Diaz v. FCA US LLCDiaz v. FCA US LLC
Counsel for Plaintiffs
Patrick M. Brannigan, Jessica L. Reno, ECKERT SEAMANS CHERIN & MELLOTT LLC, Wilmington, DE; Stephen A. D‘Aunoy, Thomas L. Azar, Scott H. Morgan, THOMPSON COBURN LLP, St. Louis, MO.
Counsel for Defendant
Wilmington, Delaware
MEMORANDUM OPINION AND ORDER
WALLACH, Circuit Judge, sitting by designation.
Gustavo Diaz, Joseph Santos, Christian A. Gibson, Gerald Sinclair, Marvin Leon Veal, Brian Stone, and Michael Kissler (collectively “Plaintiffs“)1 with the Court‘s leave filed their First Amended and Supplemental Class Action Complaint (“FASC“) (D.I. 59) against FCA US LLC (“FCA” or “Defendant“), as buyers of new or used rear-wheel-drive “Class Vehicles”2 from FCA-authorized dealerships, and “on behalf of all persons in the United States, and in the alternative, on behalf of all persons in the states of California, Florida, New Jersey, and Texas who purchased or leased” Class Vehicles, which allegedly have a “Differential Defect.”3 D.I. 59 ¶¶ 1, 39-40, 60-61, 92–93, 111–112, 130–131, 159–161, 181-182, 221–241, 340. Under
(D.I. 47) the FASC for failure to state a claim upon which relief can be granted. See Def.‘s Mot. to Dismiss (D.I. 47); Def.‘s Br. in Supp. of Mot. to Dismiss (D.I. 48); Def.‘s Reply (D.I. 50); Def.‘s Suppl. Br. (D.I. 61); Def.‘s Suppl. Reply (D.I. 63); see also Pls.’ Opp‘n to Def.‘s Mot. to Dismiss (D.I. 49);
I. BACKGROUND
In its prior Memorandum Opinion and Order (D.I. 34), the Court dismissed Plaintiffs’ Complaint (D.I. 1) “in its entirety without prejudice.” Diaz v. FCA US LLC, No. 21-cv-00906-EJW, 2022 WL 4016744, at *47 (D. Del. Sept. 2, 2022). The Court addressed at length the facts of this case, see generally id., which are not recounted here because the Parties are familiar with them, but are amended or supplemented where needed like the FASC that largely reincorporates them. The Parties fully briefed Defendant‘s Motion to Dismiss a proposed first amended complaint, see generally D.I. 39, D.I. 40, D.I. 47, D.I. 48, D.I. 49, D.I. 50, but prior to the Court‘s disposition of the Motion, Plaintiffs requested leave to file another “to supplement their allegations based on newly discovered information” “obtained from attending Dodge‘s reveal of the 2023 Demon 170 [(‘MY2023 Demon‘)] on March 20, 2023, in Las Vegas, Nevada.” D.I. 52 at 1–2; see also D.I. 53, D.I. 54. After holding a status conference with the Parties, the Court accepted the additional pleading under
Dismiss the FASC is now ripe for review5 and fully briefed after the Parties’ supplemental briefing. See D.I. 48, D.I. 49, D.I. 50, D.I. 61, D.I. 62, D.I. 63.
II. LEGAL STANDARD
Under
When reviewing a
complaint must provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.‘” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. Plaintiffs’ claims have facial plausibility when Plaintiffs “plead[] factual content that allows the [C]ourt to draw the reasonable inference that the [D]efendant is liable for the misconduct alleged.” Id. The Court may not dismiss a complaint under
III. DISCUSSION
In light of the pleading standards, as well as the claim-specific standards described below, the Court dismisses with prejudice Plaintiffs’ claims grounded in fraud (Counts I, II, V, VI, VIII, X, & XII), as Plaintiffs fail to plausibly plead FCA‘s pre-sale knowledge to allege a required element of fraud. The Court denies Defendant‘s Motion to Dismiss as to Plaintiffs’ implied warranty of merchantability claims under New Jersey and Texas law (Counts IX & XI); however, it grants the Motion as to Plaintiffs’ implied warranty of merchantability claims under California and Florida law (Counts IV & VII), which are dismissed with prejudice. In turn, the Magnuson-Moss Warranty Act claim (Count III) is dismissed without prejudice when based on New Jersey and Texas law, but it is dismissed with prejudice when based on California and Florida law. The Court also dismisses with prejudice Plaintiffs’ requested relief to compel FCA to perform a voluntary recall according to National Highway Traffic Safety Administration (“NHTSA“) regulations. The Court addresses these claims below.
A. The Fraud-Based Claims (Counts I, II, V, VI, VIII, X, & XII) are Dismissed with Prejudice Because Plaintiffs Fail to Plausibly Plead FCA‘s Pre-Sale Knowledge.
In the FASC, Plaintiffs assert several claims against FCA based on allegations of underlying fraud (“Fraud-Based Claims“).6 See generally D.I. 59 (Counts I,
unjust enrichment claims, as well as claims under the consumer fraud statutes of states where they purchased their vehicles (California, Florida, New Jersey, and Texas).“). FCA moves to dismiss the Fraud-Based Claims for, among other reasons, Plaintiffs’ failure to plausibly plead that FCA knew or should have known8 of the Differential Defect before selling Plaintiffs their Class Vehicles. See D.I. 48 at 9–12; D.I. 50 at 3–4; D.I. 61 at 6–8; see, e.g., D.I. 48 at 9 (“A plaintiff must plead facts showing that the defendant manufacturer knew of the alleged defect before the sale of a vehicle in order to state any claim based on an alleged omission.” (collecting cases)). The Court agrees with FCA that Plaintiffs’ FASC does not sufficiently correct for their failure from the original Complaint to plausibly plead FCA‘s pre-sale knowledge at any time before Plaintiffs bought their respective Class Vehicles,9 for their theories of fraud (e.g., omission, concealment, or misrepresentation). Simply put, the mismatch between Plaintiffs’ allegations of the Differential Defect and FCA‘s knowledge
Plaintiffs rely on the same Technical Service Bulletins (“TSBs“) that this Court concluded do not even address the Differential Defect. See D.I. 59 ¶¶ 280–292; see also Diaz, 2022 WL 4016744, at *29 (“Here, none of the [TSBs] (which address a variety of Class Vehicle models) cited by Plaintiffs address the Differential Defect.“). Plaintiffs appear to concede the same, yet pivot to argue that the TSBs’ lack of description of a Differential Defect somehow shows that Defendant knew of the Differential Defect based on its other communications with FCA-authorized dealerships. See, e.g., D.I. 59 ¶ 283 (“[T]he TSBs do not acknowledge the Differential Defect, but instead attempt to provide instructions to dealerships on what repairs to perform to Class Vehicles to merely alleviate the symptoms of the Differential Defect.” (emphasis added)); see also D.I. 59 ¶ 283 (“Discovery will show, as a result of its exclusive and superior knowledge regarding the Differential Defect, Defendant released several TSBs describing the issues related to the Defect to FCA‘s exclusive network of dealerships beginning in or around May 2015.“). Plaintiffs appear to ask the Court to draw an inference that FCA had pre-sale knowledge from its instructions to and communications with FCA-authorized dealerships. See, e.g., D.I. 59 ¶ 280 (“Discovery will show that this proprietary database describes in detail how FCA instructs technicians to inspect the rear differential when customers complain of noises coming from the rear of the vehicle.” (emphasis added)). However, this Court concludes that Plaintiffs’ allegations relating to these communications do not meet plausibility standards. They do not reasonably allow for the inference that the TSBs indicate FCA‘s pre-sale knowledge for Fraud-Based Claims based on the absence of details11 relating to the Differential Defect, and they speculate to reach an
unsupported conclusion that this will be revealed by Defendant‘s other communications with FCA-authorized dealerships. See Iqbal, 556 U.S. at 678 (“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.“).
Plaintiffs allege that consumer complaints filed with NHTSA, as well as those posted anonymously online, show that FCA knew or should have known of the Differential Defect.13 See generally D.I. 59 ¶¶ 293–306. Plaintiffs’ FASC adds two additional NHTSA complaints,14 see D.I. 59 ¶ 296, as well as eleven screenshots of complaints posted to online forums, see D.I. 59 ¶¶ 300–302. FCA counters that these consumer complaints “are unavailing because, at best, they still only ‘merely identify some symptoms’ rather than expressly ‘identify or describe the defect alleged.‘” D.I. 48 at 11 (quoting Diaz, 2022 WL 4016744, at *30). The Court agrees with FCA. Even giving the weight of factual truth to Plaintiffs’ assertions,15 the
Although the two additional NHTSA complaints fare better, they also fall short and do not plausibly plead Defendant‘s pre-sale knowledge of the Differential Defect. The July 30, 2015 consumer complaint (NHTSA ID Number: 10744923)16 details:
ON DRIVE HOME FROM PURCHASING VEHICLE WE NOTICED A LOUD CLUNKING IN THE REAR END WHILE IN STOP AND GO TRAFFIC. CALLED DEALERSHIP IMMEDIATELY. SALES MANAGER SAID IT WAS NORMAL, THEY ALL DO THAT. TOOK IT IN FOR SERVICE, TECH TEST DROVE IT AND SAID IT WAS NOT NORMAL & SEEMED TO BE PROBLEM IN THE REAR DIFFERENTIAL. WHEN BROUGHT IN FOR REPAIRS THEY ONLY UPDATED COMPUTER SYSTEM. PROBLEM PERSISTED WITH LOUD CLUNK AND HARD SHIFTING AT ABOUT 1500 RPM AND SLOWING AND ENGAGING GAS AT LOWER SPEEDS, TYPICALLY BETWEEN 30-40 MPH. TOOK BACK IN, AFTER SOME TIME INVESTIGATING AND COMING UP WITH NO DIAGNOSIS THEY CONTACTED MANUFACTURERS “STAR CENTER” AND WERE ADVISED IT WAS A SHIFT BINDING PROBLEM IN THE REAR DIFFERENTIAL. THEY REPLACED THE VALVE BODY & RESET THE TRANSMISSION SHIFT ADAPTIVE. PROBLEM STILL PERSIST WHILE THE DEALERSHIP & MANUFACTURER INSISTS IT MEETS MANUFACTURER SPECS. CONCERN IS WITH THE REAR DIFFERENTIAL BINDING AND LOCKING UP CAN & MAY LOCK THE REAR END UP BRINGING THE CAR TO AN IMMEDIATE & ILL TIMED STOP IN TRAFFIC.
D.I. 59 ¶ 296 (emphases added). The FASC does not identify or describe the Differential Defect with “shift binding problem,” “transmission shift adaptive,” or “valve body,” and these three terms only appear in the FASC within this single NHTSA consumer complaint. See generally D.I. 59. Also, the FASC does not plausibly plead that a brand-new car would experience the Class Vehicles’ Differential Defect that is supposed to be latent and based on degradation,17 when there
is not even, at minimum, any wear and tear yet. See generally D.I. 59 ¶ 4. Here, FCA did not have pre-sale knowledge of Plaintiffs’
Next, the June 7, 2017 consumer complaint (NHTSA ID Number: 10993808)18 states:
WHILE DRIVING DOWN THE ROAD THE REAR DIFFERENTIAL INTERNALLY EXPLODED, LOSING CONTROL OF THE VEHICLE LUCKILY I DIDN‘T HIT ANYTHING. IT‘S BEEN AT THE DEALER FOR OVER A WEEK AND I CAN‘T GET A HOLD OF ANYONE. GOING 60MPH AND A LOUD BANG. GOT PULLED OVER AND LOOKED UNDER CAR. DIFFERENTIAL PUMP HOUSING WAS SPLIT IN TWO WITH NO SIGNS OF ANY EXTERNAL DAMAGE. STILL AT THE DEALER. ...UPDATED 06/13/17 *BF ...UPDATED 08/29/17 *BF ....UPDATED 06/21/17 *BF THE CONSUMER STATED AFTER THE VEHICLE WAS REPAIRED, BUT THE FAILURE RECURRED. THE CONSUMER WAS PROVIDED A RENTAL VEHICLE. UPDATED 08/03/2017*JS *CN *JS
D.I. 59 ¶ 296 (emphases added) (detailing an incident on June 4, 2017). Similarly, even if FCA knew or should have known of some problem relating to a rear differential, it is not Plaintiffs’ Differential Defect, where “when the differential fails, it often explodes, sending shrapnel into the undercarriage of the vehicle and damaging ancillary parts that also require repair or replacement.” D.I. 59 ¶ 7 (emphases added). The June 7, 2017 NHTSA consumer complaint mentions the vehicle‘s “rear differential internally exploded”19 with “no signs of any external damage,” that
that the July 30, 2015 NHTSA complaint, where a brand-new car right off the lot had an alleged issue with the rear differential (that does not align readily with the Differential Defect) does not plausibly plead FCA‘s pre-sale knowledge, as alleged by Plaintiffs (Kissler or otherwise).
was not accelerating but going at a set speed of 60 miles per hour unlike the Differential Defect, D.I. 59 ¶ 296 (emphases added), where “the rear differential is not adequately designed for the torque loads of the engines and transmissions exerted during acceleration.” D.I. 59 ¶ 4 (emphasis added). These additional consumer complaints from NHTSA and online forums do not plausibly plead FCA‘s knowledge of the Differential Defect, when not identifying or describing the alleged defect. See Diaz, 2022 WL 4016744, at *30 (collecting cases).
Moreover, the Court finds that Plaintiffs do not point to an unusual number of complaints within the span of nearly eight years relating to the alleged Differential Defect, so they are insufficient to plausibly plead FCA‘s pre-sale knowledge. See, e.g., Sloan, 2017 WL 3283998, at *7 (“[C]onsumer complaints suffice to establish knowledge only where there were an unusual number of complaints, such that the manufacturer would be on notice of a specific problem.“); Roe v. Ford Motor Co., No. 2:18-cv-12528-LJM-APP, 2019 WL 3564589, at *7 (E.D. Mich. Aug. 6, 2019)
Plaintiffs also assert that before they bought their Class Vehicles, FCA was “aware” of the Differential Defect from “pre-production testing, including failure mode analysis . . . .” D.I. 59 ¶ 275; see generally D.I. 59 ¶¶ 275–279. Plaintiffs allege that, “[a]s an experienced manufacturer,
and its internal components including, but not limited to, the ring gear, pinion gear and differential housing to fail . . . .” D.I. 59 ¶ 4 (emphasis added). The June 7, 2017 NHTSA consumer complaint, however, does not speak to a failure or degradation under high torque loads like Plaintiffs’ Differential Defect. See D.I. 59 ¶ 296.
FCA conducts tests, including pre-sale durability testing, on incoming components, including rear differentials to verify the parts are free from defect and align with FCA‘s specifications,” and note that, because Class Vehicles have the SRT badge, FCA was required to perform “additional track evaluations that simulate actual driving conditions, including track racing.” D.I. 59 ¶¶ 276, 279. FCA insists that “Plaintiffs’ generic and conclusory averments about ‘testing,’ past designs, and other ‘data’ fail to establish the required pre-sale knowledge about the purported defect in the subject vehicles (or any other).” D.I. 48 at 9–10. The Court agrees with FCA that Plaintiffs’ allegations are entirely too speculative to satisfy the plausibility requirements of
For example, Plaintiffs allege that FCA‘s “Arizona Proving Grounds hosts testing for noise, vibration and harshness (NVH) development and pass-by-noise development and
certification[,]” and in turn, “[d]iscovery will show that such testing revealed the symptoms of the [Differential] Defect, including significant whining coming from the rear differential.” D.I. 59 ¶ 277. Plaintiffs point this Court‘s attention to a set of tests, without describing how they work to alert FCA to the Differential Defect or what they would specifically show to FCA. See Wilson, 668 F.3d at 1147. These allegations are speculative and do not plausibly plead with specificity how FCA‘s pre-production testing is connected to its alleged pre-sale knowledge of the Differential Defect, because “Plaintiff[s] must allege more than an undetailed assertion
Another example is where Plaintiffs allege that,
FCA puts vehicles with the SRT badge21 through the SRT Duty Cycle, including simulated road course on dynameters and on the drag strip which pushes the engine to peak torque and peak power and tests different types of driveline loads. Such testing revealed to FCA that the rear differentials in Class Vehicles was insufficient to carry the torque and power of the engines in Class Vehicles.
D.I. 59 ¶ 279; see also D.I. 49 at 6. Despite their allegations, see, e.g., D.I. 59 ¶ 279, Plaintiffs once again fail to connect the testing to FCA‘s alleged pre-sale knowledge of the Differential Defect, and speculate the result they want without “elaborat[ing] whatsoever as to what that
information actually showed . . . .” Lewis v. Mercedes-Benz USA, LLC, 530 F. Supp. 3d 1183, 1220 (S.D. Fla. 2021) (“[T]he assertions regarding testing, reports, data, and analyses do not elaborate whatsoever as to what that information actually showed. . . . These allegations are precisely the kind of conclusory allegations that Iqbal and Twombly caution courts to disregard.“).
Here, the Court finds that “these general statements about the testing of cars and potential data that FCA may (perhaps likely does) possess about the Class Vehicles provide insufficient support for a plausible inference that FCA actually knew about the alleged defect.” Maugain, 2023 WL 1796113, at *10. Thus, Plaintiffs’ allegations regarding pre-production and pre-sale testing do not plausibly plead FCA‘s pre-sale knowledge of the Differential Defect, and “such allegations are the type of ‘mere conclusory statements’ that the Court must ignore.” Id. (quoting Doe v. Princeton Univ., 30 F.4th 335, 342 (3d Cir. 2022)).
Plaintiffs assert that the MY2023 Demon—the Class Vehicles’ supposed successor, the revelation of which was the impetus behind Plaintiffs’ FASC—demonstrates FCA‘s pre-sale knowledge. See generally D.I. 59 ¶¶ 258–272; see also D.I. 59 ¶ 37 (“FCA failed to disclose its knowledge until March of 2023, when it announced the release of the MY2023 [] Demon with its vastly improved rear differential.“). FCA disagrees. See generally D.I. 61 at 6–8. The Court concludes that Plaintiffs fail to plausibly plead FCA‘s pre-sale knowledge of the Differential Defect based on the MY2023 Demon.
FCA contends that Plaintiffs are only able to point to a generic timeline of how car design works and do not “plead any facts about how FCA US‘s design ‘timeline’ works.”22 D.I. 61 at 6
(citing D.I. 59
As an initial matter, the Court agrees with FCA that Plaintiffs’ factual allegations regarding the MY2023 Demon relate only to the MY2023 Demon and do not relate to Class Vehicles here, so “Plaintiffs fail to connect the release of the [MY2023 Demon] to the defect and symptoms they allege for their vehicles.” D.I. 61 at 5. In response, Plaintiffs insist that the MY2023 Demon is ”virtually identical to the MY2015 - MY2022 Challenger Class Vehicles but for a modest increase in power and a vastly improved, strengthened and redesigned rear differential which directly addresses elements of the [Differential] Defect alleged by Plaintiffs and specifically demonstrates FCA‘s pre-sale knowledge . . . .” D.I. 62 at 2 (emphases added). FCA contends that Plaintiffs’ “FASC makes no effort to account for the differences in, for instance, the engines, horsepower production, and relevant component configurations or characteristics between [MY2023 Demon] and their” respective Class Vehicles. D.I. 61 at 5.
The Court agrees with FCA in that it appears that Plaintiffs cherry-picked these distinctions between Class Vehicles and the MY2023 Demon, when they highlight the changes between their
TorqueNews.com (Apr. 16, 2012), available at https://www.torquenews.com/1080/how-car-design-works-start-finish (“Most manufacturers have models on a 4-6 year ‘remodel circuit’ which means they will undergo a major remodeling in look and powertrain every 4 to 6 years.“)).
rear differentials, see, e.g., D.I. 59 ¶¶ 267–268, and do not detail the MY2023 Demon‘s other improvements, including a “1,025-horsepower ‘brand new engine‘” with “upgrades to almost every primary engine power component” and “[e]ngine upgrades” throughout the vehicle. D.I. 61 at 3–4. Plaintiffs essentially argue that the MY2023 Demon and the Class Vehicles are the same where they look the same, and are not where they look different (e.g., rear differentials). See generally D.I. 62 at 6–7, see also D.I. 62 at 9 (arguing that “the FASC demonstrates FCA knew of the Defect, substantially redesigned the rear differential of a MY2023 [Demon], which is nearly visually and structurally identical to Class Vehicle[s]“). The Court concludes that Plaintiffs fail to plausibly plead the relevance of the MY2023 Demon “as an admission of defects in rear differential components in their own less powerful vehicles manufactured as many as eight years earlier,” D.I. 61 at 5 (listing Plaintiffs’ specific Class Vehicles and suggesting that they all have somewhere between 707-horsepower to 840-horsepower), when other improvements (e.g., horsepower and engine improvements) also matter here. See D.I. 61 at 3–4.
Turning back to FCA‘s alleged pre-sale knowledge, the Court finds that Plaintiffs do not plausibly plead pre-sale knowledge
characterize the rear differential in the special-edition [MY2023 Demon] as a ‘subsequent remedial measure’ (see, e.g., D.I. 59, ¶¶ 31, 34, 264, 267), which
When measures are taken that would have made an earlier injury or harm less likely to occur, evidence of the subsequent measures is not admissible to prove:
- negligence;
- culpable conduct;
- a defect in a product or its design; or
- a need for a warning or instruction.
But the court may admit this evidence for another purpose, such as impeachment or--if disputed--proving ownership, control, or the feasibility of precautionary measures.
Litig., 846 F.3d 625, 629, 634 n.12 (3d Cir. 2017) (concluding that, on an appeal at the motion to dismiss stage, a free credit monitoring offer “should not be used” as a “concession or recognition” of the plaintiffs having suffered injury by the health insurer because “such a rule would disincentivize companies from offering credit or other monitoring services in the wake of a breach“; then citing
Finally, in addition to Plaintiffs’ failure to plausibly plead pre-sale knowledge of the Differential Defect, they also do not plausibly plead any knowing fraudulent concealment or misrepresentation of the Differential Defect by FCA. Compare D.I. 59 ¶¶ 307–322 (reasserting the same factual allegations as their Complaint and only adding one paragraph simply noting that the automotive press widely covered the 2019 private event at the Houston Raceway Park), with D.I. 1 ¶¶ 202–216; see also D.I. 49 at 3–5. The Court has also reviewed what was amended and supplemented from the original Complaint, see, e.g., D.I. 59 ¶¶ 11, 26–38, 46–48, 81–84, 99–100, 104, 118, 137–142, 149–150, 161, 166–175, 179, 188–198, 258–272 (mentioning, among other things: the MY2023 Dodge Demon‘s public acknowledgment; Plaintiffs’ experience when buying Class Vehicles, including speaking to dealership representatives or looking at window stickers;
marketing materials, including television commercials, websites, online videos or brochures on Class Vehicles; discussions with FCA-authorized dealership personnel on repairs; etc.),23 and concludes that once again, “Plaintiffs provide no facts... to show what is false about these representations, other than that they run counter to the reality of the Class Vehicles, which, according to Plaintiffs, are defective.” Diaz, 2022 WL 4016744, at *32.
In sum, Plaintiffs fail to provide any plausible facts demonstrating FCA‘s pre-sale knowledge of the Differential Defect and cannot satisfy the pleading requirements of
B. Some State Law Implied Warranty Claims Fail (Counts IV & VII) While Others Survive (Counts IX & XI).
An implied warranty of merchantability under California, Florida, New Jersey, and Texas law requires merchantable goods to be “fit for the ordinary purposes for which such goods are used.”
Taking the FASC‘s factual allegations as true, Plaintiffs assert that the “Differential Defect can cause unexpected failures that significantly impair the safety, reliability, and operability of the Class Vehicles to such an extent that they are rendered unfit for the ordinary purpose of driving on public roadways.” D.I. 59 ¶¶ 56 (Diaz), 88 (Santos), 107 (Gibson), 126 (Sinclair), 155 (Veal), 177 (Stone), 200 (Kissler). Plaintiffs insist that their Class Vehicles under warranty are “unusable and unsafe even for regular driving,” D.I. 59 ¶ 12, because the Differential Defect “pose[s] a safety risk on a racetrack and on public roads due the horsepower and torque loads placed upon the defective rear differential for which it is incapable of withstanding,” D.I. 59 ¶ 14 (“[T]he high speeds the Class Vehicles can rapidly attain due to their high-performance engines causes the defective differential to be a much greater safety risk.“). They further state that they have “lost confidence in the ability” of their respective Class Vehicles to “provide safe and reliable transportation for ordinary” purposes. D.I. 59 ¶¶ 57 (Diaz), 89 (Santos), 108 (Gibson), 127 (Sinclair), 156 (Veal), 178 (Stone), 201 (Kissler). The Court finds that Plaintiffs, at this stage, have plausibly pleaded that the Differential Defect renders Class Vehicles “unfit” for their ordinary purposes24 by failing
On the other hand, the Court concludes that Plaintiffs fail to overcome similar hurdles that previously led to the dismissal of their claims under both California and Florida law. See generally Diaz, 2022 WL 4016744, at *36-45. These are addressed in reverse order.
In Florida, implied warranties are recognized “only when the litigants were in privity with the manufacturer.” Talley v. Gen. Motors, LLC, No. 1:20-cv-01137-SB, 2021 WL 7209448, at *7 (D. Del. Nov. 26, 2021) (emphasis added) (citing Ocana v. Ford Motor Co., 992 So.2d 319, 325 (Fla. D. Ct. App. 2008)), reconsideration denied, No. 1:20-cv-01137-SB, 2022 WL 958467 (D. Del. Mar. 30, 2022). Plaintiffs largely reassert in the FASC that the FCA-authorized dealerships are Defendant‘s agents based on “agreements” between Defendant and its “nationwide network of authorized dealerships,” relating to servicing and repairing cars sold under warranty. D.I. 59 ¶ 328 (“[D]iscovery will show that Defendant‘s authorized dealerships are Defendant‘s agents, and the consumers who purchase or lease Defendant vehicles are the third-party beneficiaries25 of these dealership agreements, which allow the consumers to purchase and service their Defendant vehicles locally.“). FCA argues and the Court agrees that Plaintiffs Gibson, Sinclair, and Veal bought their Class Vehicles from “third party dealerships” and not from Defendant, so “the implied warranty claim under Florida law (Count VII) [is] also subject to dismissal for lack of privity.” D.I. 48 at 16; see also Padilla v. Porsche Cars N. Am., Inc., 391 F. Supp. 3d 1108, 1116 (S.D. Fla. 2019) (“Consistent with the overwhelming weight of Florida law, this Court has repeatedly ruled that to establish contractual privity to state a breach of implied warranty claim, plaintiffs must purchase the product at issue directly from the defendant.” (emphasis added)). Even when reading
the facts in the light most favorable to Plaintiffs, they are unable to plausibly plead privity through an agency relationship26 between Defendant
Next, Plaintiffs’ breach of implied warranty of merchantability claim under California‘s Song-Beverly Consumer Warranty Act (“Song-Beverly Act“) fails to satisfy the four-year statute of limitation. See, e.g., Harris v. LSP Prod. Grp., Inc., No. 2:18-cv-02973-TLN-KJN, 2021 WL 2682045, at *5 (E.D. Cal. June 30, 2021). “Under
[U]nder California‘s so-called “discovery rule,” this four-year statute of limitations begins to run only “when the breach is or should have been discovered.”
Cal. Com. Code. § 2725(2) ; see Krieger v. Nick Alexander Imports, Inc., 234 Cal. App. 3d 205, 216-18, 285 Cal. Rptr. 717 (1991) (applying the discovery rule to claims for a breach of warranty and other Song-Beverly Act claims). The California Supreme Court has explained that, under this discovery rule, “[o]nce the plaintiff has a suspicion of wrongdoing, and therefore an incentive to sue, she must decide whether to file suit or sit on her rights.” Jolly v. Eli Lilly & Co., 44 Cal. 3d 1103, 1111, 245 Cal. Rptr. 658, 751 P.2d 923 (1988).
Schick v. BMW of N. Am., LLC, 801 F. App‘x 519, 520 (9th Cir. 2020) (applying discovery rule to Song-Beverly implied warranty claim).
“In order to invoke the delayed discovery exception to the statute of limitations, the plaintiff must specifically plead facts which show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.” Herremans v. BMW of N. Am., LLC, No. CV 14-02363 MMM (PJWx), 2014 WL 5017843, at *4 (C.D. Cal. Oct. 3, 2014) (cleaned up); see also E-Fab, Inc. v. Accts., Inc. Servs., 64 Cal. Rptr. 3d 9, 17 (Cal. Ct. App. 2007) (“A plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.“).
Plaintiff Diaz relies on essentially the same set of factual allegations as before, with one applicable change from saying that the “dealership told him nothing was wrong with the vehicle,” D.I. 1 ¶ 37, to now detailing that the “dealership told him the driveshaft and rear differential were normal and there was nothing wrong with the vehicle as it was operating as intended. Plaintiff‘s Class Vehicle was covered by warranty at this time, yet FCA failed to recommend repairs to the rear differential,” D.I. 59 ¶ 52. However, Plaintiff Diaz does not plead facts relating to his time and manner of discovery of the Differential Defect. See generally D.I. 59 ¶¶ 39-59.
Also, this Court noted in its prior opinion that “Plaintiff Santos must specifically allege facts to show his ‘inability to have made earlier discovery despite reasonable diligence.‘” Diaz, 2022 WL 4016744, at *39. “The burden is on the plaintiff to show diligence, and conclusory allegations will not withstand demurrer.” E-Fab, Inc., 64 Cal. Rptr. 3d at 17. Plaintiff Santos insists that he “exercised reasonabl[e] diligence in investigating the defects by continually taking his vehicle in for repairs,” D.I. 59 ¶ 81, that he relied on “FCA‘s authorized dealership representatives’ assertions that each repair fixed the issue,” when at each visit he was “reassured” by the FCA-authorized dealership‘s “service personnel that his vehicle was fixed,” D.I. 59 ¶ 82, and that “[n]o reasonable consumer would have done more than take their vehicle to an authorized dealership to fix the issues with their rear differential under warranty[,]” D.I. 59 ¶ 84. Even accepting these factual allegations as true, Plaintiff Santos fails to point to his time and manner of discovery of the Differential Defect. See generally D.I. 59 ¶¶ 60-91.
The Court concludes that Plaintiffs Diaz and Santos cannot invoke the delayed discovery rule here, where even after amending and supplementing their pleading, they fail to provide any “specific allegations concerning how or when [they] first discovered the defect.” Herremans, 2014 WL 5017843, at *5 (emphasis added); see also Diaz, 2022 WL 4016744, at *39 (quoting the same). Plaintiffs have been afforded the opportunity to amend and supplement their pleading, so the Court dismisses with
Thus, Plaintiffs’ Implied Warranty Claims under New Jersey and Texas law (Counts IX and XI) survive; however, the Implied Warranty Claims under California and Florida law fail, so the Court dismisses with prejudice Counts IV and VII.
C. The Magnuson-Moss Warranty Act Claim (Count III) Stands or Falls with the State Law Implied Warranty Claims.
The Parties agree that Plaintiffs’ claim under the federal Magnuson-Moss Warranty Act (“MMWA“) (Count III) stands or falls with the state law Implied Warranty Claims. See D.I. 48 at 15; D.I. 49 at 14; see also Daniel v. Ford Motor Co., 806 F.3d 1217, 1227 (9th Cir. 2015) (“Claims under the Magnuson-Moss Warranty Act stand or fall with express and implied warranty claims under state law.” (cleaned up)); Cooper v. Samsung Elecs. Am., Inc., 374 F. App‘x 250, 254 (3d Cir. 2010) (“Cooper‘s [MMWA] claim is based upon his state law claims of breach of express and implied warranties. Since the [d]istrict [c]ourt correctly dismissed both of those claims, Cooper‘s [MMWA] claim was also properly dismissed.“).
The Court observes, however, that the “MMWA requires at least 100 named plaintiffs to advance a class action claim under the Act.” Robinson v. Gen. Motors, LLC, No. 1:20-CV-00663, 2022 WL 19384806, at *4 (D. Del. Dec. 5, 2022) (citing
D. The Request for a Recall is Pre-Empted by Federal Law.
FCA contends with Plaintiffs’ requested relief relating to an order that compels FCA “to issue a voluntary recall for the Class Vehicles pursuant to
IV. CONCLUSION
For the foregoing reasons, it is hereby ORDERED, ADJUDGED, and DECREED that Defendant‘s Motion to Dismiss (D.I. 47) is GRANTED-IN-PART and DENIED-IN-PART:
- The Motion to Dismiss is GRANTED with respect to Counts I, II, III, IV, V, VI, VII, VIII, X, and XII, as well as to the requested relief to compel FCA to perform a voluntary recall according to NHTSA regulations;
- Counts I, II, III (as to Plaintiffs Diaz, Santos, Gibson, Sinclair, and Veal), IV, V, VI, VII, VIII, X, and XII, as well as to the requested relief to compel FCA to perform a voluntary recall according to NHTSA regulations are DISMISSED WITH PREJUDICE;
- Count III (as to Plaintiffs Stone and Kissler) is DISMISSED WITHOUT PREJUDICE; and
- The Motion to Dismiss is DENIED with respect to Counts IX and XI.
The Parties are ORDERED to confer and file a Joint Letter to the Court proposing a schedule as to how this case should proceed, on or before October 5, 2023. The Court will schedule a Status Conference with the Parties after receipt of the Joint Letter.
SO ORDERED.
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Notes
Also, at this stage in the litigation and based on the Parties’ extensive briefing on New Jersey and Texas law, see D.I. 48, D.I. 49, D.I. 50, D.I. 61, D.I. 62, D.I. 63, and lack thereof on the “appropriateness of performing a choice-of-law analysis at the motion to dismiss stage,” Aclate, Inc v. Eclipse Mktg. LLC, No. 20-576-RGA, 2020 WL 6158579, at *3 (D. Del. Oct. 21, 2020), the Court takes Plaintiffs’ factual allegations as true here and does not take issue with either Plaintiff Stone representing a New Jersey Class for “[a]ll residents of the State of New Jersey,” D.I. 59 ¶ 340, where he resides but not where he bought his Class Vehicle (Florida), see D.I. 59 ¶¶ 159–161, or with Plaintiff Kissler, an Oklahoman who bought his Class Vehicle out-of-state (Texas), see D.I. 59 ¶¶ 181–182, and represents a Texas Class for “[a]ll persons who purchased or leased” a Class Vehicle “within the state of Texas,” D.I. 59 ¶ 340. Moreover, the Court acknowledges that the five returning Plaintiffs still “do not allege or argue that they have suffered injuries in states other than those in which they reside . . . .” Diaz, 2022 WL 4016744, at *18.
Should discovery indicate that any Plaintiffs’ (including Plaintiffs Stone‘s and Kissler‘s) claims should be evaluated under a different state‘s law than pleaded, the Parties will need to brief this Court on any such impacts to the law. See id. at *16 (acknowledging that “Delaware uses the