IN RE: GENERAL MOTORS AIR CONDITIONING MARKETING AND SALES PRACTICES LITIGATION
Case Number: 18-md-02818
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION
Hon.
ALL CASES
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS (ECF #35)
In this putative consolidated class action, seventeen plaintiffs from thirteen states bring a variety of claims against Defendant General Motors Company (“GM”) arising out of alleged defects in the air conditioning systems of their GM vehicles. GM has now moved to dismiss most of Plaintiffs’ claims. (See Mot. to Dismiss, ECF #35.) For the reasons that follow, GM’s motion is GRANTED IN PART AND DENIED IN PART.
I
GM is one of the world’s leading automakers. Plaintiffs are consumers who purchased various GM vehicles under the Chevrolet, GMC, and Cadillac brands (the “Class Vehicles”).1 Plaintiffs claim that the air conditioning systems in the Class Vehicles are defective and that GM’s efforts to repair the defects have failed. More specifically, Plaintiffs assert that the Class Vehicles “have a serious defect that causes the [air conditioning systems] to (a) crack and leak refrigerant; (b) lose pressure within the [air conditioning system]; and (c) fail to properly function to provide cooled air into the [v]ehicle’s passenger cabin” (the “AC Defect”). (Am. Compl. at ¶3, ECF #24 at Pg. ID 1013.) According to Plaintiffs, the
II
Plaintiffs filed their First Amended Consolidated Master Class Action Complaint (the “First Amended Complaint”), the operative pleading in this action, on August 14, 2018. (See Am. Compl., ECF #24.) The named Plaintiffs are as follows:
- Rodney Martin, an Alabama resident who “purchased a new 2015 Chevrolet Silverado” from an “authorized GM dealer” in Alabama in 2015. (See id. at ¶¶ 23-24, Pg. ID 1020);
- Kenneth Gay, an Arizona resident who “purchased a new 2014 Chevrolet Silverado” from an “authorized GM dealer” in Arizona in 2013. (See id. at ¶¶ 32-33, Pg. ID 1022);
- Carl Williams, a California resident who “purchased a new [2014 Chevrolet Silverado]” in California in 2014. (See id. at ¶43, Pg. ID 1024);
- Clarence Larry, a California resident who “purchased a new 2015 Chevrolet Tahoe” from “an authorized GM dealer” in California in 2015. (See id. at ¶¶ 54-55, Pg. ID 1028);
- Erica Wolfe, a Florida resident who “purchased a certified pre-owned 2015 Chevrolet Tahoe … with an extended warranty” from “an authorized GM dealer” in Florida in 2016. (See id. at ¶¶ 68-69, Pg. ID 1031);
- Andrew C. Hill, a Florida resident who “purchased a new 2014 Chevrolet Silverado” from “an authorized GM dealer” in Florida in 2014. (See id. at ¶¶ 79-80, Pg. ID 1033);
- Richie Ainsworth, a Louisiana resident who “purchased a used 2014 Chevrolet Silverado” from “an authorized GM dealer” in Louisiana in 2015. (See id. at ¶¶ 87-88, Pg. ID 1035);
- James Won, a New Jersey resident who purchased (1) “a new 2015 Chevrolet Suburban” from an “authorized GM dealer” in New York in 2014, (2) a “second Chevrolet Suburban” from an authorized GM dealer in New York in 2015, (3) “a third new 2015 Chevrolet Suburban” from an “authorized GM dealer” in New Jersey in 2016, and (4) a “a 2016 Cadillac Escalade” from an “authorized GM dealer” in New Jersey in 2016. (See id. at ¶¶ 99-103, Pg. ID 1037-38.)
- Hayes Ellis, an Alabama resident who purchased a “new 2014 GMC Sierra” from an “authorized GM dealer” in Oklahoma in 2014. (See id. at ¶¶ 119-20, Pg. ID 1041);
- Billy Frank, a Tennessee resident who purchased a new “2015 Chevrolet Suburban” in Tennessee in 2015. (See id. at ¶¶ 129-30, Pg. ID 1043);
- John O’Brien, a Tennessee resident who purchased a new “2014 GMC Sierra” in Tennessee in 2013. (See id. at ¶¶ 141-42, Pg. ID 1046);
- Marcus Bell, a Texas resident who purchased a “new 2014 GMC Sierra” from an “authorized GM dealer” in
Texas in 2013. (See id. at ¶¶ 152-53, Pg. ID 1049); - Aaron and Jan Howard, Washington residents who purchased a “new 2014 Chevrolet Silverado” from an “authorized GM dealer” in Washington in 2013. (See id. at ¶¶ 162-63, Pg. ID 1051);
- Leslie Griffin, a Georgia resident who purchased a “certified pre-owned 2015 Chevrolet Suburban” from an “authorized GM dealer” in Georgia in 2016. (See id. at ¶¶ 175-76, Pg. ID 1053-54);
- Edilberto Gomez, a Florida resident who purchased a “new 2015 Chevrolet Silverado” from an “authorized GM dealer” in Florida in 2016. (See id. at ¶¶ 185-86, Pg. ID 1056); and
- Corey Steketee, a Michigan resident who purchased a “new 2014 GMC Sierra” from an “authorized GM dealer” in Michigan in 2013. (See id. at ¶¶ 195-96, Pg. ID 1058).
These Plaintiffs bring claims for breach of the Class Vehicles’ express and implied warranties, unjust enrichment, fraud, and violations of the consumer protection laws of various states. GM moved to dismiss Plaintiffs’ claims on November 13, 2018. (See Mot. to Dismiss, ECF #35.) The Court held a hearing on the motion on June 25, 2019.
III
GM moves to dismiss Plaintiffs’ claims pursuant to
IV
GM moves to dismiss nearly all of Plaintiffs’ claims on several different grounds.2
- “Plaintiffs’ Express and Implied Warranty Claims Should be Dismissed.” (Mot. to Dismiss, ECF #35 at Pg. ID 1705-17);
- “Plaintiffs’ Claim of Unjust Enrichment Should be Dismissed.” (Id. at Pg. ID 1717-20);
- “Plaintiffs’ Fraudulent Concealment Claims Should be Dismissed.” (Id. at Pg. ID 1720-28); and
- “Plaintiffs’ Claims Under the Consumer Protection Statutes Should be Dismissed.” (Id. at Pg. ID 1728-42.)
The Court will address each of these categories in turn below.
A
1
In Counts 11, 12, 19, and 35 of the First Amended Complaint, Plaintiffs Carl Williams, Clarence Larry, Leslie Griffin, and James Won allege that GM breached the express “Limited Warranty” of the vehicles they purchased. (See Am. Compl., ECF #24 at Counts 11, 12, 19, and 35.) These “bumper-to-bumper” Limited Warranties provide that GM will pay for any necessary “repairs to correct any vehicle defect … related to materials or workmanship occurring during the warranty period.” (Limited Warranty, ECF #35-2 at Pg. ID 1755.3) The “warranty period” for
these vehicles is “3 years or 36,000 miles, whichever comes first.” (Id.; see also, e.g., Am. Compl. at ¶602, ECF #24 at Pg. ID 1194, describing the “new vehicle three-year and 36,000-mile Limited Warranty”).
Likewise, Plaintiffs Carl Williams, Clarence Larry, Erica Wolfe, Andrew C. Hill, Edilberto Gomez, Leslie Griffin, Richie Ainsworth, Corey Steketee, James Won, Hayes Ellis, and Marcus Bell claim GM breached their vehicles’ implied warranties. (See Am. Compl., ECF #24 at Counts 13, 14, 18, 20, 25, 28, 31, 37, and 42.) Under the terms of the Limited Warranty, any implied warranties are limited in duration to the same period (three years or 36,000 miles, whichever occurs first) that applies to the Limited Warranty: “[A]ny implied warranty of merchantability or fitness for a particular purpose applicable to this vehicle is limited in duration to the duration of this written warranty.” (Limited Warranty, ECF #35-2 at Pg. ID 1764; emphasis in original.)
2
GM argues that all Plaintiffs – with the exception of Plaintiff Carl Williams4 – cannot state a viable breach of express or implied warranty claim because the air conditioning systems in their vehicles did not allegedly fail until after their
warranties expired. (See Mot. to Dismiss, ECF #35 at Pg. ID 1706; see also id. at Pg. ID
To maintain a claim for breach of an express or implied warranty, a plaintiff must, among other things, “seek warranty service within the [] period contained in the … [w]arranty.” In re Ford Motor Co. Speed Control Deactivation Switch Prods. Liab. Litig., 2007 WL 2421480, at *7 (E.D. Mich. Aug. 24, 2007) (noting that plaintiffs’ breach of express and implied warranty claims “fail[ed]” because “[n]one of the named Plaintiffs allege[d] that they sought warranty service … within the three-year warranty period”); see also In re OnStar Contract Litig., 600 F. Supp. 2d 861, 877-79 (E.D. Mich. 2009) (dismissing breach of express warranty claim where plaintiffs “fail[ed] to allege that they sought service for the OnStar equipment in their vehicle, or actually incurred any problems with same, within the durational limits specified in their respective express warranties”).5
Here, no Plaintiff (other than Carl Williams) alleges that his or her air conditioning system failed and/or that he or she sought warranty coverage related to the air conditioning system during the durational limits covering the express and implied warranties. Indeed, the air conditioning systems in many of the named
Plaintiffs’ vehicles did not fail until tens of thousands of miles after they reached the 36,000-mile durational limit under their warranties.6 Because Plaintiffs’ warranties expired before their air conditioning systems allegedly failed, they have failed to state viable breach of express or implied warranty claims.
3
Plaintiffs counter that their express and implied warranty claims are viable because “[a]ny time and mileage limits set forth in the [Limited] Warranty [are] unconscionable” and therefore unenforceable as a matter of law. (Resp. to Mot. to Dismiss, ECF #43 at Pg. ID 1907; see also id. at Pg. ID 1917-18, discussing unconscionability of implied warranties.) The Court disagrees.
“A plaintiff must allege both substantive and procedural unconscionability when claiming a breach of warranty based on the theory of unconscionability.” Rivera v. Ford Motor Co., 2017 WL 3485815, at *3 (E.D. Mich. Aug. 15, 2017). “A contract is substantively unconscionable if its provisions are so outrageously
unfair as to shock the judicial conscious.” Id. at *4. In assessing procedural unconscionability, a court asks: “[W]hat is the relative bargaining power of the parties, their relative economic strength, the alternative sources of supply, in a word, what are their options?” Andersons, Inc. v. Horton Farms, Inc., 166 F.3d 308, 322 (6th Cir. 1998) (applying Michigan law); see also Smith v. Ford Motor Co., 749 F. Supp. 2d 980, 993 (N.D. Cal. 2010) (applying California law and explaining that “[t]he procedural element
“Unconscionability is ultimately a question of law for the court.” Id. Plaintiffs fail to plausibly allege procedural unconscionability. They contend that the durational limits in the express and implied warranties are procedurally unconscionable because “there was unequal bargaining power between GM and
Plaintiffs … as Plaintiffs … had no other options for purchasing warranty coverage other than directly from GM.” (Resp. to Mot. to Dismiss, ECF #43 at Pg. ID 1908.) But as GM aptly points out, “the auto industry is one of the most competitive marketplaces that exists.” (Mot. to Dismiss, ECF #35 at Pg. ID 1709.) An individual seeking to purchase one of the Class Vehicles has many other options – sometimes within walking distance of his local GM dealership – if he is unhappy with the warranty that GM provides. For this reason, “the clear weight of authority” has rejected the argument that a vehicle “warranty [is] procedurally unconscionable because [consumers] had no meaningful choice in determining the time limits [of the warranty].” Majdipour v. Jaguar Land Rover N. Am., LLC, 2013 WL 5574626, at *20 (D.N.J. Oct. 9, 2013) (dismissing breach of express warranty claim and rejecting argument that warranty was procedurally unconscionable); see also Rivera, 2017 WL 3485815, at *4 (rejecting argument that durational limits in automobile warranty were unconscionable and noting that “such limitations are … routinely enforced by the courts”).8
Plaintiffs respond that even if the automobile marketplace is competitive, the bargaining power here was especially unequal – and the warranty limitations were therefore procedurally unconscionable – because GM knowingly failed to disclose the AC Defect to Plaintiffs and the public. In support of that argument, Plaintiffs rely on In re Porsche Cars N. Am., Inc., 880 F. Supp. 2d 801 (S.D. Ohio 2012). In In re Porsche, an automobile manufacturer moved to dismiss the plaintiffs’ breach of warranty claims on the ground that the plaintiffs’ claims were barred by the warranty’s durational limits. The district court rejected that argument and held that
The Court respectfully disagrees with and is not persuaded by In re Porsche. In re Porsche conflates a difference in knowledge with a difference in bargaining power. Bargaining power comes primarily from having viable alternatives in the marketplace, and a vehicle consumer with many options – like the Plaintiffs here –
has real and substantial bargaining power even where a seller like GM knowingly fails to disclose a defect. That is why the “majority” of courts have ruled that a seller’s “presale knowledge [of an alleged defect,] … standing alone, is insufficient to establish procedural unconscionability.” Rivera, 2017 WL 3485815, at *4. The Court joins that majority.
Plaintiffs have also failed to plausibly allege that the warranties’ durational limits are substantively unconscionable. Plaintiffs insist that the limits are substantively unconscionable because “GM knew of the defect and did not disclose it.” (Mot. to Dismiss, ECF #43 at Pg. ID 1908.) But “[c]ourts have routinely rejected express warranty claims premised on [this] theory.” Chiarelli v. Nissan N. Am., Inc., 2015 WL 5686507, at *7 (E.D.N.Y. Sept. 25, 2015) (“The case law is clear [] that a defendant’s knowledge of a latent defect does not render unconscionable a limitation contained in an express warranty.”).9 As the United States Court of Appeals for the Second Circuit persuasively explained:
[V]irtually all product failures discovered in automobiles after expiration of the warranty can be attributed to a “latent defect” that existed at the time of sale or during the term of the warranty. All parts will wear out sooner or later
and thus have a limited effective life. Manufacturers always have knowledge regarding the effective life of particular parts and the likelihood of their failing within a particular period of time. Such knowledge is easily demonstrated by the fact that manufacturers must predict rates of failure of particular parts in order to price warranties and thus can always be said to “know” that many parts will fail after the warranty period has expired. A rule that would make failure of a part actionable based on such “knowledge” would render meaningless time/mileage limitations in warranty coverage.
Abraham v. Volkswagen of Am., Inc., 795 F.2d 238, 250 (2d Cir. 1986).
For all of the reasons explained above, the Court DISMISSES all of Plaintiffs’ express and implied warranty claims (Counts 11, 12, 13, 14, 18, 19, 20, 25, 28, 31, 35, 37, and 42) except for the warranty claims of Carl Williams, the only Plaintiff who alleges that his air conditioning system failed during the term of his warranty.10
In Counts 11-14 of the First Amended Complaint, Plaintiff Carl Williams alleges that his air conditioning system failed during the term of his express and
implied warranties and that GM breached those warranties when it failed to adequately repair the AC Defect. (See Am. Compl. at ¶¶ 42-53, ECF #24 at Pg. ID 1024-28; see also id. at Counts 11-14.) GM moves to dismiss these claims on several grounds. (See Mot. to Dismiss, ECF #35 at Pg. ID 1710-13, 1716-17.) The Court will address each of these arguments separately.
1
GM first argues that the Court should dismiss Williams’ breach of express warranty claims because Williams “does not plead facts sufficient to show that GM actually breached the Limited Warranty.” (Id. at Pg. ID 1710.) GM says that it “complied with the promises in the express warranty by paying for repairs made to [Williams’] vehicle” and that Williams’ air conditioning system is currently working. Thus, GM insists that Williams cannot maintain claims for breach of the Limited Warranty. (Id.) The Court disagrees.
Williams plausibly alleges that GM has not adequately repaired his vehicle and that his vehicle will therefore require additional repair work in the future. More specifically, Williams alleges that GM has addressed the AC Defect by installing “equally defective replacement parts [that] leaves the [air conditioning system] susceptible to repeated failure.” (Am. Compl. at ¶230, ECF #24 at Pg. ID 1067.) Williams further alleges that:
GM’s proposed “fixes” for the AC System have proven inadequate. Because GM discontinued the refrigerant hose
originally installed in Class Vehicles due to the hose’s purported inability to withstand the pressures to which it is exposed, GM required Class members whose AC Systems failed to purchase a redesigned hose supposedly manufactured to specifications sufficient to avoid cracking during ordinary and intended use. GM also required its customers to install a line bracket to restrain the hose. These repairs were ineffective, however, because other AC System components, such as the condenser, also crack and spring leaks.
(Id. at ¶232, Pg. ID 1067-68.) Finally, Williams alleges that he did have his air conditioning system repaired once, that the repair did not work, and that he needed to have his vehicle serviced a second time. (See id. at ¶¶ 49-50, Pg. ID 1026.) Taken together, at the motion to dismiss stage, Williams plausibly alleges that GM breached the express Limited Warranty by not sufficiently repairing his air conditioning system. The Court therefore DENIES GM’s motion to dismiss Williams’ breach of express warranty claims (Counts 11 and 12) on this ground.
2
GM next argues that the Court should dismiss Williams’ breach of express warranty claims because Williams did not comply with the terms of his warranty. GM says that the Limited Warranty required Williams to provide GM with “written notice of the purported defect and an opportunity to repair [his] vehicle[] prior to filing suit,” but Williams failed to provide that pre-suit notice. (Mot. to Dismiss, ECF #35 at Pg. ID 1711.) The Court disagrees.
Laws in many states permit owners to obtain a replacement vehicle or a refund of the purchase price under certain circumstances. The provisions of these laws vary from state to state. To the extent allowed by state law, GM requires that you first provide us with written notification of any service difficulty … so that we have an opportunity to make any needed repairs before you are eligible for the remedies provided by these laws.
(Id.; emphasis added.)
The Court cannot conclude at this time, as a matter of law, that this provision applies to Williams’ claims. The provision is included in a section of the Limited Warranty that appears to relate to claims under state “lemon laws.”11 But Williams is neither bringing a “lemon law” claim nor seeking any “remedies provided by [state lemon laws].” Id. Moreover, Williams is not seeking a “replacement vehicle” or a “refund of his purchase price.” For these reasons, it is not clear that the notice provision GM relies upon is applicable here. The Court therefore DENIES GM’s motion to dismiss Williams’ express warranty claims (Counts 11 and 12).
3
Williams brings two implied warranty claims: one under California’s Song-Beverly Consumer Warranty Act (see Am. Compl. at ¶¶ 519-32 (Count 13), ECF #24 at Pg. ID 1177-79) and one under California’s commercial code (see id. at ¶¶ 533-45 (Count 14), Pg. ID 1179-81.) The Court will address these claims separately.
a
GM first moves to dismiss Williams’ implied warranty claim under California’s commercial code on the basis that the code requires privity of contract and Williams “do[es] not adequately allege privity.” (Mot. to Dismiss, ECF #35 at Pg. ID 1716.) The Court declines to dismiss on that basis.
Strict contractual privity is not an essential element of every breach of warranty claim under California’s commercial code. See In re Gen. Motors LLC CP4 Fuel Pump Litig., --- F. Supp. 3d ---, 2019 WL 3315286, at ** 7-8 (N.D. Cal. July 2, 2019). On the contrary, a plaintiff may assert a warranty claim against a manufacturer under the code if the plaintiff was an intended third-party beneficiary of the contract between the manufacturer and the seller from whom the consumer purchased the product. See id. Applying this principle, the federal court in In re General Motors LLC, recently concluded that a purchaser of a GM vehicle could
bring an implied warranty claim against GM under the California commercial code even though the purchaser was not in strict contractual privity with GM:
The Court disagrees that direct privity is strictly required to make out a breach of implied warranty claim. As this Court has held in an analogous context, under California law, a third party beneficiary can enforce a contract made expressly for his benefit.... A contract made expressly
for a third party’s benefit does not need to specifically name the party as the beneficiary; the only requirement is that the party is more than incidentally benefitted by the contract. As Plaintiffs assert, the third-party beneficiary exception applies to them as the intended beneficiaries of GM‘s contracts with its dealers.
Id. at *8 (internal citation omitted). Here, Williams plausibly alleges that, like the plaintiff in In re General Motors, LLC, he is an intended third-party beneficiary of the contracts between GM and its authorized dealers. (See Am. Compl. at ¶541, ECF #24 at Pg. ID 1181.) Given that allegation, he may proceed with his implied warranty claim under the California commercial code even though he lacks strict contractual privity with GM. The Court therefore DENIES GM’s motion to dismiss Williams’ breach of implied warranty claim under the California commercial code (Count 13).
b
GM next argues that the Court should dismiss Williams’ implied warranty claim under the Song-Beverly Act because Williams fails to plausibly allege that his vehicle is unmerchantable. (See Mot. to Dismiss, ECF #35 at Pg. ID 1712-13.) GM
contends that
Williams plausibly alleges that the AC Defect is sufficiently serious as to render his vehicle unmerchantable. Under the
Finally, the Court is not persuaded by GM‘s argument that Williams’ vehicle is merchantable just because he continued to drive it despite the AC Defect. The California court in Isip, examining a similar claim under the
For all of these reasons, the Court DENIES GM‘s motion to dismiss Williams’
C
In Count 1 of the First Amended Complaint, Plaintiffs seek to hold GM liable for breach of express and implied warranties under the federal
The parties agree that “[t]he MMWA lacks substantive requirements” and instead “provides a federal remedy for breach of warranties under state law.” McKee v. Gen. Motors LLC, 376 F. Supp. 3d 751, 760 (E.D. Mich. 2019). “Thus, the applicability of the MMWA is directly dependent upon a sustainable claim for breach of warranty.” Id. (internal punctuation omitted). In other words, “if there exists no actionable warranty claim, there can be no violation of the [MMWA].” Temple v. Fleetwood Enters., Inc., 133 F. App‘x 254, 268 (6th Cir. 2005).
Because the Court concluded in Sections IV(A) and (B) above that all Plaintiffs except for Carl Williams fail to state a viable claim for breach of warranty, the Court DISMISSES the MMWA claims of all Plaintiffs except for Carl Williams (Count 1).
D
In Count 4 of the First Amended Complaint, Plaintiffs allege that GM has been unjustly enriched under Michigan law.13 (See Am. Compl. ¶¶ 381-86, ECF #24 at Pg. ID 1148-49.) GM argues that the existence of the express warranty “forecloses any claim for unjust enrichment.” (Mot. to Dismiss, ECF #35 at Pg. ID 1717.) The Court agrees.
“Under Michigan law, to plead a claim of unjust enrichment, a plaintiff must establish that the defendant has received and retained a benefit from the plaintiff and inequity has resulted.” Bowlers’ Alley, Inc v. Cincinnati Ins. Co., 32 F. Supp. 3d 824, 833 (E.D. Mich. 2014). “Michigan courts will then imply a contract to prevent unjust enrichment. However, courts will not imply a contract where there is an express contract governing the same subject matter.” Id. (internal citation omitted; emphasis in original). “The law operates to imply a contract in order to prevent unjust enrichment, and this will not occur if there is already an express contract on the same subject matter.” Id. (internal punctuation omitted).
Plaintiffs cannot maintain their unjust enrichment claim here because there is an express contract governing the same subject matter as that claim – the express Limited Warranty. See id. (dismissing unjust enrichment claim where valid contract covered the same subject matter). Courts have regularly dismissed unjust enrichment claims filed against automobile manufacturers where a valid, enforceable express warranty covers the same subject matter as plaintiffs’ unjust enrichment claims. See, e.g., McKee, 376 F. Supp. 3d at 762 (“Because the [w]arranty governs [p]laintiff‘s claims against GM for the Transmission Defect, a claim for unjust enrichment is unavailable to him.“); Mitchell v. Gen. Motors, LLC, 2014 WL 1319519, at *15 (W.D. Ky. Mar. 31, 2014) (granting GM‘s motion to dismiss unjust
Plaintiffs respond that they may plead their unjust enrichment claim in the alternative to their breach of express warranty claims even if they cannot ultimately recover under both theories. (See Resp. to Mot. to Dismiss, ECF #43 at Pg. ID 1921-22.) In support of that argument, Plaintiffs rely on the Sixth Circuit‘s decision in Solo v. United Parcel Service, Co., 819 F.3d 788 (6th Cir. 2016). But Solo is no help to Plaintiffs.
In Solo, a defendant moved to dismiss a plaintiff‘s unjust enrichment claim on the ground that the “unjust enrichment claim was precluded by the existence of an express contract concerning the subject matter at issue.” Id. at 796. The district court dismissed the enrichment claim on that basis, and the plaintiff appealed. The Sixth Circuit reversed. It held that it was “premature[]” to dismiss the unjust enrichment claim at the motion-to-dismiss stage because the plaintiff had “properly pled alternative claims.” Id. and 796-97. But the court in Solo stressed that it was unclear whether the defendant would “dispute [the existence of a valid and binding agreement] in subsequent stages of the proceedings.” Id. at 796.
Here, in contrast, GM has not only acknowledged the existence of the express Limited Warranty, it is actively trying to enforce that agreement. Moreover, during the hearing on the motion to dismiss, counsel for GM represented to the Court that GM is not disputing the existence of the Limited Warranty. Thus, unlike the plaintiff in Solo, GM has not “kept its options open” to “deny the existence of a contract.” Id. (quoting Terry Barr Sales Agency, Inc. v. All-Lock Co., 96 F.3d 174, 182 (6th Cir. 1996)). Courts have regularly rejected plaintiffs’ attempts to plead an unjust enrichment claim in the alternative where, as here, there is no dispute that an express contract covers the same subject matter. See, e.g., Bowlers’ Alley, 32 F. Supp. 3d at 834 (“A plaintiff can only plead breach of contract and implied contract claims in the alternative if there is doubt as to the existence of a contract.“); Mitchell, 2014 WL 1319519, at *15 (holding that “[p]laintiff is not permitted to plead … breach of express warranty claims and unjust enrichment in the alternative” where “the parties do not dispute the existence of [the warranty]); Miller, 2018 WL 2740240, at *15 (“Plaintiffs’ unjust enrichment claim fails not because they pled an alternative claim for breach of the GM Limited Warranty, but rather because the GM Limited Warranty is an agreement between Plaintiffs and GM which governs the same subject matter as the unjust enrichment claims.“).
For all of these reasons, Plaintiffs may not maintain an unjust enrichment claim as an alternative to their breach of express warranty claims. Accordingly, the Court DISMISSES Plaintiffs’ unjust enrichment claim (Count 4).
E
In the First Amended Complaint, Plaintiffs Rodney Martin, Kenneth Gay, Carl Williams, Clarence Larry, Erica Wolfe, Andrew C. Hill, Edilberto Gomez, Leslie Griffin, Corey Steketee, James Won,
1
“For claims involving fraudulent omissions,” like those at issue here,
2
GM first argues that the Court should dismiss Plaintiffs’ fraud claims because Plaintiffs “fail[] to allege that GM had knowledge of the [AC Defect] at the time the majority of Plaintiffs purchased their vehicles.” (Mot. to Dismiss, ECF #35 at Pg. ID 1720.) The Court disagrees.
Plaintiffs make several allegations that could plausibly establish GM‘s pre-sale knowledge of the AC Defect. (See Am. Compl. at ¶¶ 241-75, ECF #24 at Pg. ID 1072-1112.) For example, Plaintiffs allege that “at least as early as 2012” (i.e., before any of the named Plaintiffs purchased their vehicles) “GM learned of the [AC Defect] … through sources such as pre-release evaluation and testing; investigations leading to dealer service bulletins; repair data; replacement part sales data; early consumer complaints made directly to GM, collected by [the National Highway Safety Administration], and/or posted on public online vehicle owner forums; testing done in response to those complaints; [and] aggregate data from GM dealers.” (Id. at ¶241, Pg. ID 1072.) Plaintiffs also allege that:
- GM conducted “more than 12.5 million miles of testing” of the Chevrolet Silverado – one of the Class Vehicles – before it put that vehicle on sale and therefore “knew or should have known” about the air conditioning defect based on this testing. (Id. at ¶247, Pg. ID 1074-75);
- GM issued a “Technical Service Bulletin” – an “alert” that informs “authorized service technicians to pervasive issues affecting particular models and
model years” (id. at ¶248, Pg. ID 1075) – on October 6, 2014, “concerning cracks in the [air conditioning system] components” causing the system to “‘blow[] warm’ air instead of producing cold air.” (id. at ¶249, Pg. ID 1075); - The October 6, 2014, bulletin was “highlighted at a 2014 meeting of the Cadillac National Services Managers Council.” (id. at ¶250, Pg. ID 1076);
- GM issued a second “Technical Service Bulletin” related to the AC Defect on May 29, 2015. (See id. at ¶252, Pg. ID 1076);
- GM experienced “ongoing high sales of replacement [parts]” for the air conditioning system which “should have alerted GM that its [air conditioning systems] were defective.” (id. at ¶259, Pg. ID 1079); and
- Many owners of the Class Vehicles “complained directly to GM dealerships about the [air conditioning system] failures” and “some instances of these direct-to-GM complaints were posted [] online on GM‘s own website forums, and responded to by GM customer service.” (Id. at ¶261, Pg. ID 1079-80.)
When taken together and accepted as true for the purposes of GM‘s motion to dismiss, these allegations (and others in the First Amended Complaint) plausibly establish GM‘s knowledge of the AC Defect.15 See, e.g., Phillips v. Ford Motor Co., 2015 WL 4111448, at **9-10 (N.D. Cal. July 7, 2015) (denying automaker‘s motion to dismiss fraudulent omission claim and concluding that allegations of knowledge that “include[d] internal testing … dated customer complaints, and dated [technical service bulletins were] sufficient to plausibly allege that [defendant automaker] had knowledge of [the alleged defect]“); In re MyFord Touch Consumer Litig., 46 F. Supp. 3d 936, 957-58 (N.D. Cal. 2014) (same); Afzal v. BMW N. Am., LLC, 2017 WL 3207232, at *6 (D.N.J. July 27, 2017) (denying motion to dismiss fraud claim and holding that “[w]hile any of [the] sources [of knowledge plaintiffs identified] may be insufficient on [their] own, the [c]ourt finds that the totality of these allegations – construed in [p]laintiffs’ favor – is sufficient to impute knowledge to BMW [of the alleged defect]“).
3
GM next argues that the Court should dismiss Plaintiffs’ fraud claims under Alabama, Arizona, California, Georgia, and Tennessee law because GM “had no duty to disclose the alleged defects.” (Mot. to Dismiss, ECF #35 at Pg. ID 1723.) GM insists that in each of these states, a duty to disclose “arises [only] where a confidential [or fiduciary] relationship exists between the parties or where particular circumstances mandate disclosure,” and GM says Plaintiffs do not plausibly allege either of those requirements here. (Id.) The Court disagrees.
The Court begins with the Plaintiffs who bring fraud claims under Alabama, Florida, and Georgia law because
Here, Plaintiffs plausibly allege facts that could support a duty to disclose under Alabama, Florida, and Georgia law. Plaintiffs plausibly allege that (1) GM knew of the AC Defect before Plaintiffs purchased their vehicles, (2) GM “willfully failed to disclose the [AC] Defect” and “misrepresented the [air conditioning] systems in the Class Vehicles as functional”16; (3) these facts were “material” to Plaintiffs, and (4) Plaintiffs “were not able to reasonably discover the AC [] Defect” on their own and “had no realistic ability to discern that the Class Vehicles were defective until – at the earliest – after the AC [] Defect caused their [Air Conditioning] Systems to [fail].” (Am. Compl. at ¶¶ 306-307, 394-95, 429, ECF #24 at Pg. ID 1124, 1150-51, 1158.) Plaintiffs further allege that GM made repeated statements about the Class Vehicles’ “functioning [Air Conditioning] System,” the Class Vehicles’ “safety features,” and “the supposed quality, safety, and comfort of the Class Vehicles” through GM‘s “long-term, national, multimedia marketing campaign,” statements by GM‘s sales representatives, and representations included on Class Vehicle window stickers. (Id. at ¶¶ 70-71, 81, 187, 296, ECF #24 at Pg. ID 1031, 1033, 1056, 1117.)
Courts applying the laws of Florida, Alabama, and Georgia have repeatedly concluded that allegations like these are sufficient to support a duty to disclose. See, e.g., Majdpour, 2015 WL 1270958, at *13 (holding that plaintiff plausibly alleged that auto manufacturer “had superior knowledge of the alleged defect” which could “establish a duty to disclose” under Florida law); Amin, 301 F. Supp. 3d at 1296 (declining to dismiss fraud claim under Georgia law where plaintiffs plausibly alleged that “Mercedes concealed an intrinsic quality of the Class Vehicles, that [p]laintiffs and consumers generally could not have discovered in the exercise of reasonable care“); In re Takata Airbag Prods. Liability Litig., 193 F. Supp. 3d 1324, 1337 (S.D. Fla. 2016) (applying Alabama law and holding that “[a]t this motion to dismiss stage, because [p]laintiffs have alleged that Mazda made [] incomplete statements [about the safety of its vehicles], the [c]ourt finds that Plaintiffs have sufficiently alleged Mazda had a duty to disclose additional facts about the safety of its vehicles“).
Plaintiffs also plausibly allege a duty to disclose under California and Tennessee law. Under California law, manufactures have a duty to disclose “safety issue[s].” McCabe, 948 F. Supp. 3d at 1371 (applying California law). The same is true under Tennessee law. See Bearden v. Honeywell Intern. Inc., 720 F. Supp. 2d 932, 940 (M.D. Tenn. 2010) (internal quotation marks omitted) (applying Tennessee law, refusing to dismiss “plaintiffs’ fraudulent concealment claim simply because the parties were not in a fiduciary relationship,” and holding that a seller “must disclose any condition or defect that it knows or should know about that renders the product defective or dangerous, and it must disclose basic, material information if it knows that the buyer is about to act without knowledge of the information and is without reasonable means to acquire the information itself“).
In this case, Plaintiffs plausibly allege that the AC Defect is a “safety issue,” and therefore GM had a duty to disclose it. Plaintiffs specifically allege that the defect “creates a safety risk for Plaintiffs …. because [the failure of the air conditioning system] subjects the occupants of the [Class] Vehicles to unsafely high temperatures and can lead to decreased visibility due to fogging of the windows and an inability to use the [air conditioning s]ystem to de-fog the windows.” (Am. Compl. at ¶11, ECF #24 at Pg. ID 1015.) And, as noted above, Plaintiffs also specifically identify complaints consumers made to the National Highway Traffic Safety Administration and GM regarding the safety risk posted by the AC Defect. (See id. at ¶240, Pg. ID 1070-72.) In one such complaint, a driver told the National Highway Traffic Safety Administration that the inability to de-fog his windows due to the air conditioning system defect left him “[u]nable to see a thing” requiring him to “pull over[] on the freeway.” (Id. at Pg. ID 1071.) Another consumer complained about “serious breathing issues in hot weather” due to the lack of functioning air conditioning. (Id. at Pg. ID 1070.) Put simply, Plaintiffs plausibly allege that the AC Defect is a safety issue that required disclosure by GM.
GM responds that the AC Defect “simply do[es] not rise to the level of a serious safety issue.” (GM Reply Br., ECF #46 at Pg. ID 2528.) But for all of the reasons stated above, the Court concludes that Plaintiffs do plausibly allege that the failure of their air conditioning systems is a safety issue. GM also argues that it “could not disclose an issue of which it was not aware.” (Id.) But, as explained above, Plaintiffs plausibly allege GM‘s knowledge of the air AC Defect. For all of these reasons, Plaintiffs plausibly allege that GM had a duty to disclose the AC Defect under California and Tennessee law.
Finally, “Arizona does not require a duty to disclose to support a claim for fraudulent concealment.” Garcia v. Chrysler Grp. LLC, 127 F. Supp. 3d 212, 237 (S.D.N.Y. 2015). GM is therefore not entitled to dismissal of Plaintiffs’ fraud claim under Arizona law on the basis that Plaintiffs fail to plausibly allege a duty to disclose.
4
GM next argues that the Court should dismiss Plaintiffs’ fraud claims under Arizona, California, Florida, and Tennessee
Whether the economic loss doctrine bars Plaintiffs’ fraud claims is an especially complex issue with seemingly persuasive authority on both sides and with potentially different applications of the doctrine under the laws of different states. Given the page limits imposed on the motion-to-dismiss briefing, neither party was able to fully develop their arguments concerning the applicability of the doctrine to Plaintiffs’ claims.
The Court concludes that, given the complexity of the economic-loss-doctrine issues in this case, the soundest course of action is to defer decision on application of the doctrine until the summary judgment stage of these proceedings. At that time, if necessary, the Court will grant the parties additional page extensions in order to fully brief this issue on a state-by-state basis.
Deferring a decision on GM‘s economic-loss-doctrine arguments should not meaningfully change the scope of proceedings moving forward. GM has not moved to dismiss all of Plaintiffs’ common-law fraud claims under the doctrine. Thus, even if the Court agreed with GM that the doctrine barred some of the fraud claims here, others would remain, and discovery to support Plaintiffs’ fraud theory would proceed. Likewise, Plaintiffs have asserted fraud-like statutory claims under various state laws, and, for the reasons explained below, the Court is permitting Plaintiffs to proceed with several of those claims. For this reason, too, even if the Court dismissed some of Plaintiffs’ common-law fraud claims under the economic loss doctrine, discovery into GM‘s allegedly fraudulent conduct would proceed. Simply put, postponing a decision on GM‘s economic-loss-doctrine arguments until full briefing at the summary judgment stage will not substantially enlarge or impact the scope of discovery or the course of proceedings, and that fact further convinces the Court to delay decision on the economic-loss-doctrine questions.
For all of these reasons, the Court declines, at this time, to dismiss Plaintiffs’ fraud claims under Arizona, California, Florida, and Tennessee law based on the economic loss doctrine.
5
Finally, GM argues that the Court should dismiss Plaintiffs’ fraud claims “to the extent they rely on alleged advertisements.” (Mot. to Dismiss, ECF #35 at Pg. ID 1725.) GM insists that because Plaintiffs “fail to allege the advertisements they supposedly viewed with specificity or particularity,” Plaintiffs cannot plausibly allege that they relied on these advertisements. (Id. at Pg. ID 1725-26.) The Court disagrees.
In Plaintiffs’ briefing and at the hearing on GM‘s motion to dismiss, Plaintiffs made clear that their fraud claims are not based on affirmative misrepresentations made in GM‘s advertisements. Instead, Plaintiffs explain that their fraud claims are premised on “GM‘s failure to disclose the AC Defect.” (Resp. to Mot. to Dismiss, ECF #43 at Pg. ID 1934; emphasis in original.) And Plaintiffs’ failure-to-disclose allegations are much like those found sufficient to state a viable fraud claim in Beck, supra.
In Beck, the plaintiff alleged that the defendant automaker had “fail[ed] to disclose [a] defective rotary shifter system” in his vehicle. See Beck, 273 F. Supp. 3d at 750. The automaker moved to dismiss the fraud claim on multiple grounds, including that the plaintiff had failed to plead the elements
Beck has adequately pleaded the “who” (FCA), the “what” (knowing about, yet failing to disclose, the alleged rotary shifter system defect), the “when” (from the time the vehicles were first placed on the market in 2012 to the present day), the “where” (the various channels through which FCA sold the class vehicles, including the dealership in Carlsbad, California, where Beck purchased his vehicle), and the “how” (if Beck and the class members had known of the alleged defect, they would have not purchased or leased the class vehicles, or they would have paid less for them). Thus, Beck has satisfied the pleading requirements for Rule 9(b).
Likewise here, Plaintiffs plausibly allege the “who” (GM), the “what” (knowing about, yet failing to disclose, the alleged air conditioning system defect), the “when” (from the time the vehicles were first placed on the market to the present day), the “where” (various advertisements, window stickers on Class Vehicles, and discussions with GM dealers who did not disclose the defect), and the “how” (if Plaintiffs had known of the alleged defect, they would not have purchased or leased the Class Vehicles, or they would have paid less for them). Thus, like the plaintiff in Beck, Plaintiffs satisfied their pleading burden, including the burden to plead reliance. See also Bryde v. Gen. Motors, LLC, 2016 WL 6804584, at *12 (N.D. Cal. Nov. 17, 2016) (rejecting argument that “plaintiffs fail[ed] to sufficiently plead a fraudulent omission claim because plaintiffs [did] not allege that they viewed and relied on specific GM advertising” and holding that plaintiffs had satisfied burden to plead reliance where plaintiffs “alleged that they interacted with a GM dealer sales representative” and the sales representative did not disclose alleged defect).
Finally, the United States District Court for the Northern District of California‘s recent decision in In re General Motors LLC CP4 Fuel Pump Litigation, supra, further confirms that Plaintiffs’ allegations are sufficient even though they did not identify specific advertisements. In that case, GM moved to dismiss the plaintiffs’ fraud claims on the basis that the plaintiffs had failed to plead fraud with the required particularity in part because they did not identify the specific advertisements on which they allegedly relied. The Court disagreed. It held that where a plaintiff alleges fraudulent omissions, as opposed to affirmative misrepresentations, “the relevant questions [] are whether [p]laintiffs have adequately alleged (1) that GM had knowledge of the defect, and (2) that defect was material.” Id. at *4. Here, for all of the reasons explained above, Plaintiffs plausibly allege that GM “had knowledge” of the AC Defect and the AC Defect “was material.” Id. Plaintiffs therefore satisfy the pleading requirements of their fraud claims.
For all of the reasons stated above, the Court DENIES GM‘s motion to dismiss Plaintiffs’ fraudulent concealment claims (Counts 6, 8, 15, 17, 23, and 40).
F
GM moves to dismiss many of Plaintiffs’ state-law consumer-protection-act claims on several grounds. The Court will address each of GM‘s arguments separately below.
GM first argues that all of Plaintiffs’ state-law consumer-protection-act claims fail because “Plaintiffs cannot advance claims under the state consumer protection statutes unless they sufficiently allege that a defendant was aware of a defect at the time of sale.” (Mot. to Dismiss, ECF #35 at Pg. ID 1728; internal quotation marks omitted.) And GM says that Plaintiffs do not sufficiently allege that GM knew about the AC Defect prior to the purchase of Plaintiffs’ vehicles. (See id.) For all of the reasons explained in Section IV(E)(2) above, the Court concludes that Plaintiffs do sufficiently allege that GM had knowledge of the AC Defect before Plaintiffs purchased their vehicles. The Court therefore DENIES GM‘s motion to dismiss the state-law consumer-protection-act claims on this ground.
2
In Count 27 of the First Amended Complaint, Plaintiff Corey Steketee asserts that GM violated the
For all of the reasons that the Court rejected GM‘s reliance-based argument in Section IV(E)(5) above, the Court concludes that Steketee‘s reliance allegations are sufficient at this stage of the proceedings. For example, Steketee specifically alleges that he viewed and relied upon the window sticker of his vehicle prior to purchasing it, that the window sticker touted the vehicle‘s air conditioning system without disclosing the AC Defect, and that the functioning air conditioning system was central to his purchasing decision (See Compl. at ¶200, ECF #24 at Pg. ID 1059.) The Court therefore rejects GM‘s argument that, as a matter of law, Steketee does not plausibly allege reliance.
GM next argues that the Court should dismiss Steketee‘s MCPA claim because “vehicle sales are highly regulated activities that are exempt from” the MCPA. (Mot. to Dismiss, ECF #35 at Pg. ID 1730-31.) At this time, the Court declines to dismiss Steketee‘s MCPA claim on the basis that vehicle sales are exempt from the MCPA.
GM relies on a section of the MCPA exempting from the Act‘s reach any “transaction or conduct specifically authorized under laws administered by a regulatory board or officer acting under statutory authority of this state or the United States.” (Mot. to Dismiss, ECF #35 at Pg. ID 1730 (quoting
However, the Court is not yet prepared to join the courts that have barred similar MCPA claims based on this exemption. An analysis of whether claims are barred by the exemption requires the identification
In the absence of such a detailed statutory analysis, the Court declines to hold, at this time, that the exemption bars Steketee‘s MCPA claim. The Court will revisit this issue on summary judgment. At that time, GM should direct the Court to the specific statutory language that it relies upon to bar Steketee‘s claim.17
For all of these reasons, the Court declines to dismiss Steketee‘s MCPA claim on the basis that GM‘s vehicle sales are exempt from the MCPA. The Court will reconsider this line of argument, on a more developed record and on full briefing, at the summary judgment stage of these proceedings. The Court therefore DENIES GM‘s motion to dismiss Steketee‘s MCPA claim (Count 27).
3
In Count 5 of the First Amended Complaint, Plaintiff Rodney Martin asserts that GM violated the
The “savings clause” of the ADTPA does not bar Martin‘s ADTPA claim as a matter of law. The “savings clause” refers to exclusive remedies, not causes of action or theories of liability. Therefore, while the “savings clause” may prohibit Martin from recovering on both his fraud and ADTPA claims, the “savings clause” does not bar Martin from pursuing the claims as alternatives. See, e.g., In re Gen. Motors LLC Ignition Switch Litig., 257 F. Supp. 3d at 405 (allowing Alabama plaintiff to plead both fraud and ADTPA claims because, among other reasons, the ADTPA “does not specify when in the proceedings the plaintiff must … elect one or the other remedy“). Moreover, GM‘s counsel candidly acknowledged at the hearing on the motion to dismiss that Martin should be allowed to at least plead both claims as alternatives. (See 6/25/2019 Hr‘g Tr., ECF #55 at Pg. ID 2706.) Accordingly, the Court DENIES GM‘s motion to dismiss Martin‘s ADTPA claim (Count 5).
4
In Counts 21 and 22 of the First Amended Complaint, Plaintiff Leslie Griffin asserts
a
GM first argues that the Court should dismiss Griffin‘s GFBPA claim because Griffin failed to provide GM pre-suit notice in compliance with the GFBPA. (See Mot. to Dismiss, ECF #35 at Pg. ID 1733-34.) The Court agrees.
Under the GFBPA, a plaintiff must make a “written demand for relief, identifying the claimant and reasonably describing the unfair or deceptive act or practice relied upon and the injury suffered … [a]t least 30 days prior to the filing of any [GFBPA] action.‘”
Griffin did not provide timely written notice to GM under the GFPBA. Griffin asserts that she provided written notice to GM on June 29, 2018. (See Am. Compl. at ¶647, ECF #24 at Pg. ID 1203.) She then filed this action three days later – on July 2, 2018. See Marin v. Gen. Motors Co., E.D. Mich. Case No. 18-cv-12066 at Dkt. #1 (E.D. Mich. July 2, 2018). Griffin therefore did not comply with the GFBPA‘s 30-day notice requirement.
Griffin counters that her notice should be deemed timely because it was given more than thirty days before the filling of the First Amended Complaint (which was filed on August 14, 2018). (See Resp. to Mot. to Dismiss, ECF #43 at Pg. ID 1941.) Griffin insists that the Court should measure the thirty-day notice period from the date of the filing of the First Amended Complaint because that is now the operative pleading in this action. (See id.) But the GFBPA clearly provides that notice must be provided thirty days before the filing of an ”action.”
b
GM next argues that the Court should dismiss Griffin‘s claim for injunctive relief under the GUDTPA. (See Mot. to Dismiss, ECF #35 at Pg. ID 1735.) GM argues that the GUDTPA only provides injunctive relief for future, ongoing violations, and Griffin does not allege wrongs that can be remedied through an injunction. (See id.) GM insists that Griffin “has had her vehicle repaired, and she does not allege any post-repair issues, even after GM requested Plaintiffs to include any such allegations when amending their complaint.”
Griffin makes several allegations that, if proven, may establish “ongoing harm” and may entitle her to injunctive relief under the GUDTPA. For example, Griffin alleges that she “may continue to experience failure of [her] Class Vehicle[‘]s [air conditioning s]ystem[] for which there is no effective fix and for which [she] must have to pay out of pocket [to repair].” (Am. Compl. at ¶666, ECF #24 at Pg. ID 1208.) In addition, at the hearing on the motion to dismiss, Griffin‘s counsel directed the Court to the following additional claims of ongoing harm in the Complaint (See 6/25/2019 Hr‘g Tr., ECF #55 at Pg. ID 2700):
- “Even when consumers do receive replacement parts under warranty, GM replaces the parts with equally defective replacement parts, leaving the AC System susceptible to repeated failure. As a result, GM‘s warranty service does not actually remedy the AC System Defect and causes its warranty to fail of its essential purpose.” (Am. Compl. at ¶8, ECF #24 at Pg. ID 1014-15.)
- “The AC System Defect inhibits Plaintiffs and Class Members’ expected, comfortable, and safe use of their Vehicles, and requires Class Members to go months without functioning AC Systems while waiting for replacement parts, and to pay for equally defective replacement parts that themselves are susceptible to failure.” (Id. at ¶10, Pg. ID 1015.)
- “GM‘s violations present a continuing risk to plaintiffs and to the general public. GM‘s unlawful acts and practices complained of herein affect the public interest.” (Id. at ¶667, Pg. ID 1208.)
Taken as a whole, Griffin‘s allegations state a plausible claim for injunctive relief under the GUDTPA. Indeed, “the existence of an alleged defect, coupled with failed attempts at repairs, or ‘band aid’ fixes only, along with representations made after each repair that the vehicles are free from the defect, is sufficient to establish likely future harm resulting from similar unsatisfactory efforts by the defendant to skirt liability for the problem without an effective fix.” In re: FCA US LLC Monostable Electronic Gearshift Litig., 355 F. Supp. 3d 582, 597 (E.D. Mich. 2018) (denying defendant‘s motion to dismiss GUDTPA claim); see also Amin, 301 F. Supp. 3d at 1294-95 (denying defendant‘s motion to dismiss GUDTPA claim and holding that plaintiff had plausibly alleged “both ongoing and future harm“). GM‘s motion to dismiss Griffin‘s GUDTPA claim (Count 22) is therefore DENIED.
5
In Counts 24 and 26 of the First Amended Complaint, Plaintiff Richie Ainsworth asserts two statutory claims under Louisiana law. First, in Count 24, Ainsworth alleges that “[b]y failing to disclose that the [AC] Defect was not safe, by marketing its vehicles as safe, reliable, and of high quality, and by presenting itself as a reputable manufacturer … [GM] engaged in deceptive business practices in violation” of the
a
GM first argues that the Court should dismiss Ainsworth‘s LUTPA claim (Count 24) because it is barred by the LPLA. (See Mot. to Dismiss, ECF #35 at Pg. ID 1735.) In support of this argument, GM directs the Court to
The Court agrees that Ainsworth‘s LUPTA claim fails because the LPLA provides the exclusive theory of liability for the wrongs Ainsworth alleges. Therefore, Ainsworth must proceed, if at all, under the LPLA. This is the same conclusion that the court reached in In re Gen. Motors LLC Ignition Switch Litig., 2016 WL 3920353, at *29 (S.D.N.Y. July 15, 2016). In In re General Motors, GM moved to dismiss a plaintiff‘s LUPTA claims on the basis that because GM manufactured the vehicles at issue, plaintiff‘s LUPTA claim was barred by the LPLA. The district court agreed. It held that because the damages at issue in that case “were directly tied to the products manufactured by [GM] … the only method of recovery under Louisiana is through the LPLA.” Id. For all of the same reasons, Ainsworth is limited to pursuing claims, if at all, under the LPLA.
Ainsworth counters that he may plead his LUPTA and LPLA claims as alternatives to one another. (See Resp. to Mot. to Dismiss, ECF #43 at Pg. ID 1943.) This plain language of the LPLA forecloses this argument. The LPLA provides that it establishes the exclusive theory of liability; the LPLA does not merely create an exclusive remedy.19 Because the LPLA creates the sole available theory of liability, the Court declines to permit Ainsworth to pursue any alternative theory.
For all of these reasons, the Court DISMISSES Ainsworth‘s LUTPA claim (Count 24).20
b
GM argues that the Court should dismiss Ainsworth‘s LPLA claim (Count 26) for two reasons – because it is time-barred and because its allegations fall short of an LPLA violation. (See Mot to Dismiss., ECF #35 at Pg. ID 1737-39.) The Court disagrees on both grounds.
The Court is not persuaded that Ainsworth‘s LPLA claim is time-barred. GM asserts that the LPLA has a one-year statute of limitations “that runs from the date of sale or from the day the buyer discovers the defect.” (Id. at Pg. ID 1737). GM then says that this “period began to run in January 2017, when the [air conditioning] in Ainsworth‘s vehicle allegedly failed.” (Id.) And GM asserts that Ainsworth did not file this action until March 8,
The Court also concludes that Ainsworth plausibly alleges a violation of the LPLA. To state a viable LPLA claim, Ainsworth must plead that the AC Defect made his vehicle “unreasonably dangerous in one of the four ways provided in the statute.” Becnel v. Mercedes-Benz USA, LLC, 2014 WL 1918468, at *7 (E.D. La. May 13, 2014). A product may be unreasonably dangerous under the LPLA based upon (1) its “construction or composition“; (2) its “design“; (3) an “inadequate warning“; or (4) its “nonconformity to express warranty.”
Ainsworth plausibly alleges (at least) a failure to warn under the LPLA. As Ainsworth points out, GM‘s Limited Warranty includes only a general warning that the Class Vehicle as a whole may not be defect-free. But the LPLA requires a manufacturer to provide a warning about specific characteristics of a product that may cause unreasonable danger:
A product is unreasonably dangerous because an adequate warning about the product has not been provided if, at the time the product left its manufacturer‘s control, the product possessed a characteristic that may cause damage and the manufacturer failed to use reasonable care to provide an adequate warning of such characteristic and its danger to users and handlers of the product.
6
Plaintiff James Won purchased three Class vehicles in New York and one Class Vehicle in New Jersey. In the First Amended Complaint, he alleges violations of both New Jersey and New York law. In Count 30, Won asserts that GM violated the
a
GM first argues that the Court should dismiss Won‘s NJCFA claim because he is also pursuing a claim under the NYGBL. (See Mot. to Dismiss, ECF #35 at Pg. ID 1740.) GM insists that “Won cannot recover double damages for the same injury.” (Id.) But Won is not attempting to seek the same damages twice. He bought three vehicles in New York and one vehicle in New Jersey, and he seeks separate damages arising out of each purchase. Won is therefore entitled to bring claims under both the NJCFA and the NYGBL because they arise out of the separate purchase of different vehicles.
b
GM next argues that the Court should dismiss Won‘s NJCFA claim (Count 30) because “an NJFCA claim cannot proceed based on an alleged defect that manifests after the warranty expires,” and Won “has not alleged that any alleged [defect] appeared within the warranty period.” (Id. at Pg. ID 1740-41; emphasis added.) The Court agrees.
“The NJCFA authorizes ‘[a]ny person who suffers any ascertainable loss of moneys or property, real or personal, as a result of the use or employment by another person of any method, act, or practice declared unlawful under this act’ to bring a private action.” Chiarelli, 2015 WL 5686507, at *14 (quoting
“A plaintiff cannot demonstrate an ‘ascertainable loss’ where the allegedly defective component outperforms its warranty period.” Id. at *16. New Jersey courts have rejected NJCFA claims by plaintiffs whose products outlasted their warranties because “recognizing a viable [NJ]CFA claim [under those] circumstances [] would essentially compel manufacturers and sellers to warrant their products and component parts beyond that to which the parties expressly agreed.” Perkins v. DaimlerChrysler Corp., 890 A.2d 997, 1005 (N.J. Super. Ct. App. Div. 2006). Here, Won does not allege that the vehicle he purchased in New Jersey failed within the warranty period. He therefore fails to state a claim under the NJCFA.
Won responds that the Court should not dismiss his NJFCA claim because he “alleges the [air conditioning s]ystems in three of his Class Vehicles failed twice within three years of purchase, with the remaining vehicle failing once within five years.” (See Resp. to Mot. to Dismiss, ECF #43 at Pg. ID 1946.) But, the First Amended Complaint does not allege that the Class Vehicle that Won purchased in New Jersey, in particular, failed within the warranty period. (See Compl. at ¶¶ 99-118, ECF #24 at Pg. ID 1037-41.) Won asserts that three of his four Class Vehicles failed twice within the first three years, but, despite being offered the opportunity to amend his allegations (see infra at Section V), he does not allege that the sole vehicle he purchased in New Jersey was among them.
c
GM next maintains that the Court should dismiss Won‘s NYGBL claims on the basis that “[u]nder New York law, a promise to repair consumer goods, accompanied by a disclaimer that the product may contain defects, acts as a warning that the product at issue may fail, and ‘undermine[s] any claim under [GBL] § 349 of a materially misleading or deceptive omission’ of a product defect.” (Mot. to Dismiss, ECF #35 at Pg. ID 1741.) GM‘s primary authority for this argument is Against Gravity Apparel, Inc. v. Quarterdeck Corp., 699 N.Y.S.2d 368, 369 (N.Y. App. Div. 1999). In Against Gravity, a plaintiff accused a software maker of violating the NYGBL when the software company allegedly concealed from plaintiff that its software was not “Y2K complaint.” The New York state court disagreed. It held that the software maker did not violate the NYGBL because the software had a 90-day warranty and the warranty “expressly ‘did not warrant that the operation of the Software will be uninterrupted or error free.‘” Id.
The Court concludes that Against Gravity does not control here for at least two reasons. First, the opinion in Against Gravity is just two paragraphs long and, “due to its length[, it] provides little analysis.” In re OnStar, 600 F. Supp. 2d at 870 (rejecting defendant‘s reliance on Against Gravity). Second, Advanced Gravity “does not address the holding of [Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, 647 N.E.2d 741, 745 (N.Y. 1995)], where … New York‘s highest court established the possibility of a § 349 claim based on material omissions when there is a duty to disclose.” Feliciano v. Gen. Motors LLC, 2016 WL 9344120, at *10 (S.D.N.Y. Mar. 31, 2016). Here, for the reasons explained above, Plaintiffs plausibly allege that GM omitted material facts and that GM had a duty to disclose. Thus, Won may be able to prevail on his NYGBL claims under Oswego and Feliciano even though GM included
7
Finally, in Count 7 of the First Amended Complaint, Plaintiff Kenneth Gay alleges that GM violated
- “Prior to purchasing the Class Vehicle, Plaintiff Gay test drove the vehicle, viewed advertisements for the vehicle and the vehicle‘s window sticker, and spoke with GM sales representatives concerning the vehicle‘s features. Neither [GM] nor [its] agents, dealers, or other representatives informed Plaintiff Gay of the [air conditioning system d]efect‘s existence at any time either prior to or following his purchase, whether at the point of sale or otherwise. Plaintiff Gay relied on [GM‘s] misrepresentations and omissions in deciding to purchase his vehicle.” (Id. at ¶34, Pg. ID 1022-23); and
- “In addition to touting many of the Class Vehicle‘s safety features, the vehicle‘s window sticker also state that the vehicle was equipped with an [air conditioning s]ystem, the functionality of which was important to Plaintiff Gay in the hot temperatures of Arizona. The [air conditioning s]ystem was central to Plaintiff Gay‘s purchasing decision, and he relied on [GM‘s] representations regarding its functionality in deciding to purchase his vehicle.” (Id. at ¶35, Pg. ID 1023.)
As explained above in Section IV(E)(5), the Court concludes that Gay plausibly alleges the required reliance element of his claim under the Arizona Consumer Fraud Act. Accordingly, the Court DENIES GM‘s motion to dismiss Gay‘s Arizona Consumer Fraud Act claim (Count 7).
V
At the conclusion of Plaintiffs’ response to GM‘s motion to dismiss, Plaintiffs “respectfully request[ed] leave to replead” any of Plaintiffs’ claims that the Court concluded were deficiently pleaded. (Resp. to Mot. to Dismiss, ECF #43 at Pg. ID 1948.) While leave to amend should be “freely give[n] when justice so requires,”
On April 11, 2018, the Court entered its initial scheduling order in this action. (See Scheduling Order, ECF #14.) In the scheduling order, the Court set forth a procedure for Plaintiffs to file a Consolidated Master Class Action Complaint and for GM to file a motion to dismiss. More specifically, the Court ordered Plaintiffs to file a Master Complaint by no later than May 4, 2018. (See Master Compl., ECF #18.) It then required GM to deliver a substantive “meet and confer” letter to Plaintiffs in which GM would “identif[y] deficiencies in [the] Master Complaint that would be raised in a motion to dismiss.” (Scheduling Order, ECF #14 at Pg. ID 303.) The Court then permitted Plaintiffs to file a First Amended Consolidated Master Complaint that sought to address the deficiencies raised in GM‘s letter. (See id.)
This procedure allowed Plaintiffs a full opportunity to allege any and all facts in a First Amended Consolidated Master Class
VI
For all of the reasons stated above, GM‘s motion to dismiss (ECF #35) is GRANTED IN PART AND DENIED IN PART as follows:
- The Court GRANTS the motion to dismiss with respect to Counts 1 (for all plaintiffs except for Carl Williams), 4, 11-14 (with respect to Clarence Larry‘s claims only), 18, 19, 20, 21, 24, 25, 28, 29, 30, 31, 32, 35, 37, 38, and 42. Those claims are DISMISSED;
- The Court DENIES the motion to dismiss in all other respects; and
- The Court DENIES Plaintiffs leave to file a Second Amended Consolidated Master Class Action Complaint.
s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE
Dated: September 5, 2019
I hereby certify that a copy of the foregoing document was served upon the parties and/or counsel of record on September 5, 2019, by electronic means and/or ordinary mail.
s/Holly A. Monda
Case Manager
(810) 341-9764