WESKE et al v. SAMSUNG ELECTRONICS AMERICA, INC. et al
Filing
80
OPINION. Signed by Judge William J. Martini on 3/19/13. (gh, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
Civ. No. 2:10-4811 (WJM)
JEFF WESKE, et al.,
Plaintiffs,
OPINION
v.
SAMSUNG ELECTRONICS, AMERICA,
INC. & SAMSUNG ELECTRONICS, CO.,
LTD.
Defendants.
WILLIAM J. MARTINI, U.S.D.J.:
The Plaintiffs in this putative class action allege that a circuit board defect
(the “Defect”) caused their Samsung refrigerators to stop cooling. Plaintiffs assert
claims for the violation of various consumer protection laws, fraudulent
concealment, and breach of implied warranty. Defendants Samsung Electronics,
America, Inc. (“SEA”) and Samsung Electronics, Co., Ltd. (“SEC”) (together
“Samsung”) move under Federal Rules of Civil Procedure 9(b) and 12(b)(6) to
dismiss all claims. Samsung also moves under Federal Rule of Civil Procedure
12(f) to strike, among other things, Plaintiffs’ class allegations. There was no oral
argument. Fed. R. Civ. P. 78(b). For the foregoing reasons, Samsung’s motion to
dismiss is GRANTED in part and DENIED in part, and its motion to strike is
DENIED.
I.
FACTUAL AND PROCEDURAL BACKGROUND1
Plaintiffs Jeff Weske, Jo Anna Frager, and Darryl Myhre, filed an original
class action Complaint against Samsung on September 20, 2010. In that pleading,
1
For purposes of the motion to dismiss, the Court accepts as true the allegations in the
Complaint.
1
Plaintiffs alleged that they purchased defective Samsung refrigerators (the
“Refrigerators”) that stopped cooling after a certain period. For present purposes,
the Refrigerators’ warranty lasted for one year. Plaintiffs alleged that Samsung
knew—or was reckless in not knowing—that the Refrigerators were defective. In
support of this allegation, Plaintiffs pointed to customer complaints Samsung
received in early 2006 from unspecified consumers, to postings on a consumer
affairs website in 2009 and 2010, and to a BBC report from 2008 diagnosing
cooling problems in a Samsung refrigerator sold in the United Kingdom.
The original Complaint alleged four causes of action: (1) violation of the
New Jersey Consumer Fraud Act; (2) fraudulent concealment or non-disclosure;
(3) breach of implied warranty; and (4) unjust enrichment. The Court dismissed all
four claims. Subsequently, Plaintiffs filed a First Amended Complaint and then,
before there was additional motion practice, Plaintiffs filed a Second Amended
Complaint (the “SAC”). Unlike the original Complaint, the SAC identifies the
Defect as a faulty circuit board. SAC ¶ 6, ECF No. 61.
The SAC adds claims from three new Plaintiffs: Ralph Chermak and Jeff
Poslean (both from Illinois), and Maureen Kean (from California).2 As illustrated
in the following chart, the Plaintiffs named in the SAC purchased their
refrigerators in different states, and they began to experience cooling problems at
different times:
Plaintiffs’ Refrigerator Purchases
Plaintiff
State of
Purchase
Time of Purchase
Time
Samsung
Notified
Jeff Weske
Minnesota
December 2006
Spring 2009
Fall 2009
Jo Anna Frager
Ohio
February 2008
June 2010
Never
Darryl Myhre Washington November 2007
Before
Before
November
November
2008
2008
Ralph Chermak
Illinois
September 2009
March 2011
March 2011
Jeff Poslean
Illinois
2008
October 2011 October 2011
Maureen Kean California August/September
November
December
2009
2010
2011
2
Time Defect
Manifested
Beverly Burns is another named Plaintiff from California. Kean and Burns are domestic
partners, and they purchased their refrigerator together. Since their allegations are identical, the
Court refers only to Kean in this opinion.
2
The SAC alleges that Samsung “obtained (or should have obtained) . . .
notice [of the Defect] no later than spring or summer 2006.” Id. ¶ 99. In support
of this allegation, the SAC confirms that two people, neither of whom are
Plaintiffs, notified Samsung about cooling problems in 2006:
Mary Johnston. Johnston bought her Samsung refrigerator in 2005.
After Johnston’s refrigerator began to experience cooling problems in
August 2006, Johnston called Samsung’s customer service department
and spoke with “Amber.” A repairman was unable to fix the problem,
and Johnston called customer service a second time. A second
repairman diagnosed a faulty control board and said he would inform
Samsung of the problem.
Eugene Ruta.
The SAC does not say when Ruta purchased his
refrigerator. Ruta called Samsung’s customer service hotline in 2006
complaining of cooling problems. A repairman diagnosed frozen
outer heat-exchanging pipes and said he would report the problem to
Samsung.
The SAC also cites two apparently unconfirmed internet postings from non-parties
who claim to have notified Samsung about cooling problems in 2006.
II.
LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a
complaint, in whole or in part, if the plaintiff fails to state a claim upon which
relief can be granted. The moving party bears the burden of showing that no claim
has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In
deciding a motion to dismiss under Rule 12(b)(6), a court must take all allegations
in the complaint as true and view them in the light most favorable to the plaintiff.
See Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels & Casino Resorts,
Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998).
Although a complaint need not contain detailed factual allegations, “a
plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires
more than labels and conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Thus, the factual allegations must be sufficient to raise a plaintiff’s right to relief
above a speculative level, such that it is “plausible on its face.” See id. at 570; see
also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). A claim
has “facial plausibility when the plaintiff pleads factual content that allows the
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court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly,
550 U.S. at 556). While “[t]he plausibility standard is not akin to a ‘probability
requirement’ . . . it asks for more than a sheer possibility.” Id.
Federal Rule of Civil Procedure 12(f) allows courts to “strike from a
pleading an insufficient defense or any redundant, immaterial, impertinent, or
scandalous matter.” As motions to strike are “often sought by the movant simply
as a dilatory tactic,” they are extremely disfavored. F.T.C. v. Hope Now
Modifications, LLC, 2011 WL 883202, at *1 (D.N.J. Mar. 10, 2011) (internal
quotation and citation omitted).
III.
DISCUSSION
Plaintiffs assert three causes of action in the SAC: (1) violation of the state
consumer protection laws of each Plaintiff’s home state (California, Illinois,
Minnesota, Ohio, Washington) 3 (Count I); (2) fraudulent concealment/nondisclosure (Count II); and (3) breach of implied warranty under Minnesota and
Ohio law (Count III). Samsung moves to dismiss all Counts. It also moves to
strike the Ohio breach of warranty claim, several SAC paragraphs concerning
internet postings, and the class allegations.
A.
MOTION TO DISMISS
Samsung makes three arguments in support of its motion to dismiss. First, it
argues that Plaintiffs’ claims for fraudulent concealment and violation of the
Consumer Protection Laws do not satisfy the requirements of Federal Rule of Civil
Procedure 9(b). The Court agrees. In the alternative, Samsung argues that
3
Plaintiffs seek relief under the following consumer protection laws (together the “Consumer
Protection Laws”):
California Legal Remedies Act, Cal. Civ. Code § 1750, et seq. and California Unfair
Competition Law, Cal. BPC. Code § 17200, et seq.;
Illinois Consumer Fraud Act, 815 ILCS 505/1, et seq.;
Minnesota Uniform Deceptive Trade Practices Act, Minn. Stat. § 325D.43 et seq. and
Minnesota Consumer Fraud Act, Minn. Stat. § 325F.68 et seq.;
Ohio Consumer Sales and Practices Act, Ohio Rev. Code § 1345.01 et seq.; and
Washington Consumer Protection Act, RCW§ 19.86.010 et seq.
4
Plaintiffs’ claims under the Consumer Protection Laws of California, Illinois, and
Ohio should be dismissed for failure to state a claim upon which relief can be
granted under Federal Rule of Civil Procedure 12(b)(6). Again, the Court agrees
with Samsung. Third, Samsung argues that Plaintiffs’ claims for breach of
warranty under Minnesota law should be dismissed, and that Plaintiffs’ claims for
breach of warranty under Ohio law should either be dismissed or stricken. The
Court finds that that the claim sounding in Minnesota law should be dismissed.
The Court finds that the claim sounding in Ohio law should neither be stricken nor
dismissed.
1.
Federal Rule of Civil Procedure 9(b)
Counts I and II, respectively, assert claims for fraudulent concealment/nondisclosure and for violation of the Consumer Protection Laws. Samsung moves to
dismiss both counts, arguing that Plaintiffs have failed to satisfy the particularity
pleading requirements of Federal Rule of Civil Procedure 9(b). The Court will
GRANT Samsung’s motion to dismiss Counts I and II.
Rule 9(b) provides that “[i]n alleging fraud or mistake, a party must state
with particularity the circumstances constituting fraud or mistake,” although
“[m]alice, intent, knowledge, and other conditions of a person’s mind may be
alleged generally.” Rule 9(b) essentially requires Plaintiffs to allege the who,
what, when, where, and how elements to state a claim arising in fraud. See In re
Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1423 (3d Cir. 1997). Where
plaintiffs can demonstrate that specific information is in the exclusive control of
the defendant, the Court relaxes the showing required under Rule 9(b). See In re
Craftmatic Secs. Litig., 890 F.2d 628, 645 (3d Cir. 1989). But Plaintiffs “must still
allege facts suggesting fraudulent concealment.” Weske v. Samsung Elecs. Am.,
Inc., No. 10-4811, 2012 WL 833003, at *5 (D.N.J. Mar. 12, 2012). Furthermore,
“[c]ollectivized allegations that generally allege fraud as against multiple
defendants, without informing each defendant as to the specific fraudulent acts he
or she is alleged to have committed, do not satisfy Rule 9(b).” See Hale v. Stryker
Orthopaedics, No. 8–337, 2009 WL 321579, at *6 (D.N.J. Feb. 9, 2009).
In its earlier opinion, the Court dismissed fraudulent concealment claims
because “Plaintiffs [did] not provide sufficient factual allegations to establish
Samsung knew of the Defect prior to the sales at issue in this litigation.” Weske,
2012 WL 833003 at *5. The Court noted that “[a]lthough Plaintiffs allege that
Samsung knew of the Defect as early as 2006 because of complaints made by
unspecified customers, they do not allege who at Samsung learned of these
complaints and they do not identify any particular individuals who complained.”
Id.
5
Like the Complaint, the SAC fails to satisfy Rule 9(b). The SAC does not
provide the “who, what, when, where, and how elements to state a claim arising in
fraud.” Burlington, 114 F.3d at 1423. Besides from referencing a single customer
service hotline attendant, the SAC does not identify who at Samsung learned about
the customer complaints. Nor does it distinguish between the two Samsung
defendants, SEA and SEC. See Hale, 2009 WL 321579 at *6. Nor does the SAC
provide facts suggesting fraudulent concealment beginning in 2006. Ultimately,
Plaintiffs’ allegation that Samsung discovered the Defect in 2006 is based on just
two confirmed customer complaints and two unconfirmed reports posted on
internet websites. “Awareness of a few customer complaints . . . does not establish
knowledge of an alleged defect.” Baba v. Hewlett-Packard Co., No. 9-5946, 2011
WL 317650, at *3 (N.D. Cal. Jan. 28, 2011) (dismissing fraud claims under Rule
9(b)). Accordingly, the Court will DISMISS Counts I and II WITHOUT
PREJUDICE and grant Plaintiffs leave to amend.
2.
Federal Rule of Civil Procedure 12(b)(6)
a.
Count I: Consumer Protection Laws
Count I asserts a claim for violation of the Consumer Protection Laws.
Samsung argues that the claims sounding in California and Illinois law, and the
class claim (but not the individual claim) sounding in Ohio law should be
dismissed under Federal Rule of Civil Procedure 12(b)(6). While the Court need
not address Samsung’s arguments given the reasoning set forth in Section III.A.1,
the Court believes that Plaintiffs will benefit from the analysis should they choose
to amend the SAC.
i.
Ohio Consumer Sales Practices Act (“OCSPA”)
To bring a class action under the OCSPA, a plaintiff must establish that a
prior rule or judicial decision has put the defendant on notice that its conduct was
deceptive. O.R.C. § 1345.09(B) (“Section 1345”). Plaintiffs argue that Nessle v.
Whirlpool Corp., No. 12-310, 2008 WL 2967703 (N.D. Ohio July 25, 2008)
provided Samsung with the notice required by OCSPA. Plaintiffs are mistaken.
Savett v. Whirlpool Corp., No. 12-310, 2012 WL 3780451, at *4 (N.D. Ohio Aug.
31, 2012) (“[Nessle] does not constitute a determination by an Ohio court that a
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particular act or practice violates the OCSPA.”).4 It follows that Plaintiffs have not
stated a class claim under the OCSPA.
ii.
Illinois Consumer Fraud Act (“ICFA”)
Samsung contends that Plaintiffs have failed to state a claim under the ICFA
because there is no allegation that Samsung’s representations or omissions
proximately caused the two Illinois Plaintiffs (Poslean and Chermak) to purchase
their Refrigerators. The Court agrees.
To state a claim under the ICFA, a Plaintiff must allege proximate causation.
Avery v. State Farm Mut. Auto. Ins. Co., 835 N.E.2d 801, 850 (Ill. 2005). The
Supreme Court of Illinois has held that in a consumer fraud action under the ICFA,
the plaintiff must actually be deceived by a statement or omission. If
there has been no communication with the plaintiff, there have been
no statements and no omissions. In such a situation, a plaintiff cannot
prove proximate cause.
De Bouse v. Bayer, 922 N.E.2d 309, 316 (Ill. 2009). Plaintiffs have not alleged
that Poslean or Chermak ever received a communication from Samsung.
Accordingly, Plaintiffs have not stated a claim under the ICFA.
iii.
California Legal Remedies Act (“CLRA”) and
California Unfair Competition Law (“UCL”)
Next, Samsung argues that Plaintiffs have failed to state a claim under the
CLRA and the UCL because the named Plaintiff from California, Maureen Kean,
began experiencing cooling problems after her warranty had expired. The Court
agrees.
“Although California courts are split on this issue, the weight of authority
suggests that a ‘manufacturer’s duty to consumers [under the CLRA or UCL] is
limited to its warranty obligations absent either an affirmative misrepresentation or
a safety issue.’” O’Shea v. Epson America, Inc., No. 9-8063, 2011 WL 3299936,
at *8 (C.D. Cal. July 29, 2011) (citing Oestreicher v. Alienware Corp., 322 Fed.
4
Plaintiffs argue that the notice required by OCSPA was provided by two additional cases, Sovel
v. Richardson, 1995 WL 678558 (Oh. Ct App. Nov. 15, 1995) and Brown v. Lyons, 332 N.E.2d
380 (Ohio C.P. Hamilton County 1974). Because Plaintiffs failed to identify these cases in the
SAC, the Court will not consider them for purposes of the motion to dismiss. See St. Clair v.
Kroger Co., 581 F. Supp. 2d 896, 901 (N.D. Ohio 2008) (dismissing OCSPA class claim where
complaint failed to identify a rule or judgment that satisfied Section 1345).
7
Appx. 489, 493 (9th Cir. 2009)). The “safety issue” exception is grounded in
policy concerns. If the CLRA and the UCL could impose liability on any
manufacturer after the expiration of the manufacturer’s warranty, warranties would
effectively be “perpetual.” Wilson, 668 F.3d 1136 (quoting Oestreicher v.
Alienware Corp., 544 F. Supp. 2d 964, 972 (N.D.Cal. 2008)). While courts have
been reluctant to create perpetual warranties for ordinary products, they have not
expressed the same reluctance when it comes to products that implicate safety.
Kean purchased her refrigerator in August or September of 2009, and she
began to notice cooling problems in November 2010, more than one year later.
Samsung’s warranty on parts and labor lasted for one year. Accordingly, for Kean
to state an omission-based claim under the CLRA or UCL, Samsung must have
omitted facts relating to product safety.
Kean contends that the Samsung omitted to inform her about the Defect.
She further contends that the Defect is related to product safety because it can
cause food to spoil. While it is possible that a cooling problem in a refrigerator can
lead a person to ingest spoiled food and become sick, the Court is reluctant to
equate refrigerators with products that trigger the “safety issue” exception—
products such as artificial hearts and car engines. See Oestreicher v. Alienware
Corp., 544 F. Supp. 2d 964, 970 n.6 (N.D. Cal. 2008); Cholakyan v. MercedesBenz USA, LLC, 796 F. Supp. 2d 1220, 1237 (N.D. Cal. 2011). Plaintiffs have not
stated a claim under the UCL or the CLRA.
b.
Count III: Breach of Implied Warranty
Count III asserts a claim for breach of warranty under Minnesota law and a
claim for tortious breach of warranty under Ohio law. Samsung moves to dismiss
both claims. The Court will GRANT the motion to dismiss the claim sounding in
Minnesota law. The Court will DENY the motion to dismiss the claim sounding in
Ohio law.
i.
Minnesota Law
Plaintiffs assert a claim for breach of warranty under Minnesota law, arguing
that Samsung’s warranty was unconscionable.5 The Court disagrees.
The Court assumes without deciding that a breach of warranty claim can be
grounded in unconscionability. Plaintiffs argue that Samsung’s warranty was
5
Though Plaintiffs’ breach of warranty claim was pled under Minnesota law, the Court applies
New Jersey law because the two states’ laws are “substantially similar.” Weske, 2012 WL
833003 at *6.
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unconscionable because Samsung knew about the Defect and failed to disclose it.
But failing to disclose a known defect does not, by itself, make a warranty
unconscionable. See Chan v. Daimler AG, No. 11-5391, 2012 WL 5827448, at *6
(D.N.J. Nov. 9, 2012) (“The fact that a defendant may have been aware of a defect
during the period of an express warranty does not . . . give rise to a valid claim for
breach of warranty.”); Alban v. BMW of North America, No. 9-5398, 2011 WL
900114, at *9 (D.N.J. March 15, 2011) (“Alban’s allegations that BMW knew that
the sound insulation in his vehicle would fail after the expiration of the warranty
agreement do not indicate that the time and mileage limitation clause was
unconscionable.”); but see Payne v. Fujifilm U.S.A., Inc., No. 7-385, 2007 WL
4591281, at *5 (D.N.J. Dec. 28, 2007) (defendant’s knowledge of defect can
render warranty procedurally unconscionable). Accordingly, the Court will
DISMISS the breach of implied warranty claim under Minnesota law. As it is
perhaps conceivable that Plaintiffs could state a claim here, the dismissal shall
operate WITHOUT PREJUDICE.
ii.
Ohio Law
Samsung moves to dismiss the claim for tortious breach of warranty under
Ohio law, arguing that it is barred by the economic loss doctrine. The Court
disagrees with Samsung’s argument.
Jo Anna Frager, the named Plaintiff from Ohio, is an ordinary consumer
who lacks privity with Samsung. Under Ohio law, there is a “general rule [that] ‘a
plaintiff who has suffered only economic loss due to another’s negligence has not
been injured in a manner which is legally cognizable or compensable.’” In re
Whirlpool Corp. Front-Loading Washer Products Liability Litigation, 684 F. Supp.
2d 942, 949 (N.D. Ohio 2009) (quoting Chemtrol Adhesives, Inc. v. Am. Mfrs. Mut.
Ins. Co., 537 N.E.2d 624, 630 (Ohio 1989)). But the rule does not apply to
“‘ordinary consumers’ who lack privity with a product’s manufacturer.” Id.
Accordingly, the economic loss doctrine does not bar Plaintiffs’ claim for tortious
breach of implied warranty under Ohio law. The Court will DENY the motion to
dismiss the breach of warranty claim sounding in Ohio law.
B.
MOTION TO STRIKE
Samsung moves to strike the claim for tortious breach of warranty under
Ohio law. It also moves to strike the SAC paragraphs referencing internet postings
and the class allegations. The Court will not strike any of this material.
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1.
OHIO BREACH OF WARRANTY CLAIM
Samsung moves to strike Plaintiffs’ claim for tortious breach of warranty
under Ohio law, arguing that the claim was filed without permission. The Court
will DENY the motion.
In its March 12, 2012 Opinion, the Court dismissed Plaintiffs’ breach of
implied warranty claim and allowed Plaintiffs to amend their Complaint
accordingly. Plaintiffs subsequently filed the SAC, which includes a claim for
tortious breach of warranty under Ohio law. Samsung argues that the Court
intended only for Plaintiffs to re-plead breach of warranty claims sounding in
contract, not tort. The Court never specified whether Plaintiffs’ breach of warranty
claim needed to sound in contract or tort. Samsung’s reading of the Court’s March
12, 2012 Opinion is too narrow.
2.
SAC PARAGRAPHS
POSTINGS
RELATED
TO
INTERNET
Next, Samsung moves to strike SAC paragraphs 100-103, which reference
internet postings about Samsung refrigerators. As this material is not “redundant,
immaterial, impertinent or scandalous matter,” Fed. R. Civ. P. 12(f), the Court will
DENY the motion to strike it.
3.
CLASS ALLEGATIONS
Finally, Samsung also moves to strike Plaintiffs’ class allegations. The
Court will DENY the motion as premature.
Rule 12(f) permits a district court to “strike from a pleading an insufficient
defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R.
Civ. P. 12(f). Numerous “cases have affirmed that motions to strike should be
used sparingly, and generally are not favored and usually will be denied unless the
allegations have no possible relation to the controversy and may cause prejudice to
one of the parties.” Ehrhart v. Synthes, No. 7–1237, 2007 WL 4591276, at *3
(D.N.J. Dec. 28, 2007) (internal quotation and citation omitted). Similarly,
numerous cases in this District have emphatically denied requests to strike class
allegations at the motion to dismiss stage as procedurally premature. See id.;
Andrews v. Home Depot U.S.A., Inc., No. 3-5200, 2005 WL 1490474, at *3 (D.N.J.
June 23, 2005); Myers v. Medquist, Inc., No. 5-4608, 2006 WL 3751210, at *9
(D.N.J. Dec. 20, 2006).
Given the early stage of the proceedings, the Court finds that Samsung’s
request to strike the class allegations is premature. Accordingly, the motion to
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strike is DENIED. Samsung may renew its arguments in response to a motion for
class certification.
V.
CONCLUSION
For the reasons stated above, Defendants’ motion to dismiss is GRANTED
in part, and DENIED in part. Count I (fraudulent inducement/non-concealment)
and Count II (Consumer Protection Laws) are DISMISSED WITHOUT
PREJUDICE. With respect to Count III, the breach of warranty claim under
Minnesota law (Count Three) is dismissed WITHOUT PREJUDICE, but the
breach of warranty claim under Ohio law survives. Finally, the motion to strike is
DENIED. Plaintiffs shall have 30 days in which to amend their pleading in
accordance with this opinion. An appropriate order follows.
/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
Date: March 19, 2013
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