COBA ,ET AL V FORD MOTOR COMPANY
OPINION. Signed by Judge Kevin McNulty on 8/4/17. (cm, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
GALO COBA and COBA LANDSCAPING
AND CONSTRUCTION, INC., individually,
and on behalf of other members of the
general public similarly situated,
Civ. No. 12-1622 (KM) (MAH)
FORD MOTOR COMPANY,
KEVIN MCNULTY, U.S.D.J.:
Coba and Coba Landscaping and Construction, Inc.
(“Coba Landscaping”)’ bring this putative class action against Defendant Ford
Motor Company (“Ford”). The Third Amended Class Action Complaint (the
“Complaint”) (ECF no. 91)2 contains four counts arising out of Ford’s alleged
Plaintiffs will generally be referred to collectively as “Coba,” unless otherwise
My prior Summary Judgment Opinion (ECF no. 149) will be referred to herein
as “SJ Op.” It is reported as Coba a Ford Motor Co., No. 12-1622 (KM) (MAH), 2016 WL
5746361, at *12 (D.N.J. Sept. 30, 2016). As in that prior opinion, certain record items,
cited repeatedly, will be abbreviated as follows:
Third Amended Class Action Complaint (ECF no. 91)
“Def. Mot.” = Defendant Ford Motor Company’s Memorandum in Support
of Motion for Summary Judgment Pursuant to Fed. R. Civ. P. 56 (ECF
Defendant’s Statement of Material Facts (ECF no. 130-1)
“P1. Facts” = Plaintiffs Response to Ford’s Statement of Material Facts
(ECF no. 130-7)
Coba’s Opposition (ECF no. 130-7)
inability to cure a defective fuel tank installed in certain Ford F—Series Super
Duty trucks and E—Series vans.
Now before the Court is Ford’s motion (ECF no. 130-1) for summan’
judgment. In a previous Opinion (ECF no. 149), I granted summary judgment
to Ford on Counts 1, 2, and 4, which allege breach of express
of the implied contractual covenant of good faith and fair dealing, and common
law fraud. At that time, I also administratively terminated without prejudice the
portion of Ford’s summary judgment motion concerning Count 3, which alleges
a violation of the New Jersey Consumer Fraud Act (the “NJCFA”), N.J. Stat.
§ 56:8—2, and I granted leave to submit supplemental briefing.
The parties have submitted supplemental briefing and, for the reasons
stated below, I will grant summary judgment to Ford on Count 3. This opinion
assumes familiarity with my prior Summary Judgment Opinion, and should be
read in conjunction with it.
The facts, as set forth in my previous Summary Judgment Opinion, are
incorporated here by reference. (See SJ
2—13, 2016 WL 5746361 *1_*7.)
A. Summary Judgment Standard
The familiar legal standards governing a motion for summary judgment
are likewise incorporated by reference, and will not be repeated here. (See SJ
13—14, 2016 WL 5746361 *7*8.)
Declaration of Tarek H. Zohdy (ECF no. 130-8 through
“P1. Supp. Br.” = Plaintiffs’ Supplemental Brief Re: Defendant’s Motion for
Summary Judgment (ECF no. 154)
“Def. Supp. Br.” = Defendant Ford Motor Company’s Supplemental Brief
in Support of Motion for Summary Judgment Pursuant to Fed. R. Civ. P.
56 (ECF no. 153)
Violation of the New Jersey Consumer Fraud Act
a. Elements of a CFA Claim
Coba’s third cause of action arises under the New Jersey Consumer
Fraud Act (“CFA”). In a diversity case, this court must interpret substantive
state law in accordance with rulings of the state’s highest court. Lacking such
specific guidance, it must predict how the state court would resolve the issue.
Hunt v. U.S. Tobacco Co., 538 F.3d 217, 220—2 1 (3d Cir. 2008); Norfolk Southern
Ry. Co. v. Basell USA Inc., 512 F.3d 86, 9 1—92 (3d Cir. 2008); see generally Erie
R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).
The New Jersey Legislature enacted the NJCFA in 1960 to address
fraudulent practices in the market for consumer goods and to deter such
conduct by merchants. Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 11(2004)
(citing Cox v. Sears Roebuck & Co., 138 N.J. 2, 21(1994)). As amended in 1971,
the statute confers a private right of action for consumers who have suffered
from unconscionable or fraudulent practices in the marketplace:
Any person who suffers any ascertainable loss of moneys or
property, reaJ or personal, as a result of the use or employment by
another person of any method, act, or practice declared unlawful
under this act of the act hereby amended and supplement may
bring an action or assert a counterclaim therefor in any court of
N.J. Stat. Ann.
§ 56:8-19. The NJCFA is to be liberally construed in favor of the
consumer, see Cox, 138 N.J. at 14, and “applied broadly in order to accomplish
its remedial purpose,” Gonzalez v. Wilshire Credit Corp., 207 N.J. 557, 576
(2011) (quoting Lemelledo v. Beneficial Mgmt. Corp., 150 N.J. 255, 264 (1997));
see also Gennari u. Weichert Co. Realtors, 148 N.J. 582, 604 (1997).
“To state a prima facie case under the CFA, a plaintiff must demonstrate
three elements: (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 plaintiffs ascertainable loss.” Payan v. GreenPoint Mortgage
Funding, 681 F. Supp. 2d 564, 572 (D.N.J. 2010) (citing Bosland v. Wamock
Dodge, Inc., 197 N.J. 543, 557 (2009)); accord Gonzalez, 207 N.J. at 576.
The first element of an NJCFA claim—unlawful conduct—is defined as:
“[t]he act, use or employment by any person of any unconscionable commercial
practice, deception, fraud, false pretense, false promise, misrepresentation, or
the knowing, concealment, suppression, or omission, in connection with the
sale or advertisement of any merchandise
N.J. Stat. Ann.
this statutory definition, courts have derived three broad categories of unlawful
conduct: affirmative acts, knowing omissions, and regulatory violations.
Federico v. Home Depot, 507 F.3d 188, 202 (3d Cir. 2007) (citing Ccx, 138 N.J.
Coba’s allegations fall within the second category: knowing omissions.
“When the alleged consumer fraud consists of an omission, the plaintiff must
show that the defendant acted with knowledge, and intent is an essential
element of the fraud.” Cox, 138 N.J. at 18. An actionable omission thus occurs
where the defendant “(1) knowingly concealed (2) a material fact (3) with the
intention that the consumer rely upon the concealment.” Arcand v. Brother
Intern. Coip., 673 F. Supp. 2d 282, 297 (D.N.J. 2009).
b. Coba’s New Jersey CPA Claim
Coba alleges that Ford knowingly concealed the material fact that “the
Class Vehicles suffered from a common defect resulting in fuel tank material
clogging portions of the fuel system, thereby causing sudden loss of power to
the engine, sudden loss of forward propulsion, and stalling while driving the
Class Vehicles” by “purposefully fail[ing] to disclose this to Plaintiffs and Class
Members during the purchase of the vehicle and, in fact, actively conceal[ing],
suppress[ing] and omitt[ingj any mention of the Fuel Tank Defect.” (3AC
Coba further alleges that “Ford purposefully and knowingly failed to disclose
the Fuel Tank Defect in the Class Vehicles and replacement tanks in order to
secure the sale of these vehicles or replacement tanks at a premium price and
also to mislead owners during the express warranty period to avoid having to
perform their contractual duties under the warranty.” (3AC ¶j 160)
Coba’s omissions claim, as noted above, requires a showing that Ford
knowingly concealed a material fact with the intention that the consumer rely
on that omission. See Arcand, 673 F. Supp. 2d at 297. Implicit is the
requirement that the defendant be subject to an “underlying duty
disclose what he concealed to induce purchase.” Id. “Obviously, there can be
no [unlawful conduct], or reliance for that matter, if the defendant was under
no obligation to disclose the information in the first place.” Id. Whether a
defendant was subject to a duty to disclose is a question of law that must be
determined in light of the factual circumstances. Judge v. Blackfin Yacht Corp.,
357 N.J. Super. 418, 426-27 (App. Div. 2003) (citing Caner Lincoln-Mercunj,
Inc., Leasing Div.
EIVIAR Grp., Inc., 135 N.J. 182 (1994)).
Ford contends that Coba has not raised a material factual dispute with
regard to the unlawful conduct element of its omissions claim. Ford states that
it violated no duty to disclose the alleged material facts relating to the fuel tank
delamination at the time of Coba’s purchases.
There is well-developed case law, cited by both sides in the initial briefing
on this motion, as to the nature and scope of a manufacturer’s duty of
disclosure with respect to a warranted defect. See, e.g., Mickens v. Ford Motor
Co., No. lO-CV-5842 KM MAR, 2015 WL 5310755, at *8 (D.N.J. Sept. 10, 2015)
*5 (D.N.J. March 28,
(citing Tatum v. Chrysler Grp., LLC, 2011 WL 1253847,
2011)). Automobile manufacturers commonly warrant their cars against
failures for a period of time. Thus freedom from, e.g., fuel tank failure for a
fixed period of years becomes part of the bargained-for exchange; if such a
failure occurs, it will be remedied at the manufacturer’s expense. It is well
known that automobiles do not always function flawlessly; that is the very
reason for a warranty. Where the relevant defect was covered by a warranty,
then, “it is not sufficient to allege that the defendant manufacturer knew that a
part might fail [due to the defectj before the warranty expired but concealed
that knowledge.” Athan v. BMW of N. Am., LLC, 2010 WL 3636253, at *10
(D.N.J. Sept. 8, 2010) (emphasis in original) (citing Perkins v. DaimlerChnjsler
Corp., 383 N.J. Super. 99, 111—12, 890 A.2d 997 (App. Div. 2006)). Instead,
“[t]o support a CPA cause of action for fraud in the context of a warranted
defect, a plaintiff must show that the manufacturer was not in good faith
insuring against a risk, but that it actually ‘knew with certainty that the
product at issue or one of its components was going to fail.” Mickens, 2015 WL
*5 (emphasis in original)).
5310755, at *8 (citing Tatum, 2011 WL 1253847,
“Only then will a concealed, but warranted-against, defect furnish the basis for
a CPA claim.” Id.
Originally, both sides seemed to have briefed the NJCPA duty to disclose
issue on the assumption that the fuel tank delamination was a warranted
defect. As I noted in my earlier Summary Judgment Opinion, that was an
understandable assumption, given Ford’s “position that it could not reliably
identify the nature of the problem but honored warranty claims in the interim”
and Coba’s “position that the defect was covered by the NVLW.” (S.J. Op. at 22,
2016 WL 5746361 at * 12). However, because I found that the allegations and
proofs relate solely to an alleged design defect, not covered by the express
warranty’ (and there is no implied warranty claim asserted), I granted the
parties the opportunity to address the NJCFA duty-to-disclose issue in light of
my disposition of the express warranty issue.
The parties have submitted supplemental briefs on the issue of the duty
to disclose in relation to a non-warranted defect. I now turn to that question.
The parties agree that the NJCFA is applicable whether or not the
allegedly omitted defect was covered by a warranty. Thus, the disputed
question here is not whether the NJCFA protects the consumer from nonwarranted defects, but rather what standard should govern the duty to
disclose. Must plaintiffs demonstrate that a defendant knew that a product was
certain to fail, as in the Athan line of cases? Or is the knowledge that a product
may fail sufficient to trigger a duty to disclose a non-warranted defect?
For its part, Coba argues that in the “absence of warranty coverage
courts do not insist that the defendant know that a defect would arise in 100%
of the cases before finding an omissions claim actionable, with or without
warranty.” (P1. Supp. Br. 2—3) Coba further contends that if the Alban certainty
standard is applied in the absence of a warranty, “defendants will be in the
perverse position of being able to escape liability entirely under the NJCFA
simply because they did not warrant a known defect that is prone to failure but
does not fail at a 100% rate.” (P1. Supp. Br. 3—4) Coba argues that “[t]he Court’s
finding that the fuel tank delamination defect is not covered by warranty can
only aid Plaintiffs—not Ford. This is because the existence of a warranty is
typically invoked as a defense to a claim that defendant violated the NJCFA.”
(P1. Supp. Br. 8)
In contrast, Ford asks the Court to apply the certainty standard here,
arguing that “Aiban and its progeny are nearly indistinguishable from this
case.” (Def. Supp. Br. 4) This is so, says Ford, because “there is no conceptual
distinction between a defect that is not covered by warranty because it falls
outside the durational limitation (as in the Alban-line of cases) versus a defect
that falls outside the scope of the warranty (as in this case).” “fBjoth what [the
warranty] covers and for how long,” says Ford, “are ‘part of the benefit of the
bargain between the parties.”’ (Id. at 4—5) (quoting Thiedemann v. MercedesBenz U.S.A., LLC, 872 A.2d 783, 794 (N.J. 2005); and citing lYlickens, 2015 WL
5310755, at *8 (warranty duration is “part of the bargained-for exchange”
between the manufacturers and purchasers)).
Ultimately, however, I find it unnecessary to predict how the New Jersey
Supreme Court would resolve this question of law. Even without applying a
certainty standard, no reasonable factfinder could conclude, based on the
record evidence, that Ford knowingly concealed a material fact with the
intention that Coba rely upon the concealment at the time he purchased his
vehicles—or that Ford had an obligation to disclose the information known to it
about this alleged defect at the time. See Arcand, 673 F. Supp. 2d at 297.
Ford’s Knowledge of a Design
First, even assuming arguendo that the A36 fuel tanks were defectively
designed,3 Ford could not have possessed a duty in relation to information it
did not have. Therefore, only evidence bearing on Ford’s knowledge before
March 9, 2007—the date on which Coba purchased Vehicle 2—is relevant.5
That evidence, however, has not borne out the allegation that Ford knew, at the
time of Coba’s purchases, that the A36 tanks were defectively designed, such
that they were susceptible to delamination when encountering acids prevalent
in the standard diesel fuel supply.
The undisputed evidence shows that prior to March 9, 2007, Ford did
know that some number of steel fuel tanks were delaminating in the United
States.6 The delamination was not localized in a single region, but its
prevalence varied substantially by region (Def. Facts
77). Ford also knew that
customers who experienced delamination could incur serious repair costs and
Ford argues that “the undisputed evidence shows that there is no
manufacturing or design defect in the A36 coating.” (Def. Mot. 23; Def. Supp. Br. 10)
Coha counters that the tanks should have been designed to withstand more acidic
fuels. However, the parties’ briefs primarily focus on the question of Ford’s knowledge
rather than the question of whether Ford’s design was defective, and sol do as well.
Coba also alleged that Ford violated the NJCFA in the sale of defective
replacement tanks. (3AC ¶ 166) (“As a result of Ford’s conduct, Plaintiffs and Class
Members purchased Class Vehicles or replacement tanks not knowing, as Ford did,
about the Fuel Tank Defect and suffered an ascertainable loss.”) However, the
replacement tanks that delaminated were replaced under warranty at no cost to Coba.
Therefore, Coba suffered no “ascertainable loss.” Thiedemann, 183 N.J. at 251, 872
A.2d at 794 (“The defects that arise and are addressed by warranty, at no cost to the
consumer, do not provide the predicate qoss’ that the CFA expressly requires for a
private claim under the CFA, bringing with it the potential for treble damages,
attorney’s fees, and court costs and fees.”). As for the A35 replacement tanks for which
Coba partially paid under extended service plans, Coba does not allege that they have
Much of Coba’s evidence is irrelevant to what Ford knew when Coba purchased
the two vehicles.
See, e.g., Zohdy Deci. Ex. 3 (“We need to have an answer, this issue is starting
to crop up again. This has been an ongoing issue for the past 3 model years.”).
were upset] By that point, it was already important to Ford to address the
problem in order to improve their product and retain customers.8 Ford
engineers were actively attempting to identify the cause of the delamination
and develop a solution.9
The evidence of Ford’s knowledge prior to Coba’s purchases also clearly
bears out that Ford genuinely believed that fuel contamination, and not a
design defect, was responsible for the instances of tank delamination, and that
customers who used only non-contaminated fuel that did not exceed 5%
biodiesel would not experience delamination. Coba objects that this did not
turn out to be true, but the state of Ford’s knowledge and belief in this timeframe is uncontradicted in the evidence.
Thus, the epoxy-based coatings on steel fuel tanks had performed
without any reported problems from 1993 until 2001. (Def. Facts
cases of delamination arose, Ford formed a task force to study the problem.
Ford’s internal emails, its design decisions, and the SSMs it distributed to
dealers, are clear evidence that around the time that Coba purchased his two
vehicles Ford believed that high concentrations of biodiesel were responsible.
On September 13, 2006, only one month before Coba purchased Vehicle 1, a
meeting of Ford managers and engineers concluded that “[t]he cause for
damaged fuel tanks is biodiesel (both refined and the home brewed type) with
bio concentrations greater than 20% (Ford only authorizes concentrations up
to 5%).” (Zohdy DecI. Ex. 55, 94) Ford also asked Magni to develop the A35
coating to be more resistant to higher concentrations of biodiesel. (Def. Facts
89—94) Further, on February 1, 2007, approximately one month before Coba
purchased Vehicle 2, Ford distributed an SSM to dealers that identified the use
See, ag., Zohdy Dccl. Ex. 20.
See, e.g., Zohdy Dccl. Ex. 44 (An engineer noted, “I [know] the customers are
frustrated. So are we.”)
See, e.g., Zohdy Decl. Ex. 17 (“A task force has been assembled to address [the
tank delamination issue].”)
of fuel with high concentrations of biodiesel as a possible cause of delamination
and reiterated that Ford vehicles should only use a maximum 5% biodiesel
There is also unrebutted evidence of geographic clustering of the
delamination reports showing non-uniformly distributed pockets throughout
the country. Such clustering strongly corroborates Ford’s contention that it
reasonably believed that delamination was not due to a fuel tank design
problem, but rather to local instances of contaminated fuel, or fuel containing
higher-than-authorized levels of biodiesel.
data that Ford had available to it at the time of
Coba’s purchase is consistent with Ford’s claim that it did not know that
Coba’s fuel tanks were particularly susceptible to delamination. According to
Ford’s expert Dr. Paul Taylor, at the time Coba purchased his two F-350 trucks
early 2007), the nationally reported rate of tank delamination in
2007 6.OL diesel trucks (with Magni-lined steel diesel fuel tanks)
was under 1%. (Taylor Decl.
¶ 37). The rate of replacement “was consistent
across the then-available model year trucks.” (IcY.)
Coba argues that this warranty data is underinclusive because it does
not capture the cases where delamination occurred after the warranty expired,
or where Ford denied coverage for some other reason.’° Coba also cites
multiple statements by Ford engineers to this effect. (P1. Opp. 20) Coba’s point
might be well taken if the issue were, cx post, the actual rate of delamination
that materialized.” The issue material to Coba’s NJCFA claim, however, is
Dr. Taylor’s analysis included any repair recorded in Ford’s warranty database,
which included all cases where Ford paid any portion of a repair, whether in warranty
or not. (Taylor DecI. ¶1 23, 37, 39(e); Tew Dccl. Ex. 1 at 41:1-42:1, 104:15-19) That
data presumably would not capture cases in which the customer paid the entire
cost of repair out-of-pocket.
Ford counters that Dr. Taylor’s analysis was also oveHnclusive in that it
included all fuel tank repairs, including even those that were not delamination-related.
(Ford Reply Br. 9)
Ford’s knowledge at the time of Coba’s purchases. The evidence shows that
Ford relied on its warranty database to assess the prevalence of the
delamination problem. (E.g., Zohdy Deci. Ex. 57) (“Engineering has reviewed
AWS [Analytical Warranty System) data.
That seems to be a reasonable
source of real-time data on which a company could rely. Of course, Ford could
have reasoned that the actual rates might be somewhat higher than those
suggested by the AWS data, to some unknown degree. The possibility of such
an adjustment does not alter the clear import of the evidence with respect to
Ford’s knowledge at the time. What Ford knew was that the tanks for all model
years were failing at a rate around
No reasonable jury could conclude
that Ford knew that the few steel diesel fuel tanks afflicted with delamination
had failed due to a design defect (which, I suppose, could affect the
performance of as many as 100% of the tanks). Ford could, and did, reasonably
conclude that the failures resulted from the intentional or unintentional use of
In the absence of contrary quantitative evidence of the prevalence of
delamination in late 2006
early: 2007, Coba attempts in other ways to create
a genuine issue that Ford knew the tanks were defective. However, Coba does
not succeed in establishing a triable issue that Ford knew prior to Coba’s
purchase of the vehicles that A36 tanks were defectively designed. While Coba
points to statements of “concern” about the delamination issue, and so on, the
evidence does not add up to a triable issue that Ford knew there was a defect.
Coba also claims “the warranty data should not have been relied upon because
Ford orchestrated the low warranty repair rate by improperly denying warranty claims
on the pretext that customers were not using the proper diesel fuel (i.e., that
customers were using diesel fuel with more than 5% biodiesel content).” (P1. Opp. 22)
As described above, it is abundantly clear that Ford believed at that time that biodiesel
was the cause. Even so, Ford’s stated policy was to “deny warranty coverage only if
fuel samples taken from the subject vehicle proved that the customer had used
biodiesel above 5%.” (Def. Facts ¶ 106) Coba’s only reply is that Ford had no
methodology in place for dealers to analyze the fuel in a delaminated tank. (P1. Facts ¶
Coba observes that, in the 2006—07 timeframe of his purchases, Ford
was already in the process of developing the A35 tank as a more robust
replacement for the A36 tank. Further, Ford accelerated the replacement
timeline “due to problems experienced by some vehicles with A36 tanks.” In
addition, Coba also points to Ford’s failure to communicate information about
delamination directly to customers purchasing vehicles with A36 tanks, even
after deciding to accelerate the development of A35. From that evidence (in
context, of course), Coba asks the Court to find a triable issue that Ford
intended that customers rely on Ford’s concealment of the alleged defect. (P1.
Coba also asserts that “Ford knew that steel diesel fuel tank
delamination was serious and widespread.” (P1. Opp. 9). As evidence, Coba
points to the Special Service Bulletins (SSMs) that Ford sent to dealers only.’3
On November 18, 2005, Ford sent a Service Tip regarding delamination to
dealers notifying them that “in some limited number of cases, delamination of
the fuel tank lining may occur on the steel fuel tanks due to the use of fuels
containing ethanol, methanol, ketones or concentrations of bio-diesel greater
Coba cites Marsik-ian u. Mercedes Benz USA, LLC, 2009 WL 8379784, at *6 (C.D.
Cal. May 4, 2009), and Skeen v. BMWofN. Am., LLC, 2014 WL 283628, at *10 (D.N.J.
Jan. 24, 2014), to suggest that an SSM or similar communication only to dealers
reflects an intention to conceal a problem from the general customer base and that a
defendant “knew with certainty that the part would fall.” (P1. Opp. 9—10) However, both
cases were decided at the motion to dismiss stage. Here, at the summary judgment
stage, this Court must consider, in light of all the evidence presented, whether there is
a genuine dispute of material fact, not just whether the allegations are plausible.
Coba asserts that, in January 2006, “a Ford engineer recommended
communicating ‘the SSM content directly to our customers.” (P1. Opp. 10) (citing
Zohdy Decl. Ex. 103) (Referencing SSM 18893) However, in context, the engineer was
asking whether there was a way to communicate the content to customers (i.e., that
using greater than 5°/b biodiesel can cause engine or fuel system concerns) in response
to an article about a specific controversy over biodiesel in Minnesota.
That Ford did not communicate directly with customers regarding A36
tank delamination while, at the same time, it accelerated development of A35
as a replacement and alerted dealers to delamination occurring “in some
limited number of cases” does not support a finding that Ford intentionally
concealed knowledge of a defect from owners or purchasers.’5 On the contrary,
the SSM underscores that the incidence of delamination was “limited.” Further,
that Ford did not announce to its customers that it was developing an
improved fuel tank does not generate a triable issue that Ford intended to
conceal from consumers the fact of a design defect.
Coba does cite many statements by Ford and Magni employees that
underscore the duration of the problem and the importance of finding a
solution. Coba cites Ford’s and Magni’s internal emails,16 describing tank
delamination as “very serious issue,” a “big issue,” an “ongoing issue,” and a
“known issue.” (P1. Opp. 10—13) It is not disputed that Ford had been aware of
instances of tank delamination since around 2001 and was taking it
seriously.’7 Coba’s evidence, however, fails to bridge the chasm between (a)
demonstrating that delamination was a known issue that Ford was addressing
See Chan u. DaimlerAQ, No, CIV.A. 11-5391 JLL, 2012 WL 5827448, at
(D.N.J. Nov. 9, 2012) (“[Slenrice bulletins do not amount to an admission that the
M156 engines were in fact defective, or that any defects were “manifest” as of the time
[S]ervice bulletins and other technical advisories ‘are
the bulletins were issued.
generally the result of consumer complaints that cause a manufacturer to investigate,
diagnose, and remedy a defect in one of its products. Accepting these advisories as a
basis for consumer fraud claims [or as any other admission of liability] may discourage
manufacturers from responding to their customers in the first place.’”).
These emails are mostly quoted at greater length in the Background section
Coba’s observation that Magni’s October 2001 report alerted Ford to the fact
that acetic and formic acids were possible causes of the delamination process that had
been observed in several vehicles in Brazil (P1. Opp. 8), is not probative of the relevant
issue. First, Coba ignores the report’s conclusion that an “unidentified contaminate of
the Brazilian diesel fuel used” was responsible. (Zohdy Decl. Ex. 6) Second, knowing
that the acids can cause delamination does not translate into knowledge that the steel
fuel tanks are likely to encounter excessive levels of those acids during the tanks’
expected useful life.
seriously, and (b) demonstrating a genuine issue as to whether Ford knew that
Coba’s vehicle’s fuel tanks were defectively designed such that they were
susceptible to delamination while holding standard fuels. Any fuel tank
presumably will delaminate, corrode, or otherwise degrade under some
conditions; absent evidence that its fuel tanks were delaminating in significant
numbers, under reasonable and recommended conditions of use, Ford cannot
be said to have been on notice of a “defect.”
Some of Coba’s other evidence is neutralized by its own context. A Ford
engineer’s January 2005 statement that “there needs to be a sense of urgency
here” is explained not by the pervasiveness of delamination, but by the expense
that can result if delamination “take[sJ out other expensive parts downstream”
in the fuel system. (Zohdy DecI. Ex. 20) Similarly, a January 2004 Magni email
is an excellent example of a statement that can take on outsized meaning out
of context. The email notes that Ford was “seeing a large number of dealer
complaints that paint is peeling inside the diesel tanks
very similar to the
Brazilian problem of about 1 year ago,” and describes Ford as “quite
concerned” about the delamination problem. (Zohdy Decl. Ex. 14) The email
includes a prior message from a Ford employee attaching a spreadsheet of
warranty data from 2000—2003 for the F-Series showing that “the interior
coating of the fuel tank coming off to plug up the fuel system.” Subjective levels
of “concern,” however, are no substitute for data. As of the month that email
was sent, Ford had received only 86 reports of fuel tank delamination (43 of
which were from Ohio) (Def. Facts
74) By March 2005, Ford was aware of
only 156 warranty claims for delamination between January 2000 and January
2005. (Zohdy Decl. Exs. 19, 7) Further, the fonvarded email from Ford offers a
reason for Ford’s “concern”: “These are costly repairs.” (Zohdy Decl. Ex. 14) So,
in context, this email—and others like it’8—are not evidence that Ford knew
E.g., Zohdy Dccl. Ex. 22 (In May 2005, a Ford commercial service manager
wrote: “we are still seeing [delamination] out in the field with rust forming in the tanks
that Coba’s fuel tanks were defectively designed and prone to delamination.
They are evidence that Ford was concerned about resolving a costly problem
that afflicted a small number of vehicles with steel fuel tanks—hardly the stuff
of a viable consumer fraud claim.
Similarly self-neutralizing is Coba’s citation of a Ford engineer’s
testimony “that in early 2006 the delamination issue was ‘not epidemic, but
certainly it was high enough where we knew that we had to do something
about it’ and that ‘something’ was ‘to switch to A35 coating.”’ (P1. Opp. 13) The
statement, by its own terms, is that delamination was sufficiently prevalent to
have met Ford’s threshold for deciding to respond to the issue; it does not
constitute evidence that the fuel tanks were defectively designed or likely to
fail. And the engineer explicitly affirms that the prevalence was “not epidemic.”
The same goes for Coba’s citation to a Ford engineer’s 2005 recommendation
that Ford launch a Quick Service Fix (“QSF”), “IFord’s mechanism for
expediting a repair,j because ‘it has been too long waiting for root cause and
resolution.”’ (P1. Opp. 12) (citing Zohdy Decl. Ex. 24) The context provided by
the reply email clarifies that a QSF can be launched in response to as few as
ten reports of a problem like fuel tank delamination.’9 (Id.) Thus, this email
provides no evidence that Ford would have known that Coba’s tanks were
defective and likely to delaminate.
Coba may argue that even if these pieces of evidence are not individually
sufficient, the synthesis of this “plethora” of anecdotal evidence presents a
genuine issue of whether Ford had the requisite knowledge to generate a duty
to disclose. However, this mass of evidence simply reinforces the conclusion
that Ford was taking the delamination problem seriously and was determined
to solve it, all the while believing that the problem was due to instances of
on super duty involving diesel engines. We had a conference call with our group
yesterday and it came up quite a bit.”).
“Something like this that results in a stall can be as few a[s] 10 reports so we
could certainly justify it if needed.” (Zohdy Deci. Ex. 24)
contaminated fuel, affecting a limited number of tanks, rather than a
defectively designed tank.
Several other pieces of evidence that Coba highlights are also
insufficiently probative to create a genuine issue of fact regarding Ford’s
knowledge. First, it points to a Ford employee’s reference to fuel tank
delamination as the “fuel tank defect” and as a “major issue for our fuel
system.” (Zohdy Decl. Ex. 31) (emphasis added) In context, “defect” seems to
have been just a synonym for “problem,” but in any event that single
employee’s choice of terminology does not control the issue of a design “defect,”
which is one of law. All of the surrounding context demonstrates that Ford
believed the problem lay with the intentional or unintentional use of nonrecommended fuels. Second, Coba cites a Ford email chain reporting the woes
of one particular customer who needed to replace “18 injectors, 2 rear fuel
tanks and 2 midship tanks due to delamination,” prompting a Ford technician
to ask why Ford does not use plastic tanks on Super Duty vehicles. (Zohdy
Decl. Ex. 23) The technician, however, asks the question, “Is this an isolated
issue, or does it happen everywhere?” The technician’s comments do not
demonstrate that Ford knew that the problem was a widespread one,
attributable to a design defect. Finally, Coba cites that same technician’s
description of the delamination issue, nearly one year later, as “falling into the
realm of Ford’s dirty laundry” when asking whether to include the issue in a
presentation to an industry conference. (Zohdy Decl. Ex. 1) The technician’s
instinct that Ford might not want to make a presentation about an unsolved
problem in a small percentage of Ford vehicles does not suggest knowledge of a
Coba also argues that a recent case from the Northern District of Ohio, In re
Ford Motor Co., Spark Plug & 3-Value Engine Prod. Liab. Litig., No. 1: 12-MD-23 16, 2014
WL 3778592 (N.D. Ohio July 30, 2014), is instructive. The plaintiffs in that putative
class action alleged that defective spark plugs in certain Ford vehicles caused
consumers to incur excessive costs for spark plug replacement due to an alleged
design defect that, during vehicle operation, results in the formation of asphalt-like
deposits that lock the plugs in place. Id. at *1. The court denied Ford’s motion for
Materiality of the Known Risk
Additionally, Coba asserts that even if Ford had not yet identified the
root cause of the delamination (which the evidence shows it had not), Ford
could nevertheless have disclosed to customers that there was a risk of
delamination.21 The relevant question, however, is not whether Ford could have
summary judgment on the NJCFA claim, ‘because of the evidence in the record of
Ford’s actions and omissions in the face of its knowledge of the alleged defect.” Id. at
I disagree with Coba’s assessment of the relevance of that case to this matter.
The evidence in Spark Plug & 3-Valve Engine suggested that Ford was aware of both
the defect and its cause prior to releasing the vehicles for consumer purchases.
Although the engine containing the spark plugs at issue “was not installed in a Ford
vehicle in the United States until the 2004 model year, Ford was aware of the alleged
defect as early as November 1997 during the development phase.” Id. at *2. At that
time, the manufacturer warned Ford that the plugs in development “accumulate some
heavy combustion deposits on the ground shield. The complaint was that the spark
plug had to be completely removed with the socket. The high thread plug could not be
spun out like a standard spark plug.” Id. As early as 1999, a Ford employee
recommended that a particular lubricant be applied to the spark plugs during
manufacturing to solve the “removal issues.” In April 2000. Ford decided to approve
production for the engine with the spark plugs, despite the knowledge that the defect
was severe and that there was no “fall back plan” to use alternative spark plugs. Id.
The spark plugs continued to encounter this problem after the vehicles entered the
market, with the first reports of “seized plugjs” rolling in only “a month or two’ after
the vehicles were available for purchase at Ford dealerships.” Id.
Thus the evidence of Ford’s knowledge of the design defect alleged in Spark Plug
& 3-Valve Engine is far more robust than that in this case. Coba has not set forth any
evidence to question the fact that A36 coated tanks had been working without any
problem for years, and that at the time of Coba’s purchase the issues that did arise
were concentrated in particular geographic regions. Thus, no evidence contradicts
Ford’s assessment at the time that the problem was due to local fuel conditions rather
than the design of the tanks’ ability to withstand the acids in the fuel prevalent in the
Coba cites an email from Darrel Huff, a Ford employee, to Ford managers and
engineers: “In the very least we should make our customers aware of the possibility
this kind of corrosion can lead to a $6000+ repair due to injectors and fuel system
damage and suggest a preventative measure (even if they have to pay for it
themselves). At least they can then choose to pay to prevent the corrosion or take an
informed risk if they choose to not take preventative steps.” (Zohdy Decl. Ex. 5)
However, this email was sent on May 12, 2008—over one year after Coba’s purchase of
the second vehicle—and therefore does not bear on what Ford knew at the time of
disclosed, but whether Ford had a duty to disclose. Because the information
about the risk of delamination that Ford had available to it at the time was not
material, Ford had no such duty to disclose.
Information is material if “a reasonable [person] would attach importance
to its existence in determining [a choice of action.”22 Suarez v. E. Int’l CoIL, 428
N.J. Super. 10, 33, 50 A.3d 75, 89 (App. Div. 2012) (citing Restatement
(Second) of Torts
§ 538(2) (1977)). Materiality is assessed, not in retrospect, but
from the perspective of the prospective buyer. For the unlucky customers
whose trucks were among the approximately 1% of 6.OL diesel trucks to suffer
fuel tank delamination by March 2007, the issue might be deemed material in
retrospect. Some might naturally have decided to take their business
elsewhere. Hence the internal Ford and Magni emails describing tank
delamination as “very serious issue,” a “big issue,” an “ongoing issue,” and a
“known issue,” and Ford’s efforts to solve the problem.
The materiality issue, however, has a different focus. The materiality of
the known risk of delamination turns on whether a reasonable consumer
deciding whether to purchase a 2006 Ford F-350 Super Duty 6.OL diesel
truck—ignorant, of course, of the future—would attach importance to the risk
of delamination in making that decision.
Taking the evidence in the light most favorable to Coba, Ford knew in
March 2007 that fuel tanks had delaminated in around 1%
1.5% of Ford’s
6.OL diesel trucks; it also knew or believed that the cause was not any design
defect, but the use of non-recommended fuels containing biodiesel
concentrations greater than 20%. That is a factor the consumer can control.
Information is also material if “the maker of the representation knows or has
reason to know that its recipient regards or is likely to regard the matter as important
in determining his choice of action, although a reasonable man would not so regard
it.” Suarez, 428 N.J. Super. at 33, 50 A.3d at 89 (citing Restatement (Second) of Torts §
538(2) (1977)). However, there is no evidence that Ford knew or had reason to know at
the time of sale that Coba was likely to regard the matter as important in determining
whether to purchase the vehicles.
Further, the Diesel Owner’s Guide that Coba received already instructed
that “Diesel Fuel containing no more than 5% of biodiesel may be used.” That
is a disclosure that the truck simply was not intended to run on fuel containing
higher concentrations of biodiesel. That problems might arise if those
instructions were ignored does not rise to the level of a material fact requiring
No reasonable factfinder could conclude that this information would be
material to a reasonable consumer prospectively deciding, in March 2007,
whether to purchase a Ford 6.OL diesel truck. Vehicles, like the Ford Super
Duty trucks, are “complex instrumentalities,” and defects or other problems
that require maintenance or replacement of parts can be expected to arise. See
Thiedemann, 183 N.J. at 251, 872 A.2d at 794 (2005). Indeed, “perfection, or
an unlimited life span, is not attainable.” Mickens, 2015 WL 5310755, at *8.
That is particularly true where, as Ford believed, the imperfections arise from
either a customer’s disregard of the manufacturer’s directions regarding
appropriate fuels, or local instances of mislabeled or contaminated fuel. In light
of all the various problems that could arise, and do arise, with Ford’s or any
manufacturer’s trucks, Coba has failed to demonstrate a genuine issue that the
known risk of delamination was material to a reasonable consumer at the time
of Coba’s purchases.23
Coba does not cite safety concerns as an argument that the risk of tank
delamination was material to a reasonable consumer. Rather, Coba cites safety
concerns as an independent basis for a duty to disclose, as discussed infra. However, I
note that although, under different facts, safety concerns might rise to a level that
they would be material, there is insufficient evidence here to create a genuine issue
that Ford was aware of safety concerns of that degree.
As evidence of a safety concern, Coba points to Ford documents in which Ford
employees acknowledge that delamination can cause the engine to stall. (Coba also
cites an email from May 2008 about a three-vehicle accident caused by a delamination
related stall, and Coba’s deposition testimony that his vehicle stalled on the highway.
Both occurrences are irrelevant to Ford’s knowledge at the time of Coba’s purchases.)
There is no evidence in the record to indicate what percentage of cases of delamination
result in engine stalls.
c. Safety Concerns and Duty to Disclose
As an alternate ground for Ford’s alleged dut to disclose tank
delamination, Coba asserts that fuel tank delamination is a safety issue and
that “Courts in this district and this Circuit have held unequivocally that a
safet concern also gives rise to a duty to disclose.” (P1.
29) The parties
already litigated this issue at the motion to dismiss stage, and Judge Debevoise
found Coba’s authority and reasoning unpersuasive. Coba v. Ford Motor Co.,
2013 WL 244687, at *11 (D.N.J. 2013). I too find Coba’s authorities
unpersuasive. Coba relies primarily on In re Philips! Magnavox Television Litig.,
2010 WL 3522787, *7 (D.N.J. 2010) (“A duty to disclose can arise where there
is a safety concern, a fiduciary relationship, or where an omission is contrary to
a representation actually made by the defendant.”) (emphasis added), but fails
to note that the quoted language is actually from three California cases. Coba
also cites Nelson v. Nissan North America, Inc., 894 F. Supp. 2d 558, 568—69
(D.N.J. 2012). In that case, however, the court denied a motion to dismiss
because it found that the complaint sufficiently alleged that “Nissan knew and
withheld from consumers information about the transmission failures.” Id. The
court also noted that the plaintiff alleged both that the defect created a
dangerous condition and that the plaintiff incurred repair costs after the
vehicle transmission failed. Id. This ruling, at the motion to dismiss stage, does
not dictate a finding, based on the factual record before me, that a safety
concern gave rise to a duty’ to disclose.
In Mickens v. Ford Motor Co., I observed that the duty-to-disclose “calculus
might be different for a defect that truly affected the mechanical quality or safety of an
automobile. Obviously a 1% brake failure rate and a 1% hood corrosion rate would
present very distinct issues as to the manufacturer’s duty to warn” or disclose, No. 10CV-5842 KM MAH, 2015 WL 5310755, at *11 (D.N.J. Sept. 10, 2015). Considered as a
safety risk, tank delamination is potentially more serious than hood corrosion.
However, an unspecified percentage of 1% of delamination cases that result in engine
failure while driving is simply insufficient to create a genuine issue of whether Ford
was aware of safety concerns that would have been material to Coba’s purchases.
In addition, I agree with Judge Debevoise’s reasoning that “it is unclear
what logical bearing safety allegations would have on the knowledge element of
a fraud claim [rather than the ascertainable loss element], and Plaintiffs
present no reason why such allegations should satisfy that element.” Coba,
2013 WL 244687, at *11. After all, if Ford had no knowledge of the alleged
defect—and the information (including safety information) Ford did have was
immaterial to a consumer’s decision to purchase the vehicle—what does it
matter for the purposes of an omissions claim that the alleged defect posed
For the foregoing reasons, Coba has failed to establish a genuine issue of
material fact with regard to the unlawful-conduct element of its omissions
claim. Coba is unable to demonstrate that Ford violated any duty to disclose
the alleged material facts relating to the fuel tank delamination at the time of
Coba’s purchases. Therefore, I will grant summary judgment on Count 3.
For the reasons set forth above, Ford’s motion for summary judgment is
GRANTED as to Count 3.
An appropriate Order follows.
Dated: August 4, 2017
KEVIN MCNULTY, U.S.
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