Using Promised Out-Of-Court Relief To Defeat Class Actions: The 10th Circuit Reinforces Courts' Discretion To Dismiss, On Prudential Mootness Grounds, Putative Class Suits Seeking Already-Promised Remedies

Previously, we advised of the U.S. Court of Appeals for the 7th Circuit's decision in In re Aqua Dots Products Liability Litigation, 654 F.3d 748 (7th Cir. 2011). (Jim Martin & Colin Wrabley, Reed Smith Class Action Alert 12-017, "Seventh Circuit Holds That Voluntary Product Refund Programs Can Defeat Class Certification on Adequacy Grounds Under Rule 23(a)(4)" (Jan. 23, 2012).) In that case, the 7th Circuit held that the district court properly declined to certify the class because class representatives were not "adequate" where the defendant had implemented a product refund and replacement program providing a comparable remedy to what the putative class might recover in court.

Recently, and echoing some of the 7th Circuit's reasoning in Aqua Dots, the 10th Circuit dismissed a putative class action against Toyota where Toyota's recall of certain automobiles, subject to federal oversight, promised the class representative "exactly the relief sought in her complaint": notice of the defect to all owners and repair of the defect at no cost. Winzler v. Toyota Motor Sales U.S.A., Inc., 681 F.3d 1208 (10th Cir. 2012). The court held that such a "remedial promise," although it "may not be enough to kill a case constitutionally, ...can be enough to bring it to an end all the same" under the little-used doctrine of prudential mootness. Class action litigators should be aware of this decision and its implications for putative class actions across a broad range of cases.

Winzler and Prudential Mootness

In Winzler, Arrienne Mae Winzler, a Toyota car owner, brought a putative class action under state law on behalf of a nationwide class of certain Toyota car owners and lessees, alleging that the cars had defective "Engine Control Modules" (ECMs). She sought "an order requiring Toyota to notify all relevant owners of the defect and then to create and coordinate an equitable fund to pay for repairs." The district court dismissed Winzler's complaint for failure to state a claim. After she filed her appeal, Toyota announced its nationwide recall of the defective cars and, pursuant to federal law, notified owners that it would fix or replace the defective ECMs at no cost. Because Toyota was required by federal law to carry out this promise and give Ms. Winzler the exact relief she requested, Toyota argued on appeal that her case should be dismissed as moot.

The 10th Circuit agreed. It first confirmed courts' "remedial discretion" to deny equitable relief...