Class action: Sony’s Vaio GRX Series Notebooks

California Courts of Appeal Reports

SONY ELECTRONICS v. THE SUP. CT. OF SD. CTY., D048468 (Cal.App. 11-28-2006) SONY ELECTRONICS INC., Petitioner, v. THE SUPERIOR COURT OF SAN DIEGO COUNTY, Respondent, MARTIN HAPNER et al., Real Parties in Interest. D048468. Court of Appeal of California, Fourth District, Division One. November 28, 2006. Published December 18, 2006.

Appeal from the Superior Court of San Diego County (Super.Ct. No. GIC839244).

DLA Piper Rudnick Gray Cary US LLP, Luanne Sacks, for Petitioner.

No appearance for Respondent.

Thomas D. Mauriello for Real Party in Interest.

Shepherd, Finkelman, Miller & Shah, James E. Miller, and James Shah pro hac vice for Real Party in Interest.

McINTYRE, J.

Petition for writ of mandate after the superior court
issued an order certifying a class. Luis R. Vargas, Judge.
Petition granted.

Sony Electronics Inc. (Sony) petitions for a peremptory
writ of mandate directing the trial court to vacate an
order certifying a class in this action, which alleges that
Sony’s Vaio GRX Series Notebook computers suffer from a
manufacturing defect. Sony contends that the class as
designated by the court is not sufficiently ascertainable
to support certification. We agree that the class certified
by the trial court is flawed and grant the petition.

FACTUAL AND PROCEDURAL BACKGROUND

In May 2002, Martin Hapner purchased a Vaio GRX550 Notebook
computer. He experienced repeated problems with the laptop
and in July 2004 filed this action against Sony in the
Superior Court of Santa Cruz County. The complaint alleged
that Sony had marketed and distributed GRX Series Notebook
computers, knowing that the computers had defective memory
chip sockets, but without disclosing such defects to
consumers; the complaint asserted causes of action for
violation of the Unfair Competition Law (Bus. & Prof. Code,
§ 17200 et seq.), false advertising, violations of
the Consumer Legal Remedies Act (Civ. Code, § 1750 et
seq.), breach of express warranty and violations of the
Song-Beverly Consumer Warranty Act (Civ. Code, §
1790 et seq.). Based on a stipulation of the parties, the
case was subsequently transferred to the San Diego County
Superior Court.

In October 2005, Hapner filed a motion for certification of
a class consisting of “[a]ll persons or entities [in the
United States] who purchased Sony Vaio GRX [Series Notebook
computers] ” but excluding Sony, its affiliates, employees,
officers and directors, persons or entities that distribute
or sell Vaio GRX laptop computers and the court (the
excluded persons). The motion also sought to have the court
designate a sub-class consisting of “[a]ll class members who
purchased the [GRX Series Notebook computers] in the State
of California.” The motion argued that the computers
suffered from a defect (specifically, the inadequate
soldering of connector pins located on their memory slots)
which prevented “many” of them from properly “booting”
(i.e., starting the operating system when turned on) or
utilizing their memory.

In support of his motion, Hapner presented evidence that
the GRX500 Series Notebooks manufactured in the spring of
2002 suffered from an annualized failure rate of 10.1
percent from any cause, which was well above Sony’s
accepted failure rate of less than 1 percent, and that 60
to 70 percent of the 500 series models that were sent to
Sony for repair from January to July of 2003 suffered from
“no boot” or memory problems. He also introduced an
internal company memorandum by a Sony engineer identifying
8 models from the 500 series that were affected by
“motherboard related issues” and recommending an extension
of the express warranty period for those models; the
memorandum identified the affected models as the GRX500,
510, 550, 570 and 590 models manufactured in the spring of
2002, all of which had Japanese motherboards, and the
GRX520, 560 and 580 models that were manufactured in the
summer of 2002 using Japanese motherboards.

Hapner introduced documents showing that Sony ultimately
characterized the memory slot problem as a “design defect”
and that the company had its Tokyo-based design engineering
team analyze the problem. There was additional evidence
that Sony refused to offer repairs to owners of GRX Series
Notebooks that were still under warranty even after it
issued an internal service bulletin in the summer of 2003
directing that any GRX500, 510, 550, 570 or 590 Notebook
returned for in-warranty work be resoldered, irrespective
of the reason why the computer was sent for repair.
Finally, Hapner also introduced evidence of the problems he
had had with his own Notebook computer, Sony’s response to
his inquiries and the steps he took to have the computer
repaired.

Sony opposed the motion, contending Hapner had not shown
either that common issues of fact and law predominated or
that there was an ascertainable class. On the first point,
Sony contended that there was no common soldering defect in
all of the GRX Series Notebook computers and that the
symptoms of the alleged manufacturing defect could result
from numerous causes other than inadequate soldering, thus
making individual issues predominant over class-wide
issues. It submitted evidence describing possible causes
for start-up and memory-related errors like those Hapner
experienced, but which resulted from circumstances other
than inadequate soldering and argued that there was no
evidence the GRX600 and 700 Series Notebook computers
suffered from the alleged manufacturing defect. As to the
second prerequisite for a class action, Sony argued the
proposed class was not ascertainable because it included
persons who lacked viable claims (including persons whose
computers do not have any defects, persons who had their
computers repaired under warranty or persons who bought
their computers used, “as is” or in a refurbished
condition).

In February 2006, the court declined Hapner’s request that
it certify a class of all United States purchasers of Vaio
GRX Series Notebook computers because of insufficient
commonality of claims, but partially granted his motion,
certifying the following class and subclasses:

“Class: All persons or entities in the United States who
are original purchasers of Sony Vaio GRX Notebook
computers from Sony or from an authorized reseller, and in
which the memory connector pins for either of the two
memory slots were inadequately soldered[,] impeding the
recognition of installed memory causing boot failures, and
other problems. Excluded from this Class are the
following: (1) [Sony] (including its affiliates,
employees, officers and directors); (2) persons or
entities which distribute or sell Sony Vaio GRX Notebook
computers; (3) the Court; and (4) purchasers who had the
solder points repaired by Sony at no cost under the
express warranty and who no longer experience boot
failures and other problems related to inadequate
soldering of the memory connector pins.

“Sub-Class A (for purposes of [the] Third Cause of Action
[for violations of the Consumer Legal Remedies Act]): All
class members who are `consumers’ as defined by California
Civil Code section 1761[, subdivision ](d).

“Sub-Class B (for purposes of [the] Fifth Cause of Action
[for violations of the Song-Beverly Consumer Warranty
Act]): All class members who purchased Sony Vaio GRX
Notebook computers in the State of California, and who
bought their computers primarily for personal, family, or
household purposes as defined by California Civil Code
section 1791[, subdivision ](a).”

In its ruling, the court expressed concern regarding the
manageability of the class as so defined and requested
briefing from the parties on that issue.

Hapner filed a brief asserting that the certified class
was manageable. He contended that class members would be
identifiable through Sony’s consumer and service repair
databases and additional discovery and that notice would be
given by mail to the persons so identified and by
publication of notice in print media designed to reach
laptop purchasers. He also argued that since the action was
structured as an opt-out class action (i.e., one in which
class members are included in the class unless they
affirmatively opt-out), it was not critical to be able to
identify class members at that point in the proceedings.
Hapner averred that merits-based discovery would only take
an additional five months and that thereafter trial could
proceed on a bifurcated basis, with a liability phase
(which he planned to base on Sony’s own documents,
percipient witness testimony by him and Sony
representatives and expert testimony) and a damages phase
(which he planned to base on expert presentation of data,
including annualized failure rates, repair or replacement
costs and product purchase price information).

Sony’s brief argued that the certified class was
unmanageable because the court’s definition of the class
made class membership dependent on a determination of
liability and that such a definition made it impossible to
determine who was a member of the class for purposes of
sending notice of the action. It also pointed out that even
if notice was sent, recipients thereof would not be able to
tell whether they were part of the class without having
their computers dismantled and analyzed to determine if the
computers suffered from inadequate soldering.

Sony reported that there were two other “virtually
identical” actions, one in superior court and one in
district court, pending against it in San Diego (Lieber v.
Sony Electronics, Inc. (Super.Ct. San Diego County, 2005,
No. GIC852309); Arabian v. Sony Electronics, Inc. (S.D.Cal.
2005, No. 05CV1741)) and contended that Michael Lieber was
proposing to represent a class of GRX owners whose symptoms
were caused by something other than inadequate soldering
unless he could determine that his computer only suffered
from such a defect. Sony agreed that only limited
additional discovery would be required and that not only
was bifurcation as to liability and damages appropriate, but
that the court should also bifurcate the legal and
equitable claims, with the latter to be tried first.

After considering the briefs and argument by counsel, the
court declined to reconsider its certification of the
class. It recognized that the class definition was “an
imperfect solution” because membership in the class
depended on the existence of a defect, but nonetheless
concluded that, if Hapner’s allegations were true, consumers
were entitled to a remedy and the class action provided a
superior mechanism for providing such a remedy over the
institution of individual lawsuits. The court invited the
parties to offer alternative class definitions if discovery
or investigation revealed an appropriate alternative. Sony
seeks relief, contending that the certification of the class
violates due process.

DISCUSSION

1. Introduction

Code of Civil Procedure section 382 authorizes the use of a
class action “when the question is one of a common or
general interest, of many persons, or when the parties are
numerous, and it is impracticable to bring them all before
the court[.]” The party seeking certification has the
burden to establish the existence of both an ascertainable
class and a well-defined community of interest among class
members. (Lockheed Martin Corp. v. Superior Court (2003) 29
Cal.4th 1096, 1103-1104 (Lockheed Martin ), citing
Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th
906, 913.)

Whether certification of a class is appropriate is
essentially a procedural question that does not depend on
the legal or factual meritoriousness of the class claims.
(Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 439-440.)
However, the trial court’s determination of whether it
should certify a class will often involve some inquiry,
although perhaps a general one, into “the factual and legal
issues comprising the plaintiff’s cause[s] of action.”
(Caro v. Procter & Gamble Co. (1993) 18 Cal.App.4th 644,
656.) The critical inquiry on a motion for class
certification is whether “the theory of recovery advanced
by the proponents of certification is, as an analytical
matter, likely to prove amenable to class treatment.”
(Sav-On Drug Stores, Inc. v. Superior Court (2004) 34
Cal.4th 319, 327.)

2. Standard of Review

A trial court is “ideally situated to evaluate the
efficiencies and practicalities of permitting group action”
and thus is afforded great discretion in granting or
denying certification. (Lockheed Martin, supra, 29 Cal.4th
at p. 1106 [citations omitted].) Accordingly, a trial
court’s decision, if supported by substantial evidence,
generally will not be disturbed unless it was based on
improper criteria or erroneous legal assumptions.
(Washington Mutual Bank v. Superior Court, supra, 24
Cal.4th at p. 914.)

3. Did the Trial Court Err in Certifying the Limited Class?

Sony challenges the class certified by the trial court for
lack of sufficient ascertainability. Ascertainability is
required to ensure that all putative class members receive
notice of the action and that the resulting judgment will
have res judicata effect as to those class members. (See
Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th
908, 914 (Hicks).) For a class to be considered
ascertainable, its members must have a plausible cause of
action against the defendant; the failure of multiple
prospective class plaintiffs to meet this elementary
standard may preclude the existence of an ascertainable
class and prevent a class action from being maintained.
(American Suzuki Motor Corp. v. Superior Court (1995) 37
Cal.App.4th 1291, 1294-1295; see Linder v. Thrifty Oil Co.
(2000) 23 Cal.4th 429, 443.)

Ascertainability “goes to the heart of the question of
class certification, which requires a class definition that
is `precise, objective and presently ascertainable.'”
(Global Minerals & Metals Corp. v. Superior Court (2003)
113 Cal.App.4th 836, 858, citations omitted, quoting In re
Copper Antitrust Litigation (2000) 196 F.R.D. 348, 359.)
Thus, whether a class is ascertainable turns on how the
proposed class is defined, the size of the proposed class
and the means available for identifying class members,
matters that are determined from the pleadings, the
applicable law and the evidence as to the actual
performance of the product. (Global Minerals & Metals Corp.
v. Superior Court, supra, 113 Cal.App.4th at p. 849.)
Although a proposed class plaintiff need not establish the
existence and identity of class members at the
certification stage of the proceedings, he must show that
there are objective criteria by which class members can
later be identified and given notice of the proceedings.
(Reyes v. Board of Supervisors (1987) 196 Cal.App.3d 1263,
1274-1275; Manual for Complex Litigation, Fourth, ?
21.222.)

Sony contends that the partial class certified by the court
here is not ascertainable because the class definition is
not based on objective criteria, but instead on the issue
of ultimate liability, i.e., whether a particular person’s
Notebook has a soldering defect. It analogizes the court’s
definition of the class in this case to the proposed class
definition that was held to be fundamentally flawed in
Intratex Gas Company v. Beeson (Tex. 2000) 22 S.W.3d 398
(Intratex) as the basis for its contention.

In Intratex, the plaintiff sought to certify a class action
on behalf of producers of natural gas against Intratex Gas
Company, an intrastate pipeline company, for its failure to
take natural gas from them in ratable proportions as
allegedly required by state law. The trial court certified
a class consisting of natural gas producers whose gas was
purchased by Intratex between 1978 and 1988 in less than
ratable proportions. (Intratex, supra, 22 S.W.3d at p.
400.) The certification of the class was affirmed on
appeal, but the Texas Supreme Court granted review and
reversed, finding that the proposed class was fundamentally
flawed because it was not based on objective criteria and
thus class membership was not ascertainable until after a
determination of liability. (Id. at p. 402.)

The court explained why such a class definition was
improper:

“A properly defined class is imperative for a suit to
proceed as a class action because the class definition
facilitates identifying, at the outset, the individuals
affected by the litigation, and protects their interests.
First, the definition determines who is entitled to
notice, and, [in some class actions,] provides an
opportunity to opt out of the class. Failure to define a
class precisely creates a substantial risk that putative
class members cannot adequately exercise their right to
opt out of or remain in the suit before they are bound by
a class judgment. [Citation.] Second, the class
definition determines the nature of the relief that can be
awarded and who is entitled to that relief. [Citation.]
Finally, clearly defining the class identifies the
plaintiffs who will be bound by the judgment if they lose,
and insures that those actually harmed by the defendant’s
wrongful conduct will receive the relief ultimately
awarded. [Citation.]

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.

“A proposed class definition that rests on the paramount
liability question cannot be objective, nor can the class
members be presently ascertained; when the class
definition is framed as a legal conclusion, the trial
court has no way of ascertaining whether a given person is
a member of the class until a determination of ultimate
liability as to that person is made. A fail-safe class
that is based on resolving the ultimate liability issue is
bound only by a judgment favorable to [the] plaintiffs but
not by a judgment [that is] favorable to [the]
defendants [because if the defendants succeed in
establishing no liability (such as that the specified
defect does not exist), there would be no class members].
[Citation.]” (Intratex, supra, 22 S.W.3d at pp. 403-405;
see also 6 Newberg on Class Actions (4th ed.), ?
18:46.)

Many, but not all, courts reviewing the certification of a
liability-based class have concluded that such a proposed
class is improper. (See cases cited in Intratex, supra, 22
S.W.3d at pp. 404-405; also Andrews v. Trans Union Corp.
(La.Ct.App. 2005) 917 So.2d 463, 470.) In Hicks, supra, 89
Cal.App.4th at pages 914-916, the California Court of
Appeal for the Second Appellate District was faced with this
precise issue and rejected the plaintiffs’ proposed
liability-based class definition as lacking in the
requisite ascertainability.

In Hicks, several homeowners brought an action against the
developer of their residential subdivision, alleging that
their homes had defective concrete foundations resulting
from the developer’s use of a polypropylene product
(Fibermesh) rather than welded wire mesh in constructing
the foundations. (Hicks, supra, 89 Cal.App.4th at p. 912.)
The homeowners asked the trial court to certify a class of
all persons who owned homes in the developer’s subdivisions
in which the foundations had Fibermesh rather than welded
wire mesh and had “manifested damage or defect due to the
Fibermesh substitution. . . .” On appeal from the trial
court’s denial of class certification, the Second District
concluded that the inclusion of the “manifested damage or
defect” component rendered the proposed class definition
flawed, but was not fatal because the elimination of this
liability-based component created an ascertainable class.
(Id. at pp. 915-916.)

We find that the limited class as certified by the superior
court in this case suffers from the same flaw as the
proposed class definition in Hicks. As defined by the
superior court, the class consists of purchasers of GRX
Series Notebook computers that have inadequate soldering of
the memory slot connector pins. Unfortunately, because
there is no evidence showing that this alleged manufacturing
defect is universal to all GRX Series Notebook computers,
the class definition requires a merits-based determination
in order to establish whether a particular GRX Series
Notebook owner is a member of the class. The members of
such a class are thus not readily identifiable so as to
permit appropriate notice to be given and the definition
would not permit persons who receive notice of this action
to determine whether they are part of the class. (Compare
Wilner v. Sunset Life Ins. Co. (2000) 78 Cal.App.4th 952
[holding the trial court erred in sustaining a demurrer to
class action allegations where the proposed class consisted
of all persons who purchased replacement life insurance
policies from the defendant over a specified period of time
and alleged that the defendant made the same material
misrepresentations, and failed to disclose the same
material facts, to all such purchasers]; Vasquez v.
Superior Court (1971) 4 Cal.3d 800, 810-811 [similar].) For
these reasons, the class definition is flawed.

Hapner contends that if we find the class definition
unworkable, we should use a similar approach as the Hicks
court did, modifying the class definition to excise the
liability-based component. This suggestion is problematic,
however. As noted above, the issue of class certification
is fundamentally a question for the trial court, to be
determined within its broad discretion. Further, doing as
Hapner urges would result in the certification of a class
of all United States purchasers of GRX Series Notebook
computers, something that he asked for below and that the
trial court specifically declined to do based on the lack
of sufficient commonality among proposed class members’
claims. In the complete absence of evidence that the
alleged manufacturing defect exists in all GRX Series
Notebook computers (most particularly the absence of
evidence that the defect exists in the GRX600 or 700 Series
Notebooks), the trial court acted well within its discretion
in denying certification of this broader class. (See
American Suzuki Motor Corp. v. Superior Court, supra, 37
Cal.App.4th at pp. 1294-1295; also Feinstein v. Firestone
Tire and Rubber Co. (S.D.N.Y. 1982) 535 F.Supp. 595, 603
[recognizing that where the majority of putative class
members have no legally recognizable claim, “the action
necessarily metastasizes into [many] individual claims” and
class action treatment is inappropriate].) Thus, we grant
Sony’s petition.

However, although we conclude that the trial court erred in
certifying the limited class, we decline Sony’s request
that we order the superior court to deny the class
certification motion outright. There is evidence in the
record suggesting that the alleged manufacturing defect
affected primarily GRX Series 500 Notebook computers that
(1) were manufactured in the spring and summer of 2002 and
(2) had motherboards that were manufactured in Japan.
Further, the court has not yet considered whether a class
might properly be certified for those United States
purchasers of GRX Series Notebook computers who have
experienced memory or “no boot” problems. For these
reasons, we direct the superior court to conduct further
proceedings on the issue of whether an alternative class is
properly certifiable, on the foregoing bases or otherwise.

DISPOSITION

Let a writ issue directing the superior court to vacate its
order granting certification of a limited class and
subclasses and to conduct further proceedings on the issue
of whether class certification of a different class is
appropriate. Each side is to bear its own costs in these
proceedings.

WE CONCUR:

HUFFMAN, Acting P.J.

HALLER, J

The opinion filed November 28, 2006 is ordered certified
for publication.

Having received a copy of the appendix redacted in
accordance with the trial court’s sealing order, this
court’s order filed July 14, 2006 is hereby vacated.

HUFFMAN, Acting P. J.