Flynn et al v. FCA US LLC et al

Filing 236

ORDER: For the reasons set forth in the attached Memorandum and Order, Defendants motions to dismiss (Docs. 152 , 154 , 158 ) are GRANTED in part and DENIED in part. Due to the significant number of dismissed counts and the numbering errors in the amended complaint, the Court DIRECTS Plaintiffs to file a second amended complaint on or before September 21, 2017, that complies with this Order and the Courts previous orders and that accurately numbers Plaintiffs claims. To avoid futur e confusion, Plaintiffs should not use Roman numerals to number the counts in their second amended complaint. Due to the forthcoming second amended complaint, the Court DENIES as MOOT Chryslers motions for summary judgment (Docs. 202 , 217 ), Plaintiffs motion to stay and sealed motion to stay briefing on the motions for summary judgment (Docs. 215 , 216 ), and Plaintiffs motion for leave to file excess pages (Doc. 226 ). Signed by Chief Judge Michael J. Reagan on 8/21/2017. (rah)

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 & ORDER
REAGAN, Chief Judge:
In 2015, Plaintiffs Brian Flynn, Michael Keith, and George and Kelly Brown filed
this putative class action against Defendants FCA US LLC (“Chrysler”) and Harmon
International Industries, Inc. alleging a number of claims related to a design flaw in the
uConnect system, manufactured by Harmon and installed in some of Chrysler’s 20132015 vehicles. According to Plaintiffs, the uConnect system allows integrated control
over phone, navigation, and entertainment functions in certain vehicles, and it is
vulnerable to hackers seeking to take remote control of one of the affected vehicles, as
reported in a 2015 WIRED magazine article. Although the article contributed to a
voluntary recall by Chrysler, Plaintiffs maintain that the affected vehicles still have a

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number of vulnerabilities that could allow hackers to access critical and non-critical
systems in the vehicles.
Plaintiffs filed an amended complaint (Doc. 49), the operative pleading in this
action, on December 22, 2015. Chrysler and Harmon filed motions to dismiss, raising
jurisdictional issues and arguing that Plaintiffs failed to state a claim. (Docs. 66, 68, 71).
Chrysler then moved to compel arbitration as to the warranty claims of Plaintiffs
George and Kelly Brown. (Doc. 99). In two orders dated September 23, 2016, the Court
dismissed several of the counts of the amended complaint, ruling on the merits of
Defendants’ motions with respect to Plaintiffs Flynn and Keith, and directed the
Browns to proceed with arbitration on their implied warranty and Magnuson-Moss Act
claims. (Docs. 114, 115). The Court did not weigh in on the merits of the motions to
dismiss as to the Browns’ claims, and, instead, stayed their non-warranty claims
pending the outcome of arbitration. (Doc. 114).
The Browns opted not to pursue arbitration, and the Court dismissed several of
their claims without prejudice for failure to prosecute. (Doc. 149). The Court granted
Defendants leave to file new motions to dismiss directed at the Browns’ remaining
claims, which they did together with memoranda in support thereof. (Docs. 152, 153,
154, 155, 158, 159). Plaintiffs responded to each motion (Docs. 161, 162, 163), and
Defendants have replied (Docs. 166, 167, 168). For the reasons delineated below, the
defendants’ motions to dismiss are granted in part and denied in part.

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A. Jurisdictional Challenges
Defendants raise multiple jurisdictional and standing challenges. Chrysler
argues that the Court lacks jurisdiction to order a recall of affected vehicles. The Court
has already ruled that Flynn and Keith cannot pursue declaratory relief ordering
Defendants to remedy defects in the affected vehicles or to refund the purchase price
and now extends that ruling to the Browns’ claims. Chrysler also takes issue with the
Browns’ request for an order requiring Chrysler to stop selling the defective vehicles.
The Browns counter that they seek an order “requiring Defendants to desist from
further deceptive distribution, sales, and lease practices with respect to the Affected
Vehicles and uConnect system.” (Amended Complaint, Doc. 49, p. 111)(emphasis
added). While Chrysler argued, and may be correct, that an order requiring Chrysler to
stop selling vehicles may present pre-emption issues, Chrysler did not address preemption with respect to declaratory relief that would require Defendants to desist from
using deceptive practices in the distribution, sale, and leasing of the vehicles at issue in
this action. Accordingly, the Court declines to order a preemption-based dismissal of
this declaratory request at this time.
Defendants again challenge whether the Browns have standing to pursue any
claims. Challenges to standing can be either facial or factual. If a Rule 12(b)(1) motion
contends that a plaintiff’s complaint lacks sufficient factual allegations to establish
standing, the challenge is a facial one, and courts “must accept as true all material
allegations of the complaint, and must construe the complaint in favor of the
complaining party.” Silha v. ACT, Inc., 807 F.3d 169, 173 (7th Cir. 2015). Courts “should
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use Twombly-Iqbal’s ‘plausibility’ requirement, which is the same standard used to
evaluate facial challenges under Rule 12(b)(6).” Id. at 174 (citations omitted). With a
factual challenge, however, a party does not challenge whether the complaint is
formally sufficient and instead contends that there is in fact no subject matter
jurisdiction. Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009).
Here, despite arguing otherwise in their reply brief, Chrysler raises a facial
challenge to standing. The arguments in their opening brief hinge on establishing the
insufficient nature of the Browns’ injury allegations. The Court previously addressed
these arguments and found that Plaintiffs Flynn and Keith lack standing to pursue
injuries based on a risk of injury or death and the fear of that injury. (Doc. 115, p. 6). The
Browns allege the same injuries as Flynn and Keith. The Court extends its previous
ruling to the Browns’ claims and finds that they similarly lack standing to pursue
damages for a risk of harm or the fear of that risk. Chrysler and Harman reargue
standing with respect to alleged injuries for overpayment or diminution in value in
their motions to dismiss, arguments the Court again rejects for the reasons explained in
the September 2016 Order (Doc. 115).
In addition to the previously considered arguments, Chrysler argues that the
Court should distinguish the Browns’ circumstances from those of Keith and Flynn and
find that they lack standing to pursue overpayment and loss of value damages.
According to Chrysler, the Browns’ allegations are conclusory and too generalized
because the Browns purchased through a special pricing program. The Browns failure
to aver that they, personally, paid more than they otherwise would have, even with the
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special pricing program, dooms their chances of establishing that they have standing
according to Chrysler. The Browns complain the Chrysler inappropriately relies on facts
outside of the amended complaint to raise this argument, and they are correct. Even if
the Court opted to consider facts outside of the amended complaint, Chrysler’s
argument is unpersuasive, as paying a lower purchase price does not foreclose the
possibility that the Browns could be entitled to damages related to overpayment or
diminution of value. Looking at the face of the complaint and accepting all allegations
as true, the Browns, like Flynn and Keith, plead sufficient facts to establish standing
even without referencing the special pricing program. For these reasons and the reasons
explained in the Court’s September 2016 order, the Court finds that the Browns, like
Flynn and Keith, have pleaded sufficient allegations to establish standing to pursue
damages for overpayment and loss of value of their vehicles.
B. Motions to Dismiss for Failure to State a Claim
According to Defendants, Counts XVI (first), XVII (first), XVIII, XIX, and XX of
the amended complaint fail to state a claim.1 A complaint must include enough factual
content to give the opposing party notice of what the claim is and the grounds upon
which it rests. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007), and Ashcroft v.
Iqbal, 556 U.S. 662, 698 (2009). To satisfy the notice-pleading standard of Rule 8, a
complaint must provide a “short and plain statement of the claim showing that the
pleader is entitled to relief” in a manner that provides the defendant with “fair notice”
Due to what appears to be a scrivener’s error, the amended complaint contains two counts labeled XIV,
XV, XVI, and XVII, with the first set being properly numbered and the second set appearing after Count
XXIII. Where necessary, the Court will differentiate between the duplicated counts by identifying the
count that appears earlier in the amended complaint as first and the later count as second.
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of the claim and its basis. Erickson v. Pardus, 551 U.S. 89, 93 (2007) (citing Twombly,
550 U.S. at 555 and quoting Fed. R. Civ. P. 8(a)(2)). In ruling on a motion to dismiss for
failure to state a claim, a reviewing court must “examine whether the allegations in the
complaint state a ‘plausible’ claim for relief.” Arnett v. Webster, 658 F.3d 742, 751 (7th
Cir. 2011) (citing Iqbal, 556 U.S. at 677-78).
Plaintiffs’ state law fraud claims are subject to the heightened pleading rules of
Rule 9(b), which requires pleading “circumstances constituting fraud or mistake . . .
with particularity.” When pleading fraud claims, a plaintiff “must do more precomplaint investigation to assure that the claim is responsible and supported, rather
than defamatory and extortionate.” Borsellino v. Goldman Sachs Group, Inc., 477 F.3d
502, 507 (7th Cir. 2007)(citations omitted). To satisfy Rule 9(b), plaintiffs must plead,
“the who, what, when, where, and how,” of an alleged fraud. Id. Under both Rule 8 and
Rule 9, the plaintiffs’ factual allegations are accepted as true and all reasonable
inferences are drawn in their favor. Id. (citing Goren v. New Vision Int’l, Inc., 156 F.3d
721, 725-26 (7th Cir. 1998)).
Chrysler first argues that the Browns have not adequately pleaded any legally
cognizable damages. The Court addressed, and rejected, a similar argument with
respect to Flynn and Keith’s claims in the September 2016 ruling on Defendants’
motions to dismiss. As the Court explained, the operative complaint documents the
2015 WIRED article, explains the recall process, and provides fairly developed
allegations as to how the recall did not go far enough, thereby causing damage to the

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plaintiffs in the form of overpayment and lost value for their vehicles. That is sufficient
to plead damages under the federal standards.
The question for now is whether Missouri law forecloses claims for the kinds of
damages at issue here. Chrysler argues that, where a product performs satisfactorily
and an alleged defect does not manifest, there are no damages. See Briehl v. General
Motors Corp., 172 F.3d 623, 628 (8th Cir. 1999). Plaintiffs counter that their complaint
alleges that every affected vehicle manifested at least three defects. The allegations
about manifested defects in the affected vehicles are sufficient to differentiate the
Browns’ claims from those in Briehl where the plaintiffs sued over ABS braking systems
that exhibited no defects. It is not clear that Missouri law forecloses claims for damages
for manifested defects, and, as such, the Court declines to dismiss the Missouri claims
as a whole based on a failure to plead damages.
Harmon again raises the economic loss doctrine with respect to the Browns’
fraud, fraudulent concealment, and negligence claims (Counts XVII, XVIII, and XIX).
Missouri, like Michigan, applies the economic loss rule to tort claims, including
negligence claims and fraud claims related to the quality, character, or safety of a
product. See Dannix Painting, LLC, v. Sherwin-Williams Co., 732 F.3d 902, 906-07 (8th
Cir. 2013)(“Missouri’s economic loss doctrine bars recovery for negligence”);
Compass Bank v. Eager Road Associates, LLC, 922 F.Supp.2d 818, 827-28 (E.D.Mo.
2013)(“fraudulent inducement exception is subject to a widely recognized limitation
that where the fraudulent misrepresentation concerns the quality, character, or safety
of the goods sold, the economic loss doctrine bars the fraud claim because it is
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substantially redundant with warranty claims.”). The Browns’ fraud, fraudulent
concealment, and negligence claims, for the same reasons explained in the Court’s
September 2016 Order (Doc. 115), are barred by the economic loss doctrine.
Remaining are the Browns claims for unjust enrichment (Count XX) and for
violations of the Missouri Merchandising Practices Act (MMPA)(Count XVI). With
respect to the unjust enrichment arguments, the Court’s September 2016 Order
explained how Flynn and Keith conferred a benefit on both defendants. That ruling
extends to the Browns’ claims. Defendants argue that the Browns, like Flynn and Keith,
should not be allowed to plead an unjust enrichment claim because the claim cannot be
pleaded in the alternative, but Missouri does allow a party to plead unjust enrichment
as an alternative ground for relief. See Howard v. Turnbull, 258 S.W.3d 73, 76 (Mo.App.
2008)(citing Mo. Sup. Ct. R. 55.10 as allowing the alternative pleading of unjust
enrichment and breach of contract claims).
If a plaintiff has entered into an express contract for the subject matter at issue,
however, then a plaintiff’s recovery is limited to the express terms of the contract. Id.
Harmon suggests that the Browns have entered into such a contract and that the
Browns are barred from an unjust enrichment claim as a result, but the argument is
undeveloped. Chrysler’s argument on the topic is relegated to string cites in a footnote
with little analysis. At this stage, with the undeveloped arguments of Defendants, it
would be premature to dismiss the Brown’s unjust enrichment claims. Their unjust
enrichment claim seeks to recover based on alleged tortious and fraudulent conduct by
the defendants and is pleaded in the alternative to their dismissed warranty claims.
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Taking the allegations in the complaint as true and drawing all inferences in the Browns
favor, Defendants have not established that the unjust enrichment claim cannot be
pleaded as an alternative theory of recovery.
Defendants’ final challenge is to the Browns’ Missouri Merchandising Practices
Act (MMPA) claim, arguing that it is not pleaded with particularity as required by Rule
9(b). State law fraud claims raised in federal court are subject to the pleading
requirements of Rule 9. Windy City Metal Fabricators & Supply, Inc. v. CIT Tech.
Financing Servs., Inc., 536 F.3d 663, 668 (7th Cir. 2008). This means that the Browns
must plead the “who, what, when, where, and how” of Defendants’ alleged MMPA
violation. The Browns’ MMPA claim must allege that they bought merchandise from
the defendants for personal, family, or household purposes and that they suffered an
ascertainable loss of money or property as a result of an act declared unlawful by Mo.
Rev. Stat. 407.020, which defines the term “unlawful practice.” In Missouri, unlawful
practice is defined broadly as the “act, use or employment by any person of any
deception, fraud, false pretense, false promise, misrepresentation, unfair practice, or the
concealment, suppression, or omission of any material fact in connection with the sale
or advertisement of any merchandise in trade or commerce . . . in or from the state of
Missouri.” Mo. Rev. Stat. § 407.020.1.
The Browns’ claim is pleaded with the requisite specificity to satisfy Rule 9. They
clearly allege that they purchased a vehicle for personal, household, or family purposes
and that they suffered an ascertainable loss in the form of the diminution in value of or
overpayment for their vehicle as a result of Defendants’ unlawful practices. They list
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and describe different ways in which Defendants misrepresented, concealed,
suppressed, or omitted material facts. If these allegations are accepted as true, the
Browns answer the “who, what, when, where, and how,” of Defendants’ MMPA
violations. Beyond conclusory arguments that the Browns’ complaints of unlawful or
deceptive statements are what Defendants consider to be non-actionable puffery,
Defendants’ rely on a theory that the claim fails because the Browns do not allege which
misrepresentations were made to them or that they relied on the misrepresentations.
The MMPA, however, does not require that a plaintiff prove or plead reliance. 15 CSR §
60-9.110 (“Reliance and intent that others rely upon . . . [the] concealment,
suppression or omission are not elements of concealment, suppression or
omission.”); see also Plubell v. Merck & Co., Inc., 289 S.W.3d 707, 713 (Mo.App. W.D.
2009)(The MMPA supplements the common law fraud definition but does not
require proof of intent to defraud or of reliance).
Similarly, Defendants argue that the Browns’ MMPA claim is deficient in that it
does not allege that the Browns read or heard the alleged misrepresentations and, as a
result, the claim does not allege that there is a causal relationship between Defendants’
unlawful practices and their injury. The MMPA empowers private citizens “to act as
‘private attorneys general’ for purposes of enforcing it.” Hess v. Chase Bank
Manhattan, N.A., 220 S.W.3d 758, 769 (Mo. En Banc 2007). The Act is not concerned
solely with situations where a defendant’s unlawful practice causes a purchase, as the
phrase “as a result of” modifies “ascertainable loss” not “purchases or leases.” See
Plubell, 289 S.W.3d at 714. The issue is whether a plaintiff’s loss is caused by a
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defendant’s unlawful practice, not whether a plaintiff’s purchase is caused by the
unlawful practice. Defendants’ emphasis on the Browns’ alleged lack of reliance or prepurchase knowledge of misrepresented or concealed material facts is misplaced. See,
e.g., Mo. Rev. Stat. § 407.020.1 (unlawful practices can be committed “before, during
or after the sale.”). The Browns have put forth sufficient allegations that they suffered
an ascertainable loss as a result of a deceptive practice by defendants. Accepting the
allegations in the amended complaint as true, the Browns’ MMPA claim satisfies the
heightened pleading requirements of Rule 9 by alleging that misrepresentations by the
defendants and material facts that they concealed and suppressed caused an
ascertainable loss to them. Defendants rely on undeveloped arguments and arguments
directed at the Browns’ common law fraud claims that are unpersuasive in showing
why the Browns’ MMPA claim runs afoul of Rule 9.
C. Conclusion
For the above stated reasons, Defendants’ motions to dismiss (Docs. 152, 154,
158) are GRANTED in part and DENIED in part. The Browns, like Flynn and Keith,
have standing to pursue damages for loss in value and overpayment injuries.
Additionally, the Browns lack standing to pursue damages for risk of injury or death or
fear of risk of injury or death or declaratory relief ordering Defendants to remedy the
defects in or refund the purchase price of the affected vehicles. Counts XVII (first),
XVIII, and XIX are barred by the economic loss doctrine and are dismissed with
prejudice. The motions to dismiss are denied as to the Browns’ MMPA (Count XVI) and
unjust enrichment (Count XX) claims.
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Having now considered motions to dismiss as to the entire amended complaint,
the status of Plaintiffs’ claims is summarized as follows:


Counts I, II, VII, VIII, XIV (first), XV (first), XXI, and XXII have been dismissed
without prejudice;

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Counts III, IV, V, XII, XVII (first), XVIII, XIX, XIV (second), XV (second), and XVI
(second) have been dismissed with prejudice due to the economic loss doctrine;

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Count XI has been dismissed without prejudice for failure to plead reliance;



Counts VI, IX, X, XIII, XVI (first), XX, XXIII, and XVII (second) remain pending.

Due to the significant number of dismissed counts and the numbering errors in the
amended complaint, the Court DIRECTS Plaintiffs to file a second amended complaint
on or before September 21, 2017, that complies with this Order and the Court’s previous
orders and that accurately numbers Plaintiffs’ claims. To avoid future confusion,
Plaintiffs should not use Roman numerals to number the counts in their second
amended complaint. Due to the forthcoming second amended complaint, the Court
DENIES as MOOT Chrysler’s motions for summary judgment (Docs. 202, 217),
Plaintiffs’ motion to stay and sealed motion to stay briefing on the motions for
summary judgment (Docs. 215, 216), and Plaintiffs’ motion for leave to file excess pages
(Doc. 226).
IT IS SO ORDERED.
DATED: August 21, 2017

s/ Michael J. Reagan
MICHAEL J. REAGAN
Chief Judge
United States District Court
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