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Renee Tietsworth, Suzanne Rebro, Sondra Simpson, and John v. Sears

May 4, 2012

RENEE TIETSWORTH, SUZANNE REBRO, SONDRA SIMPSON, AND JOHN CAREY, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
SEARS, ROEBUCK AND CO., AND WHIRLPOOL CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Jeremy Fogel United States District Judge

**E-Filed 5/4/2012**

ORDER*fn1 GRANTING IN PART DEFENDANTS' MOTION TO EXCLUDE EXPERT TESTIMONY; DENYING PLAINTIFFS' MOTION TO EXCLUDE EXPERT TESTIMONY; AND DENYING WITHOUT PREJUDICE PLAINTIFFS' MOTION FOR CLASS CERTIFICATION [re: dkt. entries 126, 129, 137]

Plaintiffs Renee Tietsworth, Suzanne Rebro, Sondra Simpson, and John Carey ("Plaintiffs") 21 move for class certification pursuant to Fed. R. Civ. P. 23. Defendants Sears, Roebuck and Co. 22 ("Sears") and Whirlpool Corporation ("Whirlpool") (collectively, "Defendants") oppose the motion. 23

In connection with the motion, Defendants move to exclude certain testimony and opinions of 24 Plaintiffs' expert, Dr. Raymond Pietila ("Pietila"), and Plaintiffs move to exclude certain testimony 25 and opinions of Defendants' expert, Noshirwan K. Medora ("Medora"). The Court has considered 26 27 28 the briefing,*fn2 the admissible evidence in the record, and the oral argument presented at the hearing 2 on March 19, 2012. For the reasons discussed below, Defendants' motion to exclude will be 3 granted in part, Plaintiffs' motion to exclude will be denied, and Plaintiffs' motion for class 4 certification will be denied without prejudice. 5

The facts giving rise to this action are well-known to the parties and to the Court and need 7 not be set forth in full here. On April 30, 2010, Plaintiffs filed the operative third amended 8 complaint ("TAC"), asserting a putative class action on behalf of purchasers and owners of top-9 loading Kenmore Elite Oasis automatic washing machines ("Machines"). According to Plaintiffs, 10 the Machines were manufactured with a defective electronic control board ("ECB") that has caused an unacceptably high percentage of the Machines to malfunction. Plaintiffs assert that these malfunctions occur in three ways: (1) the ECB's defective software and defective pressure sensor 13 together trigger a "F1" error; (2) the ECB's defective software causes a "F51" error; and (3) the 14 ECB's defective software causes a "sudden instability event" that can result in an explosion when 15 certain types of fabric are in the wash load. 16

17 which marketed and distributed the Machines, asserting claims under California unfair competition 18 and consumer protection laws, California common law, and the federal Magnuson-Moss Act 19 Plaintiffs limited the proposed classes to consumers who actually have experienced the alleged 21 problems with their Machines. See TAC ¶ 86. On July 29, 2011, the Court granted in part 22

Plaintiffs' motion to amend their class definitions to include all purchasers and owners of Machines 23 regardless of whether the alleged defect has manifested; the expanded definitions apply to Plaintiffs' 24 claims for fraudulent concealment and nondisclosure, breach of express warranty, violation of the 25 MMWA, and violation of the CLRA, but not to Plaintiff's claim for violation of the UCL. The 26

ORDER GRANTING IN PART DEFENDANTS' MOTION TO EXCLUDE ETC.

I. BACKGROUND

Plaintiffs assert claims against Whirlpool, which manufactured the Machines, and Sears, ("MMWA"), 15 U.S.C. § 2301 et seq. In compliance with the Court's order of March 31, 2010, Court did not require Plaintiffs to file an amended pleading, nor did it require Defendants to file 2 amended answers. 3

The California Class: All California residents and entities who purchased or own a toploading Kenmore Elite Oasis automatic washing machine from January 1, 2005 to

the present, with model numbers 110.27032600, 110.27032601, 110.27032602, 110.27032603, 110.27042600, 110.27042601, 110.27042602, 110.27042603,

110.27052600, 110.27052601, 110.27052602, 110.27062600, 110.27062601, 110.27062602, 110.27062603, 110.27072600, 110.27072601, 110.27072602,

110.27072603, 110.27082601, 110.27082602, 110.27082603, 110.27082604, 110.27082605, 110.27086601, 110.27086602, 110.27086603, 110.27086604,

110.27086605, 110.27087601, 110.27087602, 110.27087603, 110.27087604, 110.27087605, 110.27092600, 110.27092601, 110.27092602, 110.27092603,

110.27092604, 110.27152600, 110.27152601, 110.27152602, 110.28032700, 110.28032701, 110.28042700, or 110.28042701.

The California Sub-Class: All California Class members who are "consumers" as defined by California Civil Code § 1761(d).

The Nationwide Class: All United States residents and entities who purchased or own a toploading Kenmore Elite Oasis automatic washing machine from January 1, 2005 to the present, with model numbers 110.27032600, 110.27032601, 110.27032602, 110.27032603, 110.27042600, 110.27042601, 110.27042602, 110.27042603,

110.27052600, 110.27052601, 110.27052602, 110.27062600, 110.27062601, 110.27062602, 110.27062603, 110.27072600, 110.27072601, 110.27072602,

110.27072603, 110.27082601, 110.27082602, 110.27082603, 110.27082604, 110.27082605, 110.27086601, 110.27086602, 110.27086603, 110.27086604,

110.27086605, 110.27087601, 110.27087602, 110.27087603, 110.27087604, 110.27087605, 110.27092600, 110.27092601, 110.27092602, 110.27092603,

110.27092604, 110.27152600, 110.27152601, 110.27152602, 110.28032700, 110.28032701, 110.28042700, or 110.28042701.

Plaintiffs now move for certification of the following classes and sub-class: 21 address the parties' cross-motions to exclude expert testimony and opinion. Defendants move to 22 exclude certain testimony and opinions of Plaintiffs' expert, Pietila, and Plaintiffs move to exclude 23 certain testimony and opinions of Defendants' expert, Medora. The experts' opinions may be 24 summarized as follows. 25

Pietila's Initial Report: The initial report of Plaintiffs' engineering expert, Pietila, was 26 disclosed on May 16, 2011. In that report, Pietila opines that the Machines suffer from "a uniform 27 design flaw -- a defectively programmed Electronic Control Board ("ECB") -- and that "[t]he 28 engineering solutions for this design flaw are likewise uniform across all subject Machines -- a

II. CROSS-MOTIONS TO EXCLUDE EXPERT TESTIMONY

Before addressing the merits of Plaintiffs' motion for class certification, the Court must redesigned ECB that addresses the F-1 and F-51 error codes." Pietila Init. Rpt. at 4. The report 2 addresses only the F1 and F51 errors; it does not address the third type of malfunction allegedly 3 caused by the ECB, that is, the error that leads to the Machine exploding.

5 sophisticated washing algorithm. In order to determine water level with more precision, a pressure 6 sensor converts information regarding water level to digital data that is used by the ECB. Id. at 11. 7

With respect to the F1 error code, Pietila states that the ECB's software includes a

However, as originally designed, the test limits used by the ECB software were not compatible with 8 the range of possible data received from the pressure sensor. Id. Thus sensor outputs that actually 9 were acceptable were causing the ECB to generate a false F1 error code, which in turn caused 10 operational failure. Id. Pietila opined that "[r]esolution of this problem required a software change in the ECB." Id.

With respect to the F51 error code, Pietila explains that "one of the major defects in the 13 overall Oasis system design was that the ECB did not reliably control motor speed." Id. at 12.

"Losing ability to track and control the motor led to problems associated with excessive spin rate 15 and the inability to implement the 'out of balance' algorithm." Id. This resulted in a F51 error code 16 and operational failure. Id. Whirlpool addressed this problem by redesigning ECB software so that 17 motor rotational status could be determined more reliably. Id. 19 failure rate," citing a service incident rate ("SIR") of 35.51% for the second quarter of 2006, and a 20 SIR of 31.17% for 2006 as a whole. Id. at 4-5. The SIR for the first quarter of 2008 had been 21 reduced to 9.87%. Id. at 5. Pietila opines that "[t]he remedy selected to resolve the underlying 22 problem was installation of a redesigned ECB." Id. at 5.

24 challenges Pietila's conclusions. Medora describes the F1 and F51 error codes slightly differently 25 than does Pietila. Medora states that "[t]he F1 error code indicates control issues and generally 26 indicates that the ECB has detected an out-of-range pressure signal and can be due to several 27 causes." Medora Reb. Rpt. at 5. He also states that "[t]he F51 error code indicates that the ECB has 28 detected an error in the pattern of signals received from the RPS [rotor position sensor] and can have Pietila concludes that "the defective ECB resulted in a product that had an unacceptably high Medora's Rebuttal Report: the rebuttal report of Defendants' engineering expert, Medora, several causes." Id. Medora points out that although Pietila claims that the allegedly defective ECB 2 caused an unacceptably high failure rate, "Pietila's report does not suggest that any statistical 3 analysis was performed to determine the failure rates due to F1 and F51 error codes." Id. at 8. 4

Medora states that the 35.51% rate that Pietila cites includes other brands of Machines that are not 5 part of the present lawsuit, and that it is not restricted to F1 or F51 errors or even to ECB-related 6 errors. Id. at 23. He provides an alternative statistical calculation, beginning with the data that the 7 total population of the Machines is 756,339 units and that complaint or service repair records are 8 available for a population of 411,385 units ("repair population"). Id. at 9-10. He states that .5% or 9 less of the repair population reported an F1 error code within the first year, and 3.2% or less of the 10 repair population reported an F51 error code within the first year. Id. He also concludes that Machines utilizing later versions of the ECB have substantially lower rates of F1 and F51 error codes than do Machines utilizing earlier versions. Id. at 13. He attributes this decrease in error 13 codes to significant changes in software and hardware, not limited to the ECB, that were made at 14 different times from 2006 to 2008. Id. at 15. For example, he states that the design change that 15 resulted in the largest reduction of SIRs was the installation of software that improved bandwidth 16 from eighteen loops per second to 900 loops per second. Id. at 21. 17

service plans ("ESPs"). He believes that individuals who had pre-paid Sears to address problems 19 with the Machines could be expected to report errors because they would have no disincentive to 20 seek repair. Id. at 23. He states that there are significant differences in the rates of F1 and F51 error 21 codes in Machines manufactured at different times during the putative class period. Id. at 23, 37. 22

Washers sold in 2007 shower far lower rates than Washers sold in 2006." Id. at 27, 37. Medora 24 concludes that "[t]he patterns and magnitude of repairs vary so dramatically between different 25 periods of washer production that, to a reasonable degree of engineering certainty, there is a real and 26 significant difference in the performances of these washers that correspond to real and significant 27 differences in software and hardware designs between washers manufactured at different times." Id. 28

Medora examines in detail error rates for Machines that were purchased with Sears extended "Washers sold in 2008 and 2009 show far lower rates than Washers sold in 2006 and 2007, and 23 He states that "Washers sold in 2006 and 2007 show rates of F1 error codes that peak between about 1 1/2 and 2 1/2 years , and then the rates drop." Id. at 37. He also states that "[t]he Washers sold in 2006 and 2007 show rates of F51 error codes that peak in the first months of service, but then the 3 rates dramatically decrease, strongly suggesting that product owners will experience F51 error 4 codes, if at all, in the first 12 months of life." Id. at 27-28. He concludes that "[s]ince the Washers 5 have not been manufactured since 2009, the vast majority of product owners whose machines might 6 experience" F1 and F51 error codes have already done so. Id. at 28, 38. 7 Clark-Rebro, and the second an exemplar provided by Defendants. See id. at 43-47. He states that 9 diagnostic testing did not reveal any F1 or F51 error codes with either Machine. Id. at 51. 10

most of Medora's conclusions. As noted above, Medora concluded that based upon a total Machine population of 756,339 units and a repair population of 411,385 units, the rate of F1 error codes was 13 Finally, Medora describes inspections of two Machines, the first owned by Plaintiff Suzanne Pietila's Sur-Rebuttal Report: Pietila has prepared a lengthy sur-rebuttal report disputing .5% or less in the first year, and the rate of F51 error codes was 3.2% or less in the first year. Pietila 14 opines that "Dr. Medora dilutes his statistical figures by improperly including later versions of the 15 Phase II software, Whirlpool had corrected the software defects contained in earlier ECBs)." Pietila 17 Sur-Rebuttal Rpt. at 16. Pietila also asserts that Medora's analysis is flawed because Medora 18 determined error rates by searching only two fields -- technician comments and recorded customer 19 complaints -- and only for derivations of "F1" and "F51." Id. at 17. Pietila states that this method is 20 under-inclusive because it does not encompass Machine failures that resulting from a defective ECB 21 but lacking a specific reference to an error code. Id. He points out that customers may not have 22 communicated the nature of the error to the call center operator, or the call center operator may not 23 have noted the particular F error. Id. Pietila states that "[t]o get an accurate picture of F-1 and F-51 24 hits in the relevant class population, the keyword search term list was expanded to include terms and 25 jargon used by service technicians to describe the ECB." Id. at 18. He claims that "when the 26 broader list of search terms is used to search the data, many more ECB failures are captured." Id. 27

When Pietila, with the assistance of a database analyst, conducted his own analysis of the data, he 28 found a failure rate of 21.55% due to defective ECBs. Id. at 12-13. He surmises that "the failure

Oasis washing machines that do not contain a defective ECB (by 2008, at the introduction of the rate in the total customer population is undoubtedly higher because the data provided is limited to 2 those customers who contacted Sears for requests for service." Id. at 15. Citing a book on 3 consumer behavior authored in the 1970s,*fn3 Pietila asserts that reported failures are only the "tip of 4 the iceberg," that is, only a fraction of the actual failures. Id. 5

6 defect associated with the ECB, including "six relevant Service Flashes between August 1, 2007 and 7

Pietila also points to other evidence that he believes supports his conclusion of a common April 13, 2009" and "a letter to Sears customers . . . [that] advised them that they may be eligible for 8 an ECB 'upgrade,'" id. at 4, as well as deposition testimony of Whirlpool engineer Eric Farrington 9 stating that the SIR at the end of 2006 was 28% and that F51 was a large contributor to that figure, 10 id. at 21.

In response to Medora's assertion that Pietila inappropriately included other brands in his analysis, Pietila represents that "[t]he basic items that control motor speed and water level (where F-13 and F-51 error codes develop) are the same for all brands that use the Oasis platform," and thus 14 that any inclusion of other brands was appropriate. Id. at 22. Moreover, Pietila does not concede 15 that other brands were included in his analysis, stating that "the only other Oasis platform-based 16 product during 2006 was the Whirlpool Cabrio that was released during the 18th week and there is 17 no indication that the 35.51% SIR included the Cabrio or any other models than those in Plaintiffs' 18 class." Id. 19

20 explaining why he believes that Medora's analysis is flawed. Id. at 22-30. He concludes that 21 portion of his sur-rebuttal report with the following: 22

because he is overlooking at least two points: a) there have been improvements made by redesigning and installing different versions of software via new versions of ECB (S14 to the Whirlpool models plus S15, S17 to both Whirlpool and Kenmore in 2006, and S18, S19 in 2007), and b) despite the new ECB's [sic] with newer and improved versions of software there still exists a class of Machines that have the older flawed ECB's [sic] that continue to have unacceptably high failure rates (a class of Machines with a common problem -- defective ECBs).

Pietila goes through Medora's remaining criticisms of his initial report point by point, Dr. Medora's conclusion that there is no basis to claim that the machines are uniformly flawed because the Machines appear to be non-homogeneous is incorrect

Id. at 30. 28

Pietila opines that "there is a relatively large set of customers who now own a machine without the 2 later ECB who have a Machine that is degenerating. At some point, there is a high probability that 3 their Machine will 'incubate' and malfunction and require a repair." Id. at 29.

Medora's Sur-Sur-Rebuttal Report*fn4 Medora's sur-sur-rebuttal report was prepared to address purported new opinions and analysis contained in Pietila's sur-rebuttal report. Medora 6 points out that although the proposed class includes persons who have purchased Machines through 7 the present, Pietila concedes that ECBs programmed with the S19 or later versions of software are 8 not defective; in fact, Pietila criticizes Medora for including in his analysis ECBs manufactured in 2008 and 2009, which contain updated ECBs. Medora Sur-Sur-Rebuttal Rpt. at 3-4. Medora 10 understands Pietila to be saying that only the earlier Machines share the common defect, that is, the defective ECB. Id. at 5. Medora opines that there are material differences in the rates of reported F1 and F51 error codes even among the Machines manufactured in 2006 and 2007. Id. at 6. In fact, 13

Medora asserts that based upon Pietila's data, "[t]his difference in the failure rates between the 14 models is so extreme that it cannot be a coincidence, and indicates that there are true and significant 15 differences between these different models and therefore that his revised Proposed Class is not 16 homogenous." Id. at 10. 17

18 detail further testing he conducted on the Machines. Medora also supplements his findings with 19 respect to Plaintiff Clark-Rebro's Machine. After Medora conducted the initial inspection of that 20

Machine, Plaintiff Clark-Rebro discovered her original ECB in her home. When that ECB was 21 tested, it appeared that it had experienced F51 error codes and other error codes. Id. at 51. 22

23 and those errors were the focus of defense counsel's questions during Pietila's deposition. 24

However, when Pietila was asked to identify the defects in the Machines, he stated that "if a 25 customer decides that he or she wants to wash a raincoat and a waterproof tablecloth and the 26 machine explodes, that's a defect." Pietila Dep. 24:6-9. Defense counsel inquired whether Pietila 27

The Court nonetheless has considered the report to assure a complete record and a thorough analysis of the issues presented by Plaintiffs' motion, Medora criticizes numerous other aspects of Pietila's sur-rebuttal report and describes in Pietila's Deposition Testimony: Pietila's written reports are limited to the F1 and F51 errors, had stated this ...


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