Podpeskar v. Makita U.S.A. Inc.
MEMORANDUM OPINION AND ORDER granting in part and denying in part 38 Motion to Dismiss. The motion is GRANTED with regard to Podpeskar's declaratory and injunctive relief claim. The declaratory and injunctive relief claim is DISMISSED with prejudice. The motion is DENIED in all other respects(Written Opinion) Signed by Chief Judge John R. Tunheim on March 28, 2017. (DML)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
SEAN PODPESKAR, on behalf of
himself and all others similarly situated,
Civil No. 15-3914 (JRT/KMM)
AND ORDER ON
MOTION TO DISMISS
MAKITA U.S.A. INC.,
Amy Elizabeth Boyle and Melissa W. Wolchansky, HALUNEN LAW,
1650 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402, for
Isaac W. Messmore and Nathan J. Marcusen, BOWMAN & BROOKE
LLP, 150 South Fifth Street, Suite 3000, Minneapolis, MN 55402, for
Plaintiff Sean Podpeskar brings this action based on alleged design defects in
batteries manufactured by Defendant Makita U.S.A. Inc. (“Makita”). Podpeskar alleges
the following claims: violation of the Minnesota Unlawful Trade Practices Act
(“UTPA”); violation of the Minnesota False Statements in Advertising Act (“FSAA”);
breach of an express warranty and the implied warranty of merchantability and fitness;
fraudulent misrepresentation, concealment, and failure to disclose; declaratory and
injunctive relief; and unjust enrichment.
Makita moves to dismiss all claims.
Because Podpeskar sufficiently pleaded
notice and unconscionability, the Court will deny Makita’s motion with regard to
Podpeskar’s express warranty claim. The Court also finds Podpeskar pleaded his fraud
claims with sufficient particularity and properly pleaded an unjust enrichment claim in
the alternative, and therefore, the Court will deny Makita’s motion with regard to those
claims. But, because Podpeskar’s declaratory and injunctive relief claims are remedies
rather than stand-alone claims, the Court will grant Makita’s motion on those claims.
Makita “design[s], manufacture[s], market[s] and s[ells ] power tools featuring
lithium-ion batteries that have been sold throughout the United States.” (Am. Compl. at
4, Jan. 29, 2016, Docket No. 29.) 1 Podpeskar bought a “Makita Cordless Drill Combo
Set” from a retailer in Duluth, Minnesota, in summer 2013. (Id. at 13.) The set contained
“a small impact drill and full-sized variable speed drill” as well as a “BL1815 18V
rechargeable lithium ion [b]attery.” (Id.) Podpeskar alleges that the “charger indicat[ed]
the [b]attery was locked and therefore unusable” after “approximately two years” and
“only a handful of uses.” (Id. at 14.) Podpeskar asserts that “he contacted Makita in
2015,” but that “Makita informed him that his [b]attery was no longer covered by the
warranty and it refused to replace the defective [b]attery.” (Id. at 8.) Podpeskar chose to
purchase a new drill set for $270 rather than replace the battery for $120. (Id. at 14.)
The Court will cite to CM/ECF page numbers rather than paragraph numbers for the
Amended Complaint because the Amended Complaint repeats paragraph numbers. (See Am.
Compl. at 13-14.)
Podpeskar contends that the batteries at issue are defective in design because they
“rely solely upon the first cell for power.” (Id. at 5.) Podpeskar alleges that this design
causes the battery to fail prematurely, and renders it unusable, stating:
Because power is used even when the [b]attery is not in use, the power in
the first cell of the [b]attery is depleted. This essentially causes the chip to
believe that the cell has shorted out. If a consumer attempts to charge the
[b]attery three times in this state the charger will believe the [b]attery is not
functional and will no longer charge it.
(Id.) Makita later introduced new batteries with “Star Protection Computer Controls
which draw power from all cells of the battery,” and which Podpeskar refers to as a
“corrective measure.” (Id. at 1-2.)
Podpeskar cites reviews of Amazon.com as a
“sampling” of the complaints Makita received, many dated between 2010 and 2012. 2
(See id. at 8-12.)
Podpeskar alleges that Makita “advertised and expressly warranted” that the
batteries were “thoroughly inspected and tested before leaving the factory,” and “free of
defects.” (Id. at 5 (citation omitted).) Podpeskar asserts that Makita “advertise[d] that
For example, Podpeskar quotes the following review from Amazon.com in his
These batteries have a design defect that will kill them prematurely and a ‘feature’
that will force you to buy another.
There is internal circuit to control charge and count how many times it has
charged or failed charging. This circuit is powered off a couple cells only, so if
you leave without use too long those cells will zero out while the remaining are
fully charged. This will cause a fail charging, and while it could be recoverable
(if not too deep discharged) the scheme of a ‘smart battery’ (should we call it a
scam?) prevents it from charging on the ‘smart charger’ and you are out $100 for
a new one.”
(Am. Compl. at 9 (from “BadApple” on January 8, 2012).)
the [b]atteries retain optimal battery life based on the built-in chip,” by stating that: the
battery and charger combination “optimize[d] battery life by actively controlling current,
voltage and temperature;” the built-in fan cooled the battery, “which help[ed] produce
more lifetime work;” the specific battery resulted in an “even longer run time;” the
battery and charger combination “maximize[d] battery life” and took “only 30 minutes to
charge.” (Id. at 5-6 (citation omitted).) Podpeskar also contends that on “information
and belief, [Makita] and its agents would represent that the [b]atteries should last
approximately 1,000 charges.”
(Id. at 6.)
Podpeskar alleges that “Makita . . .
represented, through its omissions, that the [b]atteries were free of defects and would
function properly.” (Id. at 7.) Podpeskar also asserts that Makita
negligently, knowingly and intentionally concealed, and has failed to
disclose that . . . its [b]atteries routinely fail well short of their usable life
and are not receiving maximize battery life or any benefit based on the
built-in chip . . . . Indeed, [Makita’s] [b]atteries have deteriorated and will
continue to deteriorate at a rate demonstrating their lack of durability and
(Id. at 7 (emphasis added).)
Makita has since extended its express warranty on the batteries from one year to
three years; 3 however, Podpeskar contends that “no reasonable customer would know he
or she should make a warranty claim when a warranty claim was already denied or the
product is outside of the original warranty period.” (Id. at 7.)
This extension of the warranty applies retroactively according to Makita’s brief and its
website. (See Def.’s Mem. in Supp. of Mot. to Dismiss at 3-4, Mar. 18, 2016, Docket No. 40
(citing Innovation Press Release, Makita Launches Upgraded 3-Year Lithium-Ion Warranty,
MakitaTools.com (Oct. 1, 2015), https://www.makitatools.com/company/press-releases/2015/
Podpeskar filed his initial complaint on October 22, 2015, alleging a UTPA claim,
an FSAA claim, express and implied warranty claims, and claims based on fraudulent
misrepresentation, concealment, and failure to disclose.
Podpeskar also requested
declaratory and injunctive relief, and pleaded a claim of unjust enrichment in the
alternative. The claims remain the same in Podpeskar’s Amended Complaint. Podpeskar
brings his claims as a purported class action on behalf of “a class of all others similarly
situated.” (Id. at 1.) Podpeskar defines the national class as:
All individuals and entities in the United States that purchased [b]atteries,
or devices sold with [b]atteries, on or after October 2009. Excluded from
the Class are Defendant, any entity in which Defendant has a controlling
interest or which has a controlling interest in Defendant, and Defendant’s
legal representatives, assigns and successors. Also excluded are the judge
to whom this case is assigned and any member of the judge’s immediate
(Id. at 15.) In the alternative, Podpeskar defines a “Minnesota class” the same, except
restricted to the state. (Id. at 16.)
Makita initially moved to dismiss Podpeskar’s complaint on January 8, 2016.
Podpeskar responded by amending the complaint on January 29, 2016. Makita brought
the current motion to dismiss on March 18, 2016.
STANDARD OF REVIEW
In reviewing a motion to dismiss brought under Fed. R. Civ. P. 12(b)(6), the Court
considers all facts alleged in the complaint as true to determine if the complaint “state[s]
a claim to relief that is plausible on its face.” Braden v. Wal-Mart Stores, Inc., 588 F.3d
585, 594 (8th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). To
survive a motion to dismiss, a complaint must provide more than “‘labels and
conclusions’ or ‘a formulaic recitation of the elements of a cause of action.’” Iqbal, 556
U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Although
the Court accepts a complaint’s factual allegations as true, it is “not bound to accept as
true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555
(quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)). “A claim has facial plausibility
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.
“Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability,
it ‘stops short of the line between possibility and plausibility,’” and therefore must be
dismissed. Id. (quoting Twombly, 550 U.S. at 557).
Podpeskar brings claims for both breach of express warranty and breach of the
implied warranty of merchantability and fitness based on the allegedly defective battery
design, which resulted in a shorter battery life than expected. Makita argues Podpeskar’s
warranty claims must be dismissed on various grounds that are addressed, in turn, below.
First, Makita argues that the Court should dismiss both the express and implied
warranty claims because Podpeskar did not provide pre-lawsuit notice of a breach of
warranty. Podpeskar alleges that he contacted Makita; Makita stated the warranty period
had lapsed; and, Podpeskar chose to buy a new product. Podpeskar does not allege he
told Makita that there was a breach of warranty or that he intended to sue.
Under Minnesota law, a buyer alleging breach of warranty “must within a
reasonable time after the buyer discovers or should have discovered any breach notify the
seller of breach or be barred from any remedy.” Minn. Stat. § 336.2-607(3)(a). The
purpose of this requirement is:
(1) to provide the seller with an opportunity to correct the defect . . . ; (2) to
provide the seller with an opportunity to prepare for negotiation and
litigation; and (3) to provide the seller with an opportunity to investigate the
claims independently while the merchandise remains in a relatively pristine
Christian v. Sony Corp. of Am., 152 F. Supp. 2d 1184, 1188 (D. Minn. 2001) (citing
Church of the Nativity of Our Lord v. WatPro, Inc., 491 N.W.2d 1, 5 (Minn. 1992)).
Makita argues that the plain text of the statute requires that a buyer notify the seller of the
breach of warranty, and not merely express a problem or complaint about the product.
Both parties discuss Drobnak v. Andersen Corp., in which the Eighth Circuit
discussed the notice requirement in section 336.2-607(3)(a).
561 F.3d 778, 784-86
(8th Cir. 2009). There, two of the plaintiffs failed to provide notice of a problem or a
breach. Id. at 782. But the plaintiffs argued the statute did not require notice in that
circumstance because “[f]urther notice by additional Plaintiffs and [c]lass members
would be futile.” Id. (alteration in original). Makita relies on the portion of the opinion
in which the court cited Judge Learned Hand’s interpretation of a similar provision in the
The notice ‘of the breach’ required is not of the facts, which the seller
presumably knows quite as well as, if not better than, the buyer, but of
buyer’s claim that they constitute a breach. The purpose of the notice is to
advise the seller that he must meet a claim for damages, as to which, rightly
or wrongly, the law requires that he shall have early warning.
Id. at 785 (quoting Am. Mfg. Co. v. U.S. Shipping Bd. Emergency Corp., 7 F.2d 565, 566
(2d Cir. 1925)).
However, other parts of the opinion suggest that the notice requirement is not so
strict. The reasoning in Drobnak suggests a buyer must notify the seller that there is a
problem with the particular transaction or product, but the Eighth Circuit also stated that
“[t]he bar for sufficiency is low,” id. at 784; that “[n]otice is sufficient so long as it ‘let[s]
the seller know that the transaction is still troublesome and must be watched,’” id.
(second alteration in original) (quoting Minn. Stat. § 336.2-607, U.C.C. cmt. 4); and that
the purpose of notification is to “open the way for normal settlement through
negotiation,” id. (quoting Minn. Stat. § 336.2-607, U.C.C. cmt. 4). The court in Drobnak
did not distinguish between notification of a specific problem and specific notification of
a breach of warranty – as Makita suggests. Indeed, the facts of the case did not require
the Eighth Circuit to decide that issue, since the plaintiffs provided no notice of either
type. Considering Drobnak and the statute’s underlying purpose “to defeat commercial
bad faith, not to deprive a good faith consumer of his [or her] remedy,” Minn. Stat.
§ 336.2-607, U.C.C. cmt. 4, the Court finds that a buyer need only notify the seller that he
or she is unsatisfied with the product, but need not specifically state that there was a
breach of warranty to satisfy the notice requirement.
Here, Podpeskar provides few details of his notice to Makita, stating only he
contacted Makita and Makita told Podpeskar his warranty was expired. (See Am. Compl.
at 8.) But from those factual allegations, it follows that Podpeskar must have complained
about the quality of the battery – his problem – and Makita told Podpeskar it would not
solve his problem. Indeed, the purposes of the notice requirement are sufficiently met in
Makita had an opportunity to correct the defect by replacing or fixing
Podpeskar’s battery. Makita knew to look at the Podpeskar transaction and could have
prepared for negotiation based on Podpeskar’s complaint. Accordingly, the Court rejects
Makita’s argument that Podpeskar failed to satisfy the pre-lawsuit notice requirement.
Second, Makita argues the Court should dismiss the express warranty claim
because the applicable limited warranty does not cover a design defect. Makita argues
that the battery was subject to a limited warranty, only covering defects from
workmanship and materials. “[D]efects in material and workmanship refer to departures
from a product’s intended design,” and not “inadequacy of the design itself.” Bruce
Martin Constr., Inc. v. CTB, Inc., 735 F.3d 750, 753 (8th Cir. 2013). 4 The applicable
warranty is titled “Limited Warranty,” and states in relevant part:
Each Makita Lithium-Ion tool is warranted to be free of defects from
workmanship and materials for the period of THREE YEARS from the
date of original purchase. The Makita Lithium-Ion battery has a limited
The Eighth Circuit applied Indiana law in Bruce Martin Construction, 735 F.3d at 75254, but “[t]he elements of a claim for breach of express warranty are the same under Minnesota
and Indiana law.” Thunander v. Uponor, Inc., 887 F. Supp. 2d 850, 861 (D. Minn. 2012).
ONE YEAR warranty. Should any trouble develop during the three-year
period for the Lithium-Ion tool and during the one-year period for the
Lithium-Ion battery, return the COMPLETE tool and or battery, freight
prepaid, to one of Makita’s Factory or Authorized Service Centers.
If inspection shows the trouble is caused by defective workmanship or
material, Makita will repair (or at our option, replace) without charge.
(Decl. of Isaac W. Messmore in Supp. of Mot. to Dismiss, Ex. 1 (“Warranty”), Jan. 8,
2016, Docket No. 14 (emphasis added).) 5
Podpeskar argues that because the
“workmanship and materials” language appears in the tool warranty sentence, the
limitation does not apply to the battery warranty, discussed in the next sentence.
The difference in language between the sentence about the tool warranty and the
one about the battery warranty could have been purposeful, as Podpeskar contends,
meaning that Makita intended to limit the tool warranty to workmanship and material
defects; however, the Court must read the entire warranty together. See Brookfield Trade
Ctr., Inc. v. Cty. of Ramsey, 584 N.W.2d 390, 394 (Minn. 1998) (“We read contract terms
in the context of the entire contract and will not construe the terms so as to lead to a harsh
and absurd result.”) Read in the context, the workmanship and materials limitation
applies to the entire warranty. For example, the warranty directs – presumably for both
the tool and the battery – that the buyer mail the product to a Makita factory or service
center, where “[i]f inspection shows the trouble is caused by defective workmanship or
material, Makita will repair . . . without charge.” (Warranty.) Moreover, if only the
“In addition to the pleadings, the Court may properly consider materials that are
necessarily embraced by the pleadings.” Sagehorn v. Indep. Sch. Dist. No. 728, 122 F. Supp. 3d
842, 851 (D. Minn. 2015). Here, the Court will consider the warranty because Podpeskar quoted
from it multiple times in the complaint. (See Am. Compl. at 5, 7, 26.)
- 10 -
single sentence applies to the battery warranty, the buyer has no information on how to
access relief under the warranty or what damage is covered. While not perfectly drafted,
any reasonable reading of the entire warranty requires the “workmanship and materials”
limitation to apply to both the tool and the battery warranties.
Podpeskar also argues that Makita’s advertising statements are express warranties,
which conflict with and should override the workmanship and material limitation.
Podpeskar points to several of Makita’s marketing statements, including: “15-minute
rapid optimum charger communicates with the battery’s built-in chip throughout the
charging process to optimize battery life by actively controlling current, voltage and
temperature.” (Am. Compl. at 5-6.) And that the tool “[a]ccepts Makita 18-Volt LXT
lithium-ion battery for even longer run time.”
Podpeskar argues that these
statements warrant that the chip will have increased battery life, and the workmanship
and material limitation cannot be read to prohibit breaches of that warranty involving
Under Minnesota law, a seller can create an express warranty through “[a]ny
affirmation of fact or promise” or “[a]ny description of the goods,” which form “the basis
of the bargain,” and therefore, “creates an express warranty that the goods shall conform”
to the promise or description. Minn. Stat. § 336.2-313(1)(a)-(b). While a seller need not
“use formal words such as ‘warrant’ or ‘guarantee,’ . . . an affirmation merely of the
value of the goods or a statement purporting to be merely the seller’s opinion or
commendation of the goods does not create a warranty.” Minn. Stat. § 336.2-313(2).
- 11 -
However, “[t]o be actionable, warranties must be more than ‘mere puffery.’”
Windsor Craft Sales, LLC v. VICEM Yat Sanayi ve Ticaret AS, No. 10-297, 2012 WL
639432, at *5 (D. Minn. Feb. 28, 2012). Also, courts typically do not construe general
statements about the quality of a product or service as express warranties. See, e.g.,
Bernstein v. Extendicare Health Servs., 607 F. Supp. 2d 1027, 1032 (D. Minn. 2009)
(“Statements that a nursing home will comply with or exceed ‘applicable laws,’ or that it
has established ‘rigorous standards,’ are similar to statements that services provided will
be ‘high quality.’ These statements are puffery.”); LensCrafters, Inc. v. Vision World,
Inc., 943 F. Supp. 1481, 1498 (D. Minn. 1996) (finding in a false advertising action that
the statement a business used – “the most advanced equipment available” – was “mere
puffery” and a “generalized exaggeration or overstatement of superiority . . . expressed in
broad, vague and commendatory terms”). The statements here – “to optimize battery
life” and “even longer run time” – are nonspecific and more akin to statements of “high
quality” than a specific promise, affirmation, or description of the goods. Thus, the Court
finds that they do not conflict with or render inoperable the workmanship and materials
Podpeskar next argues that even if the workmanship and materials limitation
applies to the battery, the Court should find it unconscionable.
materials warranties are not categorically unconscionable. See In re Caterpillar, Inc.,
C13 and C15 Engine Prods. Liab. Litig., No. 14-3722, 2015 WL 4591236, at *20-22
(D.N.J. July 29, 2015) (collecting cases stating that warranties limited to defects in
material and workmanship were not categorically unconscionable, and finding that the
- 12 -
plaintiffs had not sufficiently alleged unconscionability based on the defendant’s
knowledge of the defect prior to sale). But, such a warranty may be unconscionable
under the present facts because the batteries allegedly failed due to defective design
Makita knew about. See Hagen v. McAlpine & Co., No. 14-1095, 2015 WL 321428, at
*3-4 (D. Minn. Jan. 26, 2015) (denying a motion to dismiss based on a warranty
limitation because the plaintiffs had pleaded facts – that the defendant knew that the
product was manufactured with defective materials – that if true would have made the
warranty limitation unconscionable).
unconscionability, and “the Court must allow [Podpeskar] ‘the opportunity to submit
evidence regarding the disclaimer’s commercial setting, purpose, and effect.’” Johnson
v. Bobcat Co., 175 F. Supp. 3d 1130, 1144 (D. Minn. Mar. 30, 2016) (quoting In re
Hardieplank Fiber Cement Siding Litig., No. 12-2359, 2013 WL 3717743, at *8
(D. Minn. July 15, 2013)). Accordingly, the Court will deny Makita’s motion with
regard to Podpeskar’s express warranty claims: while the materials and workmanship
limitation applies to the batteries, and no additional express warranty overrides the
limitation, Podpeskar sufficiently alleged unconscionability to survive a motion to
Next, Makita argues that the Court should dismiss Podpeskar’s fraud-based claims
because he failed to plead them with sufficient particularity. The heightened pleading
- 13 -
requirement of Fed. R. Civ. P. 9(b) applies to Podpeskar’s UTPA and FSAA claims, see
Select Comfort Corp. v. Sleep Better Store, LLC, 796 F. Supp. 2d 981, 985-86 (D. Minn.
2011), as well as his fraud claims, see Toomey v. Dahl, 63 F. Supp. 3d 982, 996-97
(D. Minn. 2014) (applying the heightened standard to Minnesota fraudulent
misrepresentation claim); In re Milk Prods. Antitrust Litig., 84 F. Supp. 2d 1016, 1022
(D. Minn. 1997) (applying heightened standard to fraudulent concealment claim).
Rule 9(b) requires that the circumstances surrounding a party’s allegations of
fraud or mistake must be pleaded with particularity.
Courts have construed this
requirement to mean that “the complaint must allege such matters as the time, place, and
contents of false representations, as well as the identity of the person making the
misrepresentation and what was obtained or given up thereby.” Ransom v. VFS, Inc.,
918 F. Supp. 2d 888, 898 (D. Minn. 2013) (quoting Drobnak, 561 F.3d at 783). Or, in
other words, a plaintiff “must typically identify the who, what, where, when, and how of
the alleged fraud.” Id. (quoting BJC Health Sys. v. Columbia Cas. Co., 478 F.3d 908,
917 (8th Cir. 2007)).
Podpeskar contends that he satisfied the particularity requirement. In response to
Makita’s motion, Podpeskar points to several allegations. First, Podpeskar alleged that
Makita “advertised and expressly warranted the batteries to not only be ‘thoroughly
inspected and tested before leaving the factory,’ but also ‘free of defects.’” (Am. Compl.
at 5 (citing the warranty on Makita’s website).)
- 14 -
Second, Podpeskar’s complaint
contained several statements regarding the optimized battery life from the Home Depot
and CPO Outlets websites, including: the battery and charger combination “optimize[d]
battery life by actively controlling current, voltage, and temperature”; the “built-in fan
. . . cool[ed] the battery,” which would produce “more lifetime work”; the specific battery
resulted in an “even longer run time”; and the battery and charger combination
“maximize[d] battery life” and took “only 30 minutes to charge.” (Id. at 5-6.) Finally,
Podpeskar alleged that “[u]pon information and belief, [Makita] and its agents would
represent that the [b]atteries should last approximately 1,000 charges.” (Id. at 6.)
Because many of the statements Podpeskar relies upon suffer from certain
infirmities, 6 Podpeskar’s claims rest on the sufficiency of the second group of statements,
which refer to an “optimize[d] battery life,” “more lifetime work,” “even longer run
time,” and “maximize[d] battery life.” 7 (Id. at 5-6.) “Rule 9(b) does not require that the
exact particulars of every . . . instance of ‘false’ advertising be specified in the
Complaint.” Axcan Scandipharm Inc. v. Ethex Corp., 585 F. Supp. 2d 1067, 1084
Podpeskar’s claims regarding the warranty language would not, by themselves, satisfy
the Rule 9(b) standard because the statements specifically relate to a warranty for defects in
workmanship. (See Warranty; see also Am. Compl. at 5.) Further, Podpeskar’s statements
pleaded on “information and belief” could not independently support a finding that Podpeskar
met Rule 9(b)’s particularity requirement. See Drobnak, 561 F.3d at 783. Thus, while these
facts can support an underlying inference that fraud occurred, they do not, by themselves, show
Podpeskar satisfied Rule 9(b)’s particularity requirement.
Makita notes that the statements Podpeskar relied upon are from retailer websites and
not directly from Makita. But, Makita failed to cite any case law obligating the Court to credit
the statements to the retailers. And, in fact, one may assume that statements describing the
product specifications on a retailer’s website came from the manufacturer – not the retailer.
Thus, at least at this stage, and without any contrary case law, the Court will attribute those
statements to Makita.
- 15 -
(D. Minn. 2007). In Axcan, the court found a complaint satisfied Rule 9(b) because the
plaintiff “pleaded the ‘who [the Defendants], what [false advertising], where [in ads
targeted to drug databases, wholesalers, and pharmacies], when [since the late 1990’s],
and how [falsely claiming their drugs are generic equivalents or substitutes]’ of its
claims.” Id. (alteration in original). Podpeskar did the same here, pleading the who
(Makita), what (misrepresentations concerning the battery life of the drills), where (on the
product packaging and in marketing materials), when (throughout the Class Period), and
how (by falsely advertising the useful life and quality of the Batteries) of his fraud
claims. Podpeskar’s complaint “clearly apprises [Makita] of the acts relied upon by
[Podpeskar] in support of [his] claims.” Id. Thus, although the Complaint could have
been clearer, the Court finds Podpeskar pleaded his fraud claims with sufficient
particularity to survive a motion to dismiss.
Duty to Disclose
Makita also argues that Podpeskar did not sufficiently allege that Makita had a
duty to disclose material facts, and that therefore, Podpeskar’s claims based on fraudulent
omissions or nondisclosures fail. “As a general rule, one party to a transaction has no
duty to disclose material facts to the other.” Taylor Inv. Corp. v. Weil, 169 F. Supp. 2d
1046, 1064 (D. Minn. 2001) (citing L & H Airco, Inc. v. Rapistan Corp., 446 N.W.2d
372, 380 (Minn. 1989)). This rule has three exceptions: “(1) where a party has made a
representation and must disclose more information to prevent the representation from
being misleading; (2) where a party has special knowledge of material facts to which the
- 16 -
other party does not have access; and (3) where a party stands in a confidential or
fiduciary relation to the other party.” Exeter Bancorp., Inc. v. Kemper Sec. Grp., 58 F.3d
1306, 1314 (8th Cir. 1995). These are “special circumstances,” which “may trigger a duty
to disclose material facts.” Graphic Commc’ns Local 1B Health & Welfare Fund A v.
CVS Caremark Corp., 850 N.W.2d 682, 695 (Minn. 2014).
Podpeskar aims for the second exception, and alleges that Makita “had special
knowledge of material facts to which [Podpeskar] and the [c]lass members did not have
access, and, therefore, had a duty to disclose these facts to the other party so as to prevent
its statements from being misleading.”
(Am. Compl. at 23.)
Communications, the Minnesota Supreme Court held a plaintiff is required to allege
“actual knowledge of fraudulent conduct.”
850 N.W.2d at 698.
satisfied that pleading requirement by alleging Makita had actual knowledge of its
fraudulent conduct. Specifically, Podpeskar alleged that Makita knew of the batteries’
defects and that a buyer could not reasonably learn of the defect until after purchase.
(See Am. Compl. at 5, 7, 15.) Accepting those allegations as true, Makita was in a
superior position to know about the defect in its batteries. See Johnson, 175 F. Supp. 3d
at 1146. Thus, the Court will deny Makita’s motion with regard to Podpeskar’s fraud
claims based on omissions and nondisclosures.
Reliance and Causation
Next, Makita argues that Podpeskar’s common law fraud claims fail because
Podpeskar did not allege facts showing reliance on a misrepresentation or that such
- 17 -
reliance caused his damages.
Both parties agree that “[d]etrimental reliance is an
essential element of a common law fraud claim.” Popp Telecom, Inc. v. Am. Sharecom,
Inc., 361 F.3d 482, 491 (8th Cir. 2004). Makita contends that Podpeskar made only
conclusory allegations of reliance and causation.
See, e.g., Cox v. Mortg. Elec.
Registration Sys., Inc., 685 F.3d 663, 673 (8th Cir. 2012) (“The homeowners provided
only conclusory allegations that they relied on the lender’s representations and were
damaged ‘as a direct and proximate result’ of that reliance.”)
While the Complaint is not a model of clarity, the Court finds that Podpeskar
sufficiently alleged reliance to move forward. Podpeskar alleged: he “reasonably relied
upon the statements made by Makita on the [b]atteries’ packaging,” (Am. Compl. at 7);
“Makita also represented, through its omissions, that the [b]atteries were free of defects
and would function properly,” (id.); and that “he would not have purchased the [b]atteries
or he would have either negotiated additional warranty coverage, negotiated a lower price
to reflect the risk, or simply avoided the risk altogether by purchasing a different
product” if he had “known the [b]atteries were defective and would fail prematurely,” (id.
at 22). Accepting these allegations as true, Podpeskar alleged that he relied on statements
and omissions suggesting the product was not defective at the time of purchase and that
he was damaged by this reliance.
Makita argues that Podpeskar’s UTPA and FSAA claims also fail because he
failed to allege a public benefit. A plaintiff pursuing relief under the Private Attorney
- 18 -
General Statute must “demonstrate that their cause of action benefits the public.” In re
Levaquin Prods. Liab. Litig., 752 F. Supp. 2d 1071, 1076 (D. Minn. 2010) (quoting Ly v.
Nystrom, 615 N.W.2d 302, 314 (Minn. 2000)). In determining whether an action benefits
the public, courts consider “the
degree to which the defendants’ alleged
misrepresentations affected the public; the form of the alleged representation; the kind of
relief sought; and whether the alleged misrepresentations are ongoing.”
Symantec, 858 F. Supp. 2d 1004, 1017 (D. Minn. 2012). When a “plaintiff[ ] seek[s]
only damages, courts typically find no public benefit.” Select Comfort Corp. v. Tempur
Sealy Int’l, Inc., 11 F. Supp. 3d 933, 937 (D. Minn. 2014) (quoting Select Comfort v.
Sleep Better Store, LLC, 796 F. Supp. 2d 981, 986 (D. Minn. 2011)).
Here, several factors weigh in favor of finding Podpeskar sufficiently pleaded a
public benefit: Podpeskar attempts to bring a class action and injunction and the product
was likely widely disseminated; thus, Podpeskar seeks to benefit more than just himself.
While it is less clear if the harm is ongoing, cf. Johnson, 175 F. Supp. 3d at 1142-43
(relying on the fact that the misrepresentations were ongoing), the Court finds sufficient
allegations to support a public benefit and will deny Makita’s motion with regard to
Podpeskar’s UTPA and FSAA claims.
Makita contends that Podpeskar’s unjust enrichment claim should be dismissed
because he has an equitable remedy at law; whereas Podpeskar responds that he is
- 19 -
properly pleading the unjust enrichment claim in the alternative. “So long as an adequate
legal remedy exists, equitable remedies like unjust enrichment are not available.”
Loftness Specialized Farm Equip., Inc. v. Twiestmeyer, 742 F.3d 845, 854 (8th Cir. 2014).
However, it is impossible to know at this stage if Podpeskar has an adequate remedy at
law, and thus, his unjust enrichment claim properly pleaded in the alternative under Fed.
R. Civ. P. 8(d)(2). See, e.g., George v. Uponor Corp., 988 F. Supp. 2d 1056, 1075
(D. Minn. 2013); In re Levaquin, 752 F. Supp. 2d at 1081. Accordingly, the Court will
deny Makita’s motion with regard to Podpeskar’s unjust enrichment claim. 8
Declaratory and Injunctive Relief
Makita also challenges Podpeskar’s declaratory and injunctive relief claim,
arguing that it is actually a remedy and not a stand-alone claim, and therefore it should be
dismissed. Podpeskar contends that it is premature to dismiss his declaratory relief claim
as duplicative or arising under his substantive claims because declaratory relief may be
necessary if an injunctive relief class is certified under Fed. R. Civ. P. 23(b)(2). Gooch v.
Life Inv’rs Co., 672 F.3d 402, 427-29 (6th Cir. 2012) (discussing certification under Rule
Makita also argues that the unjust enrichment claim should be dismissed because
Podpeskar failed to plead the claim with particularity under Rule 9(b). The parties agree that
Rule 9(b) applies to an unjust enrichment claim based on fraud. See Khoday, 858 F. Supp. 2d at
Because Podpeskar’s unjust enrichment claim relies on the same
misrepresentations that form the basis of his fraud claims – they rise and fall together. See
OrthoAccel Techs., Inc. v. Devicix, LLC, No. 15-1503, 2015 WL 4563134, at *5 (D. Minn.
July 29, 2015) (finding that “Plaintiff has alleged its fraud claims with sufficient particularity to
overcome Defendant’s motion to dismiss; therefore, the same is true for its unjust enrichment
claim”). Thus, because the Court finds that Podpeskar pleaded his fraud claims with sufficient
particularity, as discussed above, Makita’s argument fails here as well.
- 20 -
23(b)(2) for class declaratory relief); Pella Corp. v. Saltzman, 606 F.3d 391, 395 (7th Cir.
Podpeskar’s claim asks for a declaration, stating that Makita’s “batteries have
defects,” that Makita “knew of the defects,” and requiring Makita to “re-audit and
reassess all prior warranty claims” and “establish an inspection program” for class
members’ claims. (Am. Compl. at 30.) The requested declaratory relief is very similar to
that discussed in Gooch, 672 F.3d at 427-29 and Pella Corp., 606 F.3d at 395.
Makita, rightly argues, however, that declaratory and injunctive relief are remedies
rather than claims, and should be dismissed. See Motley v. Homecomings Fin., LLC,
557 F. Supp. 2d 1005, 1014 (D. Minn. 2008) (dismissing declaratory and injunctive relief
count because they were “merely remedies, not separate causes of action”). While there is
the possibility of certification under Rule 23(b)(2) for class-wide declaratory relief,
declaratory relief does not require a separate claim, rather it is a remedy for a widevariety of claims. Podpeskar provides no case law suggesting that a separate claim for
declaratory relief is required in order to certify under Rule 23(b)(2). Thus, the Court will
grant Makita’s motion with regard to Podpeskar’s stand-alone declaratory and injunctive
relief claim, but Podpeskar remains free to seek declaratory and injunctive relief as a
- 21 -
Based on the foregoing, and all of the files, records, and proceedings herein, IT IS
HEREBY ORDERED that Makita’s Motion to Dismiss [Docket No. 38] is GRANTED
in part and DENIED in part as follows:
The motion is GRANTED with regard to Podpeskar’s declaratory and
injunctive relief claim. The declaratory and injunctive relief claim is DISMISSED with
The motion is DENIED in all other respects.
DATED: March 28, 2017
at Minneapolis, Minnesota.
JOHN R. TUNHEIM
United States District Court
- 22 -
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?