Flynn et al v. FCA US LLC et al

Filing 115

ORDER: For the reasons stated in the attached memorandum and order, Chrysler and Harmon's jurisdictional motions (Docs. 66 & 71 ) are GRANTED IN PART and DENIED IN PART. Flynn and Keith lack standing to pursue damages for a risk of harm or a fear of that risk, so the defendants' motions to dismiss any claims linked to those non-economic damages are GRANTED, and those claims are DISMISSED without prejudice. Flynn and Keith also cannot seek a court-ordered recall, so Chrysler's m otion to dismiss the recall-related request is GRANTED, and the recall-related request is DISMISSED with prejudice. The other requests in Chrysler and Harmon's jurisdictional motions are DENIED. Once more, Chrysler and Harmon's motions to d ismiss for failure to state a claim (Docs. 68 & 71 ) are GRANTED IN PART and DENIED IN PART. The Michigan implied warranty claim is DISMISSED with prejudice as to Chrysler and Harmon for want of pre-suit notice, and the Illinois warranty claim is DISMISSED without prejudice as to Harmon for want of any privity allegations. The Magnuson-Moss Act claim predicated on Illinois law against Harmon is DISMISSED without prejudice for want of privity allegations. The Michigan common law fraud claims a re all DISMISSED with prejudice on economic loss grounds, and the Illinois common law fraudulent misrepresentation claim is DISMISSED without prejudice for failure to plead reliance. The Michigan and Illinois negligence claims are DISMISSED with prejudice on economic loss grounds. Chrysler and Harmon's remaining motions to dismiss are DENIED. Signed by Chief Judge Michael J. Reagan on 9/23/2016. (wtw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
BRIAN FLYNN,
GEORGE BROWN,
KELLY BROWN, and
MICHAEL KEITH,
on behalf of themselves and all
others similarly situated,
Plaintiffs,
vs.
FCA US LLC, doing business as
Chrysler Group LLC, and
HARMON INTERNATIONAL
INDUSTRIES, INC.
Defendants.

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Case No. 15-cv-0855-MJR-DGW

MEMORANDUM AND ORDER
REAGAN, Chief District Judge:
In 2015, Brian Flynn, Michael Keith, and George and Kelly Brown—all owners or
lessees of Chrysler vehicles—brought suit against Chrysler and Harmon International
Industries, seeking to sue on their own behalf and on behalf of a number of other
vehicle owners similar to them. Their suit concerns a design flaw in some of Chrysler’s
2013-2015 vehicles that received public attention in a 2015 WIRED magazine article. The
vehicles in question are equipped with a uConnect system, manufactured by Harmon
International, that allows integrated control over the phone, navigation, and
entertainment functions throughout the vehicle. Per the plaintiffs, the uConnect system
turns the affected vehicles into rolling deathtraps: the uConnect system has design
vulnerabilities that allow hackers to take remote control of the vehicle’s functions,
1

including the vehicle’s steering and brakes, to comical or disastrous effect. The WIRED
article contributed to a voluntary recall by Chrysler, depending on how one sees things,
and despite the recall the plaintiffs maintain that the affected vehicles still have a
number of vulnerabilities that would allow hackers to access the vehicles’ critical and
non-critical systems.

Those ongoing vulnerabilities led the plaintiffs to file a class

complaint in this Court, seeking monetary damages and injunctive relief.
Flynn, Keith, and the Browns assert a number of claims linked to the uConnect
system and the vehicles the system was installed in, each predicated on their home
state’s law. Chrysler and Harmon, say the plaintiffs, violated the Magnuson-Moss Act
and the implied warranty of merchantability for the affected vehicles under Michigan,
Illinois, and Missouri law by putting the vehicles into circulation with the design
vulnerabilities; they committed fraud and violated the Michigan, Illinois, and Missouri
consumer protection statues when they lied about the vehicles’ safety or failed to fully
disclose the uConnect vulnerabilities; they were negligent in designing and later fixing
the affected vehicles’ vulnerabilities; and they were unjustly enriched by virtue of their
tortious or fraudulent conduct or their violations of the vehicles’ implied warranties.
As damages, the plaintiffs say that they overpaid for their vehicles because the vehicles
were initially defective; that the ongoing vulnerabilities have diminished their vehicles’
value; that the vulnerabilities have put the plaintiffs at risk of injury or death; and that
the vulnerabilities have placed the plaintiffs in an ongoing state of fear or anxiety.
Chrysler and Harmon have moved to dismiss all or part of the operative complaint on
jurisdictional and pleading grounds, and those motions are now ripe for review.
2

One note is in order concerning another motion Chrysler filed after Chrysler and
Harmon moved to dismiss the operative complaint. The two named Missouri plaintiffs
in this case, George and Kelly Brown, bought their Chrysler vehicle pursuant to a
discount program, and because that discount program included an arbitration clause
covering warranty claims against Chrysler, Chrysler has moved to stay this entire case
so that the Browns’ claims can be addressed before an arbitrator. Harmon supports the
motion. By separate order today, the Court granted a limited stay as to the Browns’
claims only, but denied a stay as to the other claims in this suit. Accordingly, this ruling
will only address the motions to dismiss directed at Plaintiff Flynn’s claims (under
Illinois law) and Plaintiff Keith’s claims (under Michigan law). Any arguments directed
at the Browns’ claims will be denied without prejudice in light of the stay; Chrysler and
Harmon are free to make those arguments again once the stay is lifted.
Chrysler and Harmon make a number of arguments in favor of full or partial
dismissal of the Michigan and Illinois claims in this case, but it makes sense to start with
their jurisdictional arguments, for if those succeed all or part of the case must end. The
two complain the loudest about standing—they insist that the plaintiffs have not
alleged the kinds of injuries recognized as viable by the courts, much less ones that are
traceable to either entity’s conduct. Their reference to “allegations” and the standard
they cite in their motions suggests a facial challenge to standing, and for that kind of
challenge the Court accepts as true all of the complaint’s allegations and construes those
allegations in the plaintiff’s favor. Silha v. ACT, Inc., 807 F.3d 169, 173 (7th Cir. 2015).
To have standing, a litigant must show that he has suffered a concrete and
3

particularized injury that is fairy traceable to the challenged conduct and is likely to be
redressed by a favorable court decision. Hollingsworth v. Perry, 133 S. Ct. 2652, 2661
(2013).

The standing doctrine, grounded as it is in the Constitution’s case or

controversy requirement, serves a number of practical goals: it limits premature judicial
interference with legislation, it prevents the courts from being overwhelmed with cases,
and it ensures that the primary victims of wrongful conduct will not have their cases
litigated in advance by persons who were only trivially harmed.

Am. Bottom

Conservancy v. United States Army Corps of Eng’s, 650 F.3d 652, 656 (7th Cir. 2011).
Flynn and Keith allege that they have been injured in a variety of ways. The first
two injuries—that the uConnect vulnerabilities have exposed them to an increased risk
of injury or death if their vehicles were hacked and that they suffer anxiety and fear
because of that possibility—both have some standing problems in light of the Supreme
Court’s holding in Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138, 1147 & n.5 (2013), that
a risk of future injury and the fear of that injury doesn’t create standing absent a
“substantial” risk that the feared injury will come to bear.

Taking the plaintiffs’

allegations as true, there’s not that kind of risk here. There’s no allegation in the
complaint that the plaintiffs’ vehicles were hacked at all or that their vehicles were
actually meddled with in a way that could cause real injury. There is the WIRED article
and its author, who was subject to a hack that put the author at some controlled risk for
journalistic effect, and there were also reports from thirty people who reported possible
hacking-related problems during the course of the voluntary recall. But the WIRED
scenario was done to a willing subject in a quasi-laboratory setting who suffered no
4

injury whatsoever, and the vast majority of the recall reports concerned theft-related
hacks, having nothing to do with any risk of injury or death. Only four owners in a
universe of over a million reported anything close to a safety-related problem—three
reported engine stalls and one reported a sudden unintended acceleration that may
have been caused by hacking—and there’s no allegation that those consumers were
actually injured, severely or otherwise. Once more, the uConnect system has been
subject to a recall, and even though Flynn and Keith insist that the recall didn’t fix all of
the vulnerabilities and offer some developed allegations on that front, the recall still
reduces the chances even more that a real world hack will occur and that Flynn and
Keith will be injured or killed by virtue of a takeover of their vehicles. At the end of the
day, four unverified safety-related reports and one safety-related hack in a quasicontrolled setting concerning a purported defect that’s been in existence since 2013
doesn’t add up to a “substantial” risk of harm to the plaintiffs here.

See, e.g.,

Koronthaly v. L’Oreal USA, Inc., 374 F. App’x 257, 259 (3d Cir. 2010) (subjective fear of
injury insufficient to create standing when plaintiff had “suffered no adverse health
effects” and there was no objective indication of a serious risk of harm); Simpson v.
California Pizza Kitchen, Inc., 989 F. Supp. 2d 1015, 1022 (S.D. Cal. 2013) (no standing
where there was nothing to suggest that ingestion caused actual harm).
Consider the chain of events that would need to occur for a serious injury to
befall Flynn or Keith.

Their automobiles would need to be hacked by a hacker

proficient enough to access the vehicles by remote. The hack would need to occur
despite the fact that the recall fixed some of the vulnerabilities referenced in the WIRED

5

article. The hacker would need to gain access to the critical systems of the vehicle, and
then the hacker would need to hijack those systems in a way that would cause a wreck
of the kind of magnitude that could injure or kill. The plaintiffs don’t allege that this
chain of events has ever happened to anyone, and the chain looks a lot like the kind
deemed too attenuated and speculative to create standing in other cases. See Clapper,
133 S. Ct. 1138 at 1148-50; In re African-Am. Slave Descendants Litig., 471 F.3d 754, 76061 (7th Cir. 2006). This isn’t like a data breach case where cybercriminals who have
stolen credit data will likely use that data in the future even if they haven’t at the start
of a suit, Remijas v. Neiman Marcus Grp., LLC, 794 F.3d 688, 694-95 (7th Cir. 2015); in
this case there is no allegation that a real world hacker has ever hacked the uConnect
system to cause injury, nor is there any suggestion that hackers with knowledge of these
kinds of vulnerabilities take advantage of them to injure hapless drivers.
So Flynn and Keith lack standing to press injuries based on a risk of injury or
death and the fear of that injury. That doesn’t mean that they lack standing across the
board, though—standing is evaluated on an injury-by-injury basis, Davis v. Fed. Elec.
Comm’n, 554 U.S. 724, 734 (2008), and Flynn and Keith have two other injuries they
wish to press here. Those two injuries are mirror images of each other: they claim that
they overpaid for their affected vehicles because the automobiles had defects at the time
they were purchased, and they also insist that the defects have caused an appreciable
drop in the value of their vehicles on the market. Chrysler and Harmon insist that any
overpayment or diminution of value is speculative given that no consumer has actually
been severely injured or killed by way of the defect, but safety-related defects aren’t the
6

only kinds of defects that could cause a drop in value, and there are enough allegations
offered and materials cited by the plaintiffs to suggest a drop, at least at this point in the
case. Market forces alone, pressed along by the 2015 WIRED article exposing safety- and
access-related vulnerabilities with the uConnect system, could lead to a reduction in the
value of the vehicles, as could reports from some 27 odd consumers during the recall
suggesting that their automobiles were remotely unlocked and then robbed by hackers.
And overpayment or a drop in value suffices as an injury for standing purposes. E.g.,
In re Aqua Dots Prods. Liab. Litigation, 654 F.3d 748, 750-51 (7th Cir. 2011); Cole v.
Gen. Motors Corp., 484 F.3d 717, 722-23 (5th Cir. 2007); In re Toyota Motor Corp.
Unintended Acceleration Prods. Liab. Litig., 754 F. Supp. 2d 1145, 1162 (C.D. Cal. 2010).
Chrysler and Harmon brush off the overpayment and diminution cases on the
grounds that they all involved situations where the harms from defects had
materialized for some group of customers, even if they hadn’t materialized for the
actual plaintiffs in the case. That distinction might matter—it stands to reason that
there likely wouldn’t be much of a loss in value if the defective product wasn’t defective
at all—but the distinction doesn’t hold up here. Aqua Dots, Cole, and Toyota Motor all
involved products where other customers had problems with the product but the
plaintiffs luckily ducked them, and there are allegations of similar problems
experienced by other consumers here—Flynn and Keith allege that a journalist driving
one of the affected vehicles was hacked in real time and his event narrated for the
market to read in a national magazine a little over a year ago, and that the narration fed
into a recall that involved at least thirty reports of purported hacking of the affected
7

vehicles. Those events might not back up a substantial risk of death or injury to Keith
and Flynn, but they do provide a foundation for a claim that the affected vehicles were
overpriced when they were sold or that the affected vehicles lost value once knowledge
of the defects reached the market. See Toyota Motor Corp., 754 F. Supp. 2d at 1162-66
(noting that the risk of actual harm from the defect wasn’t substantial, but that the
“market effect” of the defect was “actual or imminent” and that the non-conclusory
allegations of market value loss were sufficient to allege injury in fact).
It’s true that a recall occurred for the affected vehicles in this case, and it’s also
true that a number of courts have cast suspicious glances at claims of overpayment or
diminished value when a recall purportedly fixed all of the problems prior to suit. E.g.,
Hadley v. Chrysler Group LLC, 624 F. App’x 374, 378 (6th Cir. 2015); In re Toyota
Motor Corp. Hybrid Brake Marketing Sales Prac. & Prod. Liab. Litig., 915 F. Supp. 2d
1151, 1159 (C.D. Cal. 2013). The key phrase is “all of the problems”—if a recall didn’t
remedy three vulnerabilities out of ten or one vulnerability out of twenty, then it’s only
logical that there might still be a loss in value on the market despite the manufacturer’s
efforts. See Sater v. Chrysler Group LLC, No. 14-00700, 2014 WL 11412674, at *4 (C.D.
Cal. Oct. 7, 2014); In re Toyota Motor Corp., 790 F. Supp. 2d 1152, 1162 (C.D. Cal. 2011).
Keith and Flynn claim that kind of slip here, and their supporting allegations are far
from conclusory—they point out that the WIRED article documented a number of
vulnerabilities with the uConnect system, they offer clear allegations as to what
vulnerabilities the recall didn’t fix, and the documents from the recall offer some doubt
as to whether everything is fixed. If the plaintiffs can prove that the recall didn’t fix all

8

of the defects and that the ongoing vulnerabilities have reduced the market value of
their vehicles, the initial overpayment and the subsequent reduced value would qualify
as injuries in fact. Whether it’s a small injury or whether the injury isn’t legally viable
given a doctrine like economic loss are separate questions—all that matters for standing
at this phase is that the plaintiffs allege a fair probability of injury. E.g., MainStreet Org.
of Realtors v. Calumet City, Ill., 505 F.3d 742, 744-45 (7th Cir. 2007); Am. Bottom, 650
F.3d at 658. Keith and Flynn have alleged such an injury here in spite of the recall, and
that’s enough. They’ve also alleged causation despite the defendants’ argument to the
contrary: if the defects in the uConnect system still allow hackers to access their vehicles
despite the recall, then any lost value would be “fairly traceable” to the uConnect
defects, regardless of whether hacking by third parties also contributed. Lewert v. P.F.
Chang’s China Bistro, Inc., 819 F.3d 963, 967-68 (7th Cir. 2016).
Failing a wholesale jurisdictional dismissal on standing grounds, the defendants
insist that Flynn and Keith lack standing to bring some of the state law claims raised in
this suit. For instance, Flynn is a resident of Illinois, and the defendants argue that he
lacks standing to bring claims under Missouri or Michigan law where he has no
connection to those states.

Likewise, Keith is a resident of Michigan, and the

defendants maintain that he lacks standing to invoke the laws of Missouri or Illinois.
This argument conflates the standing question with the merits of a claim. Standing
exists if a litigant has been injured, the defendants caused that injury, and the injury can
be redressed by a judicial decision—nothing more is required. Morrison v. YTB Int’l,
Inc., 649 F.3d 533, 536 (7th Cir. 2011). The question of what state law is properly
9

invoked by each plaintiff or putative plaintiff is a merits question or possibly a question
linked to the propriety of class certification, and federal courts shouldn’t conflate that
issue with the standing point. E.g., Morrison, 649 F.3d at 536; Le v. Kohl’s Dep’t Stores,
Inc., — F. Supp. 3d —, 2016 WL 498083, at *12-13 (E.D. Wis. Feb. 8, 2016); Cohan v.
Medline Indus., Inc., No. 14-cv-1835, 2014 WL 4244314, at *2 (N.D. Ill. Aug. 27, 2014).
Chrysler and Harmon’s argument, premised entirely on standing, must be rejected.
With the standing point resolved, Chrysler (but not Harmon) has two more
jurisdictional arguments. The first concerns collateral attack: Chrysler says that Flynn
and Keith can’t take issue with the National Highway Traffic Safety Administration’s
ruling that there are no more problems with the uConnect system through this more
conventional lawsuit, but must challenge that purported ruling through the
Administrative Procedure Act.

It’s a tough pill for the Court to swallow that all

plaintiffs are barred wholesale from bringing a typical products liability lawsuit for
damages merely because a federal agency has coordinated a recall and made findings as
a part of that process, and Chrysler doesn’t make that pill any more palatable with a
developed argument—it doesn’t cite one case where a Court extended the collateral
attack doctrine to a case like this. The Court needn’t resolve the more difficult question
of whether collateral attack applies in these circumstances, though, because the
collateral attack point can be disposed of on more mundane grounds. To create a
collateral attack problem, Chrysler would need to show that the defect issue was finally
determined by the Administration, see Peterson v. Johnson, 714 F.3d 905, 911-12 (6th
Cir. 2013); State Farm Mut. Auto. Ins. Co. v. Indus. Pharmacy Mgmt., LLC, No. 0910

00176, 2009 WL 2448474, at *4-5 (D. Haw. Aug. 11, 2009), and the tenor of the
Administration’s findings don’t suggest that kind of finality or confidence. Far from
issuing any kind of ultimate determination on the comprehensiveness of Chrysler’s
voluntary recall, the Administration said, in its recall findings, that it only “appear[ed]”
that the defects were addressed, and elsewhere said that it was making no conclusive
ruling on whether the defects were cured by way of Chrysler’s voluntary recall.
Without a more conclusive determination by the Administration as to a defect, there’s
nothing for the plaintiffs to attack collaterally through this suit.
Chrysler’s second jurisdictional argument concerns preemption. According to
Chrysler, many of the declaratory requests in the complaint must be dismissed because
they are poorly veiled attempts to institute a court-ordered recall and thus are
preempted by the Motor Vehicle Safety Act, specifically the parts of the Act that set up
procedures for the National Highway Traffic Safety Administration to use as a part of
any recall. The touchstone of any preemption analysis is congressional intent, and that
intent can be stated explicitly or implied by the federal statute’s structure and purpose.
Gade v. Nat’l Solid Wastes Mgmt. Ass’n, 505 U.S. 88, 98 (1992). There’s nothing to
suggest that the Safety Act explicitly preempts all state claims; to the contrary, the
savings clause specifically preserves state law warranty obligations and other rights and
remedies provided by state law.

See 49 U.S.C. § 30103(d).

That said, implied

preemption can still limit a state claim or order despite the presence of a savings clause.
If a part of a federal statute occupies a field so thoroughly that it leaves no room for the
States to supplement it, or if state claims or orders serve as an obstacle to the execution
11

of Congress’ purpose or frustrates that purpose by interfering with the methods
Congress selected to achieve a federal goal, the state efforts are preempted. Indiana
Bell Telephone Co., Inc. v. Indiana Util. Reg. Com’n, 359 F.3d 493, 497 (7th Cir. 2004).
Using state law, as Keith and Flynn are trying to do here, to obtain declaratorystyle recall relief would create an implied preemption problem, for court ordered recalls
would interfere with the methods set up for recalls by the Safety Act. The Act sets forth
a comprehensive scheme for prospective relief from dangerous features in vehicles—it
creates a notification procedure if and when the Secretary of Transportation determines
that a vehicle contains a defect; it affords the Secretary discretion to determine the type
of notification that consumers need; and it provides the Secretary with the authority to
determine that a defect or noncompliance is inconsequential to safety, thereby
exempting the manufacturer from providing a remedy. See 49 U.S.C. §§ 30118 & 30119.
Allowing the courts to set up their own system for motor vehicle recalls has to conflict
with those procedures—any separate system would bypass the Secretary and the
discretion entrusted to her, including her discretion to decide against any recall because
the defect was inconsequential, and would, at the least, complicate the administrative
route set up by the statute by authorizing a parallel proceeding.

This kind of

“methods” conflict was enough to create a preemption problem for a state claim that
would have set up different methods in the Clean Water Act context in International
Paper Co. v. Ouellette, 479 U.S. 481, 492-95 (1987), and it was enough to create the same
kind of problem for state orders that would have led to different procedures in the
Telecommunications Act context in Wisconsin Bell v. Bie, 340 F.3d 441, 444 (7th Cir.
12

2003). The logic follows for the Motor Vehicle Safety Act. Lilly v. Ford Motor Co., No.
00 C 7372, 2002 WL 84603, at *4-6 (N.D. Ill. Jan. 22, 2002); In re Bridgestone/Firestone,
Inc. Tires Prods. Liab. Litig., 153 F. Supp. 2d 935, 944-48 (S.D. Ind. 2001).
Keith and Flynn’s main argument against preemption is that there is no conflict
between state recalls and the purpose of the Motor Vehicle Safety Act, for both seek to
increase safety. The problem is that a state law can be preempted if it interferes with
the actual goal of a federal statute or if it interferes with the methods by which the
federal statute set to achieve the federal goal, Indiana Bell, 359 F.3d at 498; Wisconsin
Bell, 340 F.3d at 445, and a court-supervised recall would run roughshod over the recall
procedures put forth in the Motor Vehicle Safety Act for an agency-coordinated recall,
In re Bridgestone/Firestone, 153 F. Supp. 2d at 946-47. To be sure, a few district courts,
led primarily by the Northern District of California’s decision in Kent v.
DaimlerChrysler Corp., 200 F. Supp. 2d 1208, 1217-18 (N.D. Cal. 2002), rely on Keith
and Flynn’s logic to find that the Motor Vehicle Safety Act doesn’t preempt courtordered recalls, but given the reasoning in the Bridgestone/Firestone case and the
Seventh Circuit’s conclusions in the Indiana Bell and Wisconsin Bell cases, the Court
doesn’t find those other district court opinions all that persuasive within this circuit.
So Flynn and Keith can’t use state law claims to secure a recall. The question
remains whether the declaratory requests in their complaint go that far—that is, after
all, the only basis advanced by Chrysler for dismissal of those requests. Out of the
declaratory requests targeted for dismissal by Chrysler, the plaintiffs want a declaration
that the affected vehicles are defective, that the defects are safety-related, that Chrysler
13

and Harmon be financially responsible for notifying the class of the defects, and that
Chrysler and Harmon be ordered to remedy the defects in the vehicles or refund the
purchase price. Only the last one clearly amounts to a recall order, so only it must be
dismissed on preemption grounds at this phase. Chrysler doesn’t lay out, in any real
detail, how the other three declaratory requests amount to a full-blown judicial recall,
so they aren’t grist for a preemption-based dismissal for now. The Court can better
determine the propriety of the remaining declaratory requests at a later point, with the
benefit of more developed argument from one or both of the defendants. 1
That resolves all of the jurisdictional points, leaving Chrysler and Harmon’s
arguments that some or all of Flynn and Keith’s complaint should be dismissed for
failure to state a claim. Chrysler (but again not Harmon) maintains that all of their
claims must go for failure to plead any legally cognizable damages—according to
Chrysler, the plaintiffs’ operative complaint doesn’t offer any facts to back up a loss in
value in their vehicles, and thus the damages asserted are entirely conclusory. That’s
wrong. The operative complaint documents the 2015 WIRED article, explains the recall
process, and provides fairly developed allegations as to how the recall didn’t go far
enough, thereby causing damage to the plaintiffs in the form of overpayment and lost
For similar reasons, the Court won’t dismiss the remaining declaratory requests on
primary jurisdiction grounds, at least at this point. Chrysler maintains that the National
Highway Traffic Safety Administration has primary jurisdiction over most of the
declaratory relief requests left in this case and that the Court should defer to it to
execute that kind of relief, but Chrysler’s argument is perfunctory—it is all of four
sentences long. Chrysler doesn’t lay out the doctrine, and worse yet it doesn’t explain
how the remaining declaratory relief requests that it targets for dismissal are similar
enough to a recall as to fall within the “special competence” of the Administration. See
Bussian v. DaimlerChrysler Corp., 411 F. Supp. 2d 614, 629 (M.D.N.C. 2006).
1

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value. That’s enough to plead damages under the federal standards at the motion to
dismiss stage.

See Tamoya v. Blagojevich, 526 F.3d 1074, 1084-85 (7th Cir. 2008)

(pleadings are sufficient when the allegations give the defendant “sufficient notice to
enable him to begin to investigate and prepare a defense”); see also Smolinksi v.
Oppenheimer, No. 11-C-7005, 2012 WL 2885175, at *4 (N.D. Ill. July 11, 2012). It’s true
that a number of circuits have expressed doubt that some states would recognize the
viability of those types of damages in a contract or fraud case, but those rulings haven’t
resolved the question of whether those damages are bunk in every state, and they have
hinted that certain states (like Michigan) might allow for them.

E.g., In re

Bridgestone/Firestone, Inc., 288 F.3d 1012, 1016-17 (7th Cir. 2002); Cole, 484 F.3d at 72526. The question for now, then, is whether Illinois or Michigan forecloses claims with
the kinds of overpayment damages at issue here, and Chrysler doesn’t develop that
argument, at least for its wholesale attack on the entirety of the amended complaint.
Until Chrysler lays out how those states don’t recognize the damages for the claims
here or says that it has reviewed Michigan and Illinois law and found nothing on point,
the Court isn’t in a position to dismiss the Michigan and Illinois claims at this time.
Failing a complete dismissal of the case for want of damages, Chrysler argues
that many of the damages asserted in this case must be dismissed as to specific claims
or specific plaintiffs. In light of the Court’s ruling above that Keith and Flynn only have
standing to pursue overpayment and diminished value injuries, most of Chrysler’s
damages-related dismissal arguments are now moot.

This includes the “higher

probability of injury or death”- and the “fear and anxiety”-related damages for the
15

Magnuson-Moss Warranty Act claims, the “fear and anxiety”-related damages as to all
counts, and the “high probability of injury or death”-related damages as to all counts.
The only other damages claim that Chrysler wants dismissed is Plaintiff Keith’s claim—
according to Chrysler, Keith leased his car, so he couldn’t overpay or have any
diminished value damages. It’s probably true that Keith couldn’t have lost value, but
it’s plausible that Keith was overcharged for his lease because of the ongoing defects in
his vehicle, and that overcharge could constitute damages. Because Chrysler hasn’t
cited any case suggesting that those damages aren’t recognized in Michigan or Illinois,
the Court isn’t prepared to dismiss Keith’s entire case at this stage.
Chrysler and Harmon next argue that all of the implied warranty claims must be
dismissed for several reasons, chief among them that there was no defect alleged and,
even if there was, most states don’t allow for a breach of implied warranty claim where
the plaintiffs haven’t alleged a manifestation of a defect that made the car unfit for
transport. As to the first point, the complaint plainly enumerates design vulnerabilities
in the uConnect system and the vehicles that the system was installed in, and that’s
enough to allege a defect at this stage of the case. As to the second point, it’s true that
some states seem to have limited implied warranty claims to defects which have
manifested in a way as to cause real harm to the vehicles, but the critical question here
is whether Illinois or Michigan has limited their law in that fashion, and the defendants’
arguments on that point are a bit conclusory. Chrysler cites two federal cases and one
Missouri case for the proposition, but it doesn’t offer any real analysis as to how the
circumstances of those cases are similar to this one, nor does it lay out why that law has
16

anything to do with Michigan or Illinois law. Meanwhile, Harmon offers more cases,
but its argument is three sentences long and its authority is offered in a string citation—
there’s no real depth of treatment. The reason for Chrysler and Harmon’s brevity seems
understandable: the defendants, faced with a twenty page limit on their briefs and a
number of arguable points in support of dismissal of the one-hundred-plus page
complaint filed by the plaintiffs in this case, have limited some of their arguments to a
few sentences. Some of their arguments are so simple and straightforward as to be ably
made with little ink, but this one isn’t. The point seems to be one of debate among some
of the states, Bridgestone/Firestone., 288 F.3d at 1016-17; Cole, 484 F.3d at 725-26, and
given that uncertainty, the Court won’t dismiss the warranty claims under Michigan or
Illinois law for want of viable damages at this phase. Chrysler and Harmon are free to
raise more developed arguments on this front at a later point in the proceedings.
Chrysler and Harmon offer two other reasons to dismiss the implied warranty
claims, one concerning pre-suit notice and the other concerning privity. The pre-suit
notice requirement does away with Keith’s implied warranty claim under Michigan
law, for Michigan requires pre-suit notice without exception (a point that the plaintiffs
don’t contest). See Johnson Controls, Inc. v. Jay Indus, Inc., 459 F.3d 717, 729-30 (6th
Cir. 2006). Flynn’s Illinois claim can’t be so easily dismissed on notice grounds, though,
as Illinois allows for an exception to notice when the defendants already know of the
defect as to the entire product line, Stella v. LVMH Perfumes & Cosmetics, USA, Inc.,
564 F. Supp. 2d 833, 837 (N.D. Ill. 2008), and there’s enough pled in the complaint here
about Chrysler and Harmon’s knowledge to make a dismissal on notice grounds
17

untenable at this early point. As to privity, it’s true that Illinois limits implied warranty
claims to the direct seller when the only recovery is for economic losses, but a lack of
explicit privity doesn’t doom a claim if the seller was an agent of the defendant. Rothe
v. Maloney Cadillac, Inc., 518 N.E.2d 1028, 1029-30 (Ill. 1988). The plaintiffs make no
argument about an agency relationship as to Harmon, so the Illinois warranty claim
against Harmon must be dismissed, for only economic damages are viable here. The
plaintiffs do allege an agency relationship between Chrysler and the sellers, though,
and there are just enough facts pled about that relationship to make dismissal at this
point inappropriate. See In re Rust-Oleum Restore Marketing, Sales Practices & Prods.
Liab. Litig., 155 F. Supp. 3d 772, 807 (N.D. Ill. 2016). So Flynn’s Illinois implied
warranty claim can proceed as to Chrysler, but that claim must be dismissed as to
Harmon, and Keith’s implied warranty claims must be dismissed in full.
With the implied warranty claims settled for now, next up are Keith and Flynn’s
Magnuson-Moss Act claims, which the defendants say must be dismissed for the same
reasons that the Michigan and Illinois implied warranty claims had to be dismissed.
The Magnuson-Moss Act allows for a federal suit for breach of an implied warranty
arising under state law, so the state and federal implied warranty claims usually rise
and fall together. E.g., In re Sony PS3 Other OS Litig., 551 F. App’x 916, 920 (9th Cir.
2014); Cooper v. Samsung Elec. Am., Inc., 374 F. App’x 250, 254 (3d Cir. 2010). The
defendants want the Magnuson-Moss Act claims dismissed primarily for a lack of
privity, and the federal Act incorporates the implied warranty privity requirements of
the States—if a state implied warranty claim must be dismissed for want of privity, so
18

too must the Magnuson-Moss Act claim. Voelker v. Porsche Cars North America, Inc.,
353 F.3d 516, 525-26 (7th Cir. 2003). For the reasons the Court already laid out above,
the Illinois Magnuson-Moss Act claim against Harmon must be dismissed for want of
anything to suggest privity, but the Illinois Magnuson-Moss Act claim against Chrysler
can’t be dismissed on privity grounds.

The Michigan Magnuson-Moss Act claims

against Harmon and Chrysler can’t be dismissed on privity grounds either, as Michigan
has abandoned the privity requirement for implied warranty claims. Montgomery v.
Kraft Foods Global, Inc., 822 F.3d 304, 309 (6th Cir. 2016).
Harmon and Chrysler offer three other reasons to dismiss the Magnuson-Moss
Act claims in the entirety, but all of them require little discussion. Like the implied
warranty claims, they want the Magnuson-Moss Act claims dismissed for want of an
alleged defect, but as the Court already said, the plaintiffs have alleged a defect here.
Harmon and Chrysler also want the federal claims dismissed for want of viable
warranty damages under Michigan and Illinois law, but their arguments on that front
are too undeveloped for the Court to take up now. Finally, they ask that the MagnusonMoss Act claims be dismissed for lack of pre-suit notice. The rub is that the MagnusonMoss Act has its own notice provision, and it allows a putative class action to continue
to the certification stage without pre-suit notice—after which notice and an opportunity
to cure must be provided by the named plaintiffs before the case can proceed further.
See 15 U.S.C. § 2310(e); see also Walsh v. Ford Motor Co., 807 F.2d 1000, 1004 (D.C. Cir.
1986); In re Shop-Vac Mktg. & Sales Prac. Litig., 964 F. Supp. 2d 355, 362 (M.D. Pa.
2013). This is a class case, so a lack of pre-suit notice doesn’t lead to dismissal for now.
19

Flynn and Keith next assert common law fraud claims under Michigan and
Illinois law—they claim that Chrysler and Harmon made false statements about the
uConnect system and failed to adequately disclose the failures in that system to the
plaintiffs

and

other

consumers.

Keith’s

problem

is

that

his

fraudulent

misrepresentation and omission claims suffer from a fatal flaw, one linked to the
economic loss rule and how that doctrine is applied under Michigan law. As no one
disputes, Michigan applies that rule to fraud claims—Michigan precludes recovery for
economic losses resulting from the failure of a product to live up to a buyer’s
expectations, reasoning that those claims are best channeled through the law of contract
and warranty and not the law of tort. Huron Tool & Eng’g Co. v. Precision Consulting
Servs., 532 N.W.2d 541, 543-44 (Mich. Ct. App. 1995). There’s an exception to the rule
when a plaintiff says that he was fraudulently induced to enter into the purchase
contract, but only if the inducement has nothing to do with the quality or character of
the goods—if the claim concerns the goods then the fraud claim is again redundant to a
warranty claim and, in Michigan at least, caught in the teeth of the economic loss rule.
E.g., Dinsmore Instrument Co. v. Bombardier, Inc., 199 F.3d 318, 320-21 (6th Cir. 1999);
Valleyside Dairy Farms, Inc., v. A.O. Smith Corp., 944 F. Supp. 612, 617 (W.D. Mich.
1995). Keith’s fraud claim concerns the uConnect system, so it must be dismissed. 2

The plaintiffs argue that the fraudulent inducement exception should apply without
limit to fraud claims based on non-commercial, run-of-the-mill transactions, but they
cite no case that expressly curbs the doctrine in such a fashion, and the cases the Court
has found on its own don’t back the plaintiffs up. See Murphy v. The Proctor & Gamble
Co., 695 F. Supp. 2d 600, 602, 603, 607 (E.D. Mich. 2010) (applying the doctrine to a suit
by private consumers who purchased razor blades); see also Stein v. Fenestra Am.,
2

20

As to common law fraud, that leaves Flynn’s misrepresentation and omission
claims under Illinois law. Chrysler and Harmon insist that the misrepresentation claim
must fail because it wasn’t pled with the particularity required by Rule 9, and the two
are right to complain. State law fraud claims raised in federal court are subject to the
pleading requirements of Federal Rule of Civil Procedure 9.

Windy City Metal

Fabricators & Supply, Inc., v. CIT Tech. Financing Servs., Inc., 536 F.3d 663, 668 (7th
Cir. 2008). To clear that rule for a fraudulent misstatement claim, a plaintiff must lay
out, among other points, the particulars of reliance: he must state the misrepresentation
that he saw, the date that he saw it, and where he saw it. E.g., West Coast Roofing &
Waterproofing, Inc. v. Johns Manville, Inc., 287 F. App’x 81, 88-89 (11th Cir. 2008);
Evans v. Pearson Enter., Inc., 434 F.3d 839, 852-53 (6th Cir. 2006); Baldwin v. Star
Scientific, Inc., 78 F. Supp. 3d 724, 738 (N.D. Ill. 2015). Flynn hasn’t satisfied that
requirement here. He has only pled reliance on Chrysler and Harmon’s purported
misstatements in a cursory way, so the Illinois misstatement claim must be dismissed.
Flynn’s fraudulent concealment claim presents a closer question, but considering
all of the allegations in the amended complaint, the Court is of the view that this claim
passes muster under Rule 9. For fraudulent concealment claims, a plaintiff must allege
the “who, what, when, where, and how” of the omission, and must also allege that the
defendant “intentionally omitted or concealed a material fact that it was under a duty to

LLC, No. 09-5038, 2010 WL 816346, at *4-5 (E.D. Pa. Mar. 9, 2010) (applying the
doctrine to a suit by private consumers concerning the construction of their home);
Tietsworth v. Harley-Davidson, Inc., 677 N.W.2d 233, 244 (Wis. 2004) (Sykes, J.)
(applying the doctrine to a suit by private consumers who purchased motorcycles).
21

disclose to the plaintiff.” Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 571 (7th Cir.
2012). The amended complaint clears the more mundane “who, what, when” and so on
requirements—it states what information was withheld (the extent of the vulnerabilities
in the uConnect system), when the information should have been provided (prior to
purchase and during the course of Flynn’s ownership), who should have provided it
(Chrysler and Harmon), and the where and the how (via a public medium). Chrysler
and Harmon fault Flynn for not making out some of his allegations with the precision
typically seen in fraudulent misstatement claims, but the slight lack of detail is
understandable in concealment claims, where it’s far more difficult for a plaintiff to
enumerate the time, place, and content of the omitted statement. E.g., MacDonald v.
Ford Motor Co., 37 F. Supp. 3d 1087, 1096 (N.D. Cal. 2014); Shifrin v. Assoc. Banc
Corp., No. 12-839, 2013 WL 1192766, at *3 (S.D. Ill. Mar. 22, 2013); Baggett v. HewlettPackard Co., 582 F. Supp. 2d 1261, 1267 (C.D. Cal. 2007). Chrysler and Harmon also
insist that the fraudulent concealment claim must be dismissed because Keith hasn’t
pled that Chrysler and Harmon were under any duty to disclose, but Keith has pled
such a duty, and he has backed up that allegation with facts suggesting that Chrysler
and Harmon had the kind of superior knowledge about their products that could create
a duty to disclose under Illinois law. E.g., Connick v. Suzuki Motor Co., Ltd., 675
N.E.2d 584, 594 (Ill. 1996); Lilly v. Ford Motor Co., No. 00-7372, 2002 WL 84603, at *8-9
(N.D. Ill. Jan. 22, 2002). This fraud claim isn’t grist for dismissal at this point.
Flynn and Keith also claim that Chrysler and Harmon’s misstatements and
omissions violated the consumer protection acts of Michigan and Illinois. Chrysler and
22

Harmon insist that these statutory fraud claims should be dismissed for the same
reasons that the common law fraud claims should be dismissed, but their arguments on
the consumer protection front are conclusory. In their opening briefs, the two cite little
authority to back up dismissal under Michigan and Illinois’ consumer statutes, an
especially problematic lapse given that the elements for a common law fraud claim
aren’t always the same as the elements of a violation of a state consumer protection
statute. As one example, Chrysler and Harmon’s initial briefs say that the statutory
claims should be dismissed for want of reliance, but they cite nothing to demonstrate
that reliance is required for the statutory claims, and it looks as if Illinois and maybe
even Michigan don’t require the same kind of reliance typically needed for common
law fraud claims when it comes to claims raised under their consumer statutes. Cozzi
Iron & Metal, Inc. v. U.S. Office Equip., Inc., 250 F.3d 570, 576 (7th Cir. 2001) (Illinois
law); Van Vels v. Premier Athletic Ctr. of Plainfield, Inc., 182 F.R.D. 500, 509 (W.D.
Mich. 1998) (Michigan law).

Again, while the Court is cognizant of the fact that

Chrysler and Harmon have kept many of their arguments short in an effort to squeeze
everything they can into the Court’s page limitations, the Court can’t dismiss a set of
claims unless Chrysler and Harmon make developed arguments justifying dismissal in
their opening briefs, and they haven’t done that for the consumer protection claims. 3

Chrysler (but not Harmon) also moves for dismissal of the Illinois and Michigan
consumer protection fraud claims because both statutes foreclose claims when the fraud
is based on actions “specifically authorized” by a regulatory body. See 815 ILL. COMP.
STAT. 505/10b(1); MICH. COMP. LAWS § 445.904(1)(a). Chrysler says that most of the
fraud claims in this case are based on purported misrepresentations in the recall
materials sent to the vehicle owners and thus are immunized under the statutes, but
3

23

Chrysler and Harmon next argue that the Michigan and Illinois negligence
claims must be dismissed because Flynn and Keith only seek money damages for injury
to their products, and thus can’t use a negligence claim to secure a recovery under the
economic loss rule.

Flynn and Keith concede the premise—they don’t refute the

application of the rule to a case where a consumer brings a negligence claim for
damages to a product alone—and that concession seems right under Michigan and
Illinois law, as both states channel those types of claims into the field of contract. See
Moorman Mfg. Co. v. Nat’l Tank Co., 435 N.E.2d 443, 450-51 (Ill. 1982); Neibarger v.
Universal Coop., Inc., 486 N.W.2d 612, 619 (Mich. 1992).

Flynn and Keith’s only

objection is that the rule doesn’t apply to their negligence claims here, as they are also
seeking damages for an increased risk of death or injury to them, over and above
damages for economic injuries to their vehicles. But as the Court already said, Flynn
and Keith lack standing to pursue injuries for any risk of injury or death. That leaves
them only with economic damages, meaning that the negligence claims must go.
Chrysler and Harmon’s final argument is that the Michigan and Illinois unjust
enrichment claims must be dismissed. The two insist that the claims must fail for want
of any allegations that Flynn and Keith conferred a benefit on Chrysler or Harmon.
There are allegations of a benefit here, though—Flynn bought his vehicle and Keith
leased his, and a consumer likely can confer a benefit on a manufacturer by paying for a

their argument on that front is three sentences long, and the question is a nuanced one.
See Bober v. Glaxo Wellcome PLC, 246 F.3d 934, 940-41 (7th Cir. 2001); Federal Ins. Co.
v. Binney & Smith, Inc., 913 N.E.2d 43, 52 (Ill. App. Ct. 2009). With so little offered,
Chrysler hasn’t met its burden to show that dismissal is warranted.
24

manufacturer’s products through a retailer. See Feiner v. Innovation Ventures, LLC,
No. 12-62495, 2013 WL 2386656, at *5 (S.D. Fla. May 30, 2013). In addition, Chrysler
and Harmon say that the unjust enrichment claims must be dismissed because those
claims are entirely duplicative of the implied warranty and fraud claims in this suit, but
an unjust enrichment claim can be pled in the alternative to fraud or implied contract
claims in a case, especially when there are no express contract claims. E.g., Disher v.
Tamko Building Prods., Inc., No. 14-740, 2015 WL 4609980, at *4 (S.D. Ill. July 31, 2015);
Bowlers Alley, Inc. v. Cincinnati Ins. Co., 32 F. Supp. 3d 824, 834 (E.D. Mich. 2014).
That looks to cover all of the arguments raised by the defendants in the text of
their motions and in their many footnotes in favor of dismissal. 4 To sum up, Chrysler
and Harmon’s jurisdictional motions (Docs. 66 & 71) are GRANTED IN PART and
DENIED IN PART. Flynn and Keith lack standing to pursue damages for a risk of
harm or a fear of that risk, so the defendants’ motions to dismiss any claims linked to
those non-economic damages are GRANTED, and those claims are DISMISSED
without prejudice.

Flynn and Keith also cannot seek a court-ordered recall, so

Chrysler’s motion to dismiss the recall-related request is GRANTED, and the recallrelated request is DISMISSED with prejudice. The other requests in Chrysler and

Every party in this case, some far more egregiously than others, have taken to the
practice of relegating large portions of their briefs to footnotes. The parties are
cautioned away from this practice in the future, not only because it’s an obvious effort
to get around the Court’s page limitations, but also because it makes the Court’s task of
reading the briefs and catching the arguments offered quite difficult. See Production &
Maintenance Employees’ Local 504 v. Roadmaster Corp., 954 F.2d 1397, 1407 (7th Cir.
1992). If the parties need additional pages to make a developed argument or to fully
respond to another party’s argument, they should simply ask the Court for more room.
4

25

Harmon’s jurisdictional motions are DENIED. Once more, Chrysler and Harmon’s
motions to dismiss for failure to state a claim (Docs. 68 & 71) are GRANTED IN PART
and DENIED IN PART. The Michigan implied warranty claim is DISMISSED with
prejudice as to Chrysler and Harmon for want of pre-suit notice, and the Illinois
warranty claim is DISMISSED without prejudice as to Harmon for want of any privity
allegations. The Magnuson-Moss Act claim predicated on Illinois law against Harmon
is DISMISSED without prejudice for want of privity allegations.

The Michigan

common law fraud claims are all DISMISSED with prejudice on economic loss
grounds, and the Illinois common law fraudulent misrepresentation claim is
DISMISSED without prejudice for failure to plead reliance. The Michigan and Illinois
negligence claims are DISMISSED with prejudice on economic loss grounds. Chrysler
and Harmon’s remaining motions to dismiss are DENIED.
IT IS SO ORDERED.
DATED: September 23, 2016
/s/ Michael J. Reagan
Chief Judge Michael J. Reagan
United States District Court

26