                                       SYLLABUS

This syllabus is not part of the Court’s opinion. It has been prepared by the Office of the
Clerk for the convenience of the reader. It has been neither reviewed nor approved by the
Court. In the interest of brevity, portions of an opinion may not have been summarized.

            Regina Little v. Kia Motors America, Inc. (A-24-18) (081691)

Argued October 8, 2019 – Decided June 25, 2020

PATTERSON, J., writing for the Court.

       In this class action, plaintiff Regina Little asserted claims on her own behalf
and on behalf of other New Jersey owners and lessees of 1997, 1998, 1999, and 2000
Kia Sephia vehicles distributed by defendant Kia Motors America, Inc., alleging that
those vehicles had a defective brake system. The central question in this appeal is
whether the trial court properly permitted plaintiff’s theory of damages based on the
cost of brake repairs to be asserted classwide, supported only by aggregate proofs.

       Plaintiff filed this action against defendant in June 2001, asserting breach of
warranty and statutory claims on her own behalf and on behalf of the putative class.
In 2006, the class represented by plaintiff was defined as “[a]ll residents of the State
of New Jersey who purchased or leased a model year 1995-2000 Kia Sephia within
the six year period preceding the filing of the Complaint,” subject to certain
enumerated exclusions. The matter was tried before a jury in a four-week trial.

       Plaintiff asserted two distinct theories of damages. First, she alleged that the
defective brakes hastened each Kia Sephia’s depreciation, diminishing the vehicle’s
value, and that all class members had thus overpaid for their vehicles. Second,
plaintiff asserted that the class members incurred out-of-pocket costs due to the
brake defect because the cars required more frequent brake repairs than they would
have required absent the defect.

        Plaintiff premised the latter claim not on individualized proof of class
members’ repair costs, but on an estimate by her expert, Raymond Scott King, that
an average Kia Sephia owner would pay $1250 for brake repairs over the vehicle’s
life as a result of the defect alleged. On cross-examination, King made a number of
concessions, including that he did not have any data on what Kia Sephia owners
actually paid for relevant repairs.

      The jury determined that defendant had breached its express and implied
warranties and that the class had sustained damages. The jury found that the class
members had suffered $0 in damages due to diminution in value but that each class
                                            1
member had sustained $750 in damages “[f]or repair expenses reasonably incurred
as a result of the defendant’s breach of warranty.”

       In post-verdict proceedings, defendant moved for a new trial and for an order
decertifying the class on the issue of damages. The court left the jury’s liability
verdict undisturbed but granted in part defendant’s motion for a new trial, limited to
the issue of damages. The court concluded that it had erred when it submitted the
question of out-of-pocket repair costs to the jury and instructed the jury to consider
plaintiff’s second damages theory based on classwide proofs. Instead, the court
determined that it should have required individualized proof of damages for the class
members’ brake repairs. The trial court therefore granted defendant’s motion to
decertify the class as to the quantum of damages each individual owner suffered.

       A court-appointed Special Master conducted a claims process, evaluated the
class members’ individual claims, and recommended to the trial court that it award
damages in the amount of $46,197.03 for the cost of repairs. The trial court
accepted that recommendation, and, in 2015, final judgment was entered in
plaintiff’s favor in that amount plus attorneys’ fees and costs.

        The parties cross-appealed. The Appellate Division reversed the trial court’s
post-trial determinations, reinstated the jury’s award for out-of-pocket repair costs
based on plaintiff’s aggregate proofs, and remanded for an award of attorneys’ fees.
455 N.J. Super. 411, 416-36 (App. Div. 2018). The appellate court held that,
notwithstanding the jury’s rejection of plaintiff’s diminution-in-value theory, the
trial court should have ordered a new trial on both theories of damages, which it
found were not “fairly separable from each another.” See id. at 426.

      The Court granted defendant’s petition for certification, “limited to the issue
of damages.” 236 N.J. 113 (2018).

HELD: Although aggregate proof of damages can be appropriate in some settings,
the Court considers such proof improper as presented in this case. The trial court
erred when it initially allowed plaintiff to prove class-members’ out-of-pocket costs
for brake repairs based on an estimate untethered to the experience of plaintiff’s
class. The trial court properly ordered individualized proof of damages on
plaintiff’s brake-repair claim based on the actual costs incurred by the class
members. Thus, the trial court’s grant of defendant’s motions for a new trial and for
partial decertification of the class were a proper exercise of its discretion.

1. A class action does not dispense with traditional burdens of proof in the name of
efficiency; to the contrary, it leaves the parties’ legal rights and duties intact and the
rules of decision unchanged. Before admitting aggregate proof of damages in a clas s
action, a court must undertake a careful inquiry to ensure that the proposed evidence
                                            2
does not deprive the defendant of a meaningful opportunity to contest the plaintiff’s
claims. In Muise v. GPU, Inc., 371 N.J. Super. 13 (App. Div. 2004), the Appellate
Division undertook precisely such an inquiry and set forth principles regarding
aggregate proofs of damages, which the Court now adopts. (pp. 25-30)

2. To decide whether to permit classwide proof of damages, a court must carefully
consider (1) the underlying cause of action for which the class seeks recovery; (2)
the measure of damages that the law allows if there is a finding of liability for that
claim; and (3) the methodology by which the plaintiff seeks to prove damages on an
aggregate basis. If the plaintiff cannot establish a basis for a presumption that all
members of the class have sustained damage, aggregate proof of damages raises the
specter that an individual with no viable claim will recover a windfall. In such
settings, the court should require individualized proof of damage. Even if the
plaintiff can show that all class members have sustained damage, moreover,
aggregate proof of damages must be based on a reliable mathematical formula in
order to be admissible. (pp. 30-31)

3. The Court rejects any attempt to redefine the break-repair claim as an alternative
measure of the diminution-in-value claim that does not require individualized proof.
The Court reviews the actual claim that plaintiff presented and the court submitted
to the jury -- a claim for the class members’ out-of-pocket expenditures for brake
repairs, presented through the testimony of her expert. The trial court properly
recognized that plaintiff could pursue damages based on class members’ out-of-
pocket damages for costs of repair as a remedy for breach of warranty, distinct from
her diminution in value claim. The Court therefore applies the principles set forth in
Muise and other case law to the out-of-pocket repair cost claim that plaintiff
presented at trial. (pp. 31-34)

4. Plaintiff presented no basis for a presumption -- much less for a conclusion -- that
all members of the class suffered damages for out-of-pocket brake repairs
necessitated by the Kia Sephia’s brake defect. The uncertainty about class
members’ damages claims derived from the expansive definition of plaintiff’s class,
which included an undetermined number of members who stood to gain a windfall
by virtue of the jury’s award of $750 per class member for brake repairs. Even if
plaintiff could demonstrate that all members of the class sustained an out-of-pocket
loss, plaintiff’s expert had no basis to develop a reliable mathematical formula for
estimating the average out-of-pocket costs incurred by members of that class, and he
did not present such a formula. This case is not a setting in which class members’
claims for damages could fairly be premised on aggregate proofs. The trial court
properly granted defendant’s motion for a new trial limited to that aspect of
plaintiff’s damages claim. (pp. 34-39)



                                          3
5. The trial court also properly reassessed the question of predominance under Rule
4:32-1(b)(3) in holding that for purposes of the new trial on class members’ out-of-
pocket costs, common questions no longer predominated over individualized
inquiries as to the class members’ damages. The trial court conducted a careful
assessment of the common and individual questions. It concluded that the class’s
damage claims could not be resolved in a common proceeding. The court found no
single factual pattern on the limited question of damages that remained. The trial
court’s determination was firmly grounded in the trial evidence, which demonstrated
the disparate experiences of individual class members. The trial court’s
decertification order was a correct application of the predominance standard and a
proper exercise of the court’s discretion in the management of this case. (pp. 39-43)

6. Finally, the Court reviews the adoption of the Report and Recommendations of
the Special Master by the judge assigned to handle post-trial proceedings. The
Court notes that an individualized claims process on damages may be an equitable
and practical method of resolving damages claims. The trial judge and post-trial
judge acted within their discretion when they authorized such a procedure in this
action. Moreover, the Special Master conducted the claims process with precision
and care. The Special Master reviewed each claim, made individualized
determinations, and thoughtfully considered and resolved the many objections made
by both parties. The Court finds that the claims process in this case was fair and
exemplary. The Special Master’s Report and Recommendations were supported by
substantial credible evidence in the record, and the court properly adopted the
Special Master’s findings. (pp. 43-47)

      REVERSED. The final judgment entered by the trial court is REINSTATED.

CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, FERNANDEZ-
VINA, and TIMPONE join in JUSTICE PATTERSON’s opinion. JUSTICE
SOLOMON did not participate.




                                          4
       SUPREME COURT OF NEW JERSEY
             A-24 September Term 2018
                       081691

              Regina Little, on behalf of
                herself and all others
                 similarly situated,

                Plaintiff-Respondent,

                          v.

              Kia Motors America, Inc.,

                Defendant-Appellant.

       On certification to the Superior Court,
   Appellate Division, whose opinion is reported at
       455 N.J. Super. 411 (App. Div. 2018).

       Argued                      Decided
   October 8, 2019               June 25, 2020

Roberto A. Rivera-Soto argued the cause for appellant
(Ballard Spahr and Patterson Belknap Webb & Tyler,
attorneys; Roberto A. Rivera-Soto, Neal D. Walters,
Casey G. Watkins, and Peter C. Harvey, of counsel and
on the briefs).

Michael D. Donovan (Donovan Litigation Group) of the
Pennsylvania bar, admitted pro hac vice, argued the cause
for respondent (Donovan Litigation Group; Schnader
Harrison Segal & Lewis; Feldman, Shepherd,
Wohlgelertner, Tanner, Weinstock & Dodig; and Francis
& Mailman, attorneys; Lisa J. Rodriguez, James A.
Francis, Michael D. Donovan, and Alan M. Feldman
(Feldman, Shepherd, Wohlgelertner, Tanner, Weinstock
& Dodig) of the Pennsylvania bar, admitted pro hac vice,
on the briefs).
                          1
          JUSTICE PATTERSON delivered the opinion of the Court.


      In this class action, plaintiff Regina Little asserted breach of warranty

and other claims on her own behalf and on behalf of other New Jersey owners

and lessees of 1997, 1998, 1999, and 2000 Kia Sephia vehicles distributed by

defendant Kia Motors America, Inc. Plaintiff alleged that Kia Sephias in those

model years had a defective brake system.

      At trial, plaintiff presented two distinct claims for damages. First, she

alleged that the class members suffered damages because the defective brakes

hastened each Kia Sephia’s depreciation, diminishing the vehicle’s value, and

that all class members had thus overpaid for their vehicles. Second, plaintiff

asserted that the class members incurred out-of-pocket costs due to the brake

defect because the cars required more frequent brake repairs than they would

have required absent the defect. Plaintiff premised that second damages claim

not on individualized proof of class members’ repair costs, but on an expert’s

estimate of the amount of money an average Kia Sephia owner would pay for

brake repairs over the vehicle’s life as a result of the defect alleged.

      The jury agreed with plaintiff that the Kia Sephia had a brake defect,

found that defendant had breached express and implied warranties, and

determined that the class had sustained damages because of the brake defect.


                                         2
The jury decided that the class members suffered no damages due to their

vehicles’ diminution in value. It nevertheless awarded damages in the amount

of $750 per class member based on plaintiff’s claim for the cost of repairs.

      After the jury verdict, the trial court determined that it should have

required individualized proof of damages for the class members’ brake repairs.

The court left the jury’s liability verdict undisturbed. However, it granted

defendant’s motion for a new trial pursuant to Rule 4:49-1, as to the amount of

out-of-pocket damages incurred by class members. The trial court decertified

the class as to that limited issue and ordered individualized assessments of out-

of-pocket expenses incurred by the class members. A court-appointed Special

Master conducted a claims process, evaluated the class members’ individual

claims and recommended to the trial court that it award damages in the amount

of $46,197.03 for the cost of repairs. The trial court accepted that

recommendation, and final judgment was entered in plaintiff’s favor in that

amount plus attorneys’ fees and costs.

      The parties cross-appealed. The Appellate Division reversed the trial

court’s post-trial determinations, reinstated the jury’s award for out-of-pocket

repair costs based on plaintiff’s aggregate proofs, and remanded for an award

of attorneys’ fees. Little v. Kia Motors Am., Inc., 455 N.J. Super. 411, 416-36

(App. Div. 2018). We granted defendant’s petition for certification.

                                         3
      Although aggregate proof of damages can be appropriate in some

settings, we consider such proof improper as presented in this case. We

concur with the trial court that it erred when it allowed plaintiff to prove class-

members’ out-of-pocket costs for brake repairs based on an estimate

untethered to the experience of plaintiff’s class. We hold that the trial court

properly ordered individualized proof of damages based on the actual costs

incurred by the class members. We view the trial court’s grant of defendant’s

motions for a new trial and for partial decertification of the class as a proper

exercise of its discretion. The claims proceeding that followed, carefully

conducted by a Special Master whose Report and Recommendations were

adopted by the trial court, was equitable to all parties.

      Accordingly, we reverse the Appellate Division’s judgment and reinstate

the final judgment entered by the trial court.

                                         I.

      We derive our summary of the facts from the trial record.

      Defendant began selling the Kia Sephia in New Jersey in 1997. Between

1997 and 2000, Kia sold or leased approximately 8400 Kia Sephias in New

Jersey.

      Relying in part on defendant’s internal documents, plaintiff alleged that,

because of design and manufacturing flaws, the Kia Sephia’s front brakes

                                         4
prematurely wore out, and defendant’s efforts to redesign the brakes failed to

correct the defect. 1 Defendant conceded that there was an increased rate of

brake wear in model year 1997-2000 Sephias but maintained that it had

resolved the problem through successive improvements in its design.

      Defendant’s purchase contract for 1997, 1998, and 2000 model year

Sephias included the following warranty language:

            What is Covered

            Kia Motors America, Inc. warrants that your new Kia
            Vehicle is free from defects in material or
            workmanship, subject to the following terms and
            conditions. An Authorized Kia Dealer will make
            necessary repairs, using new or remanufactured parts,
            to correct any problem covered by this limited warranty
            without charge to you.

                             *      *     *

            Basic Warranty Coverage

            Except as limited or excluded below, all components of
            your new Kia Vehicle are covered 36 months or 36,000
            miles, whichever comes first, from the earlier date of
            either retail delivery or first use of the Kia Vehicle.




1
  Although plaintiff alleged in her complaint that the brake defect in the Kia
Sephia affected the distance required to stop the car and caused a safety
hazard, the parties stipulated at trial that there was no such hazard and that the
Sephia’s brakes in the relevant model years satisfied Federal Motor Vehicle
Safety Standards for stopping distance. See generally 49 C.F.R. § 571.105.
                                           5
      The contract provided that the warranty excluded “[n]ormal

[d]eterioration,” defined to include “[n]ormal wear, tear or deterioration such

as discoloration, fading, deformation, etc.” Although defendant took the

position that brake pads were among the “wear items” excluded from its

warranty, some of its dealers in New Jersey and other states repaired

customers’ brakes at no charge, and defendant covered the dealers’ costs as

warranty repairs. The parties stipulated that there were 8404 repairs pursuant

to warranty on the front brake components to Kia Sephias owned by New

Jersey residents during the relevant period, and that those repairs were

conducted on cars bearing 4875 different vehicle identification numbers.

According to defendant, it conducted those warranty repairs whether or not the

car was still within the three-year, 36,000-mile warranty, and paid a total of

$1.4 million for those repairs.

      In January 2002, defendant offered customers a “field fix” in which a

redesigned rotor would be installed in the brake system of the customer’s car.

The parties stipulated that 242 warranty repairs involving the “field fix” were

conducted in New Jersey. In addition, defendant offered the owners of model

year 1997-2000 Kia Sephias that had previously required two or more brake

repairs a coupon for a free brake repair using the “field fix” redesign. In New




                                        6
Jersey, 650 Kia Sephia owners received a coupon for a repair pursuant to that

program.

      Beginning with model year 2001, defendant included a redesigned brake

system in Kia Sephias sold in the United States.

                                        II.

                                        A.

      Plaintiff filed this action against defendant in the Law Division on June

26, 2001. She alleged that on March 1, 1999, she purchased a 1999 Kia Sephia

from a New Jersey dealer for approximately $13,000. Plaintiff asserted that

the brakes in her vehicle constantly malfunctioned, requiring her to return her

car to Kia dealers for repairs on at least five occasions, and that defendant

failed to correct the problem. She asserted individual and class action claims

for violation of sections 17200 and 17500 of the California Business and

Professions Code; 2 violation of the New Jersey Consumer Fraud Act (CFA),

N.J.S.A. 56:8-1 to -224; breach of an express warranty and the implied

warranty of merchantability; and violation of the federal Magnuson-Moss

Warranty--Federal Trade Commission Improvement Act, 15 U.S.C. §§ 2301 to

2312 (Magnuson-Moss Act).



2
  Plaintiff’s claims based on the California Business and Professions Code were
dismissed prior to trial.
                                          7
      Pursuant to Rule 4:32, plaintiff requested certification of a class “of all

persons who purchased and/or leased Kia Sephia automobiles within six years

preceding the filing of [the] action.” On her own behalf and on behalf of the

putative class, she sought compensatory damages, a declaratory judgment,

injunctive relief, attorneys’ fees, and other remedies.

      After granting partial summary judgment dismissing plaintiff’s claims to

the extent they related to or purported to state a claim for a national class, the

judge handling pretrial matters in this case considered plaintiff’s motion to

certify a class of New Jersey owners and lessees of Kia Sephias. The judge

held that plaintiff had satisfied the requirements of Rule 4:32, granted

plaintiff’s motion for class certification, and appointed counsel for the class.3

Pursuant to an order dated February 9, 2004 and as required by Rule 4:32-2(b),

plaintiff’s counsel provided notice to the class in a form approved by the court.

      As amended by a different judge’s order dated November 17, 2006, the

class represented by plaintiff was defined as follows:


3
  With respect to the four requirements of Rule 4:32-1(a), the judge found (1)
that the class was so numerous that joinder of all members was impracticable;
(2) that there were questions of law or fact common to the class; (3) that
plaintiff’s claims were typical of the claims of the class; and (4) that plaintiff
would fairly and adequately protect the interests of the class. With respect to
the requirements of Rule 4:32-1(b), the judge found that common questions of
law and fact “predominate[d] over any questions affecting only individual
members, and that a class action [was] superior to other available methods for
the fair and efficient adjudication of the controversy.” R. 4:32-1(b)(3).
                                         8
            All residents of the State of New Jersey who purchased
            or leased a model year 1995-2000 Kia Sephia within the
            six year period preceding the filing of the Complaint,
            excluding (i) all persons who are currently engaged in
            or have been engaged in litigation and/or arbitration
            with Defendant concerning defects in the Sephia model
            automobiles; (ii) all persons who have executed valid
            releases in connection with claims related to defects in
            the Sephia model automobiles; (iii) all Judges, judicial
            officers and members of their immediate families; and
            (iv) all persons who have or may have claims for
            personal injuries arising out of or in any way related to
            alleged defects in the Sephia model automobiles, which
            claims arose prior to entry of judgment and distribution
            of the relief sought in the Complaint.

                                        B.

                                        1.

      The matter was tried before a jury in a four-week trial.

      Plaintiff asserted two distinct theories of damages, each of which, she

contended, constituted a basis for a jury’s award of damages for breach of

warranty and a finding of ascertainable loss under the CFA, without

individualized proof of each class member’s losses. She presented her first

theory of classwide damages through the testimony of John Matthews, Ph.D.,

whom the trial court qualified as an expert in quantitative analysis, statistics,

and valuation losses. Plaintiff presented her second theory of classwide




                                         9
damages through the testimony of Raymond Scott King, whom the court

qualified as an automobile engineer with an expertise in braking systems. 4

      Matthews compared the resale value of a Kia Sephia in the relevant

model years to the resale value of several competing vehicles that he selected

and assigned to a “cohort group.” Choosing a different time period for his

calculation for each of the four model years so as to maximize the rate of the

Sephia’s depreciation, Matthews opined that at the end of each model year’s

depreciation period, the Sephia was worth only forty percent of its original

value, and that it depreciated faster than all but one of the cars in his “cohort

group.”

      On that basis, Matthews testified that each purchaser of a Kia Sephia --

even a purchaser such as plaintiff who did not sell or trade in her vehicle --

suffered a loss due to his or her vehicle’s depreciation as compared with the

“cohort group” of vehicles.5 Matthews also presented a second figure,



4
  After conducting hearings pursuant to N.J.R.E. 104 in accordan ce with the
standard of N.J.R.E. 702 and Kemp v. State, 174 N.J. 412, 424 (2002), the trial
court rejected defendant’s challenges to the admission of both experts’
opinions.
5
  According to Matthews, a new 1997 Kia Sephia was subject to excess
depreciation in the amount of $2191, a new 1998 Kia Sephia was subject to
excess depreciation in the amount of $1125, a new 1999 Kia Sephia was
subject to excess depreciation in the amount of $904, and a new 2000 Kia
Sephia was subject to excess depreciation in the amount of $640.
                                       10
substantially higher than his depreciation figure, for each of the four model

years, and identified that amount as the average Kia Sephia purchaser’s

“overpayment” for his or her car. Matthews testified that in the absence of an

alternative explanation, the diminution of the Kia Sephias’ value was caused

by the brake defect.

      Although most of King’s expert testimony focused on plaintiff’s

allegation that the Kia Sephia’s brakes were defective, he also testified in

support of plaintiff’s damages claim.

      King estimated “the likely out-of-pocket expenses incurred by members

of the class” as a result of the brake defect. He premised his estimate on three

assumptions. First, he opined that it is reasonable for a car owner to expect his

or her vehicle to last 100,000 miles. Second, he stated a “normal” interval for

brake replacements is every 20,000 miles. Third, King estimated that the

average Kia Sephia required a brake replacement every 10,000 miles, twice the

“normal” frequency of every 20,000 miles. He based that estimate not on any

analysis of brake-repair data, but on several anecdotal reports of individual

brake repairs that identified the vehicle’s mileage at the time of the repair to be

relatively close to that figure.

      On that basis, King calculated that each class member should expect to

pay for five “normal” brake replacements -- repairs not attributable to any

                                        11
defect in his or her car -- during the expected 100,000-mile duration of his or

her ownership of that car. King concluded that during the ownership of the

average Kia Sephia, the vehicle accumulated the projected 100,000 miles and

the brakes would have to be repaired on ten occasions. According to King,

five of those brake repairs would be “normal” repairs that would be expected

in a vehicle without defects, and five would be “abnormal” brake repairs

attributable to the brake defect.

      Based on telephone inquiries to five or six New Jersey Kia dealers, King

estimated the average cost of a brake repair in New Jersey to be $250.

Multiplying that amount by the estimated five “abnormal” brake repairs, he

concluded that an average class member’s out-of-pocket expenses for brake

repairs would be $1250.

      King then extrapolated that calculation to the class as a whole. He

estimated that there were 42,000 “abnormal” brake repairs performed on the

Kia Sephias in the relevant model years. Deducting the 8404 brake repairs for

which defendant paid under its warranty program from that estimate, King

opined that the defect in the Sephia’s brakes required class members to pay for

a total of approximately 34,000 brake repairs. He contended that the class’s

aggregate out-of-pocket expenses could be calculated by multiplying 34,000

by $250.

                                       12
      On cross-examination, King conceded that if a given class member drove

a Kia Sephia 25,000 miles with no need for a brake repair, or incurred no out -

of-pocket costs because defendant paid for any necessary brake repairs under

warranty, his opinion would not apply to that class member. King

acknowledged that plaintiff did not retain her car until it reached 100,000

miles and that he was unaware of any brake repairs to plaintiff’s Kia Sephia

after it was driven 45,000 miles. King conceded that his estimates relied

exclusively on defendant’s warranty data and that he did not have any data on

what Kia Sephia owners actually paid for non-warranty repairs.6

                                        2.

      Before the trial judge, the parties disputed whether the evidence

presented by Matthews and King was sufficient to establish classwide damages

arising from defendant’s alleged breach of warranty. They also contested

whether Matthews and King had proven each class member’s ascertainable



6
  In addition to presenting the expert testimony of Matthews and King,
plaintiff presented her own testimony regarding her experience with her Kia
Sephia, as well as the testimony of Kia employees regarding the brake defect
and Kia’s marketing practices. Kia presented the testimony of its Vice
President of Parts and Service regarding warranty repairs; three Kia Sephia
owners who had opted out of the class because they were satisfied with the
performance of their vehicles; an expert witness on “engineering, design and
warranty data,” who addressed whether the brakes were defective; and an
expert on “statistics, expert analysis, loss causation, and damage calculati on”
to counter the expert opinions of Matthews and King on classwide damages.
                                         13
loss, an element of plaintiff’s CFA claim under Thiedemann v. Mercedes-Benz

USA, LLC, 183 N.J. 234, 247-48 (2005).

      Arguing that neither Matthews nor King had established breach of

warranty damages or ascertainable loss for any class member, and citing due

process considerations, defendant moved for an involuntary dismissal pursuant

to Rule 4:37-2 at the close of plaintiff’s proofs and again at the close of the

evidence. The trial court denied both motions.

      Reiterating purported deficiencies in plaintiff’s aggregate proofs,

defendant moved to decertify the class or, in the alternative, to recertify the

class on the question of liability only, leaving the question of damages for

individualized determinations. The trial court denied the motion.

      In the jury charge conference, defendant requested that the court limit

the class to one theory of damages for breach of warranty. The trial court

declined that request. It ruled that a class member could sustain damages for

both the diminution of his or her vehicle’s value and out-of-pocket costs for

brake repairs, and that both damages theories should be submitted to the jury .

      At the conclusion of the trial, the trial judge instructed the jury on

damages for breach of warranty, acknowledging the class’s two theories of

classwide damages:

            In a breach of warranty case, the function of damages
            is simply to make an injured party whole. In other
                                        14
            words, the innocent party must be given the benefit of
            the bargain and placed in as good a position as they
            would have been in as if the contract had been
            performed.

            It is for you to decide the appropriate amount of
            damages in this case.

            In a breach of warranty case, one measure of damages
            is the difference at the time of delivery between the
            value of the vehicle, as accepted and the value of the
            vehicle as it would have been if it was -- as it was
            warranted.

            In other words, the measure of damages is the
            difference in value between the vehicle as promised
            minus the value of the vehicle as delivered in a
            defective condition. Damages may also be measured
            by the increased cost of maintenance and repair to
            purchasers and lessees of the Sephia as a result of the
            defects.

      The two damages theories were addressed in separate questions on the

verdict form, which the trial court identified as a form used by plaintiff’s

counsel in other litigation and suggested by plaintiff.

                                        3.

      The jury returned a verdict in favor of plaintiff with respect to most of

her claims. It determined that defendant had breached its express and implied

warranties to the class members with respect to the vehicles purchased by the




                                        15
class and had violated the Magnuson-Moss Act. It found, however, that

defendant had not violated the CFA.

      The jury determined that the class had sustained damages. Asked to

state the amount of damages sustained by each class member “[f]or the

difference in value, if any, of the Sephia as warranted compared to the Sephia

as delivered,” the jury responded “$0.” Asked to state the amount of damages

sustained by each class member “[f]or repair expenses reasonably incurred as a

result of the defendant’s breach of warranty,” the jury responded “$750.”

                                        C.

      In post-verdict proceedings, defendant moved for judgment

notwithstanding the verdict pursuant to Rule 4:40-2, for a new trial pursuant to

Rule 4:49-1, and for an order decertifying the class on the issue of damages

pursuant to Rule 4:32-2.

      With respect to breach of warranty damages, defendant argued that when

the class was certified several years earlier, the court assumed that plaintiff’s

theory of classwide damages would be the diminution-in-value theory

presented by Matthews. Defendant asserted that in light of the jury’s rejection

of that theory, and its award of damages solely based on class members’ out-

of-pocket expenses for brake repairs, damages could not be fairly calculated

absent individualized proofs.

                                        16
      Noting defendant’s concession that repair costs required by a defect can

be a proper measure of damages for breach of warranty, plaintiff responded

that the jury verdict on repair costs was properly premised on King’s estimate

of the average repair cost that a class member would be expected to incur.

      Plaintiff did not challenge the jury’s verdict rejecting her diminution-of-

value damages claim in a motion for judgment notwithstanding the verdict, a

motion for a new trial, or any other post-trial application.

      The trial court denied defendant’s motion for judgment notwithstanding

the verdict in its entirety and its motion for a new trial as to liability, finding

“ample support for the jury’s verdict in all respects but damages.” It granted

in part, however, defendant’s motion for a new trial, limited to the issue of

damages. The court concluded that it had erred when it submitted the question

of out-of-pocket repair costs to the jury and instructed the jury to consider

plaintiff’s second damages theory based on classwide proofs. It commented

that “[t]he damages suffered by each class member are dependent on numerous

variables, such as brake life, frequency of repair, driving habits and length of

time the car was owned.” The trial court limited the new trial to “the monetary

amount of damages incurred, if any,” to be “handled on a claim-form basis.”

      Noting that in the initial class certification proceedings, plaintiff’s

counsel had recognized that “the fact of damages may be different for each

                                         17
individual,” the trial court held that “it cannot be shown that all members of

the class suffered monetary damages on a class-wide model.” The court

reasoned that if it were to maintain class certification for purposes of repair

damages, it would “provide a windfall for those owners who did not actually

pay for brake repairs more often than every 20,000 miles.” The trial court

therefore granted defendant’s motion to decertify the class “as to the quantum

of damages each individual owner suffered,” with the class members left to

their individual proofs.

                                        D.

      Following the transfer of this matter from the trial judge to another

judge, plaintiff proposed a class notice plan and a claims-form process. At the

court’s direction, the notice to the class requested details about each class

member’s vehicle, the vehicle’s repair history, any warranty coverage of the

repair costs, and any accidents involving the vehicle during the warranty

period. The notice indicated that the claimant should provide documentation

of his or her claims, but also directed each class member to submit his or her

claim even if he or she could not provide documentation. The court appointed

a third-party administrator to process the claims. Also at the court’s direction,

defendant set up a website for the use of class members submitting claims.




                                        18
      In response to the notice, members of the class returned between 1110

and 1120 claim forms. Plaintiff’s counsel took the position that they could not

represent the individual claimants because their interests conflicted with those

of the class as a whole. The judge certified a new class, consisting of the

individual Kia Sephia owners and lessees who had submitted claim forms, and

plaintiff’s counsel represented that class.

      The judge then appointed a Special Master to determine “which [claim]

forms state valid claims to be paid.” Shortly after his appointment, the Special

Master advised the court and counsel that he viewed his role to extend beyond

the recommended adjudication of the class members’ individual claims. He

stated that “the jury verdict finding no diminution in value cannot logically

survive,” that he considered himself “empowered to revisit this theory,” and

that the claimants should be permitted to pursue damages for breach of

warranty other than those based on out-of-pocket repair costs.

      Over defendant’s objection, the judge adopted the Special Master’s

conclusions, thus overturning the jury verdict rejecting diminution-of-value

damages -- which had not been challenged by plaintiff -- and nullifying the

trial court’s post-judgment determinations.

      The Appellate Division granted defendant’s motion for leave to file an

interlocutory appeal and reversed the judge’s order, noting that the court

                                        19
handling the post-trial proceedings had not reviewed the trial transcript before

it overturned the jury verdict and overruled the trial judge’s rulings; that the

court had adjudicated issues not before it; and that the trial judge’s post-trial

rulings should have been viewed as the law of the case. Little v. Kia Motors

Am., Inc., 425 N.J. Super. 82, 89-93 (App. Div. 2012). The Appellate

Division remanded the matter for further proceedings consistent with its

opinion. Id. at 93.

      On remand, the judge assigned to handle the post-trial proceedings

appointed a new Special Master. Analyzing each claim form that had

previously been submitted as well as other documents pertinent to some of the

claims, the second Special Master recommended that the court find that 150

claimants had proven that they incurred out-of-pocket expenses for

compensable brake repairs, and that it award damages in the amount of

$46,197.03. The judge adopted the second Special Master’s Report and

Recommendation.

      The case was then transferred to another judge. Plaintiff’s counsel

requested $6,055,916 in attorneys’ fees and $481,850 in costs, prejudgment

interest, and post-judgment interest. On September 10, 2015, the court entered

final judgment against defendant in the amount of $46,197.03 in damages

payable to the 150 claimants who had proven out-of-pocket costs for

                                        20
compensable brake repairs. The judgment also included $200,000 in legal

fees, $19,112 in prejudgment interest, $481,850 in costs, and an incentive

award of $5000 to plaintiff, who had demonstrated no out-of-pocket expenses

for compensable brake repairs.

                                        E.

      Plaintiff appealed the final judgment. She challenged several

determinations, including the trial court’s grant of a new trial on the issue of

damages and the individualized determinations that followed, and sought

reinstatement of the jury’s damages verdict. Defendant cross-appealed,

asserting, among other arguments, that the trial court should have decertified

the class for all purposes, granted its motion for a judgment notwithstanding

the verdict, and excluded King’s expert testimony.

      The Appellate Division reversed the trial court’s judgment. Little, 455

N.J. Super. at 426-36.7 The Appellate Division perceived error in the trial

court’s grant of a new trial on only the damages theory based on out-of-pocket

expenses for brake repairs and held that, notwithstanding the jury’s rejection


7
  The Appellate Division incorrectly characterized the trial court’s post -
verdict ruling to include the grant of a judgment notwithstanding the verdict on
the question of damages for brake repairs. Id. at 417. As the trial court’s
written decision makes clear, it did not grant a judgment notwithstanding the
verdict; instead, the court granted in part defendant’s motion for a new trial,
decertified the class for damages, and required “claims proceedings as to
damages.”
                                         21
of plaintiff’s diminution-in-value theory, the trial court should have ordered a

new trial on both theories of damages. See id. at 426. The court viewed

plaintiff’s damages theories as not “fairly separable from each another” and

expressed concern that the trial court did not tell the jury “of any ramification s

if only repair damages were awarded.” Ibid.

      The Appellate Division disagreed with the trial court’s conclusion that

cost-of-repair damages could not be assessed classwide. Id. at 428-36. It

viewed both of plaintiff’s experts to present reasonable theories of damages

and held that a claimant’s “small windfall . . . should not defeat recovery.” Id.

at 429. The Appellate Division distinguished this case from its decision in

Muise v. GPU, Inc., 371 N.J. Super. 13 (App. Div. 2004), on the ground that

King’s calculations more closely tracked actual data than the mathematical

model rejected in Muise, given King’s reliance on defendant’s brake-repair

data, the testimony of defendant’s executives, and defendant’s internal

documents. Id. at 431-32. The court held that a class may prove classwide

damages “based on a reliable mathematical formula.” Id. at 432.

      The Appellate Division also relied on the Pennsylvania Supreme Court’s

decision in Samuel-Bassett v. Kia Motors America, Inc., 34 A.3d 1, 12 (Pa.

2011), in which plaintiff’s counsel in this matter represented a Pennsylvania

class of Kia Sephia purchasers and lessees. Ibid. The Appellate Division

                                        22
viewed the Pennsylvania Supreme Court’s majority opinion that approved

King’s estimate of a class member’s out-of-pocket damages in Samuel-Bassett

to be a proper aggregate proof of classwide damages. Id. at 432-34 (discussing

Samuel-Bassett, 34 A.3d at 11-13, 35-37, 40).

      On those grounds, the Appellate Division reversed the trial court’s

determination, reinstated the jury’s award of $750 per class member based on

aggregate proofs, and remanded for an award of attorneys’ fees to plaintiff. Id.

at 439. It rejected the arguments presented in defendant’s cross-appeal. Id. at

436-39.

      We granted defendant’s petition for certification, “limited to the issue of

damages.” 236 N.J. 113 (2018). We invited supplemental briefs and indicated

that the parties should address “alternative methods by which damages may be

fairly and practicably determined in this action, taking into consideration the

number of claimants and the difficulties that some claimants may encounter in

documenting their expenditures to repair the brakes of the 1997-2000 model

year Kia Sephia vehicles” at issue in this case. Ibid.

                                       III.

                                       A.

      Defendant argues that, in the wake of the jury’s rejection of plaintiff’s

diminution-in-value theory of aggregate damages, the trial court properly

                                       23
recognized that individualized proof of out-of-pocket expenditures for brake

repairs represented the only equitable method to assess class members’

damages. It asserts that plaintiff’s aggregate damages evidence, presented by

her expert, King, violated defendant’s due process rights and was improperly

approved by the Appellate Division. Defendant contends that plaintiff’s

characterization of her out-of-pocket damages theory for purposes of appeal

contravenes that theory as it was presented at trial. It argues that the claims-

form proceeding overseen by the second Special Master protected the class

members’ recovery of out-of-pocket damages and also preserved defendant’s

due process right to defend this action.

                                        B.

      Plaintiff asserts that every member of the class is entitled to a remedy

for the brake defect in all model year 1997-2000 Kia Sephias, a defect

recognized by the jury in its verdict. Plaintiff contends that an award of

damages for a claimant’s “out of pocket payment” is inadequate to compensate

that claimant’s loss because no single repair could cure the defect in the brake

system. She argues instead that the jury’s award of $750 per claimant,

supported by King’s “reliable mathematical formula,” should not be deemed to

represent only the jury’s calculation of repair costs. Plaintiff asserts that the

jury award also represented the amount necessary on the date the car was

                                        24
delivered to “cure the unfixable defect” in each Kia Sephia. According to

plaintiff, the Appellate Division therefore properly declined to limit class

members’ damages to the actual repair costs that they incurred. Plaintiff

contends that the claims process overseen by the second Special Master

improperly premised an award on the “actual damages incurred,” when it

should have recognized that the defect could not be corrected by a brake

repair. Plaintiff asserts that the class members were entitled to recover more

than what they paid for such repairs.

                                        IV.

                                         A.

      We first review the trial court’s grant of defendant’s motion for a new

trial pursuant to Rule 4:49-1 as to whether damages for brake repairs could be

calculated on a classwide basis.

      In that inquiry, we “give considerable deference to a trial court’s

decision to order a new trial, as the trial court has gained a ‘feel of the case’

through the long days of the trial.” Lanzet v. Greenberg, 126 N.J. 168, 175

(1991); accord Conklin v. Hannoch Weisman, 145 N.J. 395, 407 (1996).

Applying the same standard that governs the trial court, we determine

“whether there was a miscarriage of justice under the law.” Hayes v.

Delamotte, 231 N.J. 373, 386 (2018) (quoting Risko v. Thompson Muller

                                        25
Auto. Grp., Inc., 206 N.J. 506, 522 (2011)); accord R. 2:10-1 (“The trial

court’s ruling on such a motion shall not be reversed unless it clearly appears

that there was a miscarriage of justice under the law.”).

                                        B.

      When it granted a new trial on out-of-pocket repair damages, the trial

court ruled that it had erred when it authorized proof of the class’s repair costs

by means of an expert’s estimate without requiring an individualized inquiry.

We thus consider the standard that guides a court’s determination whether to

permit a class to prove its damages in aggregate form, or to require evidence

specific to each class member. 8

      “A ‘class action is “an exception to the usual rule that litigation is

conducted by and on behalf of the individual named parties only.”’” Dugan v.

TGI Fridays, Inc., 231 N.J. 24, 46 (2017) (quoting Iliadis v. Wal-Mart Stores,

Inc., 191 N.J. 88, 103 (2007)). It “furthers numerous practical purposes,

including judicial economy, cost-effectiveness, convenience, consistent

treatment of class members, protection of defendants from inconsistent

obligations, and allocation of litigation costs among numerous, similarly


8
   We do not concur with plaintiff that defendant waived its right to argue that
the aggregate proofs at issue violated its due process rights. Defendant raised
its due process argument before the trial court at pretrial hearings and at trial,
as well as on appeal.

                                        26
situated litigants.” Ibid. (quoting Iliadis, 191 N.J. at 104). The class action

device “also helps to equalize adversaries, a purpose that is even more

compelling when the proposed class consists of people with small claims.”

Iliadis, 191 N.J. at 104.

      A class action, however, does not dispense with traditional burdens of

proof in the name of efficiency; to the contrary, “it leaves the parties’ legal

rights and duties intact and the rules of decision unchanged.” Shady Grove

Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 408 (2010)

(plurality opinion). Just as due process principles mandate that a court permit

the plaintiff to prove her case subject to the court rules, the Rules of Evidence,

and other relevant law, “[d]ue process requires that there be an opportunity to

present every available defense” within the same constraints. Gonzalez v. Safe

& Sound Sec. Corp., 185 N.J. 100, 114 (2005) (quoting N.Y., Susquehanna &

W. R.R. Co. v. Vermeulen, 44 N.J. 491, 501 (1965)).

      Notwithstanding the unique burdens that a class action imposes on

judicial resources, a court must recognize that the most expeditious method of

presenting a claim or defense may not ensure a fair trial. Accordingly, before

admitting aggregate proof of damages in a class action, a court must undertake

a careful inquiry to ensure that the proposed evidence does not deprive the

defendant of a meaningful opportunity to contest the plaintiff’s claims.

                                        27
      In its decision in Muise, the Appellate Division undertook precisely such

an inquiry. Muise arose from the claims of a class consisting of electrical

utility customers who experienced heat-related power outages. 371 N.J. Super.

at 18. The class sought to recover damages against the electrical utility whose

service was interrupted. Ibid. Although the class initially asserted claims

based on violations of the CFA, negligence, and several other common-law

claims, only the negligence claim remained when the trial court considered the

issue of aggregate proofs. Id. at 18-20.

      As an alternative to proving the customer’s individual losses, the

plaintiffs retained two experts to present classwide proof of their claims. Id. at

23. The experts relied on surveys that they and others conducted in which

electrical customers in California and Canada were asked to state what their

expected costs would be if they experienced a power outage under certain

hypothetical circumstances. Id. at 24. In papers they had written on the use of

surveys to prove damages, the experts had cautioned that respondents in such

surveys had scant experience with service interruptions and that the resulting

estimates would be influenced by socioeconomic, demographic, and

geographic factors. Ibid. Nonetheless, in the Muise case, the experts invoked

those surveys to estimate $62 million in damages to the class. Ibid.




                                       28
      In an opinion by Judge King, the Appellate Division affirmed the trial

court’s decision rejecting the survey evidence. Id. at 28-29, 46-52. The court

adopted the reasoning of the trial judge, who “did not find that individualized

proofs were always required,” but cautioned that a court should depart from

that general rule only “where class-wide damages can be calculated by a

reliable mathematical formula.” Id. at 28. “Even then,” the court observed, “a

statistical model estimating the total amount of damages should not be

substituted for actual proof unless it can be presumed that all members of the

class suffered damage.” Id. at 28-29. The Appellate Division determined that

although “it might be reasonable to presume that all class members, merely by

losing power, suffered some damage,” the plaintiffs had failed to offer a

reliable mathematical formula to quantify that damage. Id. at 52.

      The Appellate Division’s holding in Muise is consistent with the

approach taken by many federal courts under Federal Rule of Civil Procedure

23, the federal analogue to Rule 4:32. See, e.g., Ridgeway v. Walmart Inc.,

946 F.3d 1066, 1086-87 (9th Cir. 2020) (holding that although the amount of

damages is invariably an individual question, class members may resort to

representative or statistical evidence to prove their claims when “the evidence

is reliable in proving or disproving the elements of the relevant cause of

action” (quoting Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. ___, ___, 136 S.

                                       29
Ct. 1036, 1046 (2016)); Day v. Celadon Trucking Servs., Inc., 827 F.3d 817,

835 (8th Cir. 2016) (ruling that a class may use representative evidence to

calculate damages so long as the evidence is reliable); Newton v. Merrill

Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 187-89 (3d Cir. 2001)

(rejecting the plaintiff’s argument that he should be permitted to present a

formula for classwide proofs, given that the plaintiff had not establish ed that

all members of the class had suffered damages and had not presented a viable

formula as a substitute for individualized proofs).

      We concur with the principles stated by the Appellate Division in Muise,

which we now adopt. To decide whether to permit classwide proof of

damages, a court must carefully consider (1) the underlying cause of action for

which the class seeks recovery; (2) the measure of damages that the law allows

if there is a finding of liability for that claim; and (3) the methodology by

which the plaintiff seeks to prove damages on an aggregate basis. If the

plaintiff cannot establish a basis for a presumption that all members of the

class have sustained damage, aggregate proof of damages raises the specter

that an individual with no viable claim will recover a windfall. In such

settings, the court should require individualized proof of damage. Muise, 371

N.J. Super. at 47-48; Newton, 259 F.3d at 187-89. Even if the plaintiff can

show that all class members have sustained damage, moreover, aggregate

                                        30
proof of damages must be based on a reliable mathematical formula in order to

be admissible. Muise, 371 N.J. Super. at 47-48; Ridgeway, 946 F.3d at 1086-

87; Day, 827 F.3d at 835. We apply those principles in this case.

                                         C.

                                         1.

      We briefly address plaintiff’s characterization on appeal of the claim for

out-of-pocket repair costs that she asserted at trial.

      As plaintiff presented her out-of-pocket brake-repair claim to the jury, it

was premised on costs incurred by class members for brake repairs

necessitated by the brake defect. That claim was entirely separate from the

diminution-of-value damages that she also sought to recover. Indeed, plaintiff

prevailed in an application before the trial court regarding the jury charge; the

court charged the jury that plaintiff could recover for both the diminution in

value of the class members’ Kia Sephias and the “increased cost of

maintenance and repair” to purchasers and lessees “as a result of the defects.”

When the case went to the jury, plaintiff had the opportunity to achieve a

cumulative recovery on both theories.

      On appeal, however, plaintiff attempts to redefine the claim she made

before the jury. She now describes that claim to be based not on the increased

costs incurred by individual class members to maintain and repair the vehicles,

                                         31
as the jury was charged, but on the amount that would be necessary to replace

the defective vehicle with one that was defect-free. After the fact, plaintiff

portrays her out-of-pocket brake-repair claim as an alternative measure of the

diminution-in-value claim that the jury rejected. She argues that such a claim

is common to all class members, that it requires no individualized proof, and

that the Appellate Division properly viewed the two claims to be inseparable.

Plaintiff’s effort to recharacterize her damages claim, however, is belied by the

record of King’s testimony, the position she took in motion practice before the

trial court and at the charge conference, and the jury charge that she persuaded

the court to give.

      Accordingly, we review the actual claim that plaintiff presented and the

court submitted to the jury -- a claim for the class members’ out-of-pocket

expenditures for brake repairs, presented through the testimony of her expert.

                                        2.

      As the trial court recognized, costs incurred by a given class member for

repairs and maintenance necessitated by the defect in the Kia Sephia was an

appropriate measure of damages for the breach of warranty claims asserted in

this case pursuant to N.J.S.A. 12A:2-313, N.J.S.A. 12A:2-314, and N.J.S.A.

12A:2-315.




                                       32
      Under the Uniform Commercial Code (UCC), a buyer who has accepted

goods and has given notification of breach pursuant to N.J.S.A. 12A:2-607(3)

“may recover as damages for any non-conformity of tender the loss resulting

in the ordinary course of events from the seller’s breach as determined in an y

manner which is reasonable.” N.J.S.A. 12A:2-714(1). The UCC recognizes

“the difference at the time and place of acceptance between the value of the

goods accepted and the value they would have had if they had been as

warranted” as the ordinary measure of damages, “unless special circumstances

show proximate damages of a different amount.” N.J.S.A. 12A:2-714(2).

      In appropriate settings, however, the plaintiff’s repair costs can also

provide a reasonable measure of damages. See McDonald v. Mianecki, 79 N.J.

275, 282 n.1 (1979) (noting that although “diminution in value is a standard

measure of damages in breach of warranty cases,” in some circumstances “it

may be appropriate to utilize cost of repairs as the standard”); 525 Main St.

Corp. v. Eagle Roofing Co., 34 N.J. 251, 254-55 (1961) (holding that when

diminution of value damages are not easily calculated, “the cost of repairs, or

the cost of replacement if replacement is necessary to obtain the promised

performance, is the appropriate approach without reference to the [product’s]

value”); Perth Amboy Iron Works, Inc. v. Am. Home Assurance Co., 226 N.J.

Super. 200, 219 (App. Div. 1988) (holding that “diminution in value is the

                                       33
standard measure of damages in breach of warranty cases. In a few cases,

however, the appropriate standard is the cost of repairs”). Accordingly, the

trial court properly recognized that plaintiff could pursue damages based on

class members’ out-of-pocket damages for costs of repair as a remedy for

breach of warranty, distinct from her diminution-in-value claim.

                                           3.

      The central question in this appeal is whether the trial court properly

permitted plaintiff’s brake-repair claim to be asserted classwide, supported

only by aggregate proofs. As did the trial court when it granted a new trial on

damages, we apply the principles set forth in Muise and other case law to the

out-of-pocket repair cost claim that plaintiff presented at trial.

      As the record makes clear, plaintiff presented no basis for a presumption

-- much less for a conclusion -- that all members of the class suffered damages

for out-of-pocket brake repairs necessitated by the Kia Sephia’s brake defect.

Plaintiff did not contend that every member of her expansive class of 8400

owners and lessees incurred an out-of-pocket loss. Indeed, plaintiff’s expert,

King, candidly admitted that his estimate of average out-of-pocket costs would

not apply to class members whose experience with their vehicles matched

various scenarios posed to him at trial.




                                        34
      The uncertainty about class members’ damages claims derived from the

expansive definition of plaintiff’s class. As the class was proposed and as it

was certified, it was not limited to New Jersey owners and lessees of Kia

Sephias who incurred out-of-pocket expenses for repairs and maintenance

because of the brake defect. Instead, with narrow exceptions, the class

included “[a]ll residents of the State of New Jersey who purchased or leased” a

Kia Sephia in the relevant model years over the six years preceding the filing

of the complaint. Yet, any class member who did not experience problems

with the vehicle’s brakes -- as did three Kia Sephia owners who opted out of

the class and testified for defendant -- would incur no out-of-pocket costs.

Any class member whose Kia Sephia did not require brake repairs more

frequently than it would have absent the defect would incur no out-of-pocket

costs. And any class member whose brakes required extra repairs by virtue of

the brake defect, but whose repairs were paid for by Kia under warranty,

would incur no out-of-pocket costs.9 In short, plaintiff’s class included an

undetermined number of members who stood to gain a windfall by virtue of

the jury’s award of $750 per class member for brake repairs.


9
  In Thiedemann, the Court rejected class action claims premised on alleged
breaches of the CFA, the implied warranty of merchantability under N.J.S.A.
12A:2-314, and the Magnuson-Moss Act because the vehicle defects at issue
were “addressed by warranty, at no cost to the consumer.” 183 N.J. at 238-39,
251.
                                      35
      Even if plaintiff could demonstrate that all members of the class

sustained an out-of-pocket loss, she did not present a reliable mathematical

formula by which the jury could fairly quantify that loss. See Muise, 371 N.J.

Super. at 28-29; Ridgeway, 946 F.3d at 1086-87; Day, 827 F.3d at 835;

Newton, 259 F.3d at 187-89.

      The estimate provided by plaintiff’s expert, King, was based on three

premises: that an average brake repair cost $250 in New Jersey during the

relevant period; that the “life span” of an average Kia Sephia in the relevant

model years -- apparently defined as the time period in which the original

owner or lessee would retain the vehicle -- would be 100,000 miles; and that

because of the brake defect in the vehicles, an average Kia Sephia in the

relevant model years would require a brake repair every 10,000 miles, instead

of every 20,000 miles, which King considered the expected interval for a brake

repair.

      The first of those premises was amply supported by King’s research. He

conducted an informal telephone survey of six or seven New Jersey Kia

dealers, inquired as to what each of them would charge for a brake repair, and

averaged the estimates provided.

      The second and third bases for King’s testimony, however, rested on an

inadequate foundation. King’s estimate that Kia Sephias had an average “life

                                       36
span” of 100,000 miles, during which the class member owner or lessee would

retain the vehicle, was supported only by general information as to the length

of time that consumers drive their cars and statistics on how many miles an

average car is driven per year, as well as a Kia document suggesting that the

Kia Sephia could be driven as much as 200,000 miles. That estimate was

unsupported by the slightest inquiry as to the length of time that the actual Kia

Sephia owners and lessees in the class retained their vehicles. It represented

nothing more than guesswork.

      Most importantly, King’s assertion that the average Kia Sephia would

need a brake repair every 10,000 miles was untethered to the real-world

experience of the class. In support of his 10,000 miles figure, King cited

nothing more than a few anecdotal reports in defendant’s files from Kia Sephia

owners, most or all in other states, who complained of brake problems when

the mileage on their cars was in the general vicinity of that benchmark. King

also alluded to a study of what he conceded were the extreme driving

conditions faced by Los Angeles drivers. Moreover, King had no information

on the brake performance of the class members’ vehicles outside of the limited

and nonrepresentative sample that appeared in Kia’s documents on warranty

repairs; as he conceded, “[t]hat data just wasn’t available.” The information




                                       37
gathered by King simply did not support an accurate estimate of the frequency

of brake repairs to the Kia Sephias owned by the class.

      In short, plaintiff’s expert had no basis to develop a reliable

mathematical formula for estimating the average out-of-pocket costs incurred

by members of that class, and he did not present such a formula.10

                                        D.

      Like Muise, this case is not a setting in which class members’ claims for

damages could fairly be premised on aggregate proofs. The trial court

correctly determined that plaintiff’s claim for out-of-pocket brake-repair costs

required individualized determinations, and that its initial decision to submit


10
    When it approved King’s estimate as a classwide model for out-of-pocket
damages in this case, the Appellate Division relied heavily on the
Pennsylvania Supreme Court’s decision in Samuel-Bassett v. Kia Motors
America, Inc., another class action involving the Kia Sephia in which King
testified for the plaintiff class. Little, 455 N.J. Super. at 432-34. In the
Appellate Division’s view, the Pennsylvania Supreme Court held that King’s
aggregate proof of out-of-pocket damages in the Pennsylvania class action was
reliable and properly admitted in that case. Ibid. Indeed, the Appellate
Division suggested that had the Pennsylvania Supreme Court decided Samuel-
Bassett before the trial court’s decision granting a new trial in this case, the
trial court would have denied that motion. Id. at 432-33. In fact, the
Pennsylvania Supreme Court held that defendant had waived its objection to
King’s damages model in the Pennsylvania case, and expressly declined to
reach the question of whether that model was a reliable basis for aggregate
proof. Samuel-Bassett, 34 A.3d at 41 & n.27 (“Given the limited nature of
[the defendant’s] preserved challenge, we need not, and therefore do not,
express a definitive view on . . . whether the methodology of Bassett’s expert
in estimating individual damages here was sound.”). The Appellate Division’s
reliance on Samuel-Bassett is thus misplaced.
                                           38
the question of repair damages to the jury based solely on King’s classwide

proofs resulted in a “miscarriage of justice under the law.” See R. 2:10-1. The

court properly granted defendant’s motion for a new trial limited to that aspect

of plaintiff’s damages claim.

                                         V.

                                         A.

      We next consider the trial court’s decertification of the class for

purposes of individualized assessments of class members’ claims for repair

damages.

      The decertification of a class, in whole or in part, is one of the remedies

available to a trial court under Rule 4:32-2. As this Court has observed, “Rule

4:32 vests in the trial court substantial control over management of a class

action. A trial court can mold the class . . . and, in an appropriate case, can

even decertify a class.” In re Cadillac V8-6-4 Class Action, 93 N.J. 412, 437

(1983); see also Lee v. Carter-Reed Co., L.L.C., 203 N.J. 496, 530 (2010)

(“[A] trial court always will have options at its disposal, such as subdividing

the class, if necessary, or, in a worst case scenario, decertifying the class if

justice cannot be achieved through a class action.”); Iliadis, 191 N.J. at 119

(noting the court’s authority to “alter or amend the certification of a class” and




                                         39
citing In re Cadillac for the proposition that a court has the authority to

decertify a class).

      We review the trial court’s decision decertifying the class for abuse of

discretion. See Dugan, 231 N.J. at 50 (applying abuse of discretion standard to

certification decision); In re Cadillac, 93 N.J. at 438-39 (same).

      The governing standard for decertification, like the standard for class

certification, is prescribed by Rule 4:32-1(a). That Rule requires a party

seeking to certify a class to demonstrate that

             (1) the class is so numerous that joinder of all members
             is impracticable, (2) there are questions of law or fact
             common to the class, (3) the claims or defenses of the
             representative parties are typical of the claims or
             defenses of the class, and (4) the representative parties
             will fairly and adequately protect the interests of the
             class.

             [R. 4:32-1(a).]

      Should the plaintiff satisfy those requirements, the court then applies

Rule 4:32-1(b), which provides in relevant part:

             (b) Class Actions Maintainable. An action may be
             maintained as a class action if the prerequisites of
             paragraph (a) are satisfied, and in addition:

                  ....

                  (3) the court finds that the questions of law or fact
                  common to the members of the class predominate
                  over any questions affecting only individual
                                         40
                  members, and that a class action is superior to
                  other available methods for the fair and efficient
                  adjudication of the controversy. The factors
                  pertinent to the findings include:

                         (A) the interest of members of the class in
                         individually controlling the prosecution or
                         defense of separate actions;

                         (B) the extent and nature of any litigation
                         concerning the controversy already
                         commenced by or against members of the
                         class;

                         (C) the desirability or undesirability in
                         concentrating the litigation of the claims in
                         the particular forum; and

                         (D) the difficulties likely to be encountered
                         in the management of a class action.

            [R. 4:32-1(b).]

      Under Rule 4:32-1(b)’s predominance standard, the court first

undertakes “a qualitative assessment of the common and individual questions

rather than a mere mathematical quantification of whether there are more of

one than the other.” Lee, 203 N.J. at 519-20 (citing Iliadis, 191 N.J. at 108).

Second, the court considers “whether the ‘benefit’ of resolving common and

presumably some individual questions through a class action outweighs doing

so through ‘individual actions.’” Id. at 520 (quoting Iliadis, 191 N.J. at 108).

“A third inquiry is whether a class action presents a ‘common nucleus of
                                       41
operative facts.’” Ibid. (quoting Iliadis, 191 N.J. at 108). “[W]e heed our

prior observation that ‘the answer to the issue of predominance is found . . . in

a close analysis of the facts and law.’” Iliadis, 191 N.J. at 109 (omission in

original) (quoting In re Cadillac, 93 N.J. at 434).

                                        B.

      In its determination of post-trial motions, the trial court left undisturbed

its certification of the class for purposes of liability but reached the opposite

conclusion on the question of damages. Having explored the deficiencies in

plaintiff’s aggregate proofs on the cost of repair, deemed an individualized

inquiry to be the only fair way to determine class members’ out-of-pocket

losses, and ordered a new trial on damages, the trial court properly reassessed

the question of predominance under Rule 4:32-1(b)(3). Informed by the trial

evidence and the jury’s rejection of plaintiff’s diminution-in-value expert

proofs, the trial court held that for purposes of the new trial on class members’

out-of-pocket costs, common questions no longer predominated over

individualized inquiries as to the class members’ damages.

      The trial court conducted a careful assessment of the common and

individual questions. It concluded that the class’s damage claims could not be

resolved in a common proceeding. The court found no single factual pattern

on the limited question of damages that remained. See Lee, 203 N.J. at 519-

                                        42
20; Iliadis, 191 N.J. at 108. The trial court’s determination was firmly

grounded in the trial evidence, which demonstrated the disparate experiences

of individual class members.

      We view the trial court’s decertification order to be a correct application

of Rule 4:32-1(b)’s predominance standard and a proper exercise of the court’s

discretion in the management of this case.

                                       VI.

      Finally, we review the adoption of the Report and Recommendations of

the second Special Master by the judge assigned to handle post-trial

proceedings.

      When we review a Special Master’s findings and conclusions, we use

our “ordinary standards of review, considering them in the same manner as we

would the findings and conclusions of a judge sitting as a finder of fact.” State

v. Chun, 194 N.J. 54, 93 (2008). We “accept[] the fact findings of a special

master to the extent they are supported by ‘substantial credible evidence in the

record.’” State v. Cassidy, 235 N.J. 482, 491 (2018) (quoting Chun, 194 N.J.

at 93).

      With the consent of the parties, the Assignment Judge and the judge

assigned to handle post-trial proceedings jointly appointed the second Special

Master. The court assigned the Special Master to conduct a claims proceeding

                                       43
based on claim forms that class members had submitted at an earlier stage of

the case, and to submit a Report and Recommendations with a proposed

determination of all disputed claims, subject to both parties’ right to object.

      The Special Master undertook a series of steps to ensure that as many

class members as possible received full and fair consideration of their claims.

He established detailed procedures for the handling of discrete categories of

claims, such as claims in which the class member failed to sign the form,

claims in which the class member provided no information, and claims in

which the class member provided partial but incomplete information in support

of the claim. The Special Master declined to address claims in which the class

member did not sign the form or provided no information at all but allowed

class members who had submitted insufficient information on their claim

forms to present their claims before him. He made rulings on numerous issues

raised by the parties with respect to individual claims.

      The Special Master established fair and workable criteria for a

claimant’s recovery of the costs that he or she spent on a brake repair . He

deemed a repair to be compensable if it was performed within the first three

years that the claimant owned the car or when the car had been driven fewer

than 36,000 miles, if the repair was conducted when the car had been driven




                                        44
fewer than 20,000 miles since the most recent repair, and if defendant did not

pay for the repair.

      In accordance with those criteria, the Special Master adjudicated 1201

claims. The parties then conferred with respect to the Special Master’s

determination and resolved all but ninety-three claims, which were referred to

the Special Master for resolution. Of those, the Special Master recommended

that the court deny twenty-two claims, award partial recovery to thirty-three

claimants, and award full recovery to the remaining claimants.

      Both parties filed objections to the Special Master’s Report and

Recommendations. In a detailed written opinion, the judge handling post-trial

proceedings considered and rejected the parties’ objections. The judge found

the Special Master’s findings to be supported by substantial credible evidence

in the record and adopted those findings.

      We agree with the post-trial judge’s determination. As plaintiff

recognized when she suggested a claims proceeding on damages to the trial

court during a hearing on class certification, such a proceeding may be an

equitable and practical method of resolving damages claims. See, e.g., In re

Nexium Antitrust Litig., 777 F.3d 9, 19 (1st Cir. 2015) (noting that an

individual claims process may be conducted at the liability and damages stage

of class action litigation); Kern v. Siemens Corp., 393 F.3d 120, 127 (2d Cir.

                                       45
2004) (“[O]nce defendant’s liability is established, the court may be justified

in . . . requiring class members to file statements of their claims . . . .” (first

omission in original) (quoting 7B Wright, Miller & Kane, Federal Practice &

Procedure § 1787 at 217 (2d ed. 1986))); Kyriazi v. W. Elec. Co., 647 F.2d

388, 392 (3d Cir. 1981) (noting that “[t]he proof of claim procedure employed

by the district court was not novel” and that “[t]he consensus among courts

and commentators” recognized that the procedure can “serve as an essential

aid” in class actions). The trial judge and post-trial judge acted within their

discretion when they authorized such a procedure in this action.

      Moreover, the second Special Master conducted the claims process with

precision and care. As the claim form made clear, a claimant’s failure to retain

documentation of his or her brake repairs did not bar his or her otherwise valid

claim. The Special Master reviewed each claim, referring to defendant’s

records pertaining to the claimant’s vehicle and other relevant documents. He

made individualized determinations as to the brake repairs conducted on each

vehicle, and any payments for those repairs under defendant’s warranty. The

Special Master thoughtfully considered and resolved the many objections made

by both parties.

      This was, in short, a fair and exemplary claims process. We agree with

the judge who oversaw this case after trial that the Special Master’s Report and

                                           46
Recommendations were supported by substantial credible evidence in the

record. See Cassidy, 235 N.J. at 491. We hold that the court properly adopted

the Special Master’s findings.

                                     VII.

      The determination of the Appellate Division is reversed, and the final

judgment entered by the trial court on September 10, 2015 is reinstated.



     CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN,
FERNANDEZ-VINA, and TIMPONE join in JUSTICE PATTERSON’s opinion.
JUSTICE SOLOMON did not participate.




                                      47
