NELSON et al v. NISSAN NORTH AMERICA, INC. et al
Filing
44
OPINION. Signed by Judge Joseph E. Irenas on 09/06/2012. (tf, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
TAMEKA NELSON, et al.,
HONORABLE JOSEPH E. IRENAS
Plaintiffs,
CIVIL ACTION NO. 11-5712
(JEI/JS)
v.
NISSAN NORTH AMERICA, INC.,
and NISSAN MOTOR CO. LTD.,
OPINION
Defendants.
APPEARANCES:
CHIMICLES & TIKELLIS, LLP
By: Benjamin F. Johns, Esq.
Matthew D. Schelkopf, Esq.
Joseph G. Sauder, Esq.
One Haverford Centre
361 West Lancaster Avenue
Haverford, PA 19041
Counsel for Plaintiffs
SEDGEWICK LLP
By: Martin J. Healy, Esq.
Three Gateway Center, 12th Floor
Newark, NJ 07102
Counsel for Defendant Nissan North America, Inc.
IRENAS, Senior District Judge:
Plaintiffs Tameka Nelson, Richard Creel, Karim Abdullah,
Ruth Taplet, and Nancy Ebner initiated this action against
Defendants Nissan North America, Inc. and Nissan Motor Company
Ltd (collectively “Nissan”) for the alleged concealment of
defectively designed transmissions in certain Maxima, Altima, and
1
Quest vehicles.1
Pending before the Court is Defendant Nissan
North America’s Motion to Dismiss the First Amended Class Action
Complaint (“Class Action Complaint”) pursuant to Fed. R. Civ. P.
12(b)(6) and 9(b).2
I.
Certain Nissan vehicles contain a 5-speed automatic
transmission known as the RE5F22A (“22A”).
¶ 29.)
(Class Action Compl.
The 22A transmissions rely on a complex maze of channels
and passages that directs hydraulic fluid to numerous valves
called the valve body, which, when properly designed, enables a
smooth shift to the appropriate gear.
(Id. ¶ 30.)
The
transmission problems underlying this action allegedly result
from the improper design and function of the 22A valve body,
which caused delayed shift patterns, excessive heat buildup,
slippage, harshness, premature internal part wear, metal debris,
and catastrophic transmission failure.
(Id.)
Allegedly, a
faulty Transmission Control Module also contributed to the 22A
transmission failures.
(Id. ¶ 31.)
According to the Class
Action Complaint, the defective transmissions not only fail well
in advance of their expected useful life, but also pose
1
The Court exercises subject matter jurisdiction pursuant
to 28 U.S.C. § 1332(d)(2) and (6) and 28 U.S.C. § 1367.
2
The Court notes that the Motion is filed only on behalf
of Nissan North America, Inc., and it does not appear that Nissan
Motor Company Ltd has entered an appearance in the case or been
served with the Complaint.
2
significant safety risks due to an unpredictable acceleration
response and sudden total transmission failure.
(Id. ¶¶ 5-6.) As
detailed below, the five named Plaintiffs in this action all
experienced transmission problems in their Nissan vehicles.3
Plaintiff Tameka Nelson purchased a pre-owned 2006 Nissan
Maxima in August 2006 from Rancho Valley Chevrolet in Pomona,
California.
(Id. ¶ 54.)
At the time of purchase, her vehicle
had approximately 16,000 miles.
(Id.)
Beginning in 2010, before
the vehicle had been in service for five years and before it had
been driven 60,000 miles, the transmission began to malfunction.
(Id. ¶ 56.)
On May 14, 2011, with only 77,551 miles, Nelson
experienced catastrophic transmission failure and was informed by
Nissan of San Bernardino that a new transmission was required.
(Id. ¶ 57.)
Nelson ultimately had her transmission problem
repaired by a speciality transmission service center and incurred
charges of $90.00 for a diagnostic fee and $2,696.46 in repair
costs.
(Id. ¶ 58.)
Plaintiff Richard Creel purchased a new 2005 Nissan Maxima
3
The named Plaintiffs bring this action on their own
behalf and on behalf of persons or entities in California,
Pennsylvania, New Jersey, Maryland, Ohio and Illinois who are
current or former owners or lessees of Nissan Maxima (2004-2006),
Nissan Altima (2005-2006), and Nissan Quest (2004-2007) vehicles
equipped with the 22A automatic transmissions. (Class Action
Compl. ¶ 109.)
3
in August 2005 from Bowser Nissan4 in Pleasant Hills,
Pennsylvania.
(Id. ¶ 61.)
Beginning in 2008, Creel began
experiencing transmission problems.
(Id. ¶ 63.)
On April 10,
2008, before the vehicle had been in service for five years and
with only 48,486 miles, Creel brought his vehicle to Bowser
Nissan for transmission repairs under the warranty.
Creel was
told that the shifting problems could not be duplicated and that
there was nothing wrong with the vehicle.
(Id. ¶ 64.)
On
January 7, 2009 with only 59,776 miles, Creel brought the vehicle
to Bowser Nissan again seeking repairs under the warranty. (Id. ¶
65.)
Creel was again told that the shifting problems could not
be duplicated and that there was nothing wrong with the vehicle.
(Id.)
After the shifting problems continued to worsen, on March 3,
2011, with 86,943 miles, Creel brought the vehicle to Bowser
Nissan seeking repairs.
(Id. ¶ 66.)
Again, Creel was told that
nothing was wrong with the transmission.
(Id.)
On March 18,
2011, Creel sent a complaint letter to Nissan North America.
(Id. ¶ 67.)
For a fee of $89.00, Creel took his vehicle to a
different Nissan dealership for a diagnostic test.
(Id.)
Pittsburgh East Nissan informed Creel that the transmission
needed to be replaced at a cost of $3,346.57.
4
(Id. ¶ 67.)
Creel
The Class Action Complaint also refers to Bowser Nissan
as Bowser Pontiac, Inc. (See Class Action Compl. ¶¶ 61, 64-66.)
4
ultimately had the transmission replaced at an independent
transmission center for a cost of $1,457.30.
(Id. ¶ 69.)
Plaintiff Karim Abdullah purchased a pre-owned 2004 Nissan
Maxima with approximately 37,000 miles from Acura of Turnersville
in January 2006.5
(Id. ¶ 73.)
During the warranty period,
Abdullah experienced transmission problems, and beginning in
January 2009, with approximately 95,000 miles, the transmission
problem escalated.
(Id. ¶¶ 75-76.)
In January 2010, at 110,000
miles, Abdullah’s vehicle became inoperable because of the
transmission failure.
(Id. ¶ 77.)
Abdullah incurred costs of
$1,200 to repair the transmission from an independent service
center.
(Id. ¶ 79.)
Plaintiff Ruth Taplet purchased a used 2006 Nissan Maxima on
August 6, 2007 from Nissan of South Holland in South Holland,
Illinois.
(Id. ¶ 82.)
Taplet also purchased a 60 month/100,000
miles Gold Preferred Plan Service Agreement (“Service
Agreement”), which allegedly covered all internal and external
components for her transmission until the earlier of February 18,
2011 or 100,000 miles.
(Id. ¶ 84.)
On November 18, 2010, with
82,983 miles, Taplet noticed transmission problems.
(Id. ¶ 85.)
Taplet brought the vehicle to Kelly Nissan, and was told that the
transmission needed replacement.
(Id. ¶ 85.)
5
However, Kelly
At the time of purchase, Abdullah was a resident of New
Jersey; he subsequently moved to Maryland. (Class Action Compl.
¶ 73.)
5
Nissan refused to do the work under the Service Agreement and
allegedly told her that if she wanted the Service Agreement to
cover the transmission, she would have to take it to South
Holland Nissan.
(Id. ¶ 86.)
The next week, Taplet brought the
vehicle to South Holland Nissan, which found no problem with the
transmission and refused to make any repairs.
(Id. ¶¶ 88-89.)
In March 2011, after the expiration of the Service Agreement,
Taplet brought the vehicle back to South Holland Nissan, and she
was informed that she needed a new transmission.
(Id. ¶¶ 91-92.)
Plaintiff Nancy Ebner purchased a new 2004 Nissan Maxima in
October 2003 from Fred Martin Nissan, LLC in Akron, Ohio.
95.)
(Id. ¶
Beginning in April 2004, with approximately 11,000 miles,
Ebner began experiencing transmission problems; however, Fred
Martin Nissan was unable to duplicate the problem.
(Id. ¶ 97.)
In September 2004, with approximately 22,400 miles, Ebner brought
the vehicle to Fred Martin Nissan, which reprogrammed the
Transmission Control Module.
(Id. ¶ 98.)
In March 2005, with
approximately 30,600 miles, Ebner brought the vehicle back for
transmission problems, but Fred Martin Nissan was again unable to
duplicate the problem.
(Id. ¶ 99.)
On June 5, 2011, Ebner filed
a complaint with Nissan North America regarding her transmission
problems.
(Id. ¶ 100.)
Her claim was denied on the basis of the
expiration of the 5 year/60,000 mile express warranty.
(Id.) In
January 2010, with approximately 122,000 miles, Ebner’s vehicle
6
became inoperable because of the transmission problems.
(Id. ¶
101.)
The Class Action Complaint alleges that Nissan was well
aware of the alarming failure rate of the 22A transmissions based
on its own records of customer complaints, dealership repair
records, National Highway Traffic Safety Administration records,
complaints through consumer affairs websites, and its own
durability testing.
(Id. ¶ 38.)
Plaintiffs assert that “Nissan
actively concealed the material defect” and that the existence of
the transmission problem was exclusively within Nissan’s
knowledge and control. (Id. ¶ 41.)
Plaintiffs initiated this action on September 30, 2011.
On
December 5, 2011, Plaintiffs filed the instant Class Action
Complaint asserting claims for breach of express warranty, breach
of implied warranty of merchantability, unjust enrichment, and
consumer fraud act claims under the state laws of New Jersey,
California, Illinois, Ohio and Pennsylvania.
Defendant Nissan
North America filed a Motion to Dismiss on January 9, 2012.
II.
Federal Rule of Civil Procedure 12(b)(6) provides that a
court may dismiss a complaint “for failure to state a claim upon
which relief can be granted.”
In order to survive a motion to
dismiss, a complaint must allege facts that raise a right to
relief above the speculative level.
7
Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007); see also Fed. R. Civ. P.
8(a)(2).
While a court must accept as true all allegations in the
plaintiff’s complaint, and view them in the light most favorable
to the plaintiff, Phillips v. County of Allegheny, 515 F.3d 224,
231 (3d Cir. 2008), a court is not required to accept sweeping
legal conclusions cast in the form of factual allegations,
unwarranted inferences, or unsupported conclusions.
Morse v.
Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997).
The
complaint must state sufficient facts to show that the legal
allegations are not simply possible, but plausible.
515 F.3d at 234.
Phillips,
“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.”
Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949
(2009).
When evaluating a Rule 12(b)(6) motion to dismiss, the Court
considers “only the allegations in the complaint, exhibits
attached to the complaint, matters of public record, and
documents that form the basis of a claim.”
Lum v. Bank of
America, 361 F.3d 217, 221 n.3 (3d Cir. 2004).
A document that
forms the basis of a claim is one that is “integral to or
explicitly relied upon in the complaint.”
Id. (quoting In re
Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.
8
1997)).
III.
A federal court in a diversity case must apply the forum
state’s choice of law rules.
Klaxon Co. v. Stentor Elec. Mfg.
Co., 313 U.S. 487, 496-97 (1941).
New Jersey has adopted the
“most significant relationship” test.
N.J. 132, 142-43 (N.J. 2008).
P.V. v. Camp Jaycee, 197
For the purposes of this Motion,
the Court will apply the law of the state where each Plaintiff
purchased and sought repair for her vehicle.
A. Breach of Express Warranty
Plaintiffs allege that Nissan expressly warranted that its
dealerships would repair transmission defects during a 5
year/60,000 mile warranty period.
Plaintiffs contend that Nissan
breached this express warranty because (1) Nissan was aware of
the transmission defect and did not disclose it during the
warranty period, and (2) even when the transmission problem
manifested during the warranty period, Nissan refused to make any
repairs.
(Class Action Compl. ¶¶ 42-44.)
Plaintiffs further
allege that “[s]ince the Transmission Problem typically manifests
shortly outside of the warranty period for the Class vehicles-and given Defendants’ knowledge of this concealed design defect,
failure to disclose it, and superior bargaining power--Nissan’s
attempt to limit the warranty with respect to the Transmission
Problem is unconscionable here.”
(Id. ¶ 9.)
9
Nissan moves to dismiss Plaintiffs’ claims for breach of
express warranty arguing that transmission problems requiring
repair did not manifest until after the applicable time or
mileage periods in the warranty had elapsed.
A threshold issue concerns the nature of the express
warranty that Plaintiffs allege was breached.
In the Class
Action Complaint, Plaintiffs allege that “Nissan expressly
warranted that its dealerships would repair any defects in the
powertrain (including the transmission) during the warranty
period of 5 years or 60,000 miles, whichever came first.”
Action Compl. ¶ 42.)
(Class
Nissan’s Warranty Information Booklets for
the years 2004-2006 provide that “[t]his warranty covers any
repairs needed to correct defects in materials or workmanship of
all parts and components of each new Nissan vehicle supplied by
Nissan . . . .”
(Healy Cert. Exs. A-C at 4.)
Thus, the express
warranty is a warranty to repair defects in materials or
workmanship during a fixed time and mileage period.
With this in mind, a review of the allegations in the Class
Action Complaint demonstrates that Plaintiffs have generally
alleged that transmission problems such as delayed shift patterns
and slippage manifested during the warranty period.
Action Compl. ¶¶ 56, 63-65, 75, 85, 97-99.)
(See Class
However, only
Plaintiffs Creel and Ebner make specific allegations that they
sought transmission repairs from Nissan within the express
10
warranty period. (Id. ¶¶ 64-65, 97-99.)
While Plaintiffs Ebner
and Abdullah did not seek repairs during the pendency of the
warranty period, the Court does not find this fatal to their
express warranty claims.
The Class Action Complaint alleges that
Nissan knew that the vehicles had defective transmissions and
failed to disclose this to Plaintiffs.
Further, Plaintiffs
allege that they experienced symptoms of the alleged transmission
defect prior to the expiration of the warranty.
In light of the
fact that Plaintiffs allege that Nissan knew a defect covered
under the warranty was present at the time of sale and that
Plaintiffs allegedly experienced symptoms of the defect during
the warranty period, the Court finds that Plaintiffs have
sufficiently pled express warranty claims.
Moreover, the Court declines to apply the rule in Abraham v.
Volkswagen of America, Inc., 795 F.2d 238, 250 (2d Cir. 1986) to
dismiss Plaintiffs’ express warranty claims at this time because
the allegations in the instant action indicate that the defect
was not latent because the symptoms of the defect manifested
prior to expiration of the express warranty.
The Court will
therefore reserve judgment on the question of whether the
transmission fails when it first exhibits symptoms of malfunction
or whether failure requires complete inoperability.
See Abraham
v. Volkswagen of America, Inc., 795 F.2d 238, 250 (2d Cir.
1986)(noting that knowledge of the effective life of particular
11
vehicle components “is easily demonstrated by the fact that
manufacturers must predict rates of failure of particular parts .
. . in order to price warranties and thus can always be said to
‘know’ that many parts will fail after the warranty period has
expired”); see also Henderson v. Volvo Cars of N. Am., 2010 WL
2925913, at *9 (D.N.J. July 21, 2010)(holding that “a
manufacturer’s mere knowledge that a part will ultimately fail
after the expiration of a warranty period is insufficient to
provide a basis for a breach of warranty claim”).
In further support of their breach of express warranty
claims, Plaintiffs also argue that the 5 year/60,000 mile limit
on the warranty is unconscionable.
In support, Plaintiffs
contend that the warranty limit is procedurally unconscionable
because of the uneven bargaining power of
Nissan and the consumers that buy Nissan
vehicles; because the warranty limit is
presented to customers on a take-it-or-leaveit basis; because the warranty is not even
provided to customers until after they
purchase the vehicle; because the vehicles are
purchased from Nissan dealerships which do not
have authority to negotiate the terms of the
warranty with customers; and because the
warranty
language
is
not
prominent
or
conspicuous, but rather is buried within
voluminous documentation given to customers
after vehicle purchase.
(Class Action Compl. ¶ 46.)
The Plaintiffs also argue that the
warranty period is substantively unconscionable because
Nissan knowingly sold vehicles with the
Transmission
Problem,
knowing
that
the
Transmission Problem would frequently manifest
12
just after the expiration of the warranty
period, and that even when the Transmission
Problem manifested before the expiration of
the warranty period, Nissan dealerships could
deny the existence of the problem until the
warranty period expired. Additionally Nissan
knew about the Transmission Problem before the
first vehicle with the Transmission Problem
was sold, and knew with certainty that it
would
cause
premature
failure
of
the
transmission.
(Id. ¶ 47.)
The Court finds these allegations insufficient to state a
claim for unconscionability of the warranty limits.
First, there
is nothing substantively unconscionable or unreasonable about a 5
year/60,000 mile warranty.
The cases relied on by Plaintiffs in
which substantive unconscionability claims survived motions to
dismiss are distinguishable.
See In re Samsung DLP Television
Class Action Litig., 2009 WL 3584352, at *1, 5 (D.N.J. Oct. 27,
2009)(denying motion to dismiss unconscionability claim with
respect to a one year warranty on an HDTV); Payne v. Fujifilm
U.S.A., Inc., 2007 WL 4591281, at *3-5 (D.N.J. Dec. 28,
2007)(denying motion to dismiss unconscionability claim with
respect to a one year warranty on a digital camera).
Moreover,
Nissan’s alleged knowledge of a transmission defect is an
insufficient basis on which to find the warranty limit
unconscionable.
See Abraham v. Volkswagon of America, Inc., 795
F.2d 238, 250 (2d Cir. 1986); Henderson v. Volvo Cars of N. Am.,
LLC, 2010 WL 2925913, at *9 (D.N.J. July 21, 2010)(holding that a
13
car manufacturer’s mere knowledge that a part will fail after the
expiration of the warranty period is insufficient to make the
time/mileage limitation unconscionable).
Second, the allegations of unequal bargaining power with
respect to the terms of the warranty are also insufficient to
state a claim for unconscionability.
See Alban v. BMW of North
America, LLC, 2011 WL 900114, at *9 (D.N.J. March 15,
2011)(allegations of gross disparity in bargaining power and that
car purchaser had no meaningful choice in determining time and
mileage limitation are insufficient to state a claim for
unconscionability).
The Court further finds that Plaintiff Taplet has stated a
claim for breach of express warranty.
Taplet alleges that she
first began experiencing transmission problems not during the
warranty period, but during the Service Agreement, which the
Class Action Complaint refers to as a “warranty.”
Pls’ Opp. at 5.)
(Id. ¶¶ 84-92;
Taplet’s Service Agreement is issued by Nissan
Extended Services North America, Inc. not Nissan North America,
and expressly states that “THIS AGREEMENT IS NOT A WARRANTY, AN
EXTENSION OF A NEW VEHICLE WARRANTY, OR AN IMPLIED OR GENERAL
WARRANTY . . . .”
(Defs’ Reply at Ex. E.)
While Defendant
Nissan North America, Inc. does not appear to be a party to the
Service Agreement, the Court declines to dismiss Taplet’s express
warranty claim at this time without discovery on the relationship
14
between Nissan Extended Services North America and Defendant
Nissan North America.
Accordingly, Nissan’s Motion to Dismiss will be granted with
respect to all claims for unconscionability.
The Motion will be
denied with respect to all claims for claims for breach of
express warranty.
B. Breach of Implied Warranty of Merchantability
As an initial matter, Plaintiffs are no longer pursuing
breach of implied warranty claims under Illinois, California, or
Ohio laws. (See Pls’ Opp. at 11 n.12.)
Thus, the Court will
limit its analysis to Plaintiff Creel’s breach of implied
warranty under Pennsylvania law and Plaintiff Abdullah’s claim
under New Jersey law.
Nissan moves to dismiss these claims
arguing that (1) the vehicles were fit for their ordinary purpose
because the transmissions did not need replacement until after
expiration of the 60,000 mile express warranty; (2) the implied
warranty of merchantability was conspicuously limited to the
terms of the express warranty; and (3) the claims are barred by
the statute of limitations.
“Pursuant to the implied warranty of merchantability, a
merchant warrants that goods sold are fit for the ordinary
purposes for which the goods are used.”
In re Ford Motor Co. E-
350 Van Prods. Liab. Litig., 2008 WL 4126264, at *19 (D.N.J.
Sept. 3, 2008)(citing N.J. Stat. Ann. § 12A:2-314); see also 13
15
Pa. Cons. Stat. § 2314(b).
“Merchantability does not mean that
the goods are exactly as the buyer expected, but rather that the
goods satisfy a minimum level of quality.”
Sheris v. Nissan N.
Am., Inc., 2008 WL 2354908, at *6 (D.N.J. June 2, 2008)(internal
quotations and citation omitted); see also Gall v. Allegheny
Cty., Health Dept., 555 A.2d 786, 789-90 (Pa. 1989).
As applied
to cars, “the implied warranty of merchantability is simply a
guarantee that they will operate in a safe condition and
substantially free of defects [and, therefore,] where a car can
provide safe, reliable transportation[,] it is generally
considered merchantable.”
Henderson v. Volvo Cars of N. Am.,
LLC, 2010 WL 2925913, at *9 (D.N.J. July 21, 2010)(quoting
Carlson v. Gen. Motors Corp., 883 F.2d 287, 297 (4th Cir. 1989)).
Both Creel and Abdullah allege that they began experiencing
transmission problems within the 5 year/60,000 mile period and
that these problems caused slippage, hesitation and an
unpredictable acceleration response.
5, 63-65, 75, 195.)
(See Class Action Compl. ¶¶
Plaintiffs have further alleged that the
Nissan factory maintenance schedules did not even require having
the transmission fluids flushed or changed during the life of the
vehicle, unless it was used for towing or driving through rough
or muddy roads.
(Id. ¶ 34.)
At this stage in the litigation,
viewing the allegations in the light most favorable to
Plaintiffs, this Court finds that Plaintiffs Creel and Abdullah
16
have stated a claim for breach of the implied warranty of
merchantability.6
See Henderson, 2010 WL 2925913, at *9-10
(finding that allegations of slippage, hesitation, harshness and
unexpected transmission failure which rendered vehicles unfit for
the ordinary purpose of driving are sufficient to survive a
motion to dismiss); Hornberger v. GMC, 929 F.Supp. 884, 888
(E.D.Pa. 1996)(holding that allegations of transmission failure
at 40,000 miles and three years after leasing the vehicle is
sufficient to state a claim for breach of implied warranty of
merchantability).
In addition, the Court does not find Nissan’s limitation of
the Implied Warranty of Merchantability to the terms of the
6
Given Plaintiffs’ allegations of fraudulent concealment
of the alleged transmission problems by Nissan, and Creel’s
allegations that he repeatedly brought the vehicle in for
transmission repairs even before the express warranty expired,
the Court will decline at this stage of the litigation to make a
determination regarding the timeliness of Plaintiffs’ implied
warranty of merchantability claims. While the statute of
limitations for such a claim is four years from the tender or
sale of the allegedly defective product and not from the time the
breach is discovered, see N.J.S.A. § 12A:2-725 and 13 Pa. C.S.A.
§ 2725(a),(b), New Jersey and Pennsylvania state courts have
recognized equitable tolling doctrines based on fraudulent
concealment and the so-called repair doctrine. See Amodeo v.
Ryan Homes, Inc., 595 A.2d 1232, 1237 (Pa. Super.
1991)(recognizing equitable tolling doctrine where repairs were
attempted; representations were made that the repairs would cure
the defects, and the plaintiff relied upon the representations);
Simpson v. Widger, 311 N.J. Super 379, 391 (App. Div.
1998)(noting that “the presence of fraud may toll the running of
the statute [of limitations]” for breach of warranty claims); see
also Foodtown v. Sigma Mktg Sys., Inc., 518 F.Supp. 485, 488
(D.N.J. 1980).
17
express warranty, specifically the time/mileage limitation, fatal
to Plaintiffs’ claims.
Both Plaintiffs allege that the
transmission problems began prior to the expiration of the
express warranty period.
At the pleading stage, the Court finds
sufficient allegations to support a plausible claim that Creel
and Abdullah’s vehicles failed to provide a minimum level of
quality even prior to the expiration of the 5 year/60,000 mile
period.
C. Unjust Enrichment
Nissan moves to dismiss Plaintiffs’ unjust enrichment claims
arguing that they are precluded by the express warranties, which
control the relationship between the parties.
Plaintiffs respond
that they are pursuing the unjust enrichment claims only in the
alternative.
Further, Plaintiffs also do not oppose dismissal of
Abdullah’s unjust enrichment claim under New Jersey law on the
basis of New Jersey’s privity requirement.7
Because a complaint
may seek relief in the alternative, at this stage of the
litigation, the Court finds it improper to dismiss Plaintiffs’
unjust enrichment claims under California, Pennsylvania, Ohio and
Illinois state law.
D. State Consumer Protection Claims
7
The Court notes that while unjust enrichment is not an
independent cause of action under California law, see McBride v.
Boughton, 123 Cal. App. 4th 379, 387 (Cal. App. 2004), because
other claims under California law survive this motion, the Court
will not dismiss the unjust enrichment claim on this basis.
18
As an initial matter, Nissan moves to dismiss Plaintiffs’
state law consumer protection claims on the basis that the
allegations do not satisfy the heightened pleading standard of
Fed. R. Civ. P. 9(b).
Under Fed. R. Civ. P. 9(b), “[i]n alleging fraud or mistake,
a party must state with particularity the circumstances
constituting fraud or mistake.”
A plaintiff must state the
circumstances of the alleged fraud “with sufficient particularity
to place the defendant on notice of the ‘precise misconduct with
which [it is] charged.’”
Frederico v. Home Depot, 507 F.3d 188,
200 (3d Cir. 2007)(citing Lum v. Bank of Am., 361 F.3d 217, 22324 (3d Cir. 2004).
“To satisfy this standard, the plaintiff must
plead or allege the date, time and place of the alleged fraud or
otherwise inject precision or some measure of substantiation into
a fraud allegation.”
Id.
Plaintiffs’ fraud claims are based on Nissan’s failure to
disclose the alleged transmission defects to consumers.
The
Class Action Complaint specifically alleges the material
information Nissan knew and withheld from consumers.
Action Compl. ¶¶ 1-2, 8-9, 33, 154, 190.)
(Class
Plaintiffs further
allege that Nissan possessed exclusive knowledge of information
about the problem, (id. ¶¶ 2, 38-39, 41, 105-06); the materiality
of that information (id. ¶¶ 4-6, 10, 56, 63, 76, 85, 97, 134,
153); Plaintiffs’ reliance on the materiality of the non-
19
disclosed information (id. ¶¶ 49-50, 122, 134); and damages, (id.
¶¶ 4, 7, 10, 48, 52, 58-59, 70, 79, 90, 102-03, 124, 196).
Courts have held similar allegations to be sufficient to satisfy
Fed. R. Civ. P. 9(b).
See, e.g., Maniscalo v. Brother Int’l
Corp., 627 F.Supp.2d 494, 500 (D.N.J. 2009); Harper v. LG Elecs.
USA, Inc., 595 F.Supp.2d 486, 491 (D.N.J 2009); Dewey v.
Volkswagen LG, 558 F.Supp.2d 505, 527-28 (D.N.J. 2008).
The
Court finds Plaintiffs’ pleadings with regard to their omissionbased fraud claims sufficient to satisfy the Rule 9(b) standard.
The Court will next consider Nissan’s specific arguments with
regard to the state consumer protection claims.
1. New Jersey Consumer Fraud Act
To state a claim under the New Jersey Consumer Fraud Act
(“NJCFA”), a plaintiff must demonstrate (1) unlawful conduct by
the defendant; (2) an ascertainable loss by the plaintiff; and
(3) a causal connection between the defendant’s unlawful conduct
and the plaintiff’s ascertainable loss.
Payan v. GreenPoint
Mortg. Funding, Inc., 681 F.Supp.2d 564, 572 (D.N.J. 2010)(citing
Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 557 (2009).
In moving to dismiss Abdullah’s NJCFA claim, Nissan
essentially argues that Abdullah has not sufficiently alleged a
knowing omission.
In making such an argument, Nissan relies on
Perkins v. Daimlerchrysler Corp., 383 N.J. Super. 99 (App. Div.
2006).
First, as noted above, the Court finds that the Amended
20
Class Action Complaint sufficiently alleges for the purpose of a
motion to dismiss that Nissan knew and withheld from consumers
information about the transmission failures. (Class Action Compl.
¶¶ 1-2, 8-9, 33, 154, 190.)
Second, the Court does not find the holding in Perkins
instructive given key factual differences from the instant
action.
The Perkins court affirmed dismissal of NJCFA claims
stemming from a vehicle’s allegedly faulty tubular steel exhaust
manifold, holding that “the failure of manufacturer or seller to
advise a purchaser that a part of a vehicle may breakdown or
require repair after the expiration of the warranty period cannot
constitute a violation of the [NJ]CFA.”
383 N.J. Super. at 112.
In reaching this conclusion, the Perkins court noted that
plaintiff had failed to allege that the part created a danger to
others or that the part actually required repair or replacement.
Id. Here, however, the Complaint alleges that the transmission
problems created a dangerous condition created by, inter alia,
the vehicle’s delayed and unpredictable acceleration response.
(Class Action Compl. ¶¶ 5, 56, 76-77.)
Abdullah also alleges
that he experienced total transmission failure and incurred
charges of $1,200 to repair the problem.
(Id. ¶¶ 77-79.)
Because the Court finds that Abdullah has stated a claim for
relief pursuant to the NJCFA, Nissan’s motion to dismiss this
claim will be denied.
21
2. California Consumer Protection Claims
i.
Consumer Legal Remedies Act (“CLRA”) claim
The CLRA prohibits specified “unfair methods of competition
and unfair or deceptive acts or practices” in transactions for
the sale or lease of goods to consumers.
1770(a).
Cal. Civ. Code §
Plaintiffs allege that Nissan violated the CLRA by
“knowingly and intentionally concealing from Plaintiffs and class
members that the class vehicles suffer from a design defect . . .
.”
(Class Action Compl. ¶ 128.)
For an alleged omission to be
actionable under the CLRA “the omission must be contrary to a
representation actually made by the defendant, or an omission of
a fact the defendant was obliged to disclose.”
Daugherty v. Am.
Honda Motor Co., Inc., 144 Cal. App. 4th 824, 835 (Cal. App.
2006).
Under California law, absent an unreasonable risk to
personal safety, a manufacturer is not liable under the CLRA for
failing to disclose a defect that manifests itself after
expiration of the express warranty period. even if the
manufacturer knows about the defect.
Id. at 835.
Nissan moves to dismiss Nelson’s CLRA claim arguing that she
has failed to allege (1) a defect that manifested during the
warranty period and (2) a defect posing an unreasonable risk to
personal safety.
The Court does not agree.
Viewing the
allegations in the Class Action Complaint in the light most
favorable to Plaintiffs, the Court finds that Nelson has alleged
22
a defect posing an unreasonable risk to personal safety, and one
which first manifested prior to the expiration of the express
warranty.
(See Class Action Compl. ¶¶ 56, 5.)
The Court further finds Nissan’s arguments that Nelson lacks
standing to bring a claim for fraudulent non-disclosure of a
defect unavailing.
Nissan argues that Nelson has failed to plead
that she experienced an unreasonable risk to personal safety, or
suffered a personal injury as a result of the defect or that she
was unable to stop her vehicle.
A review of the Class Action
Complaint indicates that Nissan’s arguments are simply not
correct.
As noted supra, Nelson has pled that the transmission
defect posed an unreasonable risk to personal safety and that she
personally experienced the defect while operating her vehicle.
ii. Unfair Competition Law (“UCL”) claim
To prevail on a claim for a violation of the UCL, a
plaintiff must establish that defendant engaged in an unlawful,
unfair or fraudulent business practice.
Code § 17200, et seq.
See Cal. Bus & Prof.
With respect to an unlawful business
practice, the UCL “borrow violations of other law and treats them
as unlawful practices that the unfair competition law makes
independently actionable.”
Cel-Tech Comms., Inc. v. Los Angeles
Cellular Tel. Co., 20 Cal. 4th 163, 180 (Cal. 1999).
Plaintiffs claim that Nissan violated the UCL by knowingly
and intentionally concealing a design defect.
23
Plaintiffs further
allege that Nissan had an affirmative duty to disclose the design
defect and that Plaintiffs could not be reasonably expected to
learn or discover the true facts related to the transmission
defect.
(Class Action Compl. ¶ 133.)
Nissan moves to dismiss
the UCL claim, arguing that Nelson has not sufficiently alleged
an unlawful, unfair or fraudulent business practice.
The Court
does not agree.
Here, as noted supra, Nelson has adequately pleaded claims
for breach of warranty and under the CLRA.
Accordingly, an
unlawful business practice under the UCL has been adequately
alleged.
Because a plaintiff need only plead an unlawful, or
unfair or fraudulent business practice to state a claim under the
UCL, the Court need not consider at this time the sufficiency of
Plaintiffs’ allegations that Nissan also engaged in unfair and
fraudulent business practices as well.
Accordingly, because
Nelson has adequately alleged that Nissan engaged in an unlawful
business practice, Nissan’s motion will be denied.
3. Pennsylvania Consumer Fraud Claim
Pennsylvania’s Unfair Trade Practices and Consumer
Protection Law (“UTPCPL”) prohibits “unfair methods of
competition” or “unfair or deceptive acts or practices” in the
conduct of trade or commerce.
73 Pa. Con. Stat. Ann. § 201-3.
The statute creates a private right of action for persons upon
whom unfair or deceptive acts or practices are employed and who,
24
as a result, suffer an ascertainable loss.
Id. § 201-9.2.
The
Class Action Complaint alleges that Nissan engaged in the
following unlawful practices under UTPCPL § 201-2(4):
(v) Representing that goods or services have
sponsorship,
approval,
characteristics,
ingredients, uses, benefits or quantities that
they do not have or that a person has a
sponsorship, approval, status, affiliation or
connection that he does not have;
(vii) Representing that goods or services are
of a particular standard, quality or grade, or
that goods are of a particular style or model,
if they are of another;
(xiv) Failing to comply with the terms of any
written guarantee or warranty given to the
buyer at, prior to or after a contract for the
purchase of goods or services is made; and
(xxi) Engaging in any other fraudulent or
deceptive conduct which creates a likelihood
of confusion or of misunderstanding.
(Class Action Compl. ¶ 174); 73 Pa. Con. Stat. Ann. § 2012(4)(v), (vii), (xiv), (xxi).
Nissan moves to dismiss Creel’s UTPCPL claim arguing that he
has failed to identify any representation that his transmission
would not require repair at 86,000 miles.8
8
Nissan also argues that Creel’s claim is barred by the
economic loss rule. The Court does not agree. With respect to
the argument that this claim is barred by the economic loss rule,
the Court does not agree. The economic loss doctrine “prohibits
plaintiffs from recovering in tort economic losses to which their
entitlement flowers only from a contract.” Duquesne Light Co. v.
Westinghouse Elec. Corp., 66 F.3d 604, 618 (3d Cir. 1995).
“Where [a] plaintiff’s only alleged damage is a diminution in the
value of a product plaintiff has purchased, Pennsylvania law says
that plaintiff’s redress comes from the law of contract, not the
25
The Court finds that Creel has alleged a UTPCPL claim
premised on a breach of warranty.
Creel specifically alleges
that he brought his vehicle into Bowser Nissan complaining of
transmission problems twice during the warranty period, and was
told that nothing was wrong with the transmission.
Compl. ¶¶ 64-65.)
(Class Action
For the purposes of a motion to dismiss, Creel
has sufficiently alleged a colorable UTPCPL claim and Nissan’s
Motion to Dismiss will be denied.
4. Illinois Consumer Fraud Claim
To state a claim under the Illinois Consumer Fraud Act
(“ICFA”), a plaintiff must allege “(1) a deceptive act or
practice by the defendant, (2) the defendant’s intent that the
plaintiff rely on the deception, (3) the occurrence of the
deception in the course of conduct involving trade or commerce,
and (4) actual damage to the plaintiff (5) proximately caused by
the deception.”
Avery v. State Farm Mut. Auto Ins. Co., 835
law of tort.” Stein v. Fenestra Am., LLC, 2010 WL 816346, at *3
(E.D.Pa. Mar. 9, 2010). Under the fraud exception, a plaintiff
may recover in tort for purely economic losses where plaintiff
alleges an intentional tort such as fraud. Werwinski v. Ford
Motor Co., 286 F.3d 661, 676 (3d Cir. 2002). However, the Third
Circuit, in predicting how the Pennsylvania Supreme Court would
rule, limited the fraud exception and held that the economic loss
doctrine applies to bar tort claims for purely economic loss even
where plaintiff alleges an intentional tort such as fraud, if the
misrepresentation relates to the quality of goods sold. Id. at
677. Here, however, Creel’s UTPCPL claim is not based in tort,
but rather is premised on a breach of warranty claim. Thus, the
economic loss rule is not implicated.
26
N.E.2d 801, 856 (Ill. 2005).
Nissan moves to dismiss Taplet’s ICFA claim, arguing that
the allegations fail to show that Nissan knew of the alleged
transmission defect prior to the time of Taplet’s purchase.
A
review of the allegations in the First Amended Class Action
Complaint indicates that Plaintiffs have alleged generally that
Nissan was aware of the transmission defect prior to Taplet’s
purchase. (Compl. ¶ 47.)
However, the Complaint also refers to
specific customer complaints that were made prior to Taplet’s
purchase.
(Id. ¶ 106.)
Viewing the allegations in the light
most favorable to Plaintiffs, the Court finds that Taplet has
stated an ICFA claim.
Accordingly, Nissan’s Motion to Dismiss
will be denied.
5. Ohio Consumer Protection Claims
Ebner brings claims under the Ohio Consumer Sales Practices
Act (“OCSPA”) and the Ohio Deceptive Trade Practices Act
(“ODTPA”).
i.
The Court will consider each in turn.
OCSPA Claim
The OCSPA prohibits suppliers from committing either unfair
or deceptive consumer sales practices or unconscionable acts or
practices.
See Ohio Rev. Code Ann. § 1345.
The OSCPA “defines
unfair or deceptive consumer sales practices as those that
mislead consumers about the nature of the product they are
receiving, whule unconscionable acts or practices relate to a
27
supplier manipulating a customer’s understanding of the nature of
the transaction at issue.”
McKinney v. Bayer Corp., 744
F.Supp.2d 733, 742-43 (N.D. Ohio 2010).
Nissan moves to dismiss Plaintiff Ebner’s OSCPA claim
arguing that she has failed to allege that Nissan’s conduct was
previously declared deceptive or unconscionable in an
administrative rule or judicial decision, as required by OSCPA
jurisprudence when such a claim is brought on behalf of a class.
A review of the allegations in the Class Action Complaint
indicates that Plaintiff Ebner has alleged that Nissan acted in
the face of prior notice that its conduct was deceptive, unfair
or unconscionable.
(Class Action Compl. ¶ 171.)
Further, in
their opposition brief, Plaintiffs cite several judicial
decisions that have sustained OCSPA claims where a manufacturer
made similar material omissions and misrepresentations regarding
a product.
(See Pls’ Opp. Br. at 35.)
Accordingly, the Court
will deny Nissan’s motion to dismiss the OSCPA claim.
ii.
ODTPA Claim
The ODTPA proscribes certain “deceptive trade practices”
which create a likelihood of confusion or misunderstanding as to
the source, sponsorship, approval or certification of goods or
services.
Ohio Rev. Code § 4165.02(A)(1)-(2).
The statute
confers standing on persons injured by deceptive trade practices
and defines a person as an “individual, corporation, government .
28
. . or any other legal or commercial entity.”
Id. §
4165.03(A)(1)-(2), § 4165.01(D).
Nissan moves to dismiss Ebner’s ODTPA claim arguing that as
an individual consumer she lacks standing to sue.
The Court
notes that this is an unsettled question of state law and in the
absence of guidance from the Ohio Supreme Court, other courts are
split on whether ODTPA governs only conduct between commercial
entities as opposed to conduct between a commercial entity and a
consumer.
See McKinney v. Bayer Corp., 744 F.Supp.2d 733, 749-50
(N.D. Ohio 2010)(collecting cases).
The leading case on this issue from the Ohio appellate court
affirms the well-established rule that Ohio courts look to the
federal Lanham Act when interpreting claims under the ODTPA.
Dawson v. Blockbuster, Inc., 2006 WL 1061769, at *3 (Ohio App.
Ct. Mar. 16, 2006).
In reliance on the fact that the Lanham Act
denies standing to consumers and that Ohio courts apply the same
analysis to the ODTPA, the Dawson court went on to affirm the
trial court’s dismissal of an individual plaintiff’s ODTPA claim.
Id. at *4.
However, the plaintiff in Dawson was neither a
commercial entity nor a consumer, since the goods at issue were
given to him as a gift.
Id.
In contrast to the Dawson holding,
the Southern District of Ohio relied on the statutory language of
the ODTPA to find that an individual person could maintain a
cause of action.
Bower v. Int’l Bus. Machines, Inc., 495
29
F.Supp.2d 837, 842 (S.D. Ohio 2007).
In the absence of clear guidance from the Ohio Supreme Court
and in light of the conflicting case law on the issue and the
plain statutory language, this Court will decline to dismiss
Ebner’s ODTPA claim on the basis of standing at this time.
IV.
For the foregoing reasons, Nissan’s Motion to Dismiss will
be granted in part and denied in part.
Nissan’s Motion to
Dismiss will be granted with respect to (1) all claims for
unconscionability; (2) Nelson, Taplet and Ebner’s claims for
breach of implied warranty of merchantability; and (3) Abdullah’s
unjust enrichment claim under New Jersey law.
The Motion will be denied with respect to (1) all claims for
breach of express warranty; (2) Creel and Abdullah’s claim for
breach of implied warranty of merchantability; (3) Creel, Nelson,
Taplet and Ebner’s unjust enrichment claims; (4) Abdullah’s claim
pursuant to the NJCFA; (5) Nelson’s claims pursuant to the CLRA
and UCL; (6) Creel’s claim pursuant to the UTPCPL; (7) Taplet’s
claim pursuant to the ICFA; Ebner’s claims pursuant to the OCSPA
and ODTPA.
An appropriate order will be issued.
Dated: September 6, 2012
s/Joseph E. Irenas
JOSEPH E. IRENAS, S.U.S.D.J.
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