SUSAN RICHARD NELSON, United States District Judge
I. BACKGROUND
A. Factual Background
Plaintiff Michael Knotts, a citizen of Minnesota, alleges that in approximately October 2012, he purchased a new Nissan Versa from Morrie's Nissan, an authorized Nissan dealership located in Brooklyn Park, Minnesota. (Compl. ¶ 13 [Doc. No. 1].) Defendant NNA is a California corporation with its principal business office in Sacramento, California, and its North American headquarters in Franklin, Tennessee. (Id. ¶ 14.) It markets, sells, and warrants vehicles, including 2012 Nissan Versas, through an established network of licensed dealers and distributors. (Id. ¶ 18).
The subject vehicle that Plaintiff purchased was built with a continuously variable automatic transmission ("CVT"). (Id. ) A CVT is a "modified automatic transmission that employs a single, adaptable belt and a dual-pulley mechanism." (Id. ¶ 2.) It is designed such that the " 'drive pulley' and 'driven pulley' work opposite one another, constantly creating different gear ratios, allowing for smooth acceleration and deceleration." (Id. ) Knotts alleges that NNA advertised and continues to advertise the CVT as a "next-generation" transmission, designed to "provide smoother performance, quicker acceleration, and better fuel economy than ever before." (Id. ¶ 3.)
NNA provides its customers with a three-year, 36,000-mile limited vehicle warranty and a five-year, 60,000-mile powertrain
Knotts alleges that unbeknownst to him and the putative class members, the subject vehicles' CVTs were "defective," and routinely failed during and shortly after the expiration of the Warranty. (Id. ¶ 7.) The alleged defect causes the vehicle to lose most, if not all, of its ability to accelerate, putting the vehicle's occupants at serious risk of harm. (Id. ) As a result of this defect, Plaintiff alleges that NNA's CVTs fail after "an unreasonably low number of miles have been driven"-frequently just after the expiration of the Warranty. (Id. ¶ 19.)
Knotts contends that on one occasion, he was stopped at a red light, and when he
After this incident, Plaintiff alleges that his "acceleration problems were pervasive," and in or about March 2017-approximately four and a half years after he purchased his Versa-he took his vehicle to Victory Auto Service & Glass in Brooklyn Park, Minnesota. (Id. ¶ 39.) At that time, the mechanic diagnosed a "fuel injection issue" as the cause of the Versa's problems. (Id. ) The following month, when Knotts' vehicle again failed to accelerate, it was again towed to Victory Auto Service & Glass. (Id. ¶ 40.) This time, the shop identified a transmission problem, and replaced the transmission and the transmission fluid. (Id. ) Plaintiff paid more than $3,300 for this work. (Id. ¶ 42.)
At the end of April 2017, Plaintiff contacted NNA about his allegedly defective CVT, describing the acceleration problems. (Id. ¶ 41.) He alleges that NNA refused to cover the cost of the repairs because the issue arose outside of the Warranty period and the repairs had been performed by non-Nissan service providers. (Id. ¶ 42.)
Knotts alleges that he and other putative class members relied on NNA's representations. (Id. ¶ 9.) He states that had they known about the alleged defect when they leased or purchased the vehicles, they would have not purchased or leased them, or they would have paid less. (Id. ) He also contends that he, along with the putative class members, "reasonably expected that the CVTs in the Subject Vehicles would not be defective," and that "if they were defective, Nissan would repair the defect pursuant to the terms of the Warranty." (Id. ¶ 20.) Plaintiff maintains that the CVT defect, related safety concerns, and the lack of a pre-failure fix are "material facts to a reasonable consumer" in deciding whether to purchase or lease a Nissan and how much to pay for it. (Id. ¶ 26.) He asserts that "Nissan should have disclosed these material facts to the public, but failed to do so." (Id. )
Knotts imputes knowledge of the CVTs' alleged defects to NNA, including the knowledge that the CVTs were "not fit for their intended purpose, and unsafe when used as intended." (Id. ¶ 8.) According to Plaintiff, "any type of meaningful pre-production testing conducted by Nissan would have provided Nissan with knowledge of the defect." (Id. ¶ 22.) In addition, Knotts alleges that NNA's knowledge of the alleged defect further increased once the subject vehicles were on the market:
Nissan was further put on notice regarding the existence of the defect shortly after the Vehicles were brought to market (and prior to many Subject Vehicles being sold) as a result of receiving customer complaints (1) directly, (2) through its authorized dealers, (3) through complaints made to the National Highway Traffic Safety Administration ("NHTSA"), and (4) through the public dissemination of complaints publicly posted on online forums.
(Id. )
In the Complaint, Knotts quotes 18 complaints filed with the NHTSA involving acceleration failures in 2012 Nissan Versas. (Id. ¶ 22 (a)-(r).) For example, in one such complaint, the driver reported that on two occasions, his 2012 Nissan Versa stalled when he was driving at approximately 55 miles per hour. (Id. ¶ 22(a).) The driver further stated that this required two repairs, including transmission replacement, but the failure recurred after each repair. (Id. ) In addition to the
Knotts asserts that despite these consumer complaints, NNA "failed to disclose the defective CVT to Plaintiff and the Class members, both before and after purchase." (Id. ¶ 8.) Plaintiff asserts that "[a]t all relevant times, Nissan had exclusive possession of the information regarding the defective CVT and its propensity to fail and malfunction based upon, inter alia, Nissan's own testing, industry testing, and the numerous consumer complaints it received." (Id. ¶ 28.) Moreover, Plaintiff further alleges that NNA has "no viable fix for the CVT defect," other than transmission replacement, after the failure manifests. (Id. ¶ 25.) The cost of the defect, Knotts asserts, "has been borne by Plaintiff and Class members." (Id. )
B. Procedural Posture
Plaintiff initiated this putative class action on November 7, 2017, "on behalf of all current and former owners and lessees of model year[ ] 2012 ... Nissan Versas that are equipped with a continuously variable automatic transmission."
National Class : All current and former owners and lessees of the Subject Vehicles purchased or leased in the United States.
Minnesota Class : All current and former owners and lessees of the Subject Vehicles purchased or leased in the State of Minnesota.
(Id. ¶ 44.)
Knotts asserts three Minnesota statutory claims on behalf of a putative Minnesota Class. In Counts I and II, Knotts asserts deceptive trade practices claims under the Minnesota Deceptive Trade Practices Act ("MDTPA"), Minn. Stat. § 325D.44, et seq. (Id. ¶¶ 55-63), and § 325F.68. (Id. ¶¶ 64-74.) In Count III, he asserts violations of the Minnesota False Statement in Advertising Act ("MFSAA"), Minn. Stat. § 325F.67. (Id. ¶¶ 75-83.)
In Counts IV through VII, Knotts asserts common law claims on behalf of the both the putative national and Minnesota classes. In Count IV, he asserts a claim for breach of express warranty, (id. ¶¶ 84-92), in Count V, he asserts a claim for breach of the implied warranty of merchantability and fitness, (id. ¶¶ 93-101), in Count VI, he asserts a claim of fraudulent misrepresentation, concealment, and failure to disclose, (id. ¶¶ 102-09), and in Count VII, Knotts pleads an alternative claim of unjust enrichment. (Id. ¶¶ 110-14.)
In its Motion to Dismiss, NNA argues that Plaintiff's claims fail to state a claim upon which relief can be granted for several reasons, including the following: (1) the express warranty claim fails because Knotts does not allege that his vehicle was defective in materials or workmanship; (2) the implied warranty claim fails because Knotts' 2012 Versa successfully performed its ordinary function for the duration of the express warranty; (3) there can be no claim for unjust enrichment because there is an express contract between the parties; (4) Plaintiff's common law fraudulent misrepresentation claim does not allege an actionable misrepresentation that Knotts relied upon, nor does he allege that NNA had fiduciary obligations to him or was otherwise obliged to make disclosures to
In its Motion to Strike, NNA moves to strike, or in the alternative, to dismiss, the nationwide-class definition and accompanying allegations set forth in paragraphs 44-51 of the Complaint. (Def.'s Mem. Supp. Mot. to Strike ("Def.'s Strike Mem.") at 1 [Doc. No. 24].) NNA argues that the Court lacks personal jurisdiction over it "as to the claims of absent members of the putative class who did not purchase their automobiles in Minnesota and whose claims lack a sufficient connection with Minnesota to allow them to be adjudicated in a court of this state." (See
II. DISCUSSION
A. Motion to Dismiss
1. Standard of Review
When evaluating a motion to dismiss under Rule 12(b)(6), the Court assumes the facts in the complaint to be true and construes all reasonable inferences from those facts in the light most favorable to the plaintiff. Hager v. Arkansas Dep't of Health ,
When considering a motion to dismiss under Rule 12(b)(6), "the court generally must ignore materials outside the pleadings." Porous Media Corp. v. Pall Corp. ,
2. Breach of Express Warranty
Defendant argues that Plaintiff's claim for breach of express warranty should be dismissed for the following reasons: (1) Knotts fails to plead a defect in materials and workmanship, (Def.'s Dismiss Mem. at 7-8); (2) he does not show that NNA breached its repair promise, (id. at 8-9); (3) the warranty limitations are not unconscionable, (id. at 9-11); and (4) NNA was not required to pay for third-party repairs. (Id. at 12.) NNA contends that its Warranty does not promise that its vehicles or any of the components are free of defects, but rather provides only that it "will repair or replace components that are defective in materials or workmanship within the applicable time and mileage limitations"-that is, five years or 60,000 miles, whichever comes first-and requires consumers to take their vehicles to an authorized dealer for repairs. (Id. at 6-7) Therefore, according to Defendant, to plead a breach of this express warranty, Plaintiff must show that "(1) the vehicle had a defect in materials and workmanship; (2) he sought a repair from a Nissan dealer while the warranty was in effect; and (3) the dealer failed or refused to perform the repair." (Id. at 7.) Defendant contends that Plaintiff's claim does not sufficiently assert these allegations. (Id. )
Under Minnesota law, a claim for breach of an express warranty must contain the following elements: (1) the existence of a warranty; (2) a breach; and (3) a causal link between the breach and the alleged harm. Sipe v. Workhorse Custom Chassis, LLC ,
As noted, the Warranty provides basic coverage for 36 months or 36,000 miles, whichever comes first, and powertrain coverage for 60 months or 60,000 miles, whichever comes first. (Wittie Decl., Ex. A (Nissan 2012 Warranty Info. Booklet at 6).) The powertrain coverage specifically states that it applies to the transmission. (Id. ) As to both the general and powertrain-specific warranties, coverage is provided for "any repairs needed to correct defects in materials or workmanship." (Id. ) While the Warranty covers certain repairs at no charge to the vehicle owner, it expressly provides that "[y]ou must take the vehicle to an authorized Nissan dealer in the United States during regular business hours at your expense in order to obtain warranty service." (Id. at 7.) The Warranty contains no language that refers to reimbursement for third-party repairs.
The Court first considers NNA's argument concerning Knotts' failure to allege that he sought repair from NNA or an authorized Nissan dealer. (Def.'s Dismiss Mem. at 8-9.) Plaintiff asserts that the Warranty's limitations regarding place of service, time, and mileage are unconscionable in light of "Defendant's knowledge of the defective CVT, the lack of any solution to the problem, the fact that the defect tends to manifest just barely outside the Warranty period, and Defendant's refusal to honor the Warranty when Plaintiff or class members had any prior repair work completed at a non-Nissan repair shop." (Compl. ¶ 36.)
The Court agrees that if NNA had knowledge of the alleged defect and its
Knotts, however, does not allege that he presented his vehicle to an authorized Nissan dealer for repair and that the dealer refused to comply with the warranty. To the contrary, he asserts that he took his vehicle to Victory Auto Service & Glass, which is unaffiliated with NNA. (Id. ¶¶ 39-40.) Knotts alleges that when he contacted NNA after the repairs had been performed by Victory Auto Service & Glass, NNA informed him that the cost of repairs was not covered by the Warranty because the issues arose outside of the Warranty period and the repairs were performed "by service providers other than Nissan." (Id. ¶ 41.)
NNA cannot have breached the Warranty if Knotts did not submit his vehicle to a Nissan-authorized dealer for repair. See Kearney v. Bayerische Motoren Werke Aktiengesellschaft , Civ. No. 17-13544 (WHW-CLW),
3. Breach of Implied Warranty
In the Complaint, Plaintiff alleges that NNA impliedly warranted that its CVTs were not inherently defective, were of good and merchantable quality, and were fit for the ordinary purposes for which they were sold. (Compl. ¶ 95.) He asserts that NNA breached the warranty because the vehicles were "prone to substantial failure and malfunction, pose serious safety concerns," and have "substantially failed and malfunctioned." (Id. ¶ 97.)
Defendant argues that Plaintiff's claim for breach of implied warranty fails for two reasons. First, it contends that the claim does not allege a defect that manifested within the time and mileage limits of the express warranty. (Def.'s Dismiss Mem. at 12.) Second, NNA asserts that Plaintiff's vehicle was merchantable as a matter of law. (Id. )
An implied warranty of merchantability requires that goods be "fit for the ordinary purposes for which such goods are used." Daigle v. Ford Motor Co. ,
Under Minnesota law, a written implied warranty of merchantability may be excluded or modified by using language that
In addition, NNA argues that the out-of-warranty mileage of Plaintiff's vehicle affirmatively renders it merchantable as a matter of law. (Id. at 13.) NNA contends that "where the facts show that the vehicle was driven for a substantial period of time or for a substantial number of miles without serious problems, courts have concluded that the vehicle is merchantable as a matter of law." (Id. at 13) (citing Stevenson v. Mazda Motor of Am., Inc., No. 14-cv-5250 (FLW) (DEA),
And, as noted, Plaintiff alleges that his claims should survive the pleading stage because he has plausibly pled that the Warranty's mileage and temporal limitations are unconscionable. (See Compl. ¶ 33.) Knotts contends that the Warranty is unconscionable in two respects: (1) substantively, because NNA was aware, prior to the sale of the vehicle, of defects in the CVTs; and (2) procedurally, because NNA "unilaterally imposed durational and damage limits" in the Warranty, without affording Plaintiff or the putative class members any bargaining authority. (Id. ¶¶ 33-34.)
"Where the alleged breach involves a latent defect that manifests outside the period covered by the warranty, a plaintiff may sometimes state a claim if he alleges that the warranty was unconscionable." Kearney ,
Although in the context of an express warranty breach claim, in Podpeskar v. Makita U.S.A. Inc. , this Court permitted a plaintiff's claim to proceed past the motion-to-dismiss stage, finding that the plaintiff had pleaded sufficient facts regarding unconscionability.
Here, the Court similarly finds that Knotts has pleaded sufficient facts to plausibly allege unconscionability and grants him the opportunity to obtain discovery concerning this issue.
4. Unjust Enrichment
A plaintiff asserting a claim of unjust enrichment "must establish an implied-in-law or quasi-contract in which the defendant received the benefit of value that unjustly enriched the defendant in a manner that is illegal or unlawful." Caldas v. Affordable Granite & Stone, Inc. ,
Defendant argues that Plaintiff's claim for unjust enrichment fails. (Def.'s Dismiss Mem. at 16-18.) It argues that as an equitable remedy, unjust enrichment is not available where there is an adequate remedy at law-namely, Plaintiff's warranty-based claims. (Id. at 18.) Additionally, NNA contends that because Knotts purchased his vehicle from a dealer, and not directly from NNA, Knotts did not confer a benefit on NNA. (Id. ) Finally, NNA contends that it has also not received a benefit for which it should pay "in equity and good conscience." (Id. ) (citing Luckey v. Alside, Inc. ,
The Rules allow for pleading claims for relief in the alternative. Fed. R. Civ. P. 8(a)(3). Although a party may not ultimately recover on both breach of contract and unjust enrichment claims, it may pursue these alternative theories until it is conclusively decided "that a valid and enforceable contract exists between the parties which governs the specific dispute before the court." Spectro Alloys Corp. v. Fire Brick Engineers Co. ,
Although the parties do not appear to dispute that Knotts' Nissan was subject to a warranty for at least some period of time, the Court has made no finding to this effect. If and when such a finding is made, likely on summary judgment, Knotts' unjust enrichment claim will be dismissed, but not until then.
The Court is likewise not inclined, at this stage, to find that Plaintiff's unjust enrichment claim fails due to Plaintiff purchasing his vehicle from an authorized Nissan dealer, as opposed to NNA itself, or because NNA did not receive a benefit for which it should pay in equity and good
In addition, Plaintiff has sufficiently pleaded that NNA obtained a benefit that unjustly enriched it in a manner that is illegal or unlawful, see Caldas ,
5. Fraudulent Misrepresentation, Concealment, and Failure to Disclose
Defendant argues that Plaintiff's claim for fraudulent misrepresentation, concealment, and failure to disclose fails because Plaintiff does not plead this claim with the requisite specificity. (Def.'s Dismiss Mem. at 14-16.)
In Minnesota, a claim for fraudulent misrepresentation requires:
(1) a false representation by [the defendant] of a past or existing material fact susceptible of knowledge; (2) made with knowledge of the falsity of the representation or made without knowing whether it was true or false; (3) with the intention to induce [the plaintiff] to act in reliance thereon; (4) that the representation caused [the plaintiff] to act in reliance thereon; and (5) that [the plaintiff] suffered pecuniary damages as a result of the reliance.
Valspar Refinish, Inc. v. Gaylord's, Inc.,
Plaintiff's pleading satisfies some of the elements for a fraudulent misrepresentation
Plaintiff does not plead, however, that NNA intended to induce Knotts to rely on its allegedly false statements. See Valspar ,
6. Minnesota False Advertising Statute
In support of his claim under the MFSAA, Minn. Stat. § 325F.67, Knotts asserts that NNA: (1) made "fraudulent, misleading, and deceptive statements relating to the true characteristics, standards, quality, and grade of the CVTs and the Vehicles"; (2) made "misrepresentations by omission, of information about the defective nature of the CVTs in the Vehicles, the improper design of the CVTs in the Vehicles, and Defendant's knowledge of those defects"; and (3) concealed the nature of the "defective CVTs in the Vehicles." (Compl. ¶ 79.)
Under the MFSAA, it is a misdemeanor to circulate advertisements that contain "any material assertion, representation, or statement of fact which is untrue, deceptive, or misleading." Minn. Stat. § 325F.67. A person injured because of a violation of this statute may bring a civil action and recover money damages.
In the Complaint, Plaintiff identifies NNA's website as the source of an advertisement, noting that there, NNA "advertised and continues to advertise CVTs on its website as a 'next-generation' transmission, designed to 'provide smoother performance, quicker acceleration, and better fuel economy than ever before.' " (Compl. ¶ 3) (citing Nissan, Performance, https://www.nissanusa.com/cars/versa-sedan/versionsspecs/version.1-6-s-plus.html). To the extent that Plaintiff intends to allege that NNA made affirmative, deceptive statements through this allegation, it arguably satisfies the "how" requirement under Rule 9(b). See Luckey ,
Knotts also alleges false advertising by omission. (Compl. ¶ 79(b).) This Court evaluated a claim of negligent misrepresentation by omission-to which the heightened pleading requirements of Rule 9(b) again apply-in In re Target Corporation Customer Data Security Breach Litigation ,
NNA also argues that the statement in question constitutes non-actionable "puffery." (Def.'s Dismiss Mem. at 20.) Puffery consists of "exaggerated blustering or boasting and vague, subjective statements of superiority." Bernstein v. Extendicare Health Servs., Inc. ,
Defendant also argues that Plaintiff lacks standing because he fails to plead reliance. (Def.'s Dismiss Mem. at 21-22.) A plaintiff seeking damages under
Finally, NNA argues that Plaintiff fails to allege that the advertisement occurred in Minnesota. (Def.'s Dismiss Mem. at 22.) Under the MFSAA, the alleged false statement must occur "in this state." Minn. Stat. § 325F.67. Because the Complaint fails to allege that the false statement occurred in Minnesota, the claim fails for this additional reason.
In short, the Court finds that Plaintiff's claim for relief under the MFSAA fails to state a claim on which relief may be granted. However, because these deficiencies may be cured through re-pleading, the Court dismisses this claim without prejudice.
7. Injunctive Relief Under the Minnesota Deceptive Trade Practice Act
NNA moves to dismiss Plaintiff's claim under the MDTPA, Minn. Stat. § 325D.44, in Count I of the Complaint. It argues that claims brought under this statute only permit injunctive relief, and Knotts has not alleged any facts showing that he is at risk of future harm. (Def.'s Dismiss Mem. at 3.)
Under the MDTPA, "[a] person likely to be damaged by a deceptive trade practice of another may be granted an injunction against it under the principles of equity and on terms that the court considers reasonable." Minn. Stat. § 325D.45, subd. 1. A party seeking relief under the MDTPA must demonstrate a likelihood of future harm because the statute provides relief only "from future damage, not past damage." Gardner v. First Am. Title Ins. Co. ,
Plaintiff alleges that NNA violated the MDTPA by representing that its CVTs and subject vehicles were of a particular standard or quality when they were, in fact, defective. (Compl. ¶ 56.) He asserts that this created a misunderstanding among Plaintiff and the putative class members regarding the quality and longevity of the CVTs and the vehicles. (Id. ) In addition, Plaintiff alleges that NNA continues to market and advertise the subject vehicles and CVTs to the public despite NNA's knowledge of the known defects. (Id. ¶¶ 3, 18.) Plaintiff further argues that it is highly likely that current and future lessees and owners will need to repair the vehicles' transmissions in the future, and cannot rely on NNA's statements regarding the vehicles' safety. (Pl.'s Opp'n to Dismiss at 35.) As for Knotts himself, he asserts that he is likely to be harmed in the future because he has no way of knowing if NNA has fixed the defective transmissions, whether his CVT will fail again, and whether NNA would replace it with another defective transmission. (Id. )
8. Public Benefit for Statutory Consumer Protection Claims
Defendant argues that Plaintiff's statutory claims in Counts I through III, brought pursuant to the Private Attorney General Act, fail because Knotts cannot demonstrate that his causes of action benefit the public. (Def.'s Dismiss Mem. at 22.) Rather, NNA asserts, Plaintiff primarily seeks a remedy of damages. (Id. at 23) (citing Compl., Prayer for Relief.)
For a private citizen to seek relief under the statutes in question, he or she must demonstrate that the cause of action "protect[s] public rights in the interest of the state." Ly v. Nystrom ,
The Court finds that Plaintiff's allegations sufficiently allege a public benefit. Knotts asserts that NNA has made misrepresentations about the CVTs on its website, (Compl. ¶ 3), that the representations are ongoing, (id. ), and that public safety is at risk. (Id. ¶ 26.) Given that the advertisement is alleged to have appeared online, the Court finds that the alleged misrepresentation may have affected the public to a significant degree. While Plaintiff seeks damages, he also requests injunctive relief. (Id. , Prayer for Relief, ¶ (d).) Accordingly, the Court denies Defendant's Rule 12(b)(6) motion on this basis.
B. Defendant's Motion to Strike
Defendant also moves to strike, or in the alternative, to dismiss, the nationwide-class definition and accompanying allegations set forth in paragraphs 44-51 of the Complaint. (Def.'s Strike Mem. at 1.) NNA argues that the Court lacks personal jurisdiction over it "as to the claims of absent members of the putative class who did not purchase their automobiles in Minnesota
1. Bristol-Myers Squibb
Defendant relies upon the Supreme Court's decision in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty. , --- U.S. ----,
The United States Supreme Court reversed the California court, overruling their "sliding scale" approach and reaffirming that "[i]n order for a state court to exercise specific jurisdiction, 'the suit ' must 'aris[e] out of or relat[e] to the defendant's contacts with the forum .' "
"[A] defendant's relationship with a ... third party, standing alone, is an insufficient basis for jurisdiction." This remains true even when third parties (here, the plaintiffs who reside in California) can bring claims similar to those brought by the nonresidents.... What is needed-and what is missing here- is a connection between the forum and the specific claims at issue.
Id. at 1781 (quoting Walden v. Fiore ,
The Court concluded by noting that "since our decision concerns the due process limits on the exercise of specific jurisdiction by a State, we leave open the question whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court." Id. at 1783-84. Importantly, the Court did not clarify whether the logic of BMS applies to class actions. See id. at 1789 n.4 (Sotomayor, J., dissenting) ("The Court today does not confront the question whether its opinion here would also apply to a class action ....").
2. Whether this Court May Rule on the Motion to Strike Prior to Class Certification
Relying on BMS , Defendant contends that a "great majority" of the absent putative nationwide class members will not be Minnesota citizens and will not have acquired their vehicles in Minnesota. (Def.'s Strike Mem. at 2.) Because the Court allegedly lacks jurisdiction over these putative class members, NNA argues, "[i]t is clear from the face of the Complaint that the nationwide class [Plaintiff] advocates cannot be maintained," and therefore striking the class allegations is proper. (Def.'s Strike Reply at 11-12 [Doc. No. 33].)
In response, Knotts argues that class allegations can only fail as a matter of law when they fail to meet Rule 23's requirements, and therefore NNA's personal jurisdiction arguments at this stage-prior to discovery or certification-are effectively
In their briefing, the parties do not cite any authority in which a court considered personal jurisdiction over a putative class on a pre-certification motion to strike.
Defendant cites Wilcox and four other district court cases in which the courts granted motions to strike or dismiss class allegations before certification, on grounds similar to Wilcox and unrelated to jurisdictional concerns. See In re St. Jude Med. Inc. Silzone Heart Valves Prod. Liab. Litig., MDL No. 01-1396 (JRT/FLN),
District courts in other circuits have increasingly declined to address this particular issue at the pleading stage. See Gonzalez v. Costco Wholesale Corp. , No. 16-CV-2590 (NGG) (JO),
Courts in other jurisdictions have analyzed pre-certification motions to strike under a 12(b)(6) standard, i.e., "[t]he moving party has the burden of demonstrating from the face of the plaintiffs' complaint that it will be impossible to certify the class as alleged, regardless of the facts plaintiffs may be able to prove." Schilling v. Kenton Cnty., Ky. , No. CIV.A. 10-143-DLB,
3. Whether BMS Applies to Unnamed Members of a Putative Class Action Suit
No Court of Appeals has engaged the question of whether BMS requires a finding of specific personal jurisdiction with respect to unnamed members of a putative class action suit.
Defendant also argues that excluding class actions from the BMS rule would violate the Rules Enabling Act,
Outside of Illinois, district courts have largely declined to extend BMS to the class action context. Indeed, "most of the courts that have encountered this issue have found that Bristol-Myers does not apply in the federal class action context." Chernus ,
The Court agrees with this broader set of cases and holds that BMS is inapplicable to unnamed parties in a federal class action suit. Defendant does not cite any case prior to BMS that stands for the proposition that, in a class action where the defendant is not subject to general jurisdiction, specific jurisdiction must be found not only as to the named plaintiff or plaintiffs, but also as to unnamed members of the putative class as well. "The pre- Bristol-Myers consensus, rather, was that due process neither precluded nationwide or multistate class actions nor required the absent-class-member-by-absent-class-member jurisdictional inquiry." Haj v. Pfizer Inc. ,
In addition, a class action suit must satisfy due process procedural safeguards that do not exist in mass tort actions. As the court in In re Chinese-Manufactured Drywall Products Liability Litigation observed:
This Court is cognizant of the superficial similarities between mass tort actions (like in BMS ) and a class action in which every class member is a named plaintiff-as is the case here. But there is, nevertheless, a significant difference: a class action has different due process safeguards.... In particular, for a case to qualify for class action treatment, it needs to meet the additional due process standards for class certification under Rule 23-numerosity, commonality, typicality, adequacy of representation, predominance and superiority.
No. MDL 09-2047,
[A]s the Supreme Court has found, "[n]onnamed class members ... may be parties for some purposes and not for others. The label 'party' does not indicate an absolute characteristic, but rather a conclusion about the applicability of various procedural rules that may differ based on context. " Devlin v. Scardelletti ,, 9-10 [ 536 U.S. 1 , 122 S.Ct. 2005 ] (2002) (emphasis added). The Supreme Court in Devlin specified some of these procedural rules, and all dealt with promoting expediency in class action litigation. 153 L.Ed.2d 27
Fitzhenry-Russell ,
Defendant's reliance on Shutts is misplaced. As noted earlier, Shutts in part stands for the proposition that courts can exercise jurisdiction over the claim of a non-named class-action plaintiff,
[I]f due process was not offended in Shutts , a class-action in State court with absent non-resident plaintiff class members,, 472 U.S. at 808, it is not offended by a potential class-action in federal court where the plaintiff class is made up in part with non-resident members. 105 S.Ct. 2965
Defendant's argument concerning the Rules Enabling Act also fails. As discussed above, NNA has failed to show that it has the right to exclude non-named parties from a putative class action on the ground that there is no specific jurisdiction over claims of the non-named parties in the chosen forum. Therefore, the Court's holding does not deprive NNA of any substantive right. "It is for the same reason that the cases holding that absent class members need not establish their own standing, and are not considered for venue, diversity of citizenship, or amount-in-controversy purposes, do not violate the [Rules Enabling Act]." Haj ,
The conclusion that BMS did not alter prior consensus is also supported by the Supreme Court's own characterization of its holding in BMS as a "straightforward application ... of settled principles of personal jurisdiction."
Had the Supreme Court truly sought to bar certification of nationwide or multistate class actions on due process grounds in all but the one or two States where the defendant is subject to general jurisdiction, it implausible that it would have done so obliquely, in a mass action, and with the caveat that it was "leav[ing] open the question whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court" as the Fourteenth Amendment does "on theexercise of specific jurisdiction by a State."
Finally, the Court's ruling here preserves the class action as an efficient mechanism for prospective plaintiffs to seek redress of their claims. As the Supreme Court noted when addressing this issue in the context of subject matter jurisdiction,
The rule that nonnamed class members cannot defeat complete diversity is likewise justified by the goals of class action litigation. Ease of administration of class actions would be compromised by having to consider the citizenship of all class members, many of whom may even be unknown, in determining jurisdiction.
Devlin ,
THEREFORE, IT IS HEREBY ORDERED THAT:
1. Defendant's Motion to Dismiss [Doc. No. 15] is GRANTED IN PART and DENIED IN PART ; and
2. Defendant's Motion to Strike or Dismiss Plaintiff's Class Allegations [Doc. No. 21] is DENIED .
Notes
The "powertrain" is "the intervening mechanism by which power is transmitted from an engine to a propeller or axle that it drives." "power train." Merriam-Webster Online Dictionary . 2018. https://www.merriam-webster.com/dictionary/power% 20train (Oct. 5, 2018).
While the Complaint also includes the owners and lessees of 2013 Nissan Versas, (Compl. ¶¶ 1, 44), Knotts clarifies that the proposed class references to "subject vehicles" concerns only 2012 Nissan Versas. (Pl.'s Mem. in Opp'n to Mot. to Dismiss at 3 n.1 [Doc. No. 30].) He reserves the right to amend the class definition to include owners and lessees of the 2013 model should discovery provide a basis to do so. (Id. )
The Court finds that Plaintiff has sufficiently pleaded facts alleging NNA's knowledge of the alleged defect after the 2012 Versas were brought to market. (See Compl. ¶¶ 23-24.)
As counsel acknowledged at the hearing on this motion, several of the BMS cases do, however, consider personal jurisdiction at the pleading stage on a motion to dismiss. See, e.g., McDonnell v. Nature's Way Prod., LLC , No.
At least one case has been appealed in the Ninth Circuit, Feller v. Transamerica Life Insurance Co. , No. 18-55408 (9th Cir. Mar. 27, 2018).
Matus v. Premium Nutraceuticals, LLC ,
See, e.g., Swamy v. Title Source, Inc. , No. C 17-01175 WHA,
See, e.g., Casso's Wellness Store & Gym, L.L.C. v. Spectrum Lab. Prod., Inc. , No. CV 17-2161,
See, e.g., Becker v. HBN Media, Inc. ,
Sanchez v. Launch Tech. Workforce Sols. , LLC,
Morgan v. U.S. Xpress, Inc. , No. 3:17-CV-00085,
Garcia v. Peterson ,
Molock v. Whole Foods Mkt., Inc.,
Haj v. Pfizer Inc. ,
See Def.'s Strike Reply at 9.