Plaintiffs from twenty-six states sought class certification GM for alleged defects in transmission systems, experiencing “shudder” and shift quality issues while driving, even when they brought their cars in to be repaired.  The District Court certified twenty-six State-wide sub-classes, and a panel of the U.S. Sixth Circuit initially affirmed.  However, rehearing was granted, and the full Sixth Circuit, sitting en banc, reversed.

Initially, the Court addressed the Article III standing issue: “Traditional tangible harms such as ‘monetary harms’ count. But the mere risk of future harm, standing alone, does not suffice for money-damages actions. How does this test apply to a consumer who arguably overpays for a product because it allegedly has a hidden defect? Is that a sufficiently tangible and concrete harm to cross the Article III threshold? Most of our sister circuits say yes. If someone pays more for something than they would have, had they known of the risks, these courts have concluded, they suffer a concrete injury. Two features of this case complicate the issue. First is the fact that some courts forbid, as a matter of standing, purchasers without manifest defects from piggybacking on the injury caused to those with manifest defects. The Seventh Circuit likewise recently cabined overpayment-based injuries to exclude products containing only a potential risk of harm. Second is the class-action posture of this case. The Supreme Court has not decided whether an unnamed class member’s lack of standing poses an Article III problem. The parties and we agree that the class representatives in today’s case own cars that experienced these defects. The named plaintiffs suffered an injury in fact if their cars shuddered and shifted, even if their alleged overpayment for the cars may or may not suffice.”  Nevertheless: “The standing of absent class members becomes immaterial once a court, as here, vacates a certification order…. Unless and until the district court certifies the class on remand, the absent class members’ standing makes no difference. We need to verify only that the named plaintiffs, who are parties from the start, have standing to pursue their claims.”

Next, the Court turned to Commonality: “The district court reasoned that three readily discernible common questions that are crucial to the pleaded causes of action exist: whether the transmissions have shift and shudder defects; whether GM knew about them; and whether the defects are material. Every claim, it pointed out, demands proof of a defect in the vehicles’ transmission design. Because the court determined that these questions lend themselves to a common answer and feature prominently in the disposition of the case, it found commonality satisfied. With respect, that does not suffice. A court may not simply ask whether generalized questions yield a common answer. That would undermine the bedrock principle that courts must identify common questions with respect to concrete elements of each claim. By hitching all 59 claims to a question about ‘defect’ in the abstract, the court overlooked how significant differences across each cause of action raise serious commonality concerns. The plaintiffs, to illustrate the point, claim that the court may answer whether a ‘defect’ exists in each transmission in one stroke. But that is not necessarily so in the context of the relevant elements of each claim. Do the plaintiffs mean ‘defect’ in the products-liability sense because it is ‘unreasonably dangerous’? Or do they mean ‘defect’ in an implied warranty sense, as in unfit for the ordinary purposes for which the accused products are used? Or do they mean ‘defect’ in the sense of a consumer-protection statute, which asks if the feature diminished the value of the product?

“That also means we can’t tell which claims the defect question might not be central to. The district court, for example, reasoned that the plaintiffs must identify a defect that is covered by the express warranty to repair or renders the class vehicles unfit for their ordinary or intended purpose. And it observed that, without proof of a defect making the vehicles unsuitable for ordinary use, the plaintiffs cannot prevail on any implied warranty claims. But these two claims ask different things of the class, confirming the imperative of an element-driven analysis. A court might find that the element of breach in an express-warranty claim asks a common question: Does a problem exist in each transmission that GM promised to fix? But the element of breach in an implied-warranty claim asks a different question: Does a problem in each transmission amount to a defect that makes the car unfit for its ordinary purpose? The second question might not be common because some class members’ transmission problems might not seriously disrupt the safety and comfort of each class vehicle, especially for those customers who merely felt a ‘light punch’ while upshifting while others felt a ‘lurch.’

“The same goes for knowledge. Is the right question whether GM knew that the transmissions had problems with harsh shifting in 2015, as relevant to a consumer-protection claim? That might lend itself to a common answer to the extent test drivers knew about it. Or is the relevant question that GM knew that it couldn’t fix buyer vehicles and kept selling them anyway, as relevant to an express-warranty claim? That might not lend itself to a common answer because GM repaired the shudder defect in 252,059 8L transmissions, most of which GM presumably covered with its free warranties. All of this suggests that, without an element-by-element commonality analysis, this court cannot effectively review which questions are truly central to which claims. We vacate and remand for the district court to conduct an element-by-element analysis that assesses how each question is common by fitting it into each claim.

“The dissent objects to this analysis on several grounds. It worries that this approach requires a rote explication of every element for every cause of action at the commonality stage. Not necessarily and not likely. As the Court said in response to the same critique in Wal-Mart, the plaintiffs need to identify only one question suitable for common proof with respect to each cause of action. But that question must be central to the claim at hand; it can’t relate to a non-material point, such as whether the plaintiffs bought a GM car during the relevant period. The plaintiffs must tie that debated question to the relevant elements of that claim; they cannot simply ask whether a ‘defect’ exists in the abstract. And the plaintiffs must prove that common evidence would yield a common answer; they cannot ignore the individualized inquiries that might occur with respect to the allegedly ‘common’ question….  The dissent insists that an issue central to a claim does not necessarily mean an element of that claim, because a generalized question, even if not directly tied to an element of a claim, can suffice to yield a common answer that drives the litigation forward. That may be true in some settings. A vital factual question may well turn a case. But an engineer alone, to put the point in the context of a product liability case, cannot resolve the commonality inquiry. It takes a lawyer, too. The class must trace the question to a legally salient element in each cause of action and show that common proof will provide yes-or-no answers to that factual/legal question. Without this analysis, the district court cannot prove that a common defect drives all 59 claims forward, even if every plaintiff can prove that they had the same transmission.

“The dissent contends that Wal-Mart permits a district court to craft a common contention subject to generalized proof. That was possible in Wal-Mart because the claimants filed a pattern or practice claim under Title VII, in which the proof theoretically could be generalized and theoretically could lead to common yes-or-no answers for the entire class. But even that possibility did not become a reality in Wal-Mart, as the Court rejected certification on commonality grounds….

“The dissent’s fourth point — that the plaintiffs have identified the 8L transmissions’ two universal defects as one common contention that is capable of resolution – illustrates why this analysis matters. Because ‘defect’ bears different legal meanings for different causes of action, the class needs to explain how and why class-wide proof of each alleged fault in the transmission resolves a material component of each cause of action. Otherwise, the word ‘defect’ becomes a chameleon for every cause of action, no matter how differently state law gauges the point, no matter how differently each alleged fault manifests.

“Put another way, we do not object to the district court’s commonality analysis because it was one page long. The problem is one of process. By choosing to resolve the commonality question at the level of generality of a ‘defect’, the court did not measure the question’s impact on each cause of action. District courts can still efficiently conduct the one-question commonality analysis by identifying precisely how each common question advances each claim. To the extent that analysis remains labored in this instance, that turns on plaintiffs’ decision to bring 59 claims in one class action, not the imperatives of Rule 23(a).”

Moving to Predominance: “Two threshold challenges of bringing these 800,000 claims together deserve attention. First, there are high costs to a legal system that asks one district court to understand and apply nearly 60 causes of action across 26 states…. In certifying a class under Rule 23(b)(3), efficiency offers a good reason, sometimes an overriding reason. But, in making that call, it’s well to remember what concerns are being overridden. One is the undesirability of concentrating the litigation of the claims in the particular forum and the likely difficulties in managing a class, as opposed to allowing the claims to be litigated separately in forums to which they would ordinarily be brought. A bulky multi-state class action forces a federal court to play ‘central planner’ to 26 state economies under one case, one court, one set of rules, and one settlement price for all involved…. The central-planner model also asks a lot of trial courts and juries. Would the court use hundreds of citizens to form 26 juries, one for each state? If it did, how would it demarcate subtle differences in state laws to comply with the Seventh Amendment’s command that no fact tried by a jury, shall be otherwise reexamined? More complicated still, would the court empanel one jury to crown the winner, what amounts to empowering six Michigan citizens to predict 59 rules of the road for 26 state commercial and consumer norms? If the court took this approach, must it face head-on the impossible task of instructing a jury on the relevant law and provide 59 pages of verdict forms? Or would the trial court issue a central-planning ‘Esperanto’ jury instruction that merges the negligence standards of the 50 states and the District of Columbia, letting six people hold the fate of an industry in the palm of its hand?

“Second, this class action presents two theories of defect, each with multiple moving parts, exponentially increasing these challenges. In asking whether certification will achieve economies of time, effort, expense, and uniformity of decision, courts should be wary about whether two different theories will both achieve these economies of scale. If just one theory for four causes of action in as many as 26 states presents daunting challenges, one should be wary about underwriting those risks for two theories. Many of our sister circuits recognize the perils that multi-state, multi-defect, multi-claim classes pose. They look skeptically on plaintiffs who aggregate a plethora of discrete claims into one super-claim because doing so increases the complexity of performing the required rigorous analysis for certification, let alone trial…. Class actions economize on the expense of litigation by resolving key issues in one stroke.  Certifying multiple theories of liability turns a bet that resolving one set of claims will save time into a multi-leg parlay that resolving every set of claims will save time….  The district court may not ignore slight variations across state law. The inquiry evaluates predominance within, not across, each of the 26 subclasses because they are each treated as a class. And even a slight variation in state law — say, a reliance requirement — might markedly increase the difficulties in managing the class.  That helps to explain why the district court may not certify 26 subclasses on the ground that some of them do not have defect-manifestation requirements.  Because a court must treat each subclass as a class, each subclass must independently meet the requirements of Rule 23. A subclass with highly individualized issues may not ride the coattails of another subclass without them.”

Finally, the Court addressed the potential impact of various Arbitration agreements: “The district court must interpret each arbitration agreement and identify which ones warrant extension to the class’s claims against GM. Because the district court has not answered either question, we vacate for further proceedings over whether questions of arbitrability bar class certification. The record leaves a mere sample of 20 arbitration agreements, some of which bind the consumer in claims against ‘third parties who do not sign this Lease,’ and some of which do not. This twenty-contract document does not permit us to estimate the number of different arbitration agreements in this 800,000-car class. The district court should decide in the first instance whether arbitration questions overwhelm the common ones in this class. We disagree with what the district court did say – that GM waived arbitration as to the entire class when it waived arbitration as to the named plaintiffs. Federal courts may not resolve the rights of third persons not parties to suit. A party who proposes a class action may not tie the hands of absent class members until the court certifies and appoints them the class representative. That is why pre-certification stipulations do not bind a class. A person who makes a stipulation makes an express waiver that he concedes some fact. But that precertification stipulation does not bind anyone but himself. For the same reason, waiver, or GM’s ‘voluntary relinquishment’ of the right to resolve the named plaintiffs’ claims by arbitration, does not speak for the unnamed class members.”

 

Speerly v. General Motors, No.23-1940, 2025 WL 1775640 (6^th Cir. June 27, 2025) (en banc).