201 F. Supp. 3d 578
D.N.J.2016Background
- Plaintiffs filed a putative nationwide class action challenging copper evaporator coils in Rheem/Ruud residential HVAC units that allegedly suffer premature formicary (pinhole) corrosion and refrigerant leaks during normal use.
- Rheem sold the units with a five- or ten-year limited parts warranty that promises to "repair or replace, at its option, ANY PART" but excludes refrigerant and labor costs and disclaims consequential damages.
- Three named plaintiffs purchased units in 2010–2011 and experienced coil leaks within 3–5 years; two received replacement coils under the warranty but paid out-of-pocket for refrigerant and labor.
- Claims pleaded: breach of express and implied warranty, Magnuson-Moss Warranty Act (MMWA), fraudulent concealment, negligent misrepresentation, product liability (withdrawn), state consumer fraud claims (NJ, NY, AZ), unjust enrichment, and declaratory relief.
- Rheem moved to dismiss under Rule 12(b)(6). The court denied dismissal as to breach of implied warranty and the MMWA claim based on that implied-warranty theory, but dismissed all other counts without prejudice (Fecht’s implied-warranty/MMWA claims dismissed as time-barred).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of express warranty | Warranty promised parts free from defects; Rheem failed to provide an adequate remedy (didn't pay refrigerant/labor; allegedly replaced with equally defective copper coils) | Warranty expressly limits remedy to repair or replacement at Rheem’s option and excludes refrigerant/labor; Plaintiffs received replacement coils | Dismissed without prejudice — Plaintiffs did not plead that Rheem failed to perform or that replacement failed to cure; allegations that replacement was copper not pleaded in complaint. |
| Warranty fails of essential purpose / unconscionability | Limited remedy is illusory because Rheem knew of latent defect and structured warranty to avoid costs | Limited remedy is lawful; plaintiffs must show seller unwilling/unable to conform or repeated failed repairs; no such facts pleaded | Dismissed — no allegation that remedies were ineffective or that Rheem refused/failed to cure; unconscionability not shown. |
| Breach of implied warranty of merchantability | Coils were unmerchantable (not fit to cool homes during normal use) | Functioning for several years undermines claim; statute of limitations for some plaintiffs | Denied as to nationwide implied-warranty claim (plausible latent defect within warranty period); Fecht’s claim time-barred and dismissed. |
| Magnuson-Moss Warranty Act (MMWA) | Federal remedy based on underlying warranty breaches | MMWA depends on viable state-law warranty claims | Permitted to proceed to the extent it rests on the viable implied-warranty claim; dismissed insofar as based on express-warranty claim. |
| Fraudulent concealment & negligent misrepresentation | Rheem knew of the defect (consumer complaints; later switch to aluminum coils) and concealed it; advertising misled purchasers | Plaintiffs fail Rule 9(b) particularity, must show Rheem knew defect at time of sale and owed duty to disclose; economic-loss rule bars tort recovery | Dismissed without prejudice — plaintiffs did not plead contemporaneous knowledge or a special duty to disclose; fraud allegations lack required particularity. |
| Consumer protection statutes (N.J., N.Y., A.Z.) | Rheem’s marketing statements and warranty representations were deceptive and caused plaintiffs’ losses | Marketing statements are puffery/nonmaterial; plaintiffs haven’t pleaded reliance/causation or timing; some claims time-barred | Dismissed without prejudice — advertising quoted but deemed non-actionable puffery and causation not pleaded; Fecht’s NY claim tolled and not time-barred. |
| Equitable remedies (unjust enrichment, declaratory relief) | Alternative relief flowing from statutory and warranty claims | Remedies depend on valid underlying claims | Dismissed without prejudice because underlying claims were dismissed. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (standards for plausible pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions not accepted on Rule 12(b)(6))
- Chatlos Sys., Inc. v. Nat’l Cash Register Corp., 635 F.2d 1081 (3d Cir.) (limited remedy fails of essential purpose when seller cannot or will not cure after repeated attempts)
- Kuzian v. Electrolux Home Prods., Inc., 937 F. Supp. 2d 599 (D.N.J.) (limited express warranty does not guarantee defect-free product)
- Gennari v. Weichert Co. Realtors, 148 N.J. 582 (N.J.) (elements of fraud and materiality requirement for misrepresentations)
- Bosland v. Warnock Dodge, Inc., 197 N.J. 543 (N.J.) (NJCFA requires unlawful conduct, ascertainable loss, and causation)
- Johansson v. Cent. Garden & Pet Co., 804 F. Supp. 2d 257 (D.N.J.) (MMWA claims depend on viable state-law warranty claims)