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PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION No. 8:15-cv-01985 CAS (Ex)

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SHEPHERD, FINKELMAN, MILLER & SHAH, LLP Kolin Tang 11755 Wilshire Blvd., 15th Floor Los Angeles, CA 90025 Telephone: (323) 510-4060 Facsimile: (866) 300-7367 Email: [email protected] Counsel for Plaintiff, on behalf of themselves and all others similarly situated [Additional Counsel on signature page]

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

STEVE ODDO, RAJENE REARDON, ANTHONY LASALA, LINDA LAMM, KEITH KIMBALL, NORMAN KLINGE, and DAN GALLAGHER, on behalf of themselves and all others similarly situated, Plaintiffs, vs. ARCOAIRE AIR CONDITIONING AND HEATING, CARRIER CORPORATION, BRYANT HEATING AND COOLING SYSTEMS, COMFORTMAKER AIR CONDITIONING & HEATING, INTERNATIONAL COMFORT PRODUCTS LLC, and UNITED TECHNOLOGIES CORPORATION, Defendants.

)) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case Number: 8:15-cv-01985 CAS (Ex) PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION; MEMORANDUM IN SUPPORT THEREOF Amended Complaint Filed: March 7, 2016 Judge: Hon. Christina A. Snyder Hearing: October 29, 2018 Time: 10:00AM Courtroom: 8D, First Street Courthouse


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NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION

TO DEFENDANTS AND THEIR ATTORNEYS OF RECORD:

PLEASE TAKE NOTICE THAT ON October 29, 2018, or as soon

thereafter as the matter may be heard, in the United States District Court for the

Central District of California, before the Honorable Christina A. Snyder, Plaintiffs

will, and hereby do, move for the Court for an order under Fed. R. Civ. P. 23(a),

(b)(2) and (b)(3), or in the alternative (c)(4), certifying the following Classes and

naming the following Class representatives:

1. California Class. Represented by Plaintiff Steve Oddo.

All original purchasers1 in California, including individuals and entities, of new, 1.5- to 5-ton Carrier condensing units or Small Packaged air conditioning units, and not for resale, that utilize 410A refrigerant and contain an Emerson scroll compressor with a serial number beginning 13L through 14H, but excluding the compressors identified by Emerson in CARRIER_0043279 as not containing Ryconox.

The California Class seeks class certification for (a) violations of the Unfair

Competition Law (“UCL”), CAL. BUS. & PROF. CODE §§ 17200-210; (b)

violations of the False Advertising Law (“FAL”), CAL. BUS. & PROF. CODE §§

17500-509; (c) common-law fraudulent concealment; and (d) common-law

negligent misrepresentation. In the alternative, the California Class seeks

certification for unjust enrichment (quasi-contract seeking restitution).

CLRA Subclass:

All original purchasers in California who purchased for personal, family, or household purposes, and not for resale, new, 1.5- to 5-ton Carrier condensing units or Small Packaged air conditioning units that utilize 410A refrigerant and contain an Emerson scroll compressor with a serial number beginning

1 For clarity, the term “original purchasers” includes owners who acquired units with newly constructed homes, but does not include subsequent owners.



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13L through 14H, but excluding the compressors identified by Emerson in CARRIER_0043279 as not containing Ryconox.

The CLRA Subclass seeks class certification for violations of the Consumer

Legal Remedies Act (“CLRA”), CAL. CIV. CODE §§ 1750-85.

2. Missouri Class. Represented by Plaintiff Norman Klinge.

All original purchasers in Missouri, including individuals and entities, that purchased for personal, family, or household purposes, and not for resale, new, 1.5- to 5-ton Carrier condensing units or Small Packaged air conditioning units that utilize 410A refrigerant and contain an Emerson scroll compressor with a serial number beginning 13L through 14H, but excluding the compressors identified by Emerson in CARRIER_0043279 as not containing Ryconox.

The Missouri Class seeks class certification for (a) violations of the

Missouri Merchandising Practices Act (“MMPA”), MO. REV. STAT. §§ 407.010-

.1610; (b) common-law fraudulent concealment; and (c) common-law negligent

misrepresentation.

3. Georgia Damages Class. Represented by Plaintiff Linda Lamm.

All original purchasers in Georgia, including individuals and entities that purchased for personal, family, or household purposes, and not for resale, new, 1.5- to 5-ton Carrier condensing units or Small Packaged air conditioning units that utilize 410A refrigerant and contain an Emerson scroll compressor with a serial number beginning 13L through 14H, but excluding the compressors identified by Emerson in CARRIER_0043279 as not containing Ryconox.

The Georgia Damages Class seeks class certification of claims for

violations of the Fair Business Practices Act (“GFBPA”), GA. CODE ANN. §§ 10-

1-390 to -408.



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4. Georgia Injunctive Relief Class. Represented by Plaintiff Linda Lamm.

All original purchasing owners and subsequent owners in Georgia, including individuals and entities, that purchased new, 1.5- to 5-ton Carrier condensing units or Small Packaged air conditioning units that utilize 410A refrigerant and contain an Emerson scroll compressor with a serial number beginning 13L through 14H, but excluding the compressors identified by Emerson in CARRIER_0043279 as not containing Ryconox.

The Georgia Injunctive Relief Class seeks class certification for violations

of the Uniform Deceptive Trade Practices Act (“GUDTPA”), GA. CODE ANN. §§

10-1-370 to -375.

5. Indiana Class. Represented by Plaintiff Dan Gallagher.

All original purchasers in Indiana, including individuals and entities, that purchased for personal, family, or household purposes, and not for resale, new, 1.5- to 5-ton Carrier condensing units or Small Packaged air conditioning units that utilize 410A refrigerant and contain an Emerson scroll compressor with a serial number beginning 13L through 14H, but excluding the compressors identified by Emerson in CARRIER_0043279 as not containing Ryconox.

The Indiana Class seeks class certification for violations of the Deceptive

Consumer Sales Act (“IDCSA”), IND. CODE ANN. §§ 24-5-0.5-0.01 to -12.

Excluded from all of the above classes are the following individuals and/or

entities: the Court, all Court personnel involved in the handling of this case, as

well as their immediate family members; Carrier and its subsidiaries, affiliates,

officers and directors, current or former employees, and any entity in which

Carrier has a controlling interest; all individuals who timely elect to be excluded

from this proceeding using the correct protocol for opting out; and any attorneys

or other employees of any law firms hired, retained and/or appointed by or on



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behalf of the named Plaintiffs to represent the named Plaintiffs and/or any

proposed Class members or proposed class in this lawsuit.

Plaintiffs also move under Fed. R. Civ. P. 23(g) for the appointment of

Chimicles & Tikellis LLP and Shepherd, Finkelman, Miller & Shah, LLP as Class

Counsel.

DATED: August 3, 2018 Respectfully submitted,

By: Timothy N. Mathews Timothy N. Mathews (Pro Hac Vice) Zachary P. Beatty (Pro Hac Vice) CHIMICLES & TIKELLIS LLP One Haverford Centre

361 West Lancaster Avenue Haverford, PA 19041 Telephone: (610) 642-8500 Facsimile: (610) 649-3633 Email: [email protected] [email protected] James C. Shah (SBN 260435) SHEPHERD, FINKELMAN, MILLER & SHAH, LLP 35 East State Street Media, PA 19063 Telephone: (610) 891-9880 Facsimile: (866) 300-7367 Email: [email protected] Kolin C. Tang (SBN 279834) SHEPHERD, FINKELMAN, MILLER & SHAH, LLP 11755 Wilshire Blvd. 15th Floor Los Angeles, CA 90025 Telephone: (323) 510-4060 Facsimile: (866) 300-7367 Email: [email protected]


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TABLE OF CONTENTS

I. INTRODUCTION ........................................................................................... 1

A. Ryconox Causes A Failure “Epidemic” In Carrier Air Conditioners ... 1 B. Carrier Knew About The Defect But Decided To Continue Selling The Defective Systems Without Disclosure ............................. 2 C. Carrier Inject A Highly-Acidic Additive, Rather Than Fix The Defect ......................... 6

II. THE PROPOSED CLASSES MEET THE RULE 23 CERTIFICATION REQUIREMENTS .......................................... 9

A. The Classes Are Ascertainable .............................................................. 9

B. The Classes Meet The Requirements Of Rule 23(a) ........................... 10

1. The Classes Are Sufficiently Numerous ................................... 10

2. There Are Common Questions Of Fact And Law .................... 10 3. Plaintiffs’ Claims Are Typical .................................................. 11

4. Plaintiffs And Counsel Are Adequate Representatives ............ 12

C. The Classes Meet the Requirements of Rule 23(b) ............................. 12

1. Common Questions Of Law And Fact Predominate ................ 12

a. California Class .............................................................. 12

b. Missouri Class ................................................................ 16

c. Georgia Damages Class .................................................. 18

d. Indiana Class ................................................................... 19

2. Plaintiffs’ Damages Model Satisfies Comcast ......................... 19


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3. A Class Action Is The Superior Method Of Adjudication ....... 24

D. Alternatively, A Liability-Only Class Is Appropriate Under Rule 23(c)(4) ............................................................................ 25 E. The Georgia Injunctive Relief Class Meets The Requirements Of 23(b)(2) ................................................. 25

III. CONCLUSION .............................................................................................. 26


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TABLE OF AUTHORITIES

CASES

In re Actimmune Mktg. Litig., No. 08-cv-02376, 2009 U.S. Dist. LEXIS 103408 (N.D. Cal. Nov. 6, 2009) ............................................................................................................... 18

Ades v. Omni Hotels Mgmt. Corp., No. 2:13-cv-02468-CAS, 2014 U.S. Dist. LEXIS 129689 (C.D. Cal. Sept. 8, 2014) .............................................................................................. 10

AFSCME v. Cephalon, Inc. (In re Actiq Sales & Mktg. Practices Litig.), 790 F. Supp. 2d 313 (E.D. Pa. 2011) ...................................................... 20

Amin v. Mercedes-Benz USA, LLC, No. 1:17-cv-1701, 2018 U.S. Dist. LEXIS 40603 (N.D. Ga. Mar. 13, 2018) ............................................................................................................. 26

Andren v. Alere, Inc., No. 16-cv-1255, 2017 U.S. Dist. LEXIS 209405 (S.D. Cal. Dec. 20, 2017) ............................................................................................................. 19

Arthur v. United Indus. Corp., No. 2:17-cv-06983-CAS, 2018 U.S. Dist. LEXIS 83607 (C.D. Cal. May 17, 2018) ............................................................................................... 11, 12

Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753 (9th Cir. 2015) .............................................................................. 16

Ballard v. NFL Players Ass’n, 123 F. Supp. 3d 1161 (E.D. Mo. 2015) .............................................................. 18

Baranco v. Ford Motor Co., 294 F. Supp. 3d 950 (N.D. Cal. 2018) ................................................................ 15

Beck-Ellman v. Kaz USA, Inc., 283 F.R.D. 558 (S.D. Cal. 2012) ........................................................................ 17

Brickman v. Fitbit, Inc., No. 3:15-cv-02077, 2017 U.S. Dist. LEXIS 191788 (N.D. Cal. Nov. 20, 2017) .................................................................................................... 17

Carnahan v. American Family Mut. Ins. Co., 723 S.W.2d 612 (Mo. Ct. App. 1987) ................................................................ 19


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Chamberlan v. Ford Motor Co., 402 F.3d 952 (9th Cir. 2005) .............................................................................. 11

Chavez v. Blue Sky Natural Bev. Co., 268 F.R.D. 365 (N.D. Cal. 2010) .................................................................. 13, 20

Chowning v. Kohl’s Dep’t Stores, Inc., No. 15-cv-08673-RGK, 2016 U.S. Dist. LEXIS 37261 (C.D. Cal. Mar. 15, 2016)..................................................................................................... 24

Comcast Corp. v. Behrend, 569 U.S. 27 (2013) .............................................................................................. 20

Comcast. Spann v. J.C. Penney Corp., 307 F.R.D. 508 (C.D. Cal. 2015) ........................................................................ 25

In re ConAgra Foods, Inc., 908 F. Supp. 2d 1090 (C.D. Cal. 2012) .............................................................. 17

Cormier v. Carrier Corp., No. 3:18-cv-00964-VLB (D. Conn. July 31, 2018) ............................................ 25

Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc., 244 F.3d 1152 (9th Cir. 2001) ............................................................................ 25

Daniel v. Ford Motor Co., 806 F.3d 1217 (9th Cir. 2015) ............................................................................ 15

Edwards v. Ford Motor Co., 603 Fed. App’x 538 (9th Cir. 2015) ................................................................... 14

Falco v. Nissan N. Am., Inc., No. 13-cv-00686-DDP, 2016 U.S. Dist. LEXIS 46115 (C.D. Cal. Apr. 5, 2016) ................................................................................................passim

Feller v. Transamerica Life Ins. Co., No. 2:16-cv-01378-CAS, 2017 U.S. Dist. LEXIS 206822 (C.D. Cal. Dec. 11, 2017) ............................................................................................. 25

Frame v. Boatmen’s Bank of Concord Village, 824 S.W.2d 491 (Mo. Ct. App. 1992) ................................................................ 21

Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147 (1982) ............................................................................................ 12


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In re GM LLC Ignition Switch Litig., No. 14-md-2543, 2016 U.S. Dist. LEXIS 92499 (S.D.N.Y. July 15, 2016) ................................................................................................................... 21

Guido v. L’Oreal, USA, Inc., No. 11-cv-1067-CAS, 2013 U.S. Dist. LEXIS 94031 (C.D. Cal. July 1, 2013) ........................................................................................ 9, 13, 14, 16

Hoopes v. Gulf Stream Coach, Inc., No. 1:10-cv-365, 2014 U.S. Dist. LEXIS 137055 (N.D. Ind. Sept. 29, 2014) ............................................................................................................. 19

Hope v. Nissan, 353 S.W.3d 68 (Mo. Ct. App. 2011) ............................................................ 17, 18

In re Hydroxycut Mktg. & Sales Practices Litig., 289 F.R.D. 648 (S.D. Cal. Jan 27, 2014) ............................................................ 19

Keegan v. Am. Honda Motor Co., 284 F.R.D. 504 (C.D. Cal. 2012) ........................................................................ 11

Koehlinger v. State Lottery Comm’n, 933 N.E.2d 534 (Ind. Ct. App. 2010) ................................................................. 22

Lambert v. Nutraceutical Corp., 870 F.3d 1170 (9th Cir. 2017) ............................................................................ 20

Laster v. T-Mobile United States, Inc., 407 F. Supp. 2d 1181 (S.D. Cal. 2005) .............................................................. 17

Leyva v. Medline Indus., 716 F.3d 510 (9th Cir. 2013) .............................................................................. 26

LiMandri v. Judkins, 52 Cal.App.4th 326 (1997) ................................................................................. 13

Longest v. Green Tree Servicing LLC, 308 F.R.D. 310 (C.D. Cal. 2015) ........................................................................ 10

Makaeff v. Trump Univ., LLC, No. 3:10-cv-0940, 2014 U.S. Dist. LEXIS 22392 (S.D. Cal. Feb. 21, 2014) ................................................................................................. 15, 21, 24


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Mari-Mina Pharm., Inc. v. Cerner Corp., No. 5:14-cv-01249-SVW, 2014 U.S. Dist. LEXIS 199885 (C.D. Cal. Sep. 29, 2014) .............................................................................................. 21

Mash v. Brown & Williamson Tobacco Corp., No. 4:03-cv-0485, 2004 U.S. Dist. LEXIS 28951 (E.D. Mo. Aug. 26, 2004) ....................................................................................................... 18, 19

McVicar v. Goodman Glob., Inc., No. 13-cv-1223-DOC, 2015 U.S. Dist. LEXIS 110432 (C.D. Cal. Aug. 20, 2015) .................................................................................................... 16

Miller v. Fuhu Inc., No. 2:14-cv-06119-CAS, 2015 U.S. Dist. LEXIS 162564 (C.D. Cal. Dec. 1, 2015) ............................................................................. 13, 14, 21, 23

Nguyen v. Nissan N. Am., Inc., No. 16-cv-05591, 2018 U.S. Dist. LEXIS 93861 (N.D. Cal. Apr. 9, 2018) ............................................................................................................. 23, 24

In re NJOY Consumer Class Action Litig., 120 F. Supp. 3d 1050, 1117 (C.D. Cal. 2015) .............................................. 16, 25

O’Connor v. Uber Techs., No. 13-cv-3826, 2015 U.S. Dist. LEXIS 116482 (N.D. Cal. Sept. 1, 2015) ............................................................................................................... 25

Plubell v. Merck & Co., 289 S.W.3d 707 (2009) ....................................................................................... 18

Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979 (9th Cir. 2015) .............................................................................. 21

Regency Nissan v. Taylor, 391 S.E.2d 467 (Ga. Ct. App. 1990) ............................................................. 19, 21

Ries v. Ariz. Bevs. USA LLC, 287 F.R.D. 523 (N.D. Cal. 2012) ........................................................................ 11

Saavedra v. Eliu Lilly & Co., No. 2:12-cv-9366-SVW, 2014 U.S. Dist. LEXIS 179088 (C.D. Cal. Dec. 18, 2014) ............................................................................................. 22

Shady Grove Orthopedic Ass’n v. Allstate Ins. Co., 559 U.S. 393 (2010) ............................................................................................ 19


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Skalbania v. Simmons, 443 N.E.2d 352 (Ind. Ct. App. 1982) ................................................................. 20

Stearns v. Ticketmaster Corp., 655 F.3d 1013 (9th Cir. 2011) ............................................................................ 14

Tait v. BSH Home Appliances Corp., 289 F.R.D. 466 (C.D. Cal. 2012) .................................................................. 13, 16

Tiismann v. Linda Martin Homes Corp., 637 S.E.2d 14 (Ga. 2006) ................................................................................... 19

In re Tobacco II Cases, 46 Cal. 4th 298 (Cal. 2009)................................................................................. 13

In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales Practices, & Prods. Liab. Litig., 754 F. Supp. 2d 1145 (C.D. Cal. 2010) .............................................................. 13

United Steel Workers v. Conoco-Phillips Co., 593 F.3d 802 (9th Cir. 2010) ................................................................................ 9

Vaccarino v. Midland Nat’l Life Ins. Co., No. 2:11-cv-05858-CAS, 2014 U.S. Dist. LEXIS 18601 (C.D. Cal. Feb. 3, 2014) ....................................................................................................... 20

Valentino v. Carter-Wallace, Inc., 97 F.3d 1227 (9th Cir. 1996) .............................................................................. 25

Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) ............................................................................................ 11

Webb v. Dr. Pepper Snapple Grp., Inc., No. 4:17-cv-00624, 2018 U.S. Dist. LEXIS 71270 (W.D. Mo. Apr. 25, 2018) ............................................................................................................. 17

Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168 (9th Cir. 2010) ...................................................................... 11, 12

Zakaria v. Gerber Prods. Co., No. 15-cv-00200-JAK, 2016 U.S. Dist. LEXIS 184861 (C.D. Cal. Mar. 23, 2016)..................................................................................................... 20


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STATUTES

CAL. CIV. CODE § 1782 ............................................................................................ 23

IND. CODE ANN. § 24-5-0.5-4(b) .............................................................................. 20

MO. REV. STAT. § 407.020(1) .................................................................................. 17

OTHER AUTHORITIES

16 C.F.R. § 305.5 ....................................................................................................... 4

16 C.F.R. § 305.12 ..................................................................................................... 4

FED. R. CIV. P. 23 et seq. ..............................................................9, 10, 11, 12, 23, 25

FED. R. CIV. P. 24(c)(4) ............................................................................................ 25

MO. CODE REGS. ANN. tit. 15, 60-9.110 ................................................................... 18

MO. CODE REGS. ANN. tit. 15, § 60-9.010 ................................................................ 17



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I. INTRODUCTION A. Ryconox Causes A Failure “Epidemic” In Carrier Air Conditioners

From late 2013 through August 2014, Carrier manufactured over 1 million

air conditioner condensing units that were defective because the compressors

contained an “unapproved” rust inhibitor called Ryconox.1 (See Declaration of

Timothy N. Mathews (“Mathews Decl.”), Ex. 1, at ¶¶ 18A, 31-100; Ex. 2, at 17;

Ex. 3, at 114:10-12.)2 Carrier determined “conclusively” that Ryconox was the

“root cause” of widespread sticky debris forming on the thermostatic expansion

valves (“TXVs”) of new air conditioning systems. (Ex. 2, at 17.) This was a

material defect that, in Carrier’s words, caused an “Epidemic Failure” rate. (Exs.

4, 5.) Carrier’s records show that TXV failures increased at least in the first

year alone due to Ryconox. (Ex. 1, at ¶ 61.) In less than four years, an estimated

of all 1.5- to 2.5-ton units containing Ryconox have suffered acute

failures. (Ex. 1, at ¶¶ 18(B), 59, 62; see also Ex. 6 [projecting failure rate].)

Even these extremely high failure rates understate the real scope of the

problem, however. As one of Carrier’s own experts acknowledged, performance

of an air conditioner is “highly dependent on the size and shape of the TXV

opening,” which fluctuates with the movement of a pin within the TXV. (Ex. 8, at

¶ 52.) Carrier’s testing showed that sticky debris occurs on the TXV in

in which Ryconox is present. (Ex. 1, at ¶ 67; Ex. 2, at 10.) When

1 “Split system” air conditioners have two main components: (1) the outdoor unit, called the condensing unit, which contains the compressor, and (2) an indoor unit, called the evaporator coil, which contains the TXV. (Ex. 1, at ¶ 23.) In a Small Packaged system, the condensing unit and evaporator are integrated in a single unit. Emerson Climate Technologies (“Emerson”) manufactured the compressors containing Ryconox at issue here. The purpose of the rust inhibitor was solely to protect compressor parts during the manufacturing process—it has no function in an assembled condensing unit. (Ex. 7 at 29:5-30:10.) 2 All Exhibit references are to the Mathews Declaration, unless otherwise noted.



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1 enough build-up occurs, it can result in an acute failure called a "frozen coil." But

2 even before an acute failure, deposits on the TXV impair performance at levels

3 homeowners may not notice. (Ex. 1, at 72-76; see also Ex. 9, at 3325; Ex. 10,

4 at 1.) Further, an obstructed TXV can damage other parts of the system. Carrier's

5 designee, Christopher Kafura, conceded "anytime you have refrigerant not

6 flowing correctly, it's a risk to . . . the compressor and other parts of the system."

7 (Ex. 3, at 106:23-107:9; see also Ex. 11, at 1 [noting that Ryconox could be a

8 "risk to the compressor down the road from a reliability perspective"].)

As Carrier also acknowledged, there is wide variability in how long it takes

10 acute TXV failures to occur. (Ex. 10, at 1 ["[Tjesting indicates that units that were

11 run primarily in full load conditioned tended to exhibit the issue more quickly

12 than units that cycled during lower loads."]; Ex. 12 [noting that Mexico-built units

13 took sixteen times longer to fail than Collierville in testing, which equates to two

14 to four years in service]; Ex. 13, at 10

9

; see also Ex. 13, at 11, 15; Ex. 2, at 9; Ex. 14, at 1.)15

Nevertheless, Carrier admitted16

(Ex. 2, at 17.)17

There is no serious question that the presence of Ryconox, which Carrier

never approved for use, constitutes a material defect. Further, eveiy system

containing Ryconox is defective, even if the defect has not yet manifested in an

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acute TXV failure. (Ex. 1 , at ^[^[ 42, 66.)21

22 B. Carrier Knew About The Defect But Decided To Continue

Selling The Defective Systems Without Disclosure

Internal Carrier documents reflect that Carrier became aware of widespread

frozen coil failures by no later than May or June 2014. (Ex. 16, at 1; Ex. 17; Ex. 2,

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3 An email from an employee of Ingersoll Rand stated, "No one I have talked toabout this chemical would have approved it for such use by just reading the

[Material Safety Datalheet]." (Ex. 15 [emphasis added].)2

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1 at 3.) In July 2014, Carrier issued a bulletin instructing its distributors to segregate

2 inventory and cease selling systems it believed were defective. (Ex. 18.) Even

3 then Carrier recognized that it did not have enough alternative inventory and that

4 some of its distributors would need to sell affected units "if you want to sell any

5 A/C this year," and Carrier was "ok with that." (Ex. 19 [emphasis added].)

Soon, however, Carrier discovered that the defect was a contaminant from

7 the compressor and the vast majority of its inventory was affected. (Ex. 2; Ex. 20.)

8 It had to choose between continuing to sell defective units or sell nothing at all.

9 Carrier chose to sell the defective units, and it did so without disclosing the defect

10 to consumers. Carrier released the hold on inventory. (Ex. 21; Ex. 22.)

11 Representatives of Carrier's affiliated distributor, Carrier Enterprises ("CE"),

12 expressed that they were

6

I4 (Ex. 24.) Kafura,and asked,13

then Carrier's Quality Manager for Residential Products, refused to answer,

stating

14

(Id.)15

Carrier knew that "[a] typical Carrier customer completes research before

making an educated buying decision." (Ex. 25, at 0045212; see also Ex. 26, at

44103.) In fact, a study that Emerson commissioned found that on average air

conditioner purchasers spend three weeks researching their HVAC purchase, talk

to two contractors, and "do significant internet research before deciding." (Ex. 27,

at 92.) Therefore, in order to continue selling inventory. Carrier actively concealed

the defect from consumers.

Carrier engages in widespread direct-to-consumer marketing, including TV,

radio, digital, magazine and newspaper advertising. (Ex. 23, at 117:14-121:10.)

None of these disclosed the Ryconox defect. {Id., at 121:11-21.)

Carrier also provides its distributors and dealers with extensive marketing

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28 4 CE accounts for about half of all Carrier sales. (Ex. 23, at 39:7.)3

Plaintiffs ' Motion for Class Certification

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materials, including “Approved Advertising Claims,” customizable brochures,

social media content, TV and radio ad content, digital ads, and product

information and images. (Id., at 90:9-23, 94:18-96:19.) None of these disclosed

the Ryconox defect either. (Id., at 100:25-101:18.)

Carrier also provides product information on the units themselves, and also

provides manuals and warranty cards with the systems. (Ex. 3, at 199:1-204:11;

Ex. 23, at 121:22-24; Ex. 28; see also Exs. 29, 30, 31, and 32 [examples of data

plates]; Exs. 33, 34, and 35 [examples of product information].) None of these

disclosed the Ryconox defect either.

Finally, every unit that Carrier sells is required by federal law to include a

bright yellow energy rating sticker that may not be removed prior to a consumer

purchase, as well as product labels. (See Ex. 35, at 23; Ex. 34, at 1; 16 C.F.R. §

305.12 [specifying labeling requirements, including statement that “Federal law

prohibits removal of this label before consumer purchase”].) The yellow stickers

reflect the seasonal energy efficiency ratio (SEER), which is determined using a

testing conditions specified by the Department of Energy (“DOE”), including

“DOE B” conditions. (16 C.F.R. § 305.5; see also Ex. 8, at ¶¶ 66, 122.) Carrier

knew from its lab testing that running Ryconox systems at DOE B conditions

resulted in failure rate. (Ex. 1, at ¶ 48; see also Ex. 2, at 10; Ex. 12;

Ex. 36; Ex. 37, at 16.) Nevertheless, Carrier made no disclosures necessary to

make these SEER representations not misleading.

When asked why Carrier did not disclose the defect in any of its consumer-

facing marketing, Carrier’s designee, Pamela Hoppel, testified that the “only

consumer touchpoint for quality information is through the warranty card . . . .”

(Ex. 23, at 121:17-19.) When then asked why Carrier did not disclose the

Ryconox defect with the warranty information, she testified that “[i]t’s the

responsibility of the dealer to communicate that information to the consumer.”

(Id., at 139:18-140:6.)



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Carrier’s attempt to pass-the-buck does not pass muster. Carrier claims that

it disclosed the defect to dealers in service bulletins, but Carrier’s designee,

Kafura, testified that bulletins are “not intended to be communicated . . . outside

of our distributors and our dealers.” (Ex. 3 at 141:5-9.) Kafura admitted that the

purpose of the service bulletins was solely to provide information about how to fix

an issue, not to make product quality disclosures: “[F]rom a dealer perspective,”

the purpose of the bulletin is just that “they wanted to know how to fix the issue

when it does occur.” (Id., at 139:1-7; see also id., at 145:14-22 [confirming that

the bulletins “deal with fixing a failure”].)

No bulletin ever disclosed the failure rate, or the fact that the systems could

suffer decreased performance even in the absence of an acute failure.5 While

Carrier was internally projecting a failure rate, Carrier never

disclosed this in bulletins because, as Kafura testified, “we provided [dealers] the

information needed to remedy the issue in the field.” (Ex. 3, at 121:3-122:19.)

Carrier has also refused to allow public dissemination of the failure rate here.

Moreover, between July 3, 2014 and September 26, 2014, the bulletins

listed only a few models of furnace coils, since that is where the TXV is located,

but no furnace coil was defective. (See Exs. 44, 45, 46, 47.) When Carrier

eventually issued bulletins that referred to condensing units in October 2014,

Carrier marked most of those bulletins “UTC Building & Industrial Systems

Confidential & Proprietary Information – Not for Further Distribution.” (Exs. 48,

49, 50.)6 Carrier’s Director of Quality, Christine Rath stated that the bulletin

5 Moreover, Carrier does not actually send the service bulletins to its dealers. Instead, it posts them on its HVAC Partner’s website and the only notification sent to dealers of new bulletins is through weekly “What’s New” emails, which typically listed dozens of new items on the HVAC Partners website each week. (Ex. 23, at 14:11-24; see, e.g., Exs. 38, 39, 40, 41, 42, 43.) 6 These bulletins, which Carrier and Emerson jointly negotiated, did not disclose the compressor contamination and only stated that “the affected component is




confidential label was added because the bulletin should not be shown to the1

7 (Ex. 53, at 22 consumer.

.) Kafura explained that Carrier also did not want its

4 competitors to use the bulletin to denigrate Carrier and impact its sales. (Ex. 3, at

5 144:14-145:13.) Nor did any bulletin advise dealers to make a disclosure to

6 consumers.8 Tellingly, despite conducting a survey of Class members in this case,

7 Carrier has failed to identify a single class member who was notified of the

8 Ryconox defect prior to purchase.

Beginning around August 8, 2014, Emerson ceased using Ryconox and

10 every compressor manufactured by Emerson with a September 2014 manufacture

1 1 date, and many with August 2014 dates, were deemed "clean." (Exs. 55; 56; 57, at

12 002871.) Carrier could have ceased selling the defective systems then, but it did

defective units in its factory inventory and sitting

14 on distributor shelves. (Exs. 58; 59, at 1.) Carrier knew it

3

9

not. It still had almost13

]15 want

from distributors. (Ex. 60, at 1.) Carrier was not

(Ex. 61, at 1.) Carrier sold its defective

16 to get

willing to

inventory through at least 2015 without disclosure.

C. Carrier

Rather Than Fix The Defect

17

18

Inject A Highly-Acidic Additive,19

20On September 30, 2014,

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22

used by the majority of HVAC [OEMS] and has impacted much of the industry

(See, e.g., Ex. 50.) In an internal document. Carrier noted that it could

because it did

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24

not have

chain director, indicate that Emerson

and

7 Carrier also marked the bulletins "Confidential" under the protective order here.

8 Carrier bulletins sometimes instruct dealers to make disclosures to consumers.(See, e.g., Ex. 54.) Here, there was no such instruction.

(Ex. 51.) The notes of Ripley Ross, Carrier's25the October bulletin to add

26 the (Ex. 52, at 44304).

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I9 (Ex. 63, at 1).3

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16 Zerol Ice had not yet been approved by Carrier at the time

To the contrary, Carrier had drafted a communication advising dealers not to use

additives to fix stuck TXVs, stating Carrier "strongly recommends against the use

of any aftermarket additives," because "these chemicals increase the acidity of the

system" and the "long-term impact on system reliability is unknown." (Ex. 64, at

0006158; see also Ex. 65.) Likewise, Emerson had previously rejected the use of

additives. (Exs. 66, 67, 68.) Even Shrieve, the maker of Zerol Ice, told Carrier that

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Ex. 62.25

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1 its principal use was for "system[s] nearing the end of life to give an added boost

2 to an aged compressor. . . . where a [sic] owner has called the service tech and

3 wants another 3,6,12 months of operation before replacing the unit." (Ex. 69, at

4 3.)

In its September 22, 2014 "Field Status Review,"

, Carrier outlined some of the detriments of Zerol Ice,

including that it "[c]ontains organic acids," and the "[h]igher acidity level attacks

specific metals," including "lead leaching" from "leaded compressor bearings."

5

6

7

8

9 (Ex. 70, at 8; see also Ex. 71, at 0018015

]-)10

However, injecting an additive was far less costly and labor intensive than

replacing a TXV (and much less costly than removing the Ryconox), and Carrier

was getting significant pressure to approve the additive. (Exs. 71, 72, 73, 74.)

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12

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14

In October 2014,15

Carrier approved the additive to treat Ryconox TXV failures. (Ex. 50.)

Neither

Zerol Ice. (Ex. 1 , at H 152-53.) The short-term testing

Carrier showed that Zerol Ice:

16

Carrier ever conducted long-term or "life testing" with17

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(Ex. 1, 1121

149, 154, 156; see also Ex. 76; Ex. 77; Ex. 78.)22

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Plaintiffs' expert report (Ex. 1) explains in greater detail the serious harm25

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11 Copper plating is the dissolving of copper from components and redepositing ofthat copper on ferrous metal surfaces.

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caused by Zerol Ice, but an internal document,

In fact, even though

(Ex. 3, at 209:18-210:4; Ex. 7, at 233:18-234:1; Ex. 82.)

II. THE PROPOSED CLASSES MEET THE RULE 23 CERTIFICATION REQUIREMENTS

Under Rule 23, the Court may certify a class if the class meets the four

prerequisites under Rule 23(a) and complies with at least one of the requirements

under Rule 23(b). The class certification question tests Plaintiffs’ theory of the

case, not whether the merits of their claims or theories are proved. United Steel

Workers v. Conoco-Phillips Co., 593 F.3d 802, 808-9 (9th Cir. 2010).

A. The Classes Are Ascertainable.

“An ascertainable class exists if it can be identified through reference to

objective criteria . . . .” Guido v. L’Oreal, USA, Inc., No. 11-cv-1067-CAS, 2013

U.S. Dist. LEXIS 94031, at *51 (C.D. Cal. July 1, 2013) [hereinafter Guido I].

The class definition need only “describe[] a set of common characteristics

sufficient to allow a prospective plaintiff to identify himself or herself as having a

right to recover based on the description.” Ades v. Omni Hotels Mgmt. Corp., No.

2:13-cv-02468-CAS, 2014 U.S. Dist. LEXIS 129689 (C.D. Cal. Sept. 8, 2014)

(quoting McCrary v. The Elations Co., LLC, No. 13-cv-00242-JGB, 2014 U.S.

Dist. LEXIS 8443, at *25 (C.D. Cal. Jan. 13, 2014)).

12 In addition to causing harm itself, the process of injecting Zerol Ice can result in introduction of more contaminants. (See Ex. 80, at 1; Ex. 70, at 10.)




The Classes here are ascertainable by reference to objective criteria. The

2 compressors containing Ryconox can be identified by reference to Emerson's

3 records.13 Further, Carrier's records reflect the serial number of each compressor

4 used in the condensing units, and the condensing unit serial number is visible on

5 the outside of the unit. (Mathews Decl. 3-4; Ex. 84; see also, e.g., Exs. 29, 30,

6 31, 32.) Further, while ascertainability does not require identification of class

of purchasers register their warranty with

1

members by name, roughly7

Carrier. (Ex. 23, at 54:5-7.)8

9 B. The Classes Meet The Requirements Of Rule 23(a).

1. The Classes Are Sufficiently Numerous.

Rule 23(a)(1) requires a class to be "so numerous that joinder of all

members is impracticable." Generally, classes of more than forty members are

sufficient. See, e.g., Longest v. Green Tree Servicing LLC, 308 F.R.D. 310, 321

(C.D. Cal. 2015). The exact number of class members is not required. Id. Carrier

sold over 1 million affected units total. (Ex. 2, at 17.) Carrier's records also show

the states to which the class units were distributed, including approximately

to Georgia.

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to California;

(See Mathews Decl. 4; see also Ex. 86.)

2. There Are Common Questions Of Fact And Law.

Rule 23(a)(2) requires the existence of "questions of law or fact common to

to Missouri; to Indiana; and17

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22 13 The compressor serial number reflects the date of manufacture. (See Ex. 88

23^^^^^^^^^^^^^^^^^VPlaTntiffs have proposed a narrower class startingwith compressors manufactured beginning December 2013. Emerson used

Ryconox on two motor components: the stator and the rotor. (Ex. 7, at 29:1-3.)

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Ex. 57, at 2872, 2886; see also Ex. 85.27

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the class.” For purposes of Rule 23(a)(2), even a single common question will do.

Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 359 (2011). In Wolin, the Ninth

Circuit held that the plaintiffs had “easily satisfied the commonality requirement”

because all of their claims involved, among others, “the same alleged defect”

found in the manufacturer’s product. Wolin v. Jaguar Land Rover N. Am., LLC,

617 F.3d 1168, 1172 (9th Cir. 2010). Notably, “variation among class members in

their motivation for purchasing the product, the factual circumstances behind their

purchase, or the price that they paid does not defeat the relatively ‘minimal’

showing required to establish commonality.” Ries v. Ariz. Bevs. USA LLC, 287

F.R.D. 523, 537 (N.D. Cal. 2012) (citing Hanlon v. Chrysler Corp., 150 F.3d

1011, 1020 (9th Cir. 1998)).

Commonality is satisfied here. The claims brought for each State Class

involve the same alleged defect, and the existence of that defect will be proven

with class-wide evidence. See, e.g., Wolin, 617 F.3d at 1172; Chamberlan v. Ford

Motor Co., 402 F.3d 952, 962 (9th Cir. 2005); Keegan v. Am. Honda Motor Co.,

284 F.R.D. 504, 524 (C.D. Cal. 2012); see also infra Section II.C.1.

3. Plaintiffs’ Claims Are Typical.

“The purpose of the typicality requirement is to assure that the interest of

the named representative aligns with the interests of the class.” Wolin, 617 F.3d at

1175. The representative plaintiffs’ claims must be “reasonably coextensive” with

absent class members, but they need not be “substantially identical.” Arthur v.

United Indus. Corp., No. 2:17-cv-06983-CAS, 2018 U.S. Dist. LEXIS 83607, at

*15 (C.D. Cal. May 17, 2018) (quoting Hanlon, 150 F.3d at 1020). “Measures of

typicality include whether other members have the same or similar injury, whether

the action is based on conduct which is not unique to the named plaintiffs, and

whether other class members have been injured by the same course of conduct.”

Id. (internal quotation omitted). Moreover, “[t]ypicality can be satisfied despite

different factual circumstances surrounding the manifestation of the defect.”



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Wolin, 617 F.3d at 1175. Each of the Plaintiffs here purchased a new, defective

condensing unit for personal, family, or household use, and was injured by

Carrier’s failure to disclose a material defect. (Ex. 89, at 6; Ex. 90, at 6; Ex. 91, at

6; Ex. 92, at 6.) Thus, typicality is met.

4. Plaintiffs And Counsel Are Adequate Representatives.

“To establish adequacy of representation, the Court must resolve whether

‘the named plaintiffs and their counsel have any conflicts of interest with other

class members’ and whether ‘the named plaintiffs and their counsel will prosecute

the action vigorously on behalf of the class.” Arthur, 2018 U.S. Dist. LEXIS

83607, at *26-27 (quoting Hanlon, 150 F.3d at 1020). Because adequacy is

closely related to typicality, where, as here, the claims of the Class members and

the Class representatives are reasonably co-extensive, there is no conflict. See

Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 156 n.13 (1982). Plaintiffs have

vigorously represented the interests of the class members here, and Plaintiffs’

counsel is qualified and experienced in consumer class actions. (See Mathews

Decl. ¶ 2; Exs. 93, 94 [firm resumes].)

C. The Classes Meet The Requirements Of Rule 23(b). 1. Common Questions of Law And Fact Predominate.

a. California Class

Common questions predominate for Plaintiffs’ omissions claims under

California law, and these will be answered with common proof. “California's

UCL, FAL and CLRA rely on the same objective test, that is, whether ‘members

of the public are likely to be deceived. . . . This objective test renders claims under

the UCL, FAL, and CLRA ideal for class certification . . . . For this reason, district

courts in California routinely certify consumer class actions arising from alleged

violations of the CLRA, FAL, and UCL.” Tait v. BSH Home Appliances Corp.,

289 F.R.D. 466, 480 (C.D. Cal. 2012) (internal quotations and citations omitted);

see also In re Tobacco II Cases, 46 Cal. 4th 298, 327 (Cal. 2009) (“[C]ourts



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repeatedly and consistently . . . hold that relief under the UCL is available without

individualized proof of deception, reliance and injury,” and that materiality is

generally a common question of fact for the jury). Likewise, the same standard

applies to Plaintiffs’ common law fraud claim. Chavez v. Blue Sky Natural Bev.

Co., 268 F.R.D. 365, 376-77 (N.D. Cal. 2010) (citing Tobacco II, 46 Cal. 4th at

326) (“As to the common law fraud claim, the state supreme court applied the

same reasonableness standard for materiality and reliance in support of a fraud

claim . . . .”); Miller v. Fuhu Inc., No. 2:14-cv-06119-CAS, 2015 U.S. Dist.

LEXIS 162564, at *46 (C.D. Cal. Dec. 1, 2015) (noting that “relief . . . for

common law fraud is available without actual proof of reliance”).

Common issues predominate here. First, Plaintiffs will establish by

common proof that Carrier had a duty to disclose the defect because Carrier: (1)

had exclusive knowledge of material facts not known or reasonably accessible to

the plaintiffs; (2) actively concealed a material fact; and/or (3) made partial

representations that were misleading because other material facts had not been

disclosed. See Tait, 289 F.R.D. at 480 (discussing factors under LiMandri v.

Judkins, 52 Cal.App.4th 326, 336 (1997)). Common evidence, which focuses on

Carrier’s knowledge and conduct, will resolve whether Carrier had a duty to

disclose. See, e.g., Guido I, 2013 U.S. Dist. LEXIS 94031, at *26; In re Toyota

Motor Corp. Unintended Acceleration Mktg., Sales Practices, & Prods. Liab.

Litig., 754 F. Supp. 2d 1145, 1189 (C.D. Cal. 2010).

In addition, “all three statutes invoke the ‘reasonable consumer test’ to

determine whether allegedly false or deceptive advertising is unlawful.” Fuhu,

2015 U.S. Dist. LEXIS 162564, at *45 (citing Colgan v. Leatherman Tool Grp.,

135 Cal. App. 4th 663, 682 (2006); Paduano v. Am. Honda Motor Co., Inc., 169

Cal. App. 4th 1453, 1497 (2009)). Under the UCL and FAL, only the named

Plaintiff is required to establish reliance and causation. E.g., Guido I, 2013 U.S.

Dist. LEXIS 94031, at *28-29. Under the CLRA and common law, “causation, on

a class-wide basis, may be established by materiality.” Stearns v. Ticketmaster



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Corp., 655 F.3d 1013, 1022 (9th Cir. 2011) (quoting In re Vioxx Class Cases, 180

Cal. App. 4th 116, 129 (2009)); Falco v. Nissan N. Am., Inc., No. 13-cv-00686-

DDP, 2016 U.S. Dist. LEXIS 46115, at *31 (C.D. Cal. Apr. 5, 2016). Further: Because materiality is governed by an objective “reasonable person” standard under California law, an inquiry that is the same for every class member, a finding that the defendant has failed to disclose information that would have been material to a reasonable person who purchased the defendant’s product gives rise to a rebuttable inference of reliance as to the class.

Edwards v. Ford Motor Co., 603 Fed. App’x 538, 541 (9th Cir. 2015) (citing

Mass. Mut. Life Ins. Co. v. Superior Court, 119 Cal. Rptr. 2d 190, 197 (Cal. Ct.

App. 2002)); see also Guido I, 2013 U.S. Dist. LEXIS 94031, at *28 (“Since

materiality concerns objective features of allegedly deceptive advertising, . . .

whether an omission is material presents a common question of fact suitable for

class litigation.”).

The evidence also establishes a high likelihood that all Class members were

exposed to Carrier’s material omissions. “Because an omission case is premised

on the defendant’s affirmative duty to disclose, the proper focus is what channels

of information customers depend upon and whether the defendant could have

taken action to disseminate information through those channels.” Baranco v. Ford

Motor Co., 294 F. Supp. 3d 950, 967-68 (N.D. Cal. 2018).

Carrier’s own documents admit that “[a] typical Carrier customer completes

research before making an educated buying decision,” and Emerson found that air

conditioner purchasers spend an average of three weeks researching before

deciding, talk to two contractors, and do significant internet research. See supra, at

Section I.B. Carrier engages in substantial direct-to-consumer marketing, and

provides its dealers and distributors with a wide range of marketing material. Id.

Thus, it is highly likely Class members would have been aware of a disclosure if it

had been made. See, e.g., Makaeff v. Trump Univ., LLC, No. 3:10-cv-0940, 2014

U.S. Dist. LEXIS 22392, at *38 (S.D. Cal. Feb. 21, 2014) (“The effect of this



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campaign was to make it highly likely that each member of the putative class was

exposed to the same misrepresentations.”).

Further, all sales of Carrier units occur through Carrier distributors, and

most purchases occur through Carrier dealers.14 Thus, every Class member

necessarily either interacted with a distributor, or with a dealer or contractor, who

in turn interacted with a distributor. See Daniel v. Ford Motor Co., 806 F.3d 1217,

1226 (9th Cir. 2015) (evidence that plaintiffs interacted with sales representatives

was sufficient to sustain a factual finding that Plaintiffs would have been aware of

the disclosure if it had been made); see also Baranco, 294 F. Supp. 3d at 967-68

(“[I]t is highly improbable that [plaintiff] purchased her vehicle from a dealership

without any exchange of information whatsoever.”).15

Finally, at minimum, Class members were exposed to the yellow energy

rating labels that may not be removed prior to a consumer sale, which here

omitted important information necessary to make the label not misleading. See,

e.g., Tait, 289 F.R.D. at 482 (holding that exposure may be satisfied “where

Plaintiffs’ theory is that Defendant’s omissions violated the UCL, FAL, and

CLRA and that partial representations on the product itself are misleading”);

Guido I, 2013 U.S. Dist. LEXIS 94031, at *30 (“[T]he alleged omissions . . .

relate to the packaging of [the product] itself.”); In re NJOY Consumer Class

Action Litig., 120 F. Supp. 3d 1050, 1117 (C.D. Cal. 2015) (certifying omission

claims where product packaging failed to include material information). All of the

14 Even for new construction, “there is always an installing dealer or contractor who ultimately comes to the distributor and makes the purchase [and installs it in a new home].” (Ex. 23, at 30:9-31:11.) 15 This Court has rejected the argument that the possibility a consumer might have found a service bulletin defeats predominance. Falco, 2016 U.S. Dist. LEXIS 46115, at *22 (granting class certification over defendant’s argument that “TSBs and NHTSA complaints were freely available on the internet, so there could be individualized knowledge issues for those consumers exposed to such information”).



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above demonstrates that it is highly likely class members would have been aware

of a disclosure if Carrier had taken action to disseminate one.16

Oddo also seeks to certify his unjust enrichment claim, asserted in the

alternative, on behalf of the California Class. See Astiana v. Hain Celestial Grp.,

Inc., 783 F.3d 753, 762 (9th Cir. 2015). “Under California law, the elements of

unjust enrichment are: (1) the receipt of a benefit; and (2) unjust retention of the

benefit at the expense of another.” In re ConAgra Foods, Inc., 908 F. Supp. 2d

1090, 1113 (C.D. Cal. 2012) (citing Lectrodryer v. SeoulBank, 77 Cal. App. 4th

723, 726 (2000)). Unjust enrichment claims are appropriate for class certification

because the focus will be on proof of Carrier’s conduct and whether it was

unjustly enriched. See, e.g., Beck-Ellman v. Kaz USA, Inc., 283 F.R.D. 558, 568

(S.D. Cal. 2012); Brickman v. Fitbit, Inc., No. 3:15-cv-02077, 2017 U.S. Dist.

LEXIS 191788, at *17 (N.D. Cal. Nov. 20, 2017). Here, Plaintiffs will

demonstrate that Carrier was unjustly enriched by the amount it avoided paying to

properly remediate the contaminated units. Cf. Laster v. T-Mobile United States,

Inc., 407 F. Supp. 2d 1181, 1194 n.5 (S.D. Cal. 2005) (defendant “unjustly

enriched by improperly shifting sales taxes to consumers.”); see also infra II.C.2.

b. Missouri Class

Much like the California claims, common questions predominate regarding

16 In the McVicar case, the defendant submitted a survey purporting to show that a majority of the proposed class never encountered certain marketing materials, and the Court found that the plaintiffs “have not disputed Defendants’ evidence regarding the exposure to representations in any meaningful way.” McVicar v. Goodman Glob., Inc., No. 13-cv-1223-DOC, 2015 U.S. Dist. LEXIS 110432, at *36 (C.D. Cal. Aug. 20, 2015). Here, in stark contrast, Plaintiffs have adduced substantial evidence showing that Class Members would have been aware if disclosures had been made. Moreover, a fundamental flaw with the proposed class in McVicar was that it included any person who owned an air conditioner manufactured since 2006, even if he or she did not buy it new. Id. at 9. The Class here, on the other hand, is limited to purchasers of new units.



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Klinge’s MMPA, fraudulent concealment, and negligent misrepresentation claims.

To prevail on an MMPA claim, Plaintiffs must establish: (1) they purchased a

Carrier system; (2) for personal, family, or household purposes; and (3) suffered

an ascertainable loss of money or property; (4) as a result of an act declared

unlawful. See Hope v. Nissan, 353 S.W.3d 68, 82 (Mo. Ct. App. 2011).

Under the MMPA, omissions of material facts are an unlawful act. MO.

REV. STAT. § 407.020(1). Like California law, materiality is determined by

objective standards that are well-suited for class litigation: a “[m]aterial fact is any

fact which a reasonable consumer would likely consider to be important in making

a purchasing decision.” MO. CODE REGS. ANN. tit. 15, § 60-9.010; see, e.g., Webb

v. Dr. Pepper Snapple Grp., Inc., No. 4:17-cv-00624, 2018 U.S. Dist. LEXIS

71270 (W.D. Mo. Apr. 25, 2018) (quoting Murphy v. Stonewall Kitchen, LLC,

503 S.W.3d 308, 310-11 (Mo. Ct. App. 2016)) (“Whether the conduct alleged is

deceptive under the MMPA is to be analyzed under the ‘reasonable consumer’

standard.”). Thus, materiality is susceptible to objective, class-wide proof.

An MMPA claim based on a material omission requires a showing that

defendant knew of the material facts or upon a reasonable inquiry should have

known. MO. CODE REGS. ANN. tit. 15, 60-9.110; Hope, 353 S.W.3d at 84 (citing

Plubell v. Merck & Co., 289 S.W.3d 707, 713 n.4 (2009)). Here, Plaintiffs will use

class wide proof to establish that Carrier knew of the defect.

Individual questions regarding reliance and causation do not affect claims

under the MMPA. “Reliance or intent that others rely upon” omissions are not

elements of an MMPA claim. MO. CODE REGS. ANN. tit. 15, 60-9.110; Hope, 353

S.W.3d at 83 (quoting Plubell, 289 S.W.3d at 714) (“‘[R]eliance is not an element

of deception or misrepresentation’ under the MMPA’s regulations and Missouri’s

case law.”). Similarly, the “MMPA does not require that an unlawful practice

cause a ‘purchase.’ . . . Therefore, the class members are not individually required

to show what they would or would not have done had the product not been as



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misrepresented . . . .” Plubell, 289 S.W.3d at 714; see also In re Actimmune Mktg.

Litig., No. 08-cv-02376, 2009 U.S. Dist. LEXIS 103408, at *54 (N.D. Cal. Nov.

6, 2009) (“Missouri courts have interpreted the MMPA in the broadest

conceivable manner, absolving plaintiffs of any showing of reliance on a

defendant’s unfair practice.”) The MMPA claim should be certified.

Klinge additionally seeks certification of his fraudulent concealment and

negligent misrepresentation claims. Both claims require a showing that Carrier

negligently or intentionally concealed a material fact that it had a duty to disclose

to class members. Mash v. Brown & Williamson Tobacco Corp., No. 4:03-cv-

0485, 2004 U.S. Dist. LEXIS 28951, at *32 (E.D. Mo. Aug. 26, 2004); Ballard v.

NFL Players Ass’n, 123 F. Supp. 3d 1161, 1170 (E.D. Mo. 2015). These claims

are amenable to class certification because they do not require individual inquiries

into particular consumer’s reliance or decision-making process. Rather, the causal

element of Klinge’s common law claims will be satisfied through common

evidence demonstrating that Carrier possessed material information, had a duty to

disclose it and failed to do so, to the detriment of the Class members. See

Carnahan v. American Family Mut. Ins. Co., 723 S.W.2d 612 (“The test of

materiality is an objective one . . . .”); Mash, 2004 U.S. Dist. LEXIS 28951, at *32

(noting that the reliance requirement focuses on the defendant’s conduct).

c. Georgia Damages Class

Lamm seeks certification of her claims under the GFBPA. A claim under

the GFBPA has “three essential elements: a violation of the act, causation, and

injury.” Regency Nissan v. Taylor, 391 S.E.2d 467, 470 (Ga. Ct. App. 1990).17

17 Shady Grove Orthopedic Ass’n v. Allstate Ins. Co., 559 U.S. 393 (2010), permits class actions under the GFBPA as a matter of federal procedural law. See Andren v. Alere, Inc., No. 16-cv-1255-GPC, 2017 U.S. Dist. LEXIS 209405, at *63-66 (S.D. Cal. Dec. 20, 2017); In re Hydroxycut Mktg. & Sales Practices Litig., 289 F.R.D. 648, 652-54 (S.D. Cal. Jan 27, 2014).



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“The [G]FBPA ‘abandons the two elements of the common law [tort of

misrepresentation] most difficult to prove, scienter (knowledge of the deception)

and intent to deceive.’” Id. In order to demonstrate causation in a

misrepresentation case, “the consumer must show that he exercised due diligence

to ascertain the falsity of the statement.” Tiismann v. Linda Martin Homes Corp.,

637 S.E.2d 14, 18 (Ga. 2006). Here, Plaintiffs will demonstrate causation on a

class-wide basis because, by virtue of Carrier’s omission, the relevant facts were

not discoverable by class members.

d. Indiana Class

Gallagher seeks certification of his IDCSA claim. “The IDCSA is to be

liberally construed to protect the consumer,” Hoopes v. Gulf Stream Coach, Inc.,

No. 1:10-cv-365, 2014 U.S. Dist. LEXIS 137055 (N.D. Ind. Sept. 29, 2014), and

it expressly permits class actions, IND. CODE ANN. § 24-5-0.5-4(b). Courts

examining the IDCSA have concluded that “the IDCSA does not require first-

party reliance by the consumer,” nor is “any direct misrepresentation” required.

AFSCME v. Cephalon, Inc. (In re Actiq Sales & Mktg. Practices Litig.), 790 F.

Supp. 2d 313, 323 (E.D. Pa. 2011). That conclusion is buttressed by the fact that

even Indiana common law claims do not require individualized showings of

reliance. Skalbania v. Simmons, 443 N.E.2d 352, 360 (Ind. Ct. App. 1982) (citing

Vasquez v. Superior Court, 484 P.2d 964 (Cal. 1971)) (Indiana common law fraud

“certification . . . does not focus upon the individual questions of receipt of and

reliance upon representations”).

2. Plaintiffs’ Damages Model Satisfies Comcast.

At the class certification stage, Plaintiffs need only demonstrate a method

of damages that is “consistent” with their liability case. Comcast Corp. v.

Behrend, 569 U.S. 27, 35 (2013) (internal quotations and citation omitted).

Plaintiffs’ damages model neither needs to be perfect nor “precisely correct.”

Vaccarino v. Midland Nat’l Life Ins. Co., No. 2:11-cv-05858-CAS, 2014 U.S.



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Dist. LEXIS 18601, at *36 (C.D. Cal. Feb. 3, 2014); see also Zakaria v. Gerber

Prods. Co., No. 15-cv-00200-JAK, 2016 U.S. Dist. LEXIS 184861, at *40-41

(C.D. Cal. Mar. 23, 2016) (“Such calculations ‘need not be exact.’”). The model

can also be refined, if needed, prior to trial. Chavez v. Blue Sky Natural Beverage

Co., 268 F.R.D. 365, 379 (N.D. Cal. 2010) (“At class certification, plaintiff must

present a likely method for determining class damages, though it is not necessary

to show that his method will work with certainty at this time.”).18

For Plaintiffs’ California statutory claims, restitution is an appropriate form

of relief. Fuhu, 2015 U.S. Dist. LEXIS 162564, at *57-59 (citations omitted); see

also Mari-Mina Pharm., Inc. v. Cerner Corp., No. 5:14-cv-01249-SVW, 2014

U.S. Dist. LEXIS 199885, at *6-7 (C.D. Cal. Sep. 29, 2014) (stating that the

MMPA allows “actual damages, which are defined similarly to restitution… [and]

‘necessary or proper’ equitable relief”) (quoting MO. REV. STAT. § 407.025.1).

Restitution aims to “return the plaintiff to the status quo, [and] the court may

exercise its broad discretion to craft a restitutionary remedy that will.” Makaeff,

309 F.R.D. at 637 (citing Colgan, 38 Cal. Rptr. 3d at 59 (Cal. Ct. App. 2006)).19

Plaintiffs and Class members are also entitled to recover damages under the

CLRA, MMPA, IDCSA, and GFBPA, and for common law fraudulent

concealment and negligent misrepresentation under California and Missouri law.

See, e.g., Fuhu, 2015 U.S. Dist. LEXIS 162564, at *57-60 (“[C]laims for common

18 “Class wide damages calculations under the UCL, FAL, and CLRA are particularly forgiving.” Lambert v. Nutraceutical Corp., 870 F.3d 1170, 1183 (9th Cir. 2017); B.W.I. Custom Kitchen v. Owens-Illinois, Inc., 235 Cal.Rptr. 228, 237 (Cal. Ct. App. 1987) (“[W]e know of no case where [factual determinations of damages] ha[ve] prevented a court from aiding the class to obtain its just restitution.”). 19 The calculation of restitution damages “requires only that some reasonable basis of computation of damages be used, and the damages may be computed even if the result reached is an approximation.” Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979, 989 (9th Cir. 2015).



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law fraud, damages are ordinarily measured by the difference between the value

parted with and the actual value received.”) (quotations omitted); In re GM LLC

Ignition Switch Litig., No. 14-md-2543, 2016 U.S. Dist. LEXIS 92499, at *211

(S.D.N.Y. July 15, 2016) (noting that diminution in value is recoverable under the

MMPA); Frame v. Boatmen’s Bank of Concord Village, 824 S.W.2d 491, 495-96

(Mo. Ct. App. 1992) (damages recoverable for negligent misrepresentation);

Regency Nissan v. Taylor, 391 S.E.2d 467, 649 (Ga. Ct. App. 1990) (actual

damages are recoverable under the GFBPA); Koehlinger v. State Lottery Comm’n,

933 N.E.2d 534, 541 (Ind. Ct. App. 2010) (damages under the IDCSA).

Here, due to Carrier’s omissions, Plaintiffs and the Class members each

paid for a non-defective unit but instead received a unit that contained an

“unapproved” rust inhibitor, which the manufacturer concedes should not have

been present and constitutes a material defect.20 In this context, the difference

between the actual value the class members paid (market price) and the actual

value they received (a defective unit) is equal to the amount that it would have

cost to render the units non-defective at the time of purchase by removing the

Ryconox. In other words, the actual value received by Class members is the value

of a non-defective unit minus the cost of repairing it, measured at the time of

purchase. Plaintiffs’ expert, a professional engineer with over 30 years of HVAC

industry experience, has determined the steps necessary to remove Ryconox at the

time of purchase and has further concluded that the cost of that process can be

determined on a class-wide basis using industry standard cost estimating

methods.21 (Ex. 1, at ¶¶ 101-168). This model is objective, consistent with

20 In an ordinary market, the price paid represents the value of the product as misrepresented. See Saavedra v. Eliu Lilly & Co., No. 2:12-cv-9366-SVW, 2014 U.S. Dist. LEXIS 179088, at *16 (C.D. Cal. Dec. 18, 2014); Falco, 2016 U.S. Dist. LEXIS 46115, at *38. 21 At trial Plaintiffs will also seek, in the alternative, the average amount it would have cost to inject the defective units with Zerol Ice at the time of purchase.




1 Plaintiffs' liability claims, and will be established through common proof. It also

2 falls squarely under established damages models for omission/misrepresentation

3 claims involving product defects.

In Falco, for example, the Court granted class certification of UCL, CLRA,

5 FAL, and common law fraud claims where the plaintiffs presented a damages

6 model seeking the average cost to repair a defective timing chain system. 2016

7 U.S. Dist. LEXIS 46115, at *37. "By receiving restitution in the amount of

8 average repairs, the class . . . would be put in the same position they would have

9 been had the car not been sold with the defective timing chain system — it is the

10 cost necessary to make the vehicles conform to the value Plaintiffs thought they

11 were getting in the price tendered." Id.\ see also Fuhu, 2015 U.S. Dist. LEXIS

12 162564, at *57 (noting that "plaintiff s 'Diminution in Value' approach [based on

13 a cost of repair calculation] may present a legally justifiable method for

14 calculating class-wide damages," but that "at present it is not clear that a viable

15 means of repairing the defect in the Nabi tablets exists").22

Courts that have rejected a cost-of-repair method of calculating damages

17 have done so only when they found that the defective component was not

18 completely valueless. Nguyen v. Nissan N. Am., Inc., No. 16-cv-05591, 2018 U.S.

4

16

Dist. LEXIS 93861, at *15 (N.D. Cal. Apr. 9, 2018) ("[T]he difference between19

value represented and value received only equals the cost to replace the defective20

21

22 Carrier claims that Zerol Ice is an effective preventative for Ryconox-related TXV

debris and causes no damage. (Ex. 87.) While Plaintiffs' expert concludes that

Zerol Ice is harmful, if the jury were to conclude otherwise then the cost of

preventative injections would represent the difference in value between a

defective and non-defective unit. Carrier considered preventative injections, but

ultimately decided not to provide them due to

23

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26 and concerns

over the supply of Zerol Ice, among other reasons. (See Ex. 1, at 1 14.)

22 The CLRA expressly contemplates an action for repair cost damages. Cal. Civ.CODE § 1782 (requiring a demand for repair prior to an action for damages).

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[part] if consumers would have deemed the defective part valueless.”).23 Here, the

defect is the presence of an unapproved rust inhibitor, which even Carrier

acknowledges should never have been used, and which serves no purpose in an air

conditioning system. Ryconox has no value to the consumer.

Nor do Plaintiffs seek a full refund of the price of the units. Cf. Makaeff,

309 F.R.D. at 636-38. They merely seek the cost of removing the Ryconox from

the units as measured at the time of purchase.

While removing Ryconox would require replacing the compressor, this is

necessary because the compressors are hermetically sealed. (Ex. 1, at ¶¶ 134,

171.) Moreover, there is no scrap value to a Ryconox-compressor that must be

deducted—certainly none accessible by ordinary consumers. (Ex. 8, at ¶ 133.)

(Ex. 82; Ex. 83.) Thus, there is no windfall to

class members in compensating the cost of a new compressor. Nguyen, 2018 U.S.

Dist. LEXIS 93861, at *20-21 (“The approach in Falco mitigates concerns that

class members will receive a windfall, because it sets damages equal to the

amount necessary to make a defective part serviceable . . . .”)

Further, the fact that class members have used the defective systems does

not change the analysis. First, damages must be assessed as of the time of

purchase. Chowning v. Kohl’s Dep’t Stores, Inc., No. 15-cv-08673-RGK, 2016

U.S. Dist. LEXIS 37261, at *18 (C.D. Cal. Mar. 15, 2016) (the damages method

need only “account for the benefits or value that a plaintiff received at the time of

purchase”). Second, the cost to remove the Ryconox today is more than it was at

the time of purchase because over time the Ryconox spreads from the condensing

unit, through the linesets, and into the evaporator. (Ex. 1, at ¶ 42.) Third, Ryconox

23 A Rule 23(f) interlocutory appeal of the denial of class certification in Nguyen was granted by Ninth Circuit on July 20, 2018. 2018 U.S. App. LEXIS 20321.



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impacts the performance of the systems, even if it does not result in a frozen coil,

so class members have not received the value to which they are entitled during the

time the systems have run. (Ex. 1, ¶¶ 64-80.)

Nor is it necessary in this case to conduct surveys to determine how

consumers would have valued the presence of Ryconox if it had been disclosed.

While surveys are commonly used in mislabeling cases to gauge subjective

valuation of a mislabeled product attribute, they are unnecessary here where

damages can be measured objectively. Cf. In re NJOY Consumer Class Action

Litig., 120 F. Supp. at 1073 (relying on conjoint analysis to calculate the price

premium of perceived safety benefits of e-cigarettes based on survey respondents’

subjective responses). It would be incongruous to conduct surveys to determine

what value consumers would place on a chemical contaminant that the

manufacturer itself never approved and refused to accept.

3. A Class Action Is The Superior Method Of Adjudication.

A class action is also superior here. First, due to the small size of each

individual’s damages, Class members do not have an interest in individual

litigation. See, e.g., FED. R. CIV. P. 23(b)(3)(A); Culinary/Bartender Trust Fund v.

Las Vegas Sands, Inc., 244 F.3d 1152, 1163 (9th Cir. 2001). Second, there is no

other litigation pending on behalf of the class members asserted here. Third,

Carrier has assented to proceeding in this forum.24 Lastly, there is no “reason to

suspect that this class action will become so unmanageable that it would be more

efficient to litigate thousands of separate . . . lawsuits.” See O’Connor v. Uber

Techs., No. 13-cv-3826, 2015 U.S. Dist. LEXIS 116482, at *130 (N.D. Cal. Sept.

1, 2015). In this case, “classwide litigation of common issues will reduce litigation

24 Carrier recently moved to transfer to this Court a new case filed by Michigan and Massachusetts consumers in the District of Connecticut. Cormier v. Carrier Corp., No. 3:18-cv-00964-VLB (D. Conn. July 31, 2018), ECF Nos. 14, 17. Neither of those consumers is covered by the proposed classes here.



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costs and promote greater efficiency.” See, e.g., Valentino v. Carter-Wallace, Inc.,

97 F.3d 1227, 1234 (9th Cir. 1996). D. Alternatively, A Liability-Only Class Is Appropriate Under Rule

23(c)(4).

In the alternative, Plaintiffs seek certification of a liability-only class under

Rule 24(c)(4). Liability-only classes remain viable after Comcast. Spann v. J.C.

Penney Corp., 307 F.R.D. 508, 532 (C.D. Cal. 2015). Thus, if any individual

damages issues preclude certification of a damages class, Plaintiffs request a

liability-only class. All of the elements necessary to establish liability will be

established through class-wide evidence, and any individual issues of damages, to

the extent they exist, could then be resolved in bifurcated proceedings.25 Leyva v.

Medline Indus., 716 F.3d 510, 513 (9th Cir. 2013) (quotations and citation

omitted) (“[D]amage calculations alone cannot defeat certification.”). E. The Georgia Injunctive Relief Class Meets The Requirements Of

23(b)(2).

Lamm further seeks certification of her GUDTPA claim for injunctive

relief. Specifically, Lamm seeks an order enjoining Carrier from injecting Zerol

Ice in the future, and from denying warranty coverage for failures caused by Zerol

Ice and/or Ryconox. Lamm suffers continuing injury and her unit may fail again

because Ryconox and Zerol Ice remain in her system. See Amin v. Mercedes-Benz

USA, LLC, No. 1:17-cv-1701, 2018 U.S. Dist. LEXIS 40603, at *39 (N.D. Ga.

Mar. 13, 2018) (holding that the possibility of future inadequate repairs were

sufficient for injunctive relief claim under the GUDTPA). The requirements for an

injunctive relief class are met. See Feller v. Transamerica Life Ins. Co., No. 2:16-

cv-01378-CAS, 2017 U.S. Dist. LEXIS 206822, at *27 (C.D. Cal. Dec. 11, 2017).

III. CONCLUSION

Plaintiffs respectfully request that the Court grant their motion.

25 Many Class members, including Oddo and Klinge, have paid out-of-pocket for injections of Zerol Ice or to replace TXVs. (See Exs. 89, 90).



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DATED: August 3, 2018 Respectfully submitted,

By: Timothy N. Mathews Timothy N. Mathews (Pro Hac Vice) Zachary P. Beatty (Pro Hac Vice) CHIMICLES & TIKELLIS LLP One Haverford Centre

361 West Lancaster Avenue Haverford, PA 19041 Telephone: (610) 642-8500 Facsimile: (610) 649-3633 Email: [email protected] [email protected] James C. Shah (SBN 260435) SHEPHERD, FINKELMAN, MILLER & SHAH, LLP 35 East State Street Media, PA 19063 Telephone: (610) 891-9880 Facsimile: (866) 300-7367 Email: [email protected] Kolin C. Tang (SBN 279834) SHEPHERD, FINKELMAN, MILLER & SHAH, LLP 11755 Wilshire Blvd. 15th Floor Los Angeles, CA 90025 Telephone: (323) 510-4060 Facsimile: (866) 300-7367


PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION No. 8:15-cv-01985 CAS (Ex)

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CERTIFICATE OF SERVICE

I certify that on August 3, 2018, a copy of the foregoing Plaintiffs’ Notice

of Motion and Motion for Class Certification; Memorandum in Support Thereof

was served electronically through the court’s electronic filing system upon all

parties appearing on the court’s ECF service list.

/s/ Timothy N. Mathews Timothy N. Mathews

Attorney for Plaintiffs


REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED … · REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL . Case 8:15-cv-01985-CAS-E Document 113-44 Filed 08/03/18 Page

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