remedy. Rather, the court said, the remedies sought by the plaintiffs were based on individual contracts and warranties.
Because the plaintiffs' claims could not be aggregated, the federal court said it had no subject matter jurisdiction over the suit. The court also found that federal motor vehicle safety law did not preempt the plaintiffs' claims.

DEFECTIVE INTAKE MANIFOLDS. Thomas J. McGettigan, Cathy S. McGettigan, and Pauline C. Langham filed a putative class action in an Alabama state court against Ford, alleging that between 1995 and 2001, Ford manufactured automobiles with engines containing defective intake manifolds. They claimed the intake manifolds were manufactured with a plastic component that fails at certain temperatures, causing the engine to seize.
The plaintiffs alleged Ford learned of the defect and recalled vehicles purchased by fleet consumers, but left individual consumers "to tough it out and suffer the risks of foreseeable engine failures."
According to the complaint, Ford violated the Magnuson-Moss Warranty Act. The plaintiffs asked Ford to disgorge all "ill-gotten revenues and/or profits" for the purpose of creating a program to repair and retrofit affected vehicles. The plaintiffs also seek injunctive relief requiring Ford to notify the public of the defect and the safety risk.
The plaintiffs alleged the cost to replace an intake manifold is about $1,200 per vehicle.

AGGREGATION OF CLAIMS NOT APPROPRIATE. Both parties agreed that complete diversity jurisdiction existed, but disagreed over whether the amount-in-controversy requirement was met. Specifically, the parties disputed whether the claim for relief may be aggregated for purposes of diversity jurisdiction.
Ford argued that requiring it to disgorge profits for a retrofit and repair program means the class plaintiffs will have a unified and indivisible interest in a common fund that is the object of litigation.
But the court said the disgorged monies were not damages in which the class had a common and undivided interest because the class claims were based on the plaintiffs' individual warranty contracts with Ford. Any recovery from the common fund would be based on a plaintiff's individual warranty.

"[I]t is clear to the Court that Plaintiffs are not suing in order to vindicate their rights in the common fund of disgorged monies, but that the common fund will only be used to facilitate the litigation process," wrote Judge Charles R. Butler. "Furthermore, the common fund will benefit each member of the class only to the extent that it is used to repair or retrofit the defective manifold on their respective cars," which is to cost about $1,200 per vehicle. "Thus, the disgorgement claim may not be attributed to each Plaintiff here."
The court similarly rejected Ford's argument that the plaintiffs' request for a consumer notification program should also be aggregated. Ford argued this program would be aimed at unnamed plaintiffs "as a group" since "the named individual plaintiffs" are already aware of the alleged defect.

But the court said the plaintiffs' claims were based on a written manufacturer's warranty issued by Ford, which said any existing defect would be repaired, free of charge, to the purchaser or any subsequent owner. "Therefore, Plaintiffs' claims arise from the individual warranty possessed by each member of the class," Butler wrote. "Thus, the notification claim may not be aggregated because Plaintiffs' claims are separate and distinct."

The court concluded that because the plaintiffs' claims may not be aggregated, diversity jurisdiction did not exist because the amount in controversy requirement was not satisfied.

NO PREEMPTION MEANS NO FEDERAL QUESTION. Finally, the court rejected Ford's argument that the court had subject matter jurisdiction overt the action pursuant to federal question jurisdiction.
The court said the question whether an action raises a federal question is governed by the "well-pleaded complaint rule," which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's complaint.

A case may not be removed to federal court on the basis of a federal defense, including the defense of preemption.
Ford argued the plaintiffs' Magnuson-Moss Warranty Act claims were completely preempted by federal National Traffic and Motor Vehicle Safety Act because the plaintiffs were seeking a recall and, therefore, the U.S. district court had federal subject matter jurisdiction.

But the court rebuffed Ford's argument, saying the "text of the Safety Act allows state remedies to be used in the field of automotive safety, which is not evidence that Congress intended to transform state law causes of action into federal ones."

Therefore, Butler wrote, the Magnuson-Moss Warranty Act is not completely preempted by the National Traffic and Motor Vehicle Safety Act. "In light of this conclusion, the Court does not have federal question jurisdiction over the matter because Plaintiffs' complaint fails the well-pleaded complaint rule as there is no federal claim on the face of the complaint," the court said.

However, Butler said despite his ruling, the state court could hold differently and find that the plaintiffs' Magnuson-Moss claims may be preempted by the Safety Act.
The plaintiffs were represented by Richard T. Dorman, David G. Wirtes, Jr., and Gregory B. Breedlove of Cunningham, Bounds, Yance, Crowder & Brown in Mobile, Ala.

Ford Motor Co. was represented by D. Alan Thomas, Gregory L. Schuck, and Jason Robert Watkins of Huie, Fernambucq & Stewart in Birmingham, Ala.; and Brian C. Anderson and Matthew M. Shors of O'Melveny & Myers in Washington, D.C.

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