Opinion ID: 50921
Heading Depth: 3
Heading Rank: 3

Heading: Privity of Contract

Text: Plaintiffs similarly failed to “extensively analyze” the variations in the law of the fifty-one jurisdictions concerning the requirement of privity of contract. There is a “sharp split -23- of authority” as to whether a purchaser may recover economic loss from a remote manufacturer when there is no privity of contract between the parties. BARKLEY CLARK & CHRISTOPHER SMITH, THE LAW OF PRODUCT WARRANTIES § 10:20 (2d ed. 2002) (“Many cases hold that [the absence of] vertical privity is a bar to recovery of primary economic loss against the remote manufacturer.”). The requirement of privity is more strictly enforced in claims involving implied warranties than those involving express warranties. Id. Plaintiffs’ expert briefly addressed the privity requirement for express warranties in four states, concluding that any variations among the jurisdictions were “minor” and opining that regardless of variation, the privity requirement was inapplicable to the facts of this case. Plaintiffs’ expert, however, entirely failed to address the privity requirement for implied warranties. The district court did not analyze the laws of any jurisdictions regarding privity and instead “note[d] that there may be some variations in the state laws with respect to this issue” but that those differences “could be addressed through subclasses and the normal course of individual trials that take place in large litigations.” This is hardly the type of “extensive analysis” of variations in law that is required prior to certification. Cf. Castano, 84 F.3d at 742. GM has provided its own catalog of state law variations regarding privity, which indicates that a significant number of -24- jurisdictions require vertical privity in an implied warranty action for direct economic loss. See, e.g., Rhodes v. Gen. Motors, 621 So. 2d 945, 947 (Ala. 1993); Rocky Mountain Fire & Cas. Co. v. Biddulph Oldsmobile, 640 P.2d 851, 856 (Ariz. 1982); Hauter v. Zogarts, 534 P.2d 377, 383 n.8 (Cal. 1975); Spolski Gen. Contractor, Inc. v. Jett-Aire Corp. Aviation Mgmt. of Cent. Fla., Inc., 637 So. 2d 968, 970 (Fla. Dist. Ct. App. 1994); Bodymasters Sports Indus. v. Wimberley, 501 S.E.2d 556, 561 (Ga. Ct. App. 1998); Puckett v. Oakfabco, Inc., 979 P.2d 1174, 1183 (Idaho 1999); Connick v. Suzuki Motor Co., Ltd., 656 N.E.2d 170, 180 (Ill. App. Ct. 1995), aff’d in part on other grounds, rev’d in part on other grounds, 675 N.E.2d 584 (Ill. 1996). Other jurisdictions, however, have eliminated the privity of contract requirement and allow recovery of economic loss from remote manufacturers. See, e.g., Morrow v. New Moon Homes, Inc., 548 P.2d 279, 289 (Alaska 1976); Nobility Homes of Tex., Inc. v. Shivers, 557 S.W. 2d 77, 81 (Tex. 1977); Cova v. Harley Davidson Motor Co., 182 N.W. 2d 800, 802 (Mich. Ct. App. 1970). These state law variations are important, in part because they would require separate jury instructions. Additionally, for states that have a strict privity requirement for implied warranty claims, each class member would be required to prove individually that she purchased her DeVille from GM or its agent, as opposed to an independent dealer or another individual. -25- Therefore, the privity of contract inquiry would turn on facts particular to each class member and thus would require individualized hearings. Other courts have declined class certification, at least in part because of variations in state law regarding privity of contract. See, e.g., Chin v. Chrysler Corp., 182 F.R.D. 448, 460 (D.N.J. 1998) (noting that plaintiffs failed to show that state law differences regarding vertical privity did not pose manageability problems); Walsh v. Ford Motor Co., 130 F.R.D. at 272 (“Along with the various implied warranty standards and other subsidiary issues . . . the numerous vertical privity rules convince this Court that a predominance of common issues are not present in this case.”).