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When the lawyers for Kia Motors America took an appeal from a December 2002 decision that certified a class action consumer lawsuit on behalf of more than 10,000 Pennsylvania owners of the Sephia model of Kia cars, their prayer was a simple one — decertify the class. But the 3rd U.S. Circuit Court of Appeals never reached any of the issues relating to whether the class was properly certified because the appellate judges spotted a more fundamental issue — whether the case belonged in federal court in the first place. In a decision handed down Thursday in Samuel-Bassett v. Kia Motors America Inc., a unanimous three-judge panel found that the case may have to be sent back to the state courts because the claims of each individual class member may not be enough to satisfy the $75,000 minimum to establish federal diversity jurisdiction. None of the lawyers had addressed the issue in their initial briefs, but the appeals court ordered supplemental briefs when the judges questioned whether the federal courts had subject matter jurisdiction over the case. Now the 3rd Circuit has ruled that subject matter jurisdiction was never properly established. The court’s order sends the case back to U.S. District Judge Curtis Joyner for “fact-finding on the amount in controversy.” Although the appellate court vacated the ruling that certified the class, the decision could ultimately prove to be more of a victory for the plaintiffs because it could result in a remand of the case to the Philadelphia Court of Common Pleas, where it was originally filed. In the suit, plaintiffs allege that Kia Sephias manufactured from 1997 to 2001 suffer from widespread problems in the brake systems that cause premature wear, vibration and increased stopping distance. The suit alleges claims for, and breaches of, implied and express warranties, as well as claims under the Pennsylvania Unfair Trade Practices and Consumer Protection Law and the federal Magnuson-Moss Warranty Improvement Act. When Joyner certified the case as a class action, he rejected defense arguments that the case was unsuitable for class treatment because the individual owners would each have to prove that their cars suffered from the alleged defect. Instead, Joyner found that there was “sufficient evidence” that Kia “had knowledge that a vast number of its Sephia automobiles between at least 1997 and 2001 required replacement of brake pads and rotors at intervals of less than 5,000 miles.” Although he sided with the plaintiffs on all of the larger questions, Joyner said he agreed with the defense that the UTPCPL claim should be dismissed because it is barred by the economic loss doctrine under the 3rd Circuit’s decision in Werwinski v. Ford Motor Co. But in Thursday’s decision, the 3rd Circuit hinted that Werwinski may be bad law. “Application of the economic loss doctrine to claims under the Consumer Protection Law has been questioned,” Senior U.S. Circuit Judge Joseph F. Weis Jr. wrote in a footnote. Although the Pennsylvania Supreme Court has never addressed the issue, Weis noted that Pennsylvania trial courts “have rejected Werwinski’s prediction that the Pennsylvania Supreme Court would apply the economic loss rule in claims under the Consumer Protection Law.” The footnote also carried a strong prediction of the outcome of the remand when Weis said Joyner may not need to revisit the Werwinski issue. “In this case if the District Court’s re-assessment of plaintiffs’ damages results in an amount less than $75,000, as seems likely, then the Werwinski ruling need not be addressed,” Weis wrote. Joyner had originally sided with Kia in holding that the case was properly removed. In calculating the potential damages, Joyner began with the base purchase price of the automobile, $13,370, and added registration, title and filing fees; sales tax; service contract cost; and expenses of financing to reach a total of $22,095. Joyner concluded that giving the damages claims the broadest possible reading — and trebling the $22,095 as a jury could — in addition to attorney fees and out-of-pocket expenses, the damages of each plaintiff would clearly exceed $75,000. But Weis found there were possible flaws in Joyner’s calculations. “The record before us fails to establish the value of the automobile with and without the brake defect. Even adding consequential damages to a conjectural estimate of value here fails to establish anything near $75,000,” Weis wrote in an opinion joined by 3rd Circuit Judges Theodore A. McKee and D. Brooks Smith. Kia was represented on appeal by attorneys Joseph Kernen and Neal Walters, both of Piper Rudnick. Attorney Michael D. Donovan of Donovan Searles argued the appeal for the plaintiffs and was joined on the briefs by his partner, David A. Searles; attorney James A. Francis of Francis & Mailman; and Alan M. Feldman of Feldman Shepherd Wohlgelernter & Tanner. Kernen said on Friday that he was pleased with the court’s decision to vacate the ruling that certified the class. Whichever court ultimately gets the case, Kernen said, he intends to argue once again that the class cannot be certified because a “vast majority” of Sephia owners have never had any brake problems and others have had the problem fixed already. Donovan said he was encouraged by the court’s discussion of the Werwinski decision and said he intends to revive the UTPCPL claim when the case is remanded to state court.

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