American Honda Motor Co., Inc. v. Allen

In the

United States Court of Appeals

For the Seventh Circuit

No. 09-8051

A MERICAN H ONDA M OTOR C OMPANY, INC., et al.,

Petitioners,

v.

R ICHARD A LLEN, et al.,

Respondents.

Petition for Leave to Appeal from the

United States District Court for the

Northern District of Illinois, Eastern Division.

No. 06 CV 5932—Nan R. Nolan, Magistrate Judge.

S UBMITTED D ECEMBER 30, 2009—D ECIDED A PRIL 7, 2010

Before P OSNER, E VANS, and T INDER, Circuit Judges.

P ER C URIAM. American Honda Motor Company and

Honda of America Manufacturing (collectively “Honda”)

seek leave to appeal the district court’s grant of class

certification pursuant to Federal Rule of Civil Procedure

23(f). Specifically, Honda asks us to resolve whether

the district court must conclusively rule on the admissi-

bility of an expert opinion prior to class certification in

2 No. 09-8051

this case because that opinion is essential to the certifica-

tion decision. Since this is the type of question that

Rule 23(f) was designed to address, and because the

district court’s analysis was incomplete, we accept the

appeal. See Allen v. Int’l Truck & Engine Corp., 358 F.3d 469,

470 (7th Cir. 2004) (“The parties’ comprehensive sub-

missions show not only that immediate review would

promote the development of the law . . . but also that

the district court committed an error best handled by a

swift” action.).

Plaintiffs are purchasers of Honda’s Gold Wing GL1800

motorcycle; they allege that the motorcycle has a design

defect that prevents the adequate dampening of “wob-

ble,” that is, side-to-side oscillation of the front steering

assembly about the steering axis. In other words, they

claim that the defect makes the steering assembly shake

excessively and they want Honda to fix the problem.

Plaintiffs moved for class certification pursuant to Rule

23(b)(3). To demonstrate the predominance of common

issues, they relied heavily on a report prepared by

Mark Ezra, a motorcycle engineering expert. Ezra’s

report opined that motorcycles should “by [their] design

and manufacture exhibit[] decay of any steering oscilla-

tions sufficiently and rapidly so that the rider neither

reacts to nor is frightened by such oscillations.” Assuming

that human reaction time to wobble is ½ to ¾ of a second,

Ezra opined that wobble should decay, or dissipate, to

37% of its original amplitude within ¾ of a second to

ensure that riders do not perceive and react to the oscilla-

tions. This standard, which Ezra devised himself and char-

acterizes as “reasonable,” was published in the June 2004

No. 09-8051 3

edition of the Journal of the National Academy of Forensic

Engineers. After testing one used GL1800 serviced to

factory condition, Ezra concluded that it failed to meet his

wobble decay standard. He also concluded that his stan-

dard could be achieved in the GL1800 motorcycle by

replacing the regular ball bearings in the steering as-

sembly with tapered ones.

Honda moved to strike the report pursuant to Daubert

v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993), arguing

that Ezra’s wobble decay standard was unreliable be-

cause it was not supported by empirical testing, was not

developed through a recognized standard-setting proce-

dure, was not generally accepted in the relevant scientific,

technical, or professional community, and was not the

product of independent research. In the alternative,

Honda argued that even if the standard was reliable, Ezra

did not reliably apply it to this case because he only

tested one motorcycle and did not account for variables

that could affect the wobble decay rate.

The district court concluded that it was proper to

decide whether the report was admissible prior to certi-

fication because “most of Plaintiffs’ predominance argu-

ments rest upon the theories advanced by Mr. Ezra.” Allen

v. Am. Honda Motor Co., 264 F.R.D. 412, 425 (N.D. Ill. 2009).

The court then discussed Honda’s Daubert arguments. It

noted that it was concerned that, among other things,

Ezra’s wobble decay standard may not be supported by

empirical evidence, the standard has not been generally

accepted by the engineering community, and Ezra’s test

sample of one may be inadequate to conclude that the

4 No. 09-8051

entire fleet of GL1800s is defective. The court then con-

cluded, “Viewing all of the arguments together, the court

has definite reservations about the reliability of Mr. Ezra’s

wobble decay standard. Nevertheless, the court declines

to exclude the report in its entirety at this early stage of

the proceedings.” Id. at 428. The court denied Honda’s

motion to exclude “without prejudice,” id. at 437, and

granted Plaintiffs’ motion for class certification in part,

certifying two classes of individuals who purchased

GL1800s.

In Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 676 (7th

Cir. 2001), we held that a district court must make what-

ever factual and legal inquiries are necessary to ensure

that requirements for class certification are satisfied

before deciding whether a class should be certified, even

if those considerations overlap the merits of the case. And

in West v. Prudential Sec., Inc., 282 F.3d 935, 938 (7th Cir.

2002), we held that a plaintiff cannot obtain class certifica-

tion just by hiring a competent expert. We emphasized, “A

district judge may not duck hard questions by observing

that each side has some support. . . . Tough questions

must be faced and squarely decided, if necessary by

holding evidentiary hearings and choosing between

competing perspectives.” Id. But we have not yet specifi-

cally addressed whether a district court must resolve a

Daubert challenge prior to ruling on class certification if

the testimony challenged is integral to the plaintiffs’

satisfaction of Rule 23’s requirements.

Plaintiffs argue that we do not need to accept this ap-

peal because district courts in this circuit generally agree

that a Daubert challenge must be resolved prior to class

No. 09-8051 5

certification. This is true, though the courts have relied

on different authority, including other district court

decisions, to reach their conclusion. See, e.g., Reed v.

Advocate Health Care, No. 06 C 3337, 2009 WL 3146999, at

*21 (N.D. Ill. Sept. 28, 2009); In re Ready-Mixed Concrete

Antitrust Litig., 261 F.R.D. 154, 162 (S.D. Ind. 2009); Srail v.

Village of Lisle, 249 F.R.D. 544, 557, 560-61 (N.D. Ill. 2008); cf.

Szabo, 249 F.3d at 675 (accepting an appeal pursuant to

Rule 23(f) in part because the district court relied largely

on decisions by other district judges “[a]t critical junc-

tures”). Further, in many of these cases, including the

case at hand, this issue was heavily contested. Finally,

other appellate courts have not directly addressed whether

challenges to experts must be resolved prior to certifica-

tion. See, e.g., In re Hydrogen Peroxide Antitrust Litig., 552

F.3d 305, 315 n.13 (3d Cir. 2008) (noting that parties

agreed that lower court properly addressed admission of

expert testimony); Dukes v. Wal-Mart, Inc., 509 F.3d 1168,

1174, 1179 (9th Cir. 2007) (withdrawing and superceding

prior opinion, 474 F.3d 1214, which held that full

Daubert examination should not be conducted at class

certification stage), reh’g granted, 556 F.3d 919 (9th Cir.

2009); In re Initial Public Offering Sec. Litig., 471 F.3d 24, 42

(2d Cir. 2006) (disavowing suggestion that expert’s testi-

mony may establish component of class certification

“simply by being not fatally flawed”). Given the uncer-

tainty surrounding the propriety of conducting a Daubert

analysis at the class certification stage, and the fre-

quency with which this issue arises, we find the question

to be one appropriate for resolution under Rule 23(f).

See Blair v. Equifax Check Servs., Inc., 181 F.3d 832, 835 (7th

Cir. 1999).

6 No. 09-8051

We hold that when an expert’s report or testimony is

critical to class certification, as it is here, see Allen, 264

F.R.D. at 420 (“Mr. Ezra’s wobble decay standard . . . forms

the basis of Plaintiffs’ theory of defect.”), a district

court must conclusively rule on any challenge to the

expert’s qualifications or submissions prior to ruling on

a class certification motion. That is, the district court

must perform a full Daubert analysis before certifying

the class if the situation warrants. If the challenge is to

an individual’s qualifications, a court must make that

determination “by comparing the area in which the

witness has superior knowledge, skill, experience, or

education with the subject matter of the witness’s testi-

mony.” Carroll v. Otis Elevator Co., 896 F.2d 210, 212 (7th

Cir. 1990). The court must also resolve any challenge to

the reliability of information provided by an expert if

that information is relevant to establishing any of the

Rule 23 requirements for class certification.

Here, the district court started off on the right foot by

beginning to undertake what might have become a fairly

extensive Daubert analysis. Cf. Naeem v. McKesson Drug

Co., 444 F.3d 593, 608 (7th Cir. 2006) (noting that there is

no need for a court to perform the Daubert analysis in any

particular or mechanical way). It noted its role as “gate-

keeper” and its duty to “determine reliability in light of

the proposed expert’s full range of experience and

training as well as the methodology used to arrive at a

particular conclusion.” Allen, 264 F.R.D. at 423 (quotations

omitted). The district court acknowledged Honda’s

concerns about the reliability of Ezra’s testimony and

largely agreed with them. It expressed reservations

No. 09-8051 7

about Ezra’s failure to “establish the minimal amplitude

required for a rider to detect an oscillation,” id. at 426, his

failure to “verif[y] whether a lesser or greater percentage

of decay would also provide an appropriate margin of

safety,” id. at 427, the fact that his wobble decay standard

was developed “to assist with a lawsuit and was not

conceived through the logical flow of independent re-

search,” id., the questionable peer-review process that his

article underwent, see id., the engineering community’s

lack of acceptance of his proposed standard, id., and his

test sample size of one used GL1800, see id. at 427-28. Yet

the district court ultimately declined, without further

explanation, “to exclude the report in its entirety at this

early stage of the proceedings.” Id. at 428.

“We give the court great latitude in determining not only

how to measure the reliability of the proposed expert

testimony but also whether the testimony is, in fact,

reliable, but the court must provide more than just

conclusory statements of admissibility to show that it

adequately performed the Daubert analysis.” United States

v. Pansier, 576 F.3d 726, 737 (7th Cir. 2009) (citation omit-

ted). The court’s effective statement of admissibility here

is not even conclusory; it leaves open the questions of

what portions of Ezra’s testimony it may have decided

(or will decide) to exclude, whether Ezra reliably applied

the standard to the facts of the case, and, ultimately,

whether Plaintiffs have satisfied Rule 23(b)(3)’s predomi-

nance requirement. As a result, the district court never

actually reached a conclusion about whether Ezra’s expert

report was reliable enough to support Plaintiffs’ class

certification request. Instead it denied Honda’s motion

8 No. 09-8051

to exclude without prejudice and noted that the case was

in an “early stage of the proceedings.” This was not

sufficient. Indeed, it was an abuse of discretion. See Night-

ingale Home Healthcare, Inc. v Anodyne Therapy, LLC, 589

F.3d 881, 883 (7th Cir. 2009) (“It is an abuse of discretion

not to exercise discretion.”); Smith v. Ford Motor Co., 215

F.3d 713, 717 (7th Cir. 2000) (“We review for abuse of

discretion the district court’s choice of factors to include

within [the Daubert] framework as well as its ultimate

conclusions regarding the admissibility of expert testi-

mony.”).

As we have explained, a district court must make

the necessary factual and legal inquiries and decide all

relevant contested issues prior to certification. See West,

282 F.3d at 938; Szabo, 249 F.3d at 676. The district court’s

actions here were more akin to the “provisional” approach

that we rejected in Szabo. 249 F.3d at 676. Ezra’s testimony

is necessary to show that Plaintiffs’ claims are capable of

resolution on a class-wide basis and that the common

defect in the motorcycle predominates over the class

members’ individual issues. Therefore, by failing to clearly

resolve the issue of its admissibility before certifying

the class, the district court erred. Cf. West, 282 F.3d at

938 (“A district judge may not duck hard questions by

observing that each side has some support . . . . Tough

questions must be faced and squarely decided . . . .”(em-

phasis added)).

The district court was reluctant to exclude Ezra’s re-

port “in its entirety at this early stage of the proceedings,”

Allen, 264 F.R.D. at 428, but our examination of the

No. 09-8051 9

record reveals that exclusion is the inescapable result

when the Daubert analysis is carried to its conclusion.

Under the Daubert framework, a district court must

determine “whether a given expert is qualified to testify

in the case in question and whether his testimony is

scientifically reliable.” Gayton v. McCoy, 593 F.3d 610,

616 (7th Cir. 2010). Ezra’s qualifications are not at issue

here; the reliability of his testimony is what Honda con-

tests. But even the most “supremely qualified expert

cannot waltz into the courtroom and render opinions

unless those opinions are based upon some recognized

scientific method and are reliable and relevant under

the test set forth by the Supreme Court in Daubert.” Clark

v. Takata Corp., 192 F.3d 750, 759 n.5 (7th Cir. 1999).

Daubert sets forth a non-exhaustive list of guideposts to

consult in assessing the reliability of expert testimony:

(1) whether the scientific theory can be or has been tested;

(2) whether the theory has been subjected to peer review

and publication; and (3) whether the theory has been

generally accepted in the relevant scientific, technical, or

professional community. Daubert, 509 U.S. at 593-94. In

addition to these guideposts, the 2000 Advisory Commit-

tee’s Notes to Rule 702 suggest other benchmarks for

gauging expert reliability, including whether the testi-

mony relates to “matters growing naturally and directly

out of research they have conducted independent of the

litigation, or whether they have developed their opinions

expressly for purposes of testifying”; “[w]hether the

expert has adequately accounted for obvious alternative

explanations”; and “[w]hether the expert is being as

careful as he would be in his regular professional

10 No. 09-8051

work outside his paid litigation consulting.” Fed. R. Evid.

702 Advisory Committee’s Notes (2000 Amends.); see

also Fuesting v. Zimmer, Inc., 421 F.3d 528, 534-35 (7th Cir.

2005), vacated in part on other grounds, 448 F.3d 936 (7th Cir.

2006).

The “theory” here is Ezra’s wobble decay standard, and,

as the district court thoroughly enumerated, there are

many reasons to harbor “definite reservations” about its

reliability. Allen, 264 F.R.D. at 428. Ezra originally devel-

oped the standard for use in a mid-1980s lawsuit

in which he testified as an expert against Honda and

subsequently published it in a journal article aimed at

forensic engineers who testify as experts on motorcycle

instability, see Mark A.M. Ezra, Forensic Engineering Investi-

gation of Motorcycle Instability Induced Crashes, 21 J. Nat’l

Acad. Forensic Eng’rs 69, 80-84 (2004) (discussing seven

common “attacks by opposing counsel,” including “You

Did What While Testing the Motorcycle?!”, and instructing

future experts to “be ready to defend in simple lay terms

the standard [they have] proposed and relied upon in

evaluating the motorcycle and its reasonableness”). Despite

its publication, there is no indication that Ezra’s wobble

decay standard has been generally accepted by anyone

other than Ezra. See Porter v. Whitehall Labs., Inc., 9 F.3d 607,

613 (7th Cir. 1993) (“A known technique that has gained

only a minimal following may be viewed with some

skepticism.”). Indeed, Ezra’s article merely “suggested” a

standard for wobble decay; it acknowledged that he was

“unaware of any governmental, industry or [Society of

Automotive Engineers] standards determining acceptable

response characteristics for [motorcycles] . . . in . . . wobble

No. 09-8051 11

mode[],” Ezra, supra, at 78, and noted that “it is up to the

investigating forensic engineer to define a reasonable

standard that he may defend in the legal forum before

opposing council [sic] or a jury,” id. at 79.

Even if we were to assume that Ezra’s standard is

generally accepted by mere virtue of its publication in a

peer-reviewed journal, its reliability remains in question.

Ezra has never conducted any rider confidence studies

to determine when motorcycle riders perceive wobble,

or performed any tests to determine the minimal

wobble amplitude at which riders detect oscillation.

See Allen, 264 F.R.D. at 426; see also West, 282 F.3d at 939

(expressing skepticism in a model that “has not been

verified empirically”). His report merely deemed “reason-

able” his proposed standard, relying solely on his own

previous (and similarly unsupported) assessment of the

same for support. The “principles and methodology”

underlying his findings, Winters v. Fru-Con, Inc., 498 F.3d

734, 742 (7th Cir. 2007), then, are questionable at best.

And although we do not consider the validity or accuracy

of the conclusions Ezra reached, see id., we note that the

methodological omissions here render the 37% wobble

decay standard Ezra articulated “somewhat speculative,”

Allen, 264 F.R.D. at 427; see Chapman v. Maytag Corp., 297

F.3d 682, 686-87 (7th Cir. 2002) (noting that courts

must consider “whether the testimony has been sub-

jected to the scientific method, ruling out any subjec-

tive belief or unsupported speculation”).

The methodology underlying the tests Ezra conducted

to determine whether the GL1800 met his standard also

12 No. 09-8051

gives us pause. Ezra tested a single, used 2006 GL1800,

ridden by a single test rider, and extrapolated his con-

clusions to the fleet of GL1800s produced from 2001 to

2008. “Determining the minimum sample size from

which reliable extrapolations can be made to the sampled

population is tricky,” DeKoven v. Plaza Assocs., ___ F.3d __,

Nos. 09-2016, 09-2249, 2010 WL 938025, at *4 (7th Cir.

Mar. 17, 2010), but a sample size of one is rarely, if ever,

sufficient. That is especially true when deposition testi-

mony from putative class members reveals that different

GL1800s handle and manifest the wobble problem dif-

ferently, and when the handling—and wobble—of motor-

cycles is known to vary with the rider and road conditions.

The small sample size also highlights the constraints

litigation placed upon Ezra’s methods and professional

judgment; Ezra was not being as thorough as he might

otherwise be due to Plaintiffs’ reluctance to pay for

more testing. See Smith, 215 F.3d at 719 (“The trial court

must . . . ‘make certain that an expert, whether basing

testimony upon professional studies or personal experi-

ence, employs in the courtroom the same level of intellec-

tual rigor that characterizes the practice of an expert in

the relevant field.’ ”(quoting Kumho Tire Co. v. Carmichael,

526 U.S. 137, 152 (1999))).

“ ‘[S]haky’ expert testimony may be admissible, assailable

by its opponents through cross-examination,” Gayton, 593

F.3d at 616, but the testimony proffered here is not

merely shaky: it is unreliable. And expert testimony that

is not scientifically reliable should not be admitted, even

“at this early stage of the proceedings.” Allen, 264 F.R.D. at

428. Without Ezra’s testimony, Plaintiffs are left with too

No. 09-8051 13

little to satisfy Rule 23(b)(3)’s predominance prong. The

named plaintiffs have presented evidence that their

GL1800s wobble, that 49 declarants’ GL1800s also wobble,

that all GL1800s have the same ball bearing, that over

11,000 aftermarket kits containing tapered ball bearings

and marketed to fix the GL1800 wobble have been sold,

and that some plaintiffs and declarants fixed their wobble

problems by replacing the factory-installed ball bearings

with tapered ones. See Pl. Answer to Petition for Leave

to Appeal at 20. Without Ezra’s testimony, which asserts

that the factory-installed ball bearings are responsible

for an “increased wobble mode decay time” in all GL1800s,

Plaintiffs are not only unable to support their theory

that all GL1800 motorcycles use ball bearings that fail

to adequately dampen wobble, they are also unable

to demonstrate that their wobble claim sufficiently pre-

dominates as to warrant class certification under

Rule 23(b)(3).

We therefore G RANT Honda’s petition for leave to

appeal, V ACATE the district court’s denial of Honda’s

motion to strike and its order certifying a class, and

R EMAND for proceedings consistent with this opinion.

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