MORANO v. BMW OF NORTH AMERICA, LLC

Filing 65

OPINION. Signed by Judge Kevin McNulty on 6/11/15. (DD, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

JOHN J. MORANO, individually, and on
behalf of all others similarly situated,

Civ. No. 2: 12-CV-0606
(KM)(MAH)

Plaintiff,
OPINION
V.

BMW OF NORTH AMERICA, LLC,
Defendant.

KEVIN MCNULTY, U.S.D.J.:
While this motion was pending, boxing fans observed the 50th
anniversary of the 1965 Ali/Liston fight. In an iconic photo, Muhammed
Au stands over a supine Sonny Liston, exhorting him to “Get up and
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fight.” Defendant, BMW of North America, LLC (“BMW”), finds itself in
much the same position. The court, however, has no sporting interest in
the continuation of this lawsuit, and will not force an unwilling plaintiff
to pursue his federal claims. The motion of the plaintiff, John J. Morano,
for voluntary dismissal of his complaint without prejudice, under Fed. R.
Civ. P. 41(a)(2) (ECF No. 58), will be granted.
The background of the parties and claims has been fully laid out in
an earlier opinion (ECF No. 32), and will only be briefly summarized here.
Morano has brought a putative class action against BMW of North

The story behind the fight and the famous photo is well told in Dave
Mondy, “How Things Break,” 44 The Iowa Review, vol. 3 (Winter 2014—15)
(available at www. iowareview. org/from-the-issue /volume-44-issue-3%E2%80%94winter-2014 15/how-things-break) and, in another version, at
www.slate.com/articles/sports! sports_nut/ 2015 / 05 / ali_liston_5Oth_anniversa
rythe_true_storybehindneil_leifer_s_perfect. html).

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America, LLC (“BMW”) for violations of the Florida Deceptive and Unfair
Trade Practices Act (“FDUTPA”), breach of contract, breach of the
covenant of good faith and fair dealing, breach of warranty, and punitive
damages. On March 1, 2013, I denied BMW’s motion to dismiss Morano’s
complaint. (ECF Nos. 32, 33) There has been no motion for class
certification, and no class has been certified.
Allegedly, Morano leased a new BMW automobile and discovered
that the vehicle’s battery would not hold a charge. Morano requested that
his BMW dealer replace the battery pursuant to BMW’s maintenance
program. The BMW dealer refused, determining that Morano’s battery
problems were excluded from coverage under BMW’s warranty because
they were caused by “unfavorable customer usage.” Morano alleges that
BMW wrongly denied warranty coverage and failed to clearly disclose the
exclusion.
In his complaint, Morano seeks damages (essentially for his and
similarly situated BMW owners’ purchases of replacement batteries), as
well as an injunction compelling BMW to change its warranty policy.
Through discovery, however, Morano has discovered that BMW modified
its policy in April 2011, about ten months before he filed his complaint.
Under BMW’s amended policy, Morano’s repair would be covered. He
concedes that his requested injunctive relief is therefore moot.
Morano does not wish to proceed with this federal action. He seeks
to dismiss the action voluntarily and without prejudice, pursuant to
Federal Rule of Civil Procedure 4l(a)(2).
Rule 41(a) 1) allows a plaintiff to voluntarily dismiss an action as of
right only if (1) the plaintiff provides “a notice of dismissal before the
opposing party serves either an answer or a motion for summary
judgment”; or (2) “a stipulation of dismissal [is] signed by all parties who
have appeared.” Otherwise, as in this case, dismissal is by leave of the

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court: “Except as provided in Rule 41(a)(1), an action may be dismissed
at the plaintiff’s request only by court order, on terms that the court
considers proper.” Fed. R. Civ. P. 41(a)(2). “Unless the order states
otherwise, a dismissal under [Fed. R. Civ. P. 41(a)(2)] is without
prejudice.” Id.
Here, Morano moves for dismissal because he has discovered that
this Court does not have, and never had, subject matter jurisdiction over
his complaint. To attempt to proceed further in federal court, he believes,
would be quixotic. In the end, it does not much matter whether Morano’s
reasons for wanting to dismiss his complaint are good ones. I
nevertheless briefly discuss the jurisdictional issue.
Jurisdiction over this proposed class action is founded on
diversity, pursuant to 28 U.S.C. § 1332, as supplemented and amended
by the Class Action Fairness Act of 2005. To qualify, the claims of the
proposed class must exceed $5 million in value. See 28 U.S.C.

§

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1332(d)(2). Where damages are sought, the value of a claim may, of
course, be measured by their dollar amount. Where injunctive relief is
sought, the plaintiff may attempt to assign a dollar value to that claim in
order to meet the diversity threshold.
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Jurisdiction is measured as of the date of filing of the complaint. It
It is conceded that the parties are of minimally diverse citizenship within
the meaning of 28 U.S.C. § 1332(d)(2)(a). Morano’s individual claim for
replacement of a car battery is not alleged to exceed the value of $75,000, the
threshold for an individual diversity claim.
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See Hunt v. Washington State Apple Adver. Comm’n, 432 U.S. 333, 347
(1977) (“In actions seeking declaratory or injunctive relief, it is well established
that the amount in controversy is measured by the value of the object of the
litigation.”); C. Wright, A. Miller, & E. Cooper, Federal Practice & Procedure
§
3708 Amount in Controversy in Particular Cases—Proceedings for Injunctive
and Declaratory Relief (4th ed.) (“[I]t is well-settled that the amount in
controversy is to be measured for subject matter jurisdiction purposes by the
value of the right that the plaintiff seeks to enforce or to protect against the
defendant’s conduct or the value of the object that is the subject matter of the
action.”).
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is not lost through changed circumstances (for example, a once-diverse
party’s change of state citizenship). A court will, however, find that there
is no subject matter jurisdiction “if after the case is filed it is discovered
that there was no jurisdiction at the outset.” Cunningham Charter Corp.
v. Learjet, Inc., 592 F.3d 805, 807 (7th Cir. 2010) (citing Church of
ell
Scientology of Calfomia v. United States, 506 U.S. 9, 12 (1992); Rockw
Int’l Corp. v. United States, 549 U.S. 457, 473—74 (2007)). In particular,
subject matter jurisdiction will be found lacking where, after the filing of

a complaint, “subsequent revelations’ [show] that, in fact, the required
statutory amount was not in controversy at the commencement of the
action.” Huber v. Taylor, 532 F.3d 237, 244 (3d Cir. 2008) (citing St. Paul
Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 290 (1938)). The
distinction is “between subsequent events that change the amount in
controversy and subsequent revelations that, in fact, the required
amount was or was not in controversy at the commencement of the
action.” Id. (quoting Jones v. Knox Exploration Corp., 2 F.3d 181, 183 (6th
Cir. 1993) (emphasis added).
Morano says that discovery has revealed that the amount in
controversy at the time of filing did not exceed $5 million.
Morano concedes that, because BMW changed its warranty policy
in 2011, his request for injunctive relief is moot. He now knows that it
was moot at the time he filed his complaint in 2012. The dollar value of
the object of injunctive relief, then, is zero. BMW does not seem to
disagree.
That leaves damages. Morano argues that discovery has revealed
that the claims of the proposed class members could not possibly have
added up to $5 million at the time of filing of the complaint; in fact,
based on his calculations, potential damages total something less than
$50,000.

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The number of vehicles sold or leased within the time period
covered by the proposed class is about 115,000, as the parties agree.
(Welling Decl. ¶9; Def.

Opp.

5) Morano cites to evidence produced by
BMW, which shows that there are currently 4,577 Florida owners of
BMW 6 Series vehicles (the particular model Morano leased). (Id. 6 (citing
Welling Decl. Ex. 5 at 5)) BMW is aware of only two other consumers,
apart from Morano, who were denied a replacement battery based on an
“unfavorable driving profile.” (Id. (citing Welling Deci. Ex. 5 at 6)) Morano
calculates that the number of BMW 6 series vehicle owners allegedly
harmed by BMW’s policy, then, is 3 out of 4,577, or 0.00066%. (Id.) That
percentage, applied to the total of 115,000 vehicles sold or leased in the
relevant period, implies that the proposed class consists of approximatel
y
75 consumers. If each of those 75 paid $150 for a replacement battery,
the total of compensatory damages would be $11,250. Morano assumes
attorneys’ fees at a rate of 30%, which would yield a total of $3,375
.
Because Florida limits punitive damages to three times compensatory
damages, the punitive damages ceiling would be $33,750. All together,
then, the amount in controversy would be $48,375. That is less than 1%
of the $5 million required for diversity jurisdiction; to put it another way,
if Morano is off by a factor of 100, jurisdiction is still lacking.
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BMW

—

counterintuitively, to say the least

—

demurs, contending

that the amount in controversy could top $17 million. (Def. Opp. 10)
BMW arrives at this figure by multiplying the total number vehicles sold
or leased (115,000) by the amount Morano paid to replace his own
battery ($150), which comes out to $17,250,000. BMW’s calculation
assumes that (1) every single vehicle sold by BMW experienced battery
trouble; (2) each example of battery trouble was attributed to an
“unfavorable driving profile”; (3) each vehicle’s owner was denied a free
Morano proposes another scenario, in which he assumes that 10% of the
relevant vehicle owners were harmed by BMW’s warranty policy. I see no basis
in the record for that assumption, and I do not consider it.
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battery replacement under the Warranty; and (4) each owner paid out-ofd
pocket for a replacement battery. Those assumptions, seemingly plucke
from the air, are highly suspect. Certainly there is a whiff of opportunism
in BMW’s insistence that every one of these cars is defective. And if
anybody is in a position to ascertain from the dealers how many owners
have sought a battery replacement, it is BMW—but BMW pleads
ignorance

.

I need not settle definitively whether the underlying facts would
support jurisdiction. Morano does not want to pursue his federal action,
or perhaps thinks it is not worth investing further resources in an action
that may well lack a jurisdictional foundation. Absent some prejudice to
the defendant, I will not force Morano to litigate against his will.
The Third Circuit has taken a “liberal” stance toward Rule 41(a)(2)
dismissals. In re Paoli R.R. Yard PCB Litigation, 916 F. 2d 829, 863 (3d
Cir. 1990). In general, the guiding principle for a dismissal with leave of
court under Rule 4 1(a)(2) is that
dismissal should be allowed unless the defendant will suffer
some plain legal prejudice other than the mere prospect of a
Also, it is well established that it is not
second lawsuit.
a bar to a court-granted dismissal under Rule 41(a) (2) that
the plaintiff may obtain some tactical advantage thereby.
.

.

.

9 C. Wright, A. Miller, & E. Cooper, Federal Practice & Procedure: Civil
3d § 2364, at 475—88 (footnotes and citations omitted). The touchstone,
then, is “prejudice.”
The only prejudice to which BMW points is the possibility of “forum
I pause to observe that this issue has brought about an odd alignment of
parties and positions. Plaintiff, in his complaint, asserted that there was
diversity jurisdiction. BMW’s answer denied that there was $5 million at stake.
BMW mischievously agrees to be bound by that admission, provided that it can
also be “bound” by its statement that plaintiff has not stated a cause of action.
Each party says that the other has the burden of proof. In short, the parties
have switched sides, but seemingly for purposes of this motion only.

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shopping.” But plaintiff could always have brought his action elsewhere if
he wished to. And there is no impending development—say, an
impending or actual judgment in defendant’s favor—that would make
withdrawal unfair. See id. at 500. What BMW means is that Morano
might later refile his action elsewhere. That, without more, does not
constitute prejudice:
[T]he prospect of subsequent suit is inherent to every action
dismissed without prejudice; on its own, it cannot logically
form the basis of an argument that Defendant is harmed by
the dismissal sufficient to deny it. See In re Paoli R.R. Yard
PCB Litigation, 916 F.2d 829, 863 (3d Cir. 1990) (noting that
fear of a successive suit is not sufficient to show prejudice);
John Evans Sons, Inc. v. Majik—Ironers, Inc., 95 F.R.D. 186,
190 (E.D. Pa. 1982) (same).
Loose v. North Wildwood City, 2012 WL 480025 at *1 (D.N.J. Feb. 14,
2012) (Simandle, C.J.). I add that, should Morano seek to refile his
claims in another forum, the resulting prejudice to the defendant, if any,
can be assessed then.
Suggesting prejudice to absent prospective class members, BMW
cites Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345 (2013). There,
the Supreme Court ruled that a named plaintiff could not prevent the
removal of his putative class action complaint by stipulating that the
proposed class would seek less than $5 million in damages. However, the
Supreme Court’s ruling was based on its conclusions that (1) the named
plaintiff could not legally bind other members of the proposed class to
the stipulation; and (2) “federal jurisdiction cannot be based on
contingent future events”; the nonbinding stipulation was “in effect
contingent.” Id. at 1346.
Here, however, Morano is not attempting to stipulate away other
class members’ right to recover over $5 million. Because no class has
been certified (and because Morano is abandoning the effort to certify
one), his fiduciary duties to potential class members are not great, and in
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any event he cannot and does not seek to bind them. He has merely
made a factual determination that there is less than $5 million at stake,
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and has decided to abandon a futile effort.
This action is not on the verge of trial. Although it has been
pending for some time, there is no class certification motion pending,
and discovery is seemingly still in progress. The plaintiff has not been
dilatory in bringing this motion for dismissal, which is based on matters
uncovered in discovery. And assuming there is some subsequent lawsuit,
any discovery already turned over can be used in that action, so the
effort and expense will not be wasted.
In short, because I see no particular prejudice to the defendant, I
will grant the motion.
CONCLUSION
For the foregoing reasons, Morano’s motion for voluntary dismissal
(ECF No. 58) pursuant to Fed. R. Civ. P. 41(a)(2) is GRANTED, with costs
but without prejudice.
Dated: June 11, 2015

/dfr/(
Kevin McNulty
United States District Judge

There remains the possibility that putative class members could have
been lulled by the existence of this action. Because there has been no class
certification, any potential plaintiffs who withheld their claims did so at their
own risk. But should a class member subsequently bring a claim that would
otherwise be time barred, a court may consider whether the limitations period
should be tolled. I take no position on that issue.

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