Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-md-02672/USCOURTS-cand-3_15-md-02672-260/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 15:2301 Magnuson-Moss Warranty Act

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

IN RE: VOLKSWAGEN “CLEAN DIESEL” 

MARKETING, SALES PRACTICES, AND 

PRODUCTS LIABILITY LITIGATION

_____________________________________/

This Order Relates To:

Bellwether Trial.

______________________________________/

MDL No. 2672 CRB (JSC)

ORDER RE: JURY INSTRUCTIONS 

AND STIPULATED FACTS

This Order provides guidance for Phase One of the upcoming trial. The Court 

agrees with Plaintiffs and Volkswagen that California Civil Jury Instruction No. 1923 

provides the proper measure of economic damages for the first phase of the trial. A copy 

of the model instruction that the Court will use as a guide for the relevant jury instructions 

in this case is attached as Exhibit A to this Order.

While the parties (and the Court) agree on the appropriate model jury instruction, 

they dispute the meaning of that instruction. CACI No. 1923 provides that a plaintiff’s 

out-of-pocket damages are “the fair market value of what [the plaintiff] gave” less “the fair 

market value of what [the plaintiff] received” (original brackets omitted). “‘Fair market 

value’ is the highest price that a willing buyer would have paid on the date of the 

transaction to a willing seller” if “there [was] no pressure on either one to buy or sell” and 

“the buyer and seller [knew] all the uses and purposes for which the [car was] reasonably 

capable of being used.” Id. (original brackets omitted). According to Plaintiffs, this means 

that the fair market value is the amount each of them would have paid for their cars on the 

original date of sale, had they known that those cars contained a defeat device. This 

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United States District Court

Northern District of California

position is belied by caselaw, the ordinary meaning of “fair market value,” and the plain 

language of the model instructions.

Another court in this Circuit has recently considered, and rejected, Plaintiffs’ 

interpretation of California’s out-of-pocket measure of damages. Judge Birotte’s analysis 

begins by noting that “[t]he rule is now well established that, in the typical case involving 

a fraudulent vendor and a defrauded vendee” the “exclusive measure of damages” is “the 

difference between the actual value of that with which the defrauded person parted and the 

actual value of that which he received.” In re: Ford Motor Co. DPS6 Powershift 

Transmission Prods. Liability Litig., No. 18-ML-02814-AB (FFMx), 2019 WL 7171546, 

at *4 (C.D. Cal. Dec. 2, 2019) (citing Walsh v. Hooker & Fay, 212 Cal. App. 2d 450, 458 

(1963) & Cal. Civ. Code. § 3343). Turning to California caselaw, Judge Birotte 

determined that “actual value” means “market value.” Id. at *5 (citing Nece v. Bennett, 

212 Cal. App. 2d 494, 497 (1963)). He therefore concluded that “‘actual value’ does not 

mean Plaintiffs’ subjective valuation of the vehicle” and so the plaintiffs’ “own opinion as 

to the value of the vehicle” could not establish their out-of-pocket damages. Id.

The Court is persuaded by Judge Birotte’s reasoning and adopts it here. As noted 

above, California caselaw and CACI No. 1923 establish that the proper measure of 

damages is the amount Plaintiffs paid for their cars, less the actual fair market value of 

those cars at the time of sale. See Nece, 212 Cal. App. 2d at 497. “Fair market value” is 

an objective measure. It asks what price a typical, willing, and informed buyer and seller 

would arrive at in an arm’s-length transaction, not how much a particular individual would 

have paid if that person had been fully informed. See Value, Black’s Law Dictionary 

(11th ed. 2019) (defining “fair market value” as “[t]he price that a seller is willing to 

accept and a buyer is willing to pay on the open market and in an arm’s-length transaction; 

the point at which supply and demand intersect.”). 

The language Plaintiffs cite from CACI No. 1923 confirms this conclusion. That 

model instruction defines fair market value as “the highest price that a willing buyer would 

have paid on the date of the transaction to a willing seller, assuming:” no pressure and full 

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United States District Court

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knowledge on both sides of the transaction. CACI No. 1923. The instruction speaks in 

terms of a generic buyer, paying the price determined by the market as a whole. Plaintiffs’ 

reading would substitute the words “this Plaintiff” for “a willing buyer,” but neither the 

language of the statute nor any case cited by the parties justifies that alteration.1 

Ultimately, Plaintiffs’ position amounts to an unjustifiable effort to seek rescission in the 

guise of out-of-pocket damages.

Plaintiffs rely heavily on Schroeder v. Auto Driveaway Co., 11 Cal. 3d 908 (Cal. 

1974), but that case does not support their position. The Schroeders hired Auto Driveaway 

to drive to Susanville, California a van loaded with merchandise for their new store. Id. at 

912. Auto Driveaway’s driver drove the van off the side of a mountain road, resulting in 

the total destruction of the van and substantial destruction of the Schroeder’s goods. Id. at 

913. The Schroeders sued for breach of contract, fraud, and conversion. Id. at 914. 

Schroeder does not help Plaintiffs because it is distinguishable. The main measure 

of damages in Schroeder was “the difference between the value of the goods stored in the 

van and the salvage value.” Id. at 921. Schroeder even distinguished a case that had 

applied the out-of-pocket measure of damages applicable here. Id. at 916–17 (holding 

there was “no similarity between . . . this case” and one which measured damages from 

fraud by “the difference between the amount the plaintiffs had paid for the property and 

what it was actually worth”). The disputed issue here—how to measure the fair market 

value of goods at the time of the original sale—was not relevant in Schroeder.

Plaintiffs have emphasized Schroeder’s instruction that “[t]he opinion of an owner 

of personal property is in itself competent evidence of the value of that property, and 

sufficient to support a judgment based on that value.” Id. at 921. This statement related to 

1

 At the hearing, Plaintiffs also cited CACI No. 1923’s direction that a plaintiff “may also recover 

amounts that [he/she/it] reasonably spent in reliance on” the fraudulent misrepresentations. The 

Court is not clear whether this reference was meant to support Plaintiffs’ arguments regarding 

their reliance damages, or the correct measure of out-of-pocket damages. In any event, the Court 

interprets this language to describe the correct measure of reliance damages, not an alternative 

method for measuring out-of-pocket damages. On that note, the Court points out that Plaintiffs’ 

reliance damages will be limited to “those amounts [that] would not otherwise have been spent.” 

CACI No. 1923.

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