Burton et al v. Chrysler Group LLC

Filing 75

MEMORANDUM ORDER re 63 MOTION to Dismiss filed by Chrysler Group LLC is GRANTED. Signed by Judge Leonard P. Stark on 8/27/14. (ntl)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

AUTUMN BURTON, MORRIS E.
McMILLIAN, MIKE BURKE, and AMANDA
SHEPHERD, individually and in their
respective capacity for all others similarly
situated,
Plaintiffs,

v.

C.A. No. 12-5-LPS

CHRYSLER GROUP LLC,
Defendant.

MEMORANDUM ORDER
Presently before the Court is Defendant's Motion to Dismiss Plaintiffs' Third Amended
Complaint. (D.I. 63) The Court heard argument on the motion on August 20, 2014. (See
Transcript ("Tr.")) For the reasons discussed below, the Court will grant the motion.
BACKGROUND
This case is a putative class action against Defendant Chrysler Group, LLC ("Chrysler
Group" or "Defendant") alleging negligence and breach of warranty. Plaintiffs own model 20062008 cars manufactured and built by Old Carco LLC, formerly known as Chrysler LLC and
Chrysler Motors LLC (collectively, "Chrysler Motors"). 1 See In re Old Carco LLC, 492 B.R.
392, 394 (Ban1a. S.D.N.Y. 2013). 2 Plaintiffs' claims pertain to a "fuel spit-back problem," a

1

Further background relating to the bankruptcy is set forth in In re Chrysler LLC, 405
B.R. 84 (Ban1a. S.D.N.Y. 2009).
2

The Court takes judicial notice of the proceedings of the Bankruptcy Court. See Oneida
Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414, 416 n.3 (3d Cir. 1988).

defect in the vehicles causing fuel to spill out of the filler tube during refueling. (See D.I. 62

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iMr 1-2)

In 2002 and 2005, Chrysler Motors issued safety recalls for certain affected model year

vehicles to address this problem. (Id.

W 3-4)

In April 2009, Chrysler Motors filed for

bankruptcy in the Bankruptcy Court for the Southern District of New York. See In re Old Carco

LLC, 492 B.R. at 394. Then, in June of that year, Chrysler Group purchased Chrysler Motors'
assets free of certain liabilities, pursuant to a Sale Order entered by the Bankruptcy Court. Id. at
396.
In 2011, Plaintiffs filed their complaint against this new owner of Chrysler Motors' assets

- Defendant Chrysler Group - under a variety of legal theories; they filed their suit in Delaware
state court. (D.I. 1if1) In January 2012, Defendant removed the action to this Court. (D.I. 1)
Defendant later filed a motion to dismiss, arguing that the Sale Order entered in the bankruptcy
proceedings involving Chrysler Group barred Plaintiffs' claims; the economic loss doctrine
barred Plaintiffs' negligence claims; and the Court should abstain from exercising its jurisdiction
under the doctrine of primary jurisdiction. (D.I. 4; D.I. 5 at 4-5, 8) After hearing oral argument
in August 2012, the Court transferred the action to the Southern District ofNew York, which had
presided over the bankruptcy and had entered the Sale Order. (D.I. 58; D.I. 60) The Court's
expectation was that the New York Bankruptcy Court would determine the effect of the Sale
Order on Plaintiffs' claims and thereafter, if necessary, the case would return to this Court.
In announcing its ruling from the bench, the Court added:

[I]f the case returns here, the Plaintiff will need to file a third
amended complaint which accounts for whatever the New York
court rules, and ... [such claims,] if any, will be limited to actions
that Defendant took in 2011 and 2012 .... Additionally, in the
Court's view, and the Court holds, the economic loss doctrine

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applies here and the de minimis loss of the value of gas that is
spilled, which is concededly de minimis, does not get around the
application of that doctrine.
(DJ. 60 at 70-71) After the case was transferred, the New York Bankruptcy Court dismissed
several of Plaintiffs' claims based on the Sale Order, but also determined that the Sale Order did
not bar claims related to repair or replacement warranties issued by Chrysler Group in 2011 and
2012 (after the Sale Order); nor did it bar any "Lemon Law" claims arising under non-bankruptcy
law. See In re Old Carco LLC, 492 B.R. at 395, 407.
On October 18, 2013, Plaintiffs filed in this Court their Third Amended Complaint (the
"Complaint") against Chrysler Group, seeking compensation and remedial repairs for damages
allegedly caused by Chrysler Group in relation to a Technical Service Bulletin ("TSB") and
several warranties Defendant had issued, providing coverage for any repair or replacement of
parts necessitated by the fuel spit-back problem for certain models (the "Extended Lifetime
Warranties"). (DJ. 62 iMf 1, 11-14) Specifically, Count I of Plaintiffs' Complaint alleges
Chrysler Group acted negligently in connection with the issuance of the TSB and the Extended
Lifetime Warranties (id. iMf 32-41), and Count II alleges a breach of the Extended Lifetime
Warranties (id.

iriJ 42-44).

In its motion to dismiss, Chrysler Group contends that: (1) the Court

lacks subject matter jurisdiction; (2) Plaintiffs have failed to plead a cause of action for
negligence and breach of warranty; and (3) Plaintiffs' claim for relief is preempted by federal
law. (DJ. 64)
LEGAL STANDARDS
I.

Rule 12(b)(l)

Motions brought under Rule 12(b)( 1) may present either facial or factual challenges to a

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court's subject matter jurisdiction. See Gould Elec. Inc. v. United States, 220 F.3d 169, 176 (3d
Cir. 2000). In reviewing a factual challenge to the Court's subject matter jurisdiction, the Court
is not confined to the allegations of the complaint, and the presumption of truthfulness does not
attach to those allegations. See Mortensen v. First Fed. Sav. & Loan Ass 'n, 549 F.2d 884, 891
(3d Cir. 1977). Instead, the Court may consider evidence outside the pleadings, including
affidavits, depositions, and testimony, to resolve any factual issues bearing on jurisdiction. See
Gotha v. United States, 115 F.3d 176, 179 (3d Cir. 1997). Once the Court's subject matter
jurisdiction is challenged, the plaintiff bears the burden of proving jurisdiction exists. See
Mortensen, 549 F.2d at 891.

II.

Rule 12(b)(6)

When presented with a motion to dismiss for failure to state a claim pursuant to Federal
Rules of Civil Procedure 12(b)(6), courts conduct a two-pah analysis. See Fowler v. UPMC
Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). First, courts separate the factual and legal elements
of a claim, accepting "all of the complaint's well-pleaded facts as true, but [disregarding] any
legal conclusions." Id. at 210-11. This step requires courts to draw all reasonable inferences in
favor of the non-moving party. See Maio v. Aetna, Inc., 221 F.3d 472, 500 (3d Cir. 2000).
However, courts are not obligated to accept as true "bald assertions," Morse v. Lower Merion
Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997), "unsupported conclusions and unwarranted
inferences," Schuylkill Energy Res., Inc. v. Pa. Power &Light Co., 113 F.3d 405, 417 (3d Cir.
1997), or allegations that are "self-evidently false," Nami v. Fauver, 82 F.3d 63, 69 (3d Cir.
1996).
Second, courts determine "whether the facts alleged in the complaint are sufficient to

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show that the plaintiff has a 'plausible claim for relief."' Fowler, 578 F.3d at 211 (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). A claim is facially plausible ''when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged." Iqbal, 556 U.S. at 678. This is a context-specific
determination, requiring the court "to draw on its judicial experience and common sense." Id. at
679. At bottom, "[t]he complaint must state enough facts to raise a reasonable expectation that
discovery will reveal evidence of [each] necessary element" of a claim. Wilkerson v. New Media
Tech. Charter Sch. Inc., 522 F.3d 315, 321 (3d Cir. 2008) (internal quotation marks omitted).
Courts may consider exhibits attached to the complaint, matters of public record, and
''undisputedly authentic" documents when the plaintiffs claims are based on the documents and
the defendant has attached copies of the documents to the motion to dismiss. See Pension
Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).

DISCUSSION3
I.

Subject Matter Jurisdiction
Chrysler Group argues that Plaintiffs' Complaint should be dismissed because there is no

justiciable case or controversy. (D.I. 64 at 8) Federal courts may only consider ongoing cases or
controversies. See Lewis v. Cont'! Bank Corp., 494 U.S. 472, 477-78 (1990). The "case-orcontroversy requirement subsists through all stages of federal judicial proceedings." Id.; see also
United States v. Kissinger, 309 F.3d 179, 180 (3d Cir. 2002).
Chrysler Group argues that it has already provided Plaintiffs with the very relief Plaintiffs

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The parties are in agreement that, for the purposes of resolving the pending motion, the
Court may apply Delaware law. (See D.I. 66 at 14; D.I. 69 at 5)

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seek in their Complaint, thus rendering the case moot. (D.I. 64 at 8-9) Chrysler Group premises
this contention on the uncontested fact that it has "already agreed to 'provide for the repair and
replacement of parts necessitated by the fuel spit-back problem' in [Plaintiffs'] vehicles." (D.I.
64 at 8) (quoting D.I. 62 ~ 14) Therefore, according to Defendant, the Court cannot provide
Plaintiffs with any materially more favorable relief beyond that which Chrysler Group has
already provided Plaintiffs. (D.I. 64 at 9) Hence, Defendant continues, there is no ongoing case
or controversy, the Court lacks subject matter jurisdiction, and the case must be dismissed.
The Court does not agree. By their Complaint, Plaintiffs seek more in the way of relief
than Chrysler Group has given them, and the Court could (if Plaintiffs prevail on the merits)
grant materially more favorable relief than Plaintiffs have already received. For example,
Plaintiffs request a mandatory injunction compelling Chrysler Group ''to repair all vehicles that
are subject to this cause of action" and provide "reasonable notification" of the defect to all
owners of the affected vehicles. (D.I. 62 at 13) (emphasis added) By contrast, what Defendant
has voluntarily agreed to do is to repair all vehicles that are currently experiencing the defect;
Defendant has not agreed that it will today repair all vehicles (of the specified models and model
years) even if they are not today experiencing the fuel spit-back problem. Likewise, while
Chrysler Group has taken reasonable steps to notify all current owners of the affected vehicles of
the defect, that notice does not advise all such owners to have their vehicles repaired, even if they
are not today experiencing the fuel spit-back problem. The Court could order Defendant to
provide such more fulsome notice.
While, as explained below, Plaintiffs have failed to state a claim for which these
additional forms ofrelief (or any others) may be granted, that failing does not change the fact that

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the Court could fashion materially more favorable relief for Plaintiffs than Chrysler Group has to
date given Plaintiffs, meaning there is a dispute among the parties and the case is not moot.
Accordingly, the Court has subject matter jurisdiction and will deny the portion of Defendant's
motion that is predicated on Rule 12(b)(l).

II.

Failure to State a Claim
A.

Count I: Negligence

Chrysler Group argues that Plaintiffs have failed to state a claim for negligence. (D .I. 64
at 10-15) In particular, Defendant contends Count I of the Complaint should be dismissed
because: (1) Plaintiffs do not plead any facts supporting damages; (2) Plaintiffs have not
established causation; (3) and Plaintiffs have not pled any facts showing a breach of any duty.

(Id. at 1) The Court agrees with Defendant.
With regard to damages, Chrysler Group argues that Plaintiffs' negligence claim should
be dismissed because the only allegations of damages in the Complaint are barred by the
economic loss doctrine. (Id. at 1) Plaintiffs appear to argue that the economic loss doctrine does
not apply because Plaintiffs are seeking injunctive, rather than monetary, relief. (See D.I. 66 at
11-13)4 As the Court has already held, however, "the economic loss doctrine applies here and
the de minimis loss of the value of gas that is spilled, which is concededly de minimis, does not
get around the application of that doctrine." (D.I. 60 at 71)
The question then becomes whether the Complaint contains any new allegations of

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Plaintiffs offer no authority for the proposition that the damages component of a
negligence claim may be satisfied by seeking injunctive - rather than monetary - relief. See
generally Schaefer v. IndyMac Mortg. Servs., 2012 WL 4929094, at *3 n.5 (D.N.H. Oct. 16,
2012) (economic loss doctrine applies irrespective of type ofremedy sought).
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damages sufficient to support a claim for negligence. The Court finds that it does not.
For example, Plaintiffs allege that they have, and will continue to, "suffer the loss of fuel
and/or be exposed to potential health and safety hazards" due to Chrysler Group's actions. (D.I.
62 ~ 46) As previously noted, the allegations concerning the loss of fuel are de minimis and do
not suffice given the application of the economic loss doctrine. See Kuhn Const. Co. v. Ocean &
Coastal Consultants, Inc., 844 F. Supp. 2d 519, 526 (D. Del. 2012); see also Danforth v. Acorn
Structures, Inc., 608 A.2d 1194, 1198 (Del. 1992). Plaintiffs' allegation of"potential health and
safety hazards" is also inadequate, as it is conclusory, and the mere threat of future harm caused
by owning a defective product does not necessarily give rise to a legally cognizable tort. See In
re Bridgestone/Firestone, Inc. Tires Prods. Liab. Litig., 155 F. Supp. 2d 1069, 1087-88 (S.D.
Ind. 2001) (no legally cognizable harm where plaintiffs' only damages were threat of vehicle
accident caused by owning defective tire), rev 'don other grounds sub nom. In re
Bridgestone/Firestone, Inc., 288 F.3d 1012 (7th Cir. 2002).
Moreover, Plaintiffs have failed to allege (or thereafter in briefing or at oral argument
articulate) any way in which Chrysler Group's offer of Extended Lifetime Warranties caused
Plaintiffs to be worse off than they otherwise would have been, or what duty Chrysler Group
(which neither manufactured nor sold the affected vehicles, nor assumed liability for defects
created by the former Chrysler entities that are now defunct) owed Plaintiffs and has breached.
See Rogers v. Christina Sch. Dist., 73 A.3d 1, 7 (Del. 2013) ("Generally, to determine whether
one party owed another a duty of care, [Delaware] follows the guidance of the Restatement
(Second) of Torts.").
Accordingly, Count I of Plaintiffs' Complaint fails to state a negligence claim on which

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relief may be granted and, hence, will be dismissed.

B.

Count II: Breach of Warranty

Chrysler Group argues that Plaintiffs' breach of warranty claim in Count II of the
Complaint should be dismissed. (D.I. 64 at 1) Under Delaware law, claims for breach of an
express warranty are governed by the Uniform Commercial Code ("UCC"). See Bell Sports, Inc.

v. Yarusso, 759 A.2d 582, 592 (Del. 2000) (express warranty provisions of Delaware law are
identical to UCC provisions).
Chrysler Group contends that its Extended Lifetime Warranties are repair or replacement
warranties, which offer owners of vehicles with the fuel spit-back problem a free repair of their
vehicles, or reimbursement for repairs already done to fix this same problem. (D .I. 64 at 15-16)
Plaintiffs appear to dispute this characterization, instead describing the warranty as being ''that
the product is free from this defect." (Tr. at 37; see also Tr. at 38 ("[I]f you made a promise to
repair something ... [y]ou are doing it because you warrant that this is a part that shouldn't fail
.... So they're warranting the part.")) But the Complaint and the attachments to it (which all
parties agree the Court must consider) more accurately describe the warranty as follows: "[t]he
defendant issued extended lifetime warranties to provide for the repair and replacement ofparts
necessitated by the fuel spit-back problem." (D.I. 62 if 14 (emphasis added); see also, e.g., D.I.
66-4 (warranty letter to Plaintiff Burton stating that warranty "has been extended to include
lifetime coverage to repair a certain condition that may occur during refueling of the vehicle"))
Once the scope of the warranty is understood, it is clear that Plaintiffs have failed to state
a claim for breach of that warranty. As Chrysler Group points out, the Complaint is devoid of
allegations that any Plaintiff has sought the promised repair or replacement and not received it, or

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has received it but been charged, or has sought reimbursement for an earlier repair or
replacement and been denied. (D.I. 64 at 16) Given that the scope of Chrysler Group's duties
are bound by the express warranty Chrysler Group provided, and there is no well-pleaded factual
allegation that Chrysler Group failed to fulfill the Extended Lifetime Warranties it extended to
Plaintiffs, the Complaint has failed to adequately allege a breach of those Warranties.
Plaintiffs contend that the Complaint sufficiently alleges insufficient notice, failure to
warn consumers, failure to eliminate the safety hazards, and conducting silent recalls. (D.I. 66 at
17; D.I. 62 iMf 11-13) Even accepting these allegations (though they to some extent state
conclusory legal opinions and not facts), they do not permit the conclusion that the Extended
Lifetime Warranties have "fail[ed] [their] essential purpose," as is needed on a breach of
warranty claim. Beal v. Gen. Motors Corp., 354 F. Supp. 423, 425-26 (D. Del. 1973). In the
context of a warranty for the repair or replacement of defective parts, a warranty fails its essential
purpose "where the warrantor refuses to repair the vehicle, the vehicle is not repaired within a
reasonable time or the vehicle is not repaired in a reasonable number of attempts." Norman

Gershman 's Things To Wear, Inc. v. Mercedes-Benz ofN. Am., Inc., 558 A.2d 1066, 1071 (Del.
Super. 1989). Plaintiffs fail to allege any of these things. See generally In re MyFord Touch

Consumer Litig., 2014 WL 2451291 (N.D. Cal. May 30, 2014) (stating plaintiffs failed to plead
breach of repair or replacement warranty where they did not afford defendant opportunity to
repair or replace defective parts).
Count II, then, does not contain "factual content" sufficient to allow the Court "to draw
the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S.
at 678. Therefore, the Court will grant Defendant's motion to dismiss Plaintiff's breach of

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warranty claim. 5
CONCLUSION
For the reasons set forth above, IT IS HEREBY ORDERED that Defendant's Motion to
Dismiss (DJ. 63) is GRANTED. The Clerk of the Court is directed to CLOSE this case.

August 27, 2014
Wilmington, Delaware

UN~TATES DISTRICT JUDGE

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Given the Court's conclusions regarding the sufficiency of Plaintiffs' allegations in
Count I and II of the Complaint, the Court does not address whether Plaintiffs' claims are
preempted under the Motor Vehicle Safety Act, 49 U.S.C. § 30101, et seq. This is an issue that
goes to the appropriate remedy, an issue that is unripe since Plaintiffs have failed to state a claim
on which any relief may be granted.
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