Hubler Chevrolet, Inc. v. General Motors Corp.

United States District Court for the Southern District of Indiana
193 F.R.D. 574 (2000)

ELI5:

Rule of Law:

A class may be certified under Federal Rule of Civil Procedure 23(b)(3) when a defendant's uniform course of conduct raises a common legal question that predominates over individual factual variations, such as differing damages or communications. When substantial monetary damages are sought, certification under Rule 23(b)(3) is superior to Rule 23(b)(2) because it provides class members with notice and an opportunity to opt out.

Facts:

General Motors (GM) operated a marketing program where it collected from its Indiana dealers a 1% charge on the Manufacturer’s Suggested Retail Price (MSRP) of new vehicles sold.
Initially, GM redistributed these funds to regional dealer marketing groups (DMGs) for use in local advertising campaigns, and dealers authorized the collection on this basis.
In April of 1999, GM unilaterally altered its marketing program.
GM ceased distributing the collected 1% charge to the regional DMGs.
Instead, GM began retaining the funds to spend on its own national advertising campaigns.
This new practice of retaining the funds was applied uniformly to all Indiana GM dealers.

Procedural Posture:

A group of Indiana automobile dealers sued General Motors (GM) in the U.S. District Court for the Southern District of Indiana.
The complaint alleged that GM's marketing scheme violated the Indiana Deceptive Franchise Practices Act and constituted criminal conversion and unjust enrichment.
The plaintiffs filed a motion to certify a class consisting of all GM dealers located in Indiana pursuant to Federal Rule of Civil Procedure 23.
GM filed a brief in opposition to the plaintiffs' motion for class certification and requested oral argument on the motion.

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Issue:

Does a proposed class of franchisees meet the requirements for certification under Federal Rule of Civil Procedure 23(b)(3) where the defendant franchisor engaged in a uniform practice affecting all franchisees, but individual franchisees may have differing damage calculations, goals, or may have received varying communications?

Opinions:

Majority - Barker, Chief Judge

Yes, a proposed class of franchisees meets the requirements for certification under Rule 23(b)(3) because the defendant's uniform practice of retaining a marketing fee creates a common legal issue that predominates over individual factual variations. The court first found that all four prerequisites of Rule 23(a) were met: the class of 258 dealers was numerous, the legality of GM's retention of the fee was a common question, the named plaintiffs' claims were typical as they arose from the same course of conduct, and the representatives could adequately protect the class's interests. The court then rejected certification under Rule 23(b)(1) as this was not a limited fund case and under Rule 23(b)(2) because substantial money damages were sought, making the notice and opt-out provisions of (b)(3) more appropriate. Finally, the court found the requirements of Rule 23(b)(3) were satisfied because the common legal question of GM's liability predominated over individual issues like damage calculations or the need to prove coercion, and a class action was superior to hundreds of individual lawsuits in terms of judicial economy and consistency.

Analysis:

This decision illustrates the practical application of the Rule 23(b)(3) predominance and superiority requirements. It establishes that a defendant's single, uniform policy can serve as the 'essential factual link' needed for class certification, even in the face of anticipated individualized issues like damages or reliance. The court's preference for Rule 23(b)(3) over (b)(2) when significant monetary damages are at stake reinforces the due process considerations of providing notice and opt-out rights. This case serves as a strong precedent for plaintiffs seeking to certify class actions based on a common course of conduct that results in widespread economic harm, making it more difficult for defendants to defeat certification by highlighting minor factual differences among class members.

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