Filed 8/27/18 Dagher v. Ford Motor Co. CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

GREG DAGHER,

Plaintiff and Appellant,

v.

FORD MOTOR COMPANY,

Defendant and Respondent.

D072436

(Super. Ct. No. 37-2013-00046812-

CU-BC-CTL)

APPEAL from a judgment of the Superior Court of San Diego County, Joel M. Pressman, Judge. Affirmed.

Rosner, Barry & Babbitt, Hallen D. Rosner, and Arlyn L. Escalante; Lemon Law Associates of California and Susan A. Yeck for Plaintiff and Appellant.

Wilson Turner Kosmo, Vickie E. Turner, Robert A Shields, Robert K. Dixon, and Mark A. Rein; Dykema Gossett, John M. Thomas, and Tamara A. Bush for Defendant and Respondent.

Greg Dagher asserted various claims against Ford Motor Company (Ford) arising from alleged defects in his Ford truck’s diesel engine. Ford filed a motion for summary judgment, primarily arguing that Dagher’s claims were barred by an earlier federal class action settlement under the doctrine of res judicata or claim preclusion. The trial court agreed, granted Ford’s motion, and entered judgment accordingly.

Dagher appeals. He contends the doctrine of claim preclusion does not apply because (1) he was not a member of the earlier federal class action; (2) even if he were a member, he effectively opted out of the settlement; and (3) even if he did not opt out, it would be manifestly unjust and violate his due process rights to bind him to the settlement. We disagree and affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

In February 2009, Dagher purchased a used 2006 Ford F-350 truck with a Navistar PowerStroke six-liter diesel engine. A few months later, Dagher took the truck to a Ford dealership to diagnose and fix problems with the engine. The dealership serviced the engine’s turbocharger and replaced its center housing. The cost of the work was covered by Ford’s limited warranty, less a $100 deductible. Later, in 2010, Dagher sought further service from a different Ford dealership.

The Navistar diesel engine was the subject of several class action lawsuits, which were eventually transferred to a federal district court in Illinois for coordination. (See In re: Navistar Diesel Engine Products Liability Litigation (N.D.Ill., No. 11 C 2496, MDL No. 2223) (Navistar).) After substantial litigation, the class action plaintiffs and Ford reached a settlement agreement. The settlement agreement provided for certification of a class of Ford truck owners, which it described in part as follows: “All entities and natural persons . . . who currently own or lease (or who in the past owned or leased) a model year 2003-2007 non-ambulance Ford vehicle sold or leased in the United States and equipped with a 6.0-liter PowerStroke diesel engine that received one or more repairs covered by Ford’s New Vehicle Limited Warranty during the vehicle’s first five years in service or 100,000 miles, whichever comes first, to . . . the turbocharger.” It also provided for certain monetary relief to the class in exchange for the release of all claims, known or unknown, against Ford. Ford agreed to pay for a notice program by a claims administrator to potential class members based on a list provided by R.L. Polk & Co. The settlement agreement provided that any class member who wanted to be excluded from the settlement had to provide notice including the member’s contact information and the make, model, year, and vehicle identification number (VIN) for each vehicle to be excluded.

The federal district court preliminarily approved the settlement agreement, provisionally certified the proposed class, and ordered Ford to provide notice to each original and subsequent purchaser of a class vehicle for whom Ford could reasonably obtain an address. The court adopted the settlement agreement’s requirements for exclusion. The court stated, “Any Settlement Class Member who fails to submit a timely and complete Request for Exclusion to the required address, or communicates his, her or its intentions regarding membership in the Settlement Class in an ambiguous manner, shall be subject to and bound by all proceedings, orders, and judgments of this Court pertaining to the Settlement Class pursuant to the Settlement Agreement unless determined otherwise by the Court. Any communications from Settlement Class Members (whether styled as an exclusion request, an objection, or a comment) as to which it is not readily apparent whether the Settlement Class Member meant to request an exclusion from the Class will be evaluated jointly by counsel for the Parties, who will make a good-faith evaluation if possible. Any uncertainties about whether a Settlement Class Member requested to exclude himself/herself from the Settlement Class will be resolved by the Court.”

Dagher consulted an attorney, who submitted a timely exclusion request on his behalf. Dagher’s request referenced the Navistar litigation and stated, “Please be advised that I request to be excluded as a class member and[/]or from any class settlement in the above referenced action or any class action involving the Ford 6.0 liter diesel engine.” Dagher provided his name and identified a 2006 Ford F-350 King Ranch truck. Dagher also provided a VIN number, but it was incorrect. Dagher and his attorney signed the exclusion request. In a cover letter, Dagher’s attorney requested that the claims administrator advise her immediately “if this request does not effectively exclude my client from the subject class settlement or is not sufficient for my client to retain any and all individual claims against Ford arising from the 6.0 liter engine.”

Following a fairness hearing, the federal district court found, among other things, that “[i]ndividual notice was given to all members of the settlement class known and reasonably identifiable, in conformity with the requirements of Federal Rule of Civil Procedure 23(c)(2) and due process.” The court certified the class described in the settlement agreement, “approve[d] the proposed settlement and dismisse[d] with prejudice the claims of all class members who did not opt out of the settlement class in a valid and timely manner.” The court’s order identified the settlement class members “who excluded themselves” in an exhibit. The exhibit did not list Dagher or his vehicle.

Meanwhile, after Dagher had submitted his exclusion request but before the federal district court approved the settlement, Dagher filed this lawsuit. After a number of years of litigation that we need not recount here, including an appeal to this court (see Dagher v. Ford Motor Co. (2015) 238 Cal.App.4th 905), Ford filed its motion for summary judgment. It primarily argued that Dagher’s claims were barred by the Navistar class action settlement and judgment under the doctrine of res judicata or claim preclusion. Ford relied on the Navistar judgment and service records for Dagher’s Ford truck, as well as Dagher’s admissions in his operative complaint that he was a “putative class member[]” of the Navistar class and he “did not delay in bringing [an] individual action because it was not until a settlement was approved and notice of the settlement was provided that they were able to evaluate whether they wanted to request exclusion from that class.”

Dagher opposed. He argued that Ford had not shown he was a member of the Navistar class and, even if he were a member, his due process rights were violated because Ford did not send him individual notice of the class action settlement and because his exclusion request should have been sufficient to remove him from the class.

Following oral argument, the trial court granted Ford’s motion. It found that Dagher was a party to the Navistar litigation through his membership in the settlement class, that Dagher could not collaterally attack the notice and exclusion determinations of the Navistar court, and that all of Dagher’s claims were barred by the Navistar settlement and judgment. The court entered judgment accordingly, and Dagher appeals.

DISCUSSION

I
Summary Judgment Standards

“A defendant’s motion for summary judgment should be granted if no triable issue exists as to any material fact and the defendant is entitled to a judgment as a matter of law.” (Kahn v. East Side Union High School Dist. (2003) 31 Cal.4th 990, 1002-1003 (Kahn).) A defendant moving for summary judgment on an affirmative defense has “the initial burden of showing that the undisputed facts support each element of the defense. [Citation.] It ‘must present evidence that would require a reasonable trier of fact to find any underlying material fact more likely than not—otherwise, [it] would not be entitled to judgment as a matter of law, but would have to present his evidence to a trier of fact.’ [Citation.] If a defendant fails to meet this initial burden, its motion should be denied regardless of the plaintiff’s evidentiary showing in opposition.” (Orange County Water Dist., supra, 14 Cal.App.5th at pp. 388-389; accord, Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 467-468.)

If the defendant “carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) “The plaintiff . . . shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(2).)

“We review the record and the determination of the trial court de novo.” (Kahn, supra, 31 Cal.4th at p. 1003.) “In performing our de novo review, we must view the evidence in a light favorable to plaintiff as the losing party [citation], liberally construing [the plaintiff’s] evidentiary submission while strictly scrutinizing defendants’ own showing, and resolving any evidentiary doubts or ambiguities in plaintiff’s favor.” (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768.)

II
Claim Preclusion

Dagher contends the trial court erred by granting Ford’s motion for summary judgment on its affirmative defense of claim preclusion. He relies in large part on California authorities discussing claim preclusion under California law. However, because the Navistar judgment was rendered by a federal district court sitting in Illinois, it appears that either federal common law or Illinois law would apply, depending on whether the judgment was based on federal question jurisdiction or diversity jurisdiction. (See Hardy v. America’s Best Home Loans (2014) 232 Cal.App.4th 795, 805 [“In federal question cases, federal common law determines the claim-preclusive effect of federal court judgments . . . .”]; Burdette v. Carrier Corp. (2008) 158 Cal.App.4th 1668, 1674 [“A diversity claim resolved in a federal action is subject to the law of res judicata of the state in which the federal court sits.”]; see also Semtek Internat., Inc. v. Lockheed Martin Corp. (2001) 531 U.S. 497, 507-509.)

We need not dwell on any distinctions between or among these bodies of law. As the appellant, Dagher has the burden of showing error. (Christoff v. Union Pacific Railroad Co. (2005) 134 Cal.App.4th 118, 125.) Even assessing his contention on its own terms, under California law, he has not shown the court erred. We therefore need not consider federal common law or Illinois law. And, in any event, it does not appear that applying federal common law or Illinois law would alter the result here. (See Federated Dept. Stores, Inc. v. Moitie (1981) 452 U.S. 394, 398 [describing the elements of claim preclusion under federal law]; Nowak v. St. Rita High School (Ill. 2001) 757 N.E.2d 471, 477 [same, under Illinois law].)

“Claim preclusion, the ‘ ” ‘primary aspect’ ” ‘ of res judicata, acts to bar claims that were, or should have been, advanced in a previous suit involving the same parties.” (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824 (DKN Holdings).) “A clear and predictable [claim preclusion] doctrine promotes judicial economy. Under this doctrine, all claims based on the same cause of action must be decided in a single suit; if not brought initially, they may not be raised at a later date. ‘ “[Claim preclusion] precludes piecemeal litigation by splitting a single cause of action or relitigation of the same cause of action on a different legal theory or for different relief.” ‘ [Citation.] A predictable doctrine of [claim preclusion] benefits both the parties and the courts because it ‘seeks to curtail multiple litigation causing vexation and expense to the parties and wasted effort and expense in judicial administration.’ ” (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 897.)

“Claim preclusion ‘prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them.’ [Citation.] Claim preclusion arises if a second suit involves (1) the same cause of action (2) between the same parties (3) after a final judgment on the merits in the first suit. [Citations.] If claim preclusion is established, it operates to bar relitigation of the claim altogether.” (DKN Holdings, supra, 61 Cal.4th at p. 824.) Because class members are in privity with named class action plaintiffs, the doctrine “applies to a court-approved settlement agreement in a class action dismissed with prejudice.” (Villacres v. ABM Industries, Inc. (2010) 189 Cal.App.4th 562, 577 (Villacres); accord, Taylor v. Sturgell (2008) 553 U.S. 880, 894 (Taylor) [“Representative suits with preclusive effect on nonparties include properly conducted class actions . . . .”]; Hansberry v. Lee (1940) 311 U.S. 32, 41 (Hansberry).)

Dagher disputes only the “same parties” element of claim preclusion. He argues that Ford did not present evidence he was a member of the Navistar settlement class. We disagree. The Navistar judgment defined the settlement class as “[a]ll entities and natural persons . . . who currently own or lease (or who in the past owned or leased) a model year 2003-2007 non-ambulance Ford vehicle sold or leased in the United States and equipped with a 6.0-liter PowerStroke diesel engine that received one or more repairs covered by Ford’s New Vehicle Limited Warranty during the vehicle’s first five years in service or 100,000 miles, whichever comes first, to . . . the turbocharger.” The undisputed evidence showed that Dagher and his vehicle fell within this description. Dagher owns a 2006 Ford truck with the specified engine, and he received warranty service on the truck’s turbocharger during its first five years in service and 100,000 miles.

Indeed, Dagher repeatedly alleged in his operative complaint that he was a “putative class member[]” in the Navistar litigation. These allegations are binding on Dagher and conclusive of the truth of the matter. (See St. Paul Mercury Insurance Co. v. Frontier Pacific Insurance Co. (2003) 111 Cal.App.4th 1234, 1248; Gibbs v. American Airlines, Inc. (1999) 74 Cal.App.4th 1, 11.) Dagher attempts to avoid the binding effect of these allegations by relying on authorities where a plaintiff was allowed to amend his complaint (see, e.g., Meyer v. State Bd. of Equalization (1954) 42 Cal.2d 376, 386), but Dagher made no such attempt here. These allegations are part of his operative complaint in his lawsuit; they are therefore binding on him.

Dagher appears to argue that his membership in the Navistar settlement class can only be proved by a list of class members to whom notice of the Navistar settlement was sent. Dagher cites no authority for this proposition, and we are aware of none. The settlement class is defined in the Navistar judgment, which certified the class described above and identified the absent class members who had validly requested exclusion. Because Dagher falls within the definition of the certified Navistar settlement class, and was not identified in the court’s exclusion list, he is bound by the judgment. (See Matsushita Electric Industrial Co. v. Epstein (1996) 516 U.S. 367, 379.) The proper place to address any perceived inadequacies regarding the definition of the settlement class was in the Illinois proceedings, not here.

Relying on Rio Linda Unified School Dist. v. Superior Court (1997) 52 Cal.App.4th 732, 739-740, Dagher claims that Ford was required to submit all evidence relevant to its motion for summary judgment, including a list of class members to whom notice of the Navistar settlement was sent. It does not appear that any such list was ever requested in discovery in this action. In any event, as a subsequent case has explained, Rio Linda “do[es] not hold that the failure to set forth all material evidence necessarily defeats a threshold burden.” (Collin v. CalPortland Co. (2014) 228 Cal.App.4th 582, 591.) We note that Rio Linda was decided before our Supreme Court’s landmark discussion of summary judgment law in Aguilar, supra, 25 Cal.4th 826. Under Aguilar, Ford must only show that the undisputed facts justified judgment in its favor as a matter of law. (Id. at pp. 850-851.) The evidence it submitted, including the Navistar judgment, Dagher’s service records, and Dagher’s own allegations, were sufficient to make that showing.

Dagher contends that, even if he were initially a member of the settlement class, his exclusion request should have been honored notwithstanding the fact that he listed the wrong VIN. He claims, without evidence, that Ford failed to comply with various procedural aspects of the Navistar preliminary approval order. In effect, Dagher argues the Navistar court erred by not including Dagher on its exclusion list. His argument is unavailing. “Even if we assume that the prior judgment was incorrect, it is settled that ‘[an] erroneous judgment is as conclusive as a correct one.’ ” (Carroll v. Puritan Leasing Co. (1978) 77 Cal.App.3d 481, 488.) “The mere fact that a judgment is erroneous or unfair will not prevent the application of res judicata.” (McGaffey v. Sudowitz (1961) 189 Cal.App.2d 215, 217; accord, Proctor v. Vishay Intertechnology, Inc. (2013) 213 Cal.App.4th 1258, 1270.) Dagher’s remedy for any error was to challenge the allegedly erroneous Navistar judgment in the federal district court or on direct appeal. He may not collaterally attack the Navistar court’s exclusion findings now.

Dagher points out that, “[i]n rare circumstances, a final judgment may be denied claim preclusive effect when to do so would result in manifest injustice.” (F.E.V. v. City of Anaheim (2017) 15 Cal.App.5th 462, 465; accord, Dunkin v. Boskey (2000) 82 Cal.App.4th 171, 181 [“Even if [the] threshold requirements are established, res judicata will not be applied ‘if injustice would result or if the public interest requires that relitigation not be foreclosed.’ “].) Dagher argues that this manifest injustice exception should apply because he did not receive any recovery from the Navistar settlement and because Ford allegedly did not raise its claim preclusion defense until late in this litigation. We disagree with Dagher’s claims of manifest injustice here. Dagher’s failure to recover is not sufficient to show manifest injustice. Otherwise, any class member could refuse recovery and thereafter maintain his own lawsuit. Although Dagher submitted an exclusion request, the Navistar court’s final judgment showed that it was not accepted. It is not manifestly unjust to hold Dagher to the reasonable requirement that he verify his exclusion request was accepted, or accept the consequences of claim preclusion. Dagher was represented by counsel at the time and actively pursuing his own individual claims against Ford in this litigation. Dagher’s assertion that Ford did not raise its claim preclusion defense until late in the litigation is factually incorrect. Ford raised res judicata as an affirmative defense in its answer to Dagher’s initial complaint. (See JSJ Limited Partnership v. Mehrban (2012) 205 Cal.App.4th 1512, 1526 [“res judicata can be waived if not asserted as an affirmative defense and proven”].) Considering all of the circumstances, Dagher has not shown the manifest injustice exception should apply here. (See Villacres, supra, 189 Cal.App.4th at p. 592.)

III
Due Process

Dagher further contends that it would violate due process to give preclusive effect to the Navistar judgment under the circumstances here. As the United States Supreme Court has explained, “[W]hen the judgment of a state court, ascribing to the judgment of another court the binding force and effect of res judicata, is challenged for want of due process it becomes the duty of this Court to examine the course of procedure in both litigations to ascertain whether the litigant whose rights have thus been adjudicated has been afforded such notice and opportunity to be heard as are requisite to the due process which the Constitution prescribes.” (Hansberry, supra, 311 U.S. at p. 40; see Taylor, supra, 553 U.S. at p. 891.)

Dagher argues his due process rights were violated in the Navistar litigation because, he claims, he was not sent individual notice of the Navistar settlement, despite his name and address being readily ascertainable from his service transactions at Ford dealerships. Due process, in this context, requires “notice plus an opportunity to be heard and participate in the litigation, whether in person or through counsel. The notice must be the best practicable, ‘reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.’ ” (Phillips Petroleum Co. v. Shutts (1985) 472 U.S. 797, 812.) We note that, while an absent class member must be provided notice, it is elementary that any failure to receive notice, in and of itself, is insufficient to show a due process violation. (Juris v. Inamed Corp. (11th Cir. 2012) 685 F.3d 1294, 1321 [“Courts have consistently recognized that . . . due process does not require that class members actually receive notice.”]; Silber v. Mabon (9th Cir. 1994) 18 F.3d 1449, 1454.)

The only evidence Dagher cites in support of the proposition that he was not sent notice of the Navistar settlement is his declaration, but the trial court sustained Ford’s objection to the relevant portion of that declaration. Dagher has not challenged that evidentiary ruling on appeal, so we will not consider the excluded evidence. (Orange County Water Dist., supra, 14 Cal.App.5th at p. 368.) Dagher’s claim that he was not sent notice of the Navistar settlement is therefore unsupported by any evidence, and it is insufficient to raise a triable issue of material fact regarding the application of claim preclusion here. (See Code Civ. Proc., § 437c, subd. (p)(2).)

The importance of evidence on the issue of adequate notice is illustrated by Peters v. National R.R. Passenger Corp. (D.C. Cir. 1992) 966 F.2d 1483. In Peters, an absent class member claimed the notice sent to him was not reasonably calculated to advise him of the class action because it did not include his apartment number and it used an incorrect zip code. (Id. at p. 1486.) The court examined the circumstances of the omissions individually. It found that the omission of his apartment number was reasonable because there was no evidence that the defendant or class counsel had actual knowledge the address was incomplete. (Id. at p. 1487.) And the incorrect zip code was attributable to class counsel’s error and was not foreseeable by the defendant. (Ibid.) The court therefore concluded no due process violation occurred because, notwithstanding these deficiencies, the notice was reasonably calculated to inform the absent class member of his rights. (Ibid.) Here, Dagher has presented no evidence that he was not sent notice of the Navistar settlement, let alone evidence of the surrounding circumstances.

Perhaps recognizing this evidentiary gap, Dagher asserts that Ford bore the burden of showing he was sent individual notice in order to establish its claim preclusion defense. Our Supreme Court has not identified any requirement that a party show a prior judgment complied with due process in order to make out a prima facie case of claim preclusion. (See DKN Holdings, supra, 61 Cal.4th at p. 824; Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 797.) Federal courts appear to be split on this issue. (Compare Richardson v. Wells Fargo Bank, N.A. (5th Cir. 2016) 839 F.3d 442, 448 [“[A] plaintiff asserting that preclusion should not apply because the prior class action settlement violated due process has the burden of proving a due process violation.”] and Kulak v. City of New York (2d Cir. 1996) 88 F.3d 63, 72 with Pelt v. Utah (10th Cir. 2008) 539 F.3d 1271, 1283-1284 and Brown v. Wells Fargo Bank, N.A. (D.D.C. 2012) 869 F.Supp.2d 51, 65-66.) It appears the appropriate framework would place the burden of proof on the party seeking to establish a constitutional violation and avoid claim preclusion. As a leading commentator has explained, “Given the fact that the party collaterally attacking the judgment is mounting a constitutional argument, it is consistent with constitutional law generally to place the burden on that party to prove its case; this seems especially true in that the party is both alleging a constitutional due process violation and simultaneously arguing that the judgment should not be given full faith and credit.” (6 Newberg on Class Actions (5th ed. 2011) § 18:38; see Rubenstein, Finality in Class Action Litigation: Lessons from Habeas (2007) 82 N.Y.U. L.Rev. 790, 815-816.) Because Dagher did not submit any admissible evidence that would raise a triable issue of fact on the question of notice, he could not carry this burden.

In any event, we need not decide who bears the burden of proof on this due process issue based on the record presented. Regardless whether Dagher was specifically sent notice, it is undisputed that Dagher and his attorney had actual notice of the Navistar settlement. He submitted a request to be excluded from the settlement, and his operative complaint alleges that he considered the settlement terms before requesting exclusion: “Plaintiff did not delay in bringing Plaintiff’s individual action because it was not until a settlement was approved and notice of a settlement was provided that they were able to evaluate whether they wanted to request exclusion from that class.” Actual notice to Dagher and his attorney is sufficient to satisfy Dagher’s due process rights under the circumstances here. (See United Student Aid Funds, Inc. v. Espinosa (2010) 559 U.S. 260, 272; Seacor Holdings, Inc. v. Mason (In re Deepwater Horizon) (5th Cir. 2016) 819 F.3d 190, 199; see also Benson v. Cal. Coastal Com. (2006) 139 Cal.App.4th 348, 353 [“Actual notice satisfies due process.”]; In re Albert B. (1989) 215 Cal.App.3d 361, 380-381.) Dagher has not raised a triable issue of fact that his due process rights would be violated by the application of claim preclusion here.

DISPOSITION

The judgment is affirmed.

GUERRERO, J.

WE CONCUR:

HUFFMAN, Acting P. J.

IRION, J.