DURSO v. SAMSUNG ELECTRONICS AMERICA, INC.
Filing
51
OPINION. Signed by Judge Dennis M. Cavanaugh on 11/6/13. (gmd, )
NOT FOR PUBLICATION
UNITEI) STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ROBERT N. DURSO, SUZANNE FAST,:
CATHIE COKE, AND DOUGLAS
:
WALKER, individually and on behalf of
all other persons similarly situated.
:
Plaintiffs,
:
Hon. Dennis M. Cavanaugh
OPINION
Civil Action No. 2:12-cv-05352 (DMC) (JBC)
v.
SAM SUNG ELECTRONICS AMERICA,:
INC.,
Defendant.
DENNIS M.CAVANAUGIj,U.S,Di.:
This matter comes before the Court upon motion by Samsung Electronics America. Inc.
e’Defendant” or “Samsung”) to dismiss the Amended Complaint of Robert N. Durso. Suzanne
Fast, Cathie Coke, and Douglas Walker (collectively ‘Plaintiffs”), pursuant to FEI. R. Civ. P.
l2çh)(6) and FED. R. Civ. P9(B) and to Strike Plaintiffs’ Class Allegations. (Defs.’ Mot, to
Dismiss. .Jan. 29. 2013. ECF No. 22). Pursuant to FED. R. Civ. P. 78. no oral argument xas
heard. Based on the following and lbr the reasons expressed herein. Defendant’s Motion to
I)isrniss is granted in part and denied in part. Defendant’s Motion to Strike Plaintiffs’ Class
Allegations is denied.
I.
BACKGROUNI)’
Plaintiffs assert this class action against Samsung based on the alleged de1cti c design.
‘The facts set forth in
this Opinion are taken from the parties’ respective moving papers and filings.
manufacture,
warranty,
advertisement and sale of Samsung front load washers, including. hut not
limited to model numbers WF331ANW, WF448AAW. WF1124XAU. WFS28AAW.
WF2O9ANWXAA, WF2IOANW, WF218ANWXAC. AND WF2O6ANSW (the ‘Washers”).
Plaintiffs claim the Washers fail to adequately clean clothes; do not spin properly leave clothes
and the surrounding area smelling like mold; and leave deposits of pot metal flakes from the
drum on clothes. Plaintiffs assert that Defendant is aware of these and other defects and
continues to market, sell and profit from the sale of the Washers. The specific factual
backgrounds of each individual plaintiff are as follows:
a.
Plaintiff Durso
Plaintiff Robert N. Durso (Durso’”), a resident of New Jersey, purchased a new Samsung
front load washer (model number WF33 1ANW) from P.C. Richard & Son for approximately
$550.0() on November 8, 2011. Durso selected this particular washer because it was advertised
as having the capacity to ‘wash a full set of your bedding. king-size comforter. or up to 26 bath
towels in a single load.” When Durso attempted to wash a king size comforter, the washer
would not spin properly. He complained to Samsung via telephone and had two service visits
but was ultimately informed by the technician that the unit could not spin properly when a kingsize coin torter was beinL washed.
a. Plaintiff Fast
Plaintiff Suzanne Fast (“Fast”), a New Jersey resident. purchased a new Samsung front
load washer (model number WF448AAW/SZZO2) from Sears for approximately $3,000.00 on
February 19, 2010. According to Fast, the machine did not function properly as clothes,
particularly whites, came out dingy and little black specks appeared on light colored clothes and
towels, Fast had the machine serviced
by
Sears on December 30, 2011 and was informed by the
2
service technician that Samsung is known for these problems. Fast called and complained to
Samsung directly and was told by the customer service representative not to fill the machine
more than half full; to use Tide and Clorox; and to set the machine to heavy duty or steam. Fast
also consulted a plumber, who advised her to purchase and install lint catchers on the discharge
hose to catch the little black pieces of pot metal to prevent clogging the drain.
b. Plaintiff Cole
Plaintiff Cathie Cole (“Cole”), a Texas resident, purchased a new Samsung front load
washer (model number 209ANW/XAAO2) from Lowe’s for over $500 in May of 2010. Cole
stated she purchased the Samsung washer based on an advertisement claiming the washer would
wash a king size comforter and used less water than other washers. Cole asserts that the washer
did not function properly, leaving clothes smelling like mold and mildew after washing. Cole
called Samsung to complain on numerous occasions beginning in May2010. Samsung made
service visits in July and August of 2010 but was never able to correct the problem. In October
2012, Samsung provided Cole with a different washer (model number WF21OANW/XAA).
Cole claims that this machine is also defective because it fails to clean clothes adequately; leaves
clothes too wet to put in the dryer; and shakes violently at times.
c. Plaintiff Walker
Plaintiff Douglas Walker (“Walker”), a Texas resident, owns a Samsung front load
washer (model number WF2O6ANS), which was manufactured in March 2007. Walker claims
the washer emits strong bad odors which make the laundry room and clothes smell; has a leaky
door gasket which caused the door to rust; has an inadequate spin cycle leaving clothes wet at the
end of a cycle; and fails to adequately clean the clothes leaving them dingy. Walker complained
to Samsung and was told that the machine is no longer covered by warranty.
3
Based on the foregoing facts. Plaintiffs’ Amended Class Action Complaint (the “ACAC”
asserts the following six causes of action: (1) Violation of New Jersey’s Consumer Fraud Act.
N.J.S.A.56:8-2 et. seq. (‘NJCFA”); (2) Violation of the Texas Deceptive Trade Practices Act,
Tex. Bus. & Comm. Code §1741 et. seq. (DTPA”) (for the Texas sub-class): (3) Fraudulent
Concealment/Nondisclosure: (4) Breach of Implied Warranties: (5) Breach of Express
Warranties; and (6) Negligent Misrepresentation.
On January 29, 2013, Defendant filed a motion to dismiss the ACAC on various grounds.
(ECF No. 22). As a threshold matter. Defendant argues that Plaintiffs lack standing to bring
claims on behalf of purchasers of models they do not own and for alleged defects they did not
experience. Next, Defendant asserts Plaintiffs’ consumer fraud claims should he subject to the
laws of their respective home states. Defendant then argues that the claims of the New Jersey
Plaintiffs fail under the NJCFA because they cannot demonstrate two essential elements:
ascertainable loss and proximate causation. Similarly, Defendant asserts the Texas Plaintiffs’
claims fail because they have not adequately pled reliance or actual damages and because the
statute of limitations on the claim has run. Defendant also makes an argument that all ol’
Plaintiffs’ fraud—based claims should be dismissed under Fed. R. Civ. P. 9(b) because Plaintiffs
do not allege fraud with sufficient particularity. In addition. Defendant finds lhuh with
Plaintiffs’ claims for breach of implied and express warranties. Finally, Defendant argues that
Plaintiffs’ allegations seeking class status should be stricken because they fail to meet the
requirements of Fed. R. Civ. P. 23(a).
H.
STANDARD OF REVIEW
a. Motion to Dismiss
In deciding a motion under Rule 1 2(b)(6), a district court is “required to accept as true all
4
factual allegations in the complaint and draw all inferences in the facts alleged in the light
most
favorable to the [Plaintiffi.” Phillips v. Cnty. of Allegheny. 515 F.3d 224. 228 (3d Cir. 2008).
“[Al complaint attacked by a.
.
.
motion to dismiss does not need detailed factual allegations.”
Bell\tl Corplwombly, 550 U S 544, 555 (2007) Hocr, the PlaintiUTh obligation to
provide the grounds’ of his entitle[mentl to relief requires more than labels and conclusions,
and a formulaic recitation of the elements of a cause of action will not do.’ Id. ( internal citations
omitted). “[A court isj not bound to accept as true a legal conclusion couched as a factual
allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). Instead, assuming that the factual
allegations in the complaint are true, those ‘[factual allegations must be enough to raise a right
to relief above a speculative level,” Twombly, 550 U.S. at 555.
A complaint will survive a motion to dismiss if it contains sufficient flictual matter to
‘state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal. 556 U.S. 662. 678 (2009)
(citing Twomhlv. 550 U.S. at 570). ‘A claim has facial plausibility when the pleaded factual
content allows the court to draw the reasonable inference that the defendant is liable for
misconduct alleged.”
a
14:
“Determining whether the allegations in a complaint are ‘plausible’ is
‘context-specific task that requires the reviewing court to draw on its judicial experience and
common sense.” Young v. Speziale. Civ. No. 07-03129. 2009 WL 3806296. at *3 (D.N.J. Nov.
1 0. 2009) (quoting lqhal. 556 U.S. at 679). “{W]here the well—pleaded facts do not permit the
court to infer more than the mere possibility of misconduct. the complaint has alleged—hut it has
not ‘shown’—that the pleader is entitled to reliet” lqbal, 556 U.S. at 679.
b. Motion to Strike Class Allegations
When evaluating a motion to strike allegations of a complaint, the court must accept as
true all factual allegations in the complaint and view all reasonable inferences in the light most
5
favorable to Plaintiffs, just as on a motion to dismiss pursuant to FED.R.Clv.P. I 2(b)(6). SmikJg
v. Coca-Cola Enterprises. Inc.. Civ. 03-1431(RBK). Slip Op. 7. (D.N.J. May 17. 2004).
“Generally courts do not consider whether a proposed class meets the FED.R.Clv.P. 23 class
requirements until after plaintiffs move for class certification.” 6803 Blvd. E., EEC v.
DIRECTV, Inc., 12-CV-2657 WHW, 2012 WL 3133680 (D.N.J. July 31, 2012), However, a
defendant may move to strike class action allegations prior to discovery in rare cases “where the
complaint itself demonstrates that the requirements for maintaining a class action cannot be
met.” Landsman & Funk PC v. Skinder—Strauss Associates, 640 F.3d 72, 93 n. 30 (3d Cir. 2011).
In Koirnan v 1 he Walking Co, 503 F Supp 2d 75, 762—63 (F D Pa 2007) the court
held that a motion to strike class allegations is premature when a plaintiff has failed to file a
motion for class certification. The court reasoned that a motion to strike class allegations under
FiD.R,Civ.P. 23 is,
all ractical purposes, identical to an opposition to a motion br class
certification.” and that “[i]t would be improper to allow Defendants to slip through the backdoor
what is essentially an opposition to a motion for class certification before Plaintiffs have made
such a motion and when discoveiy on the issue is still ongoing
Id at 762 Sce also Bell v
Money Resource Corp., No. 08—639, 2009 WE 382478, at *3 (E.D.Pa. Feb. 13, 2009) (denying a
motion to dismiss class allegations because it found that defendant was using the motion to
attack the merits of the class itself, which is improper before a motion for class certitication has
been tiled): Rosenberg v. Avis Rent A Car Sys.. Inc.. No. 07—1110. 2007 WE 2213642. at *4
(E.D.Pa. July 31, 2007) (same); Brothers v. Portage Nail Bank, No. 06—94. 2007 WL 965835, at
*7 (W.D.Pa. Mar. 29, 2007) (same); Padilla
v. GMAC Mortg. Corp., 389 B.R. 409, 447—48
(I3ankr. E.D.Pa.2008) (same).
6
Hi.
DISCUSSION
a. Standing
As dictated by Article III of the United States Constitution. a plaintiff must have standing
to bring a suit in federal court. To establish standing, a plaintiff must show (1) injury in fact, (2)
causation, and (3) redressahility. Horvath v. Keystone Health Plan E.. Inc.. 333 F.3d 450, 455
(3d. Cir. 2003) Lujan v. Defenders of Wildlife. 504 U.S. 555. 560-61 (1992). “Injury in fact” is
“an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual
or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560. As the United States
Supreme Court explained further, a “particularized” injury is one that “affect[s] the plaintilY in a
personal and individual way.” Id. at 561 n.1.
Defendant argues that since Plaintiffs did not experience three of the eight defects alleged
in this putative class action, Plaintiffs do not have standing to assert claims arising from those
three alleged defects. Similarly. Defendant asserts that since Plaintiffs only purchased four of
the eight specified models mentioned in the Amended Complaint. Plaintiffs only have standing
as to those four models. Plaintiffs respond that Defendant’s
argument conflates
the requirements
of standing with those of class certification under FE[. R. Civ. P. 23 and should be rejected as a
premature challenge. Defendant counters that it is Plaintiff who conflates standing with class
certification as the majority of cases cited by Plaintiff do not mention standing but address the
issue of typicality at the class certification stage. See Elias v. Ungar’s Food Prods., 252 F.R.D.
23, 244 (1) N 1 2007) Baby Ncal v Casey 43 F 3d 48, 58 (3d Cuc 1994) Hoxwoith v
Blinder. Robinson & Co., 980 F.3d 912. 923 (3d Cir. 1992); Eisenberg. v. Gagnon. 766 1.2d 770.
786 (3d. Cir. 1985).
As the present case illustrates, and as the United States Supreme Court has recognized,
7
there is clearly an inherent tension between the issues of standing and adequate representation for
class certification, See Gratz v. Bollinger, 539 U.S. 244, 263 n. 15 (“Although we do not resolve
here whether such an inquiry in this case is appropriately addressed under the rubric of standing
or adequacy, we note that there is a tension in our prior cases in this regard.”). In Stewart v.
Smart Balance, Inc., 2012 U.S. Dist. LEXIS 138454 (D.N.J. June 26. 2012). the court addressed
this tension. This Court finds the analysis and conclusion reached in Stewart to be persuasive.
The plaintiffs in Stewart filed a putative class action against Smart Balance on consumer
fraud and breach of warranty grounds. Id. at *2. Smart Balance moved to dismiss those claims
related to Smart Balance products not actually purchased by the plaintiffs for lack of standing.
Id. at *5 As noted by the court in Stewart, courts in this District have held that “standing cannot
be predicated on an injury which the plaintiff has not suffered, nor can it be acquired through the
back door of a class action.” Id. (citing In re Franklin Mut. Funds Litig.. 338 F. Supp. 2d 451.
461 (D.N.J. 2005): See also Koronthaly v. L’Oreal USA. Inc.. 2008 U.S. Dist. LFXIS 59024. at
*4 (D.N.J. July 29, 2008), aft’d, 374 F.App’x 257
(3d. Cir. 2010); Lieherson v. Johnson
,
Johnson Consumer Litig., 865 F. Supp 2d 529 (D.N.J. 2011). However, the Stewart court also
noted that In the class action context.. .traditional notions of standing are not completely
informative of what claims may be asserted.” In re Franklin Mut,. 388 F. Supp at 461-62.
The defendants in Stewart, as Defendants here, pointed to a number of recent decisions in
this I)istrict dismissing claims in putative class actions where plaintiffs only alleged injury as to
one product in a series of products by the same defendant. $gg Lieberson. 865 F.Supp 529:
Green v. Green Mountain Coffee Roasters, Inc.. 279 F.R.D. 275. 280 (D.N.J. 2011), 1lemv v.
U.S.Dist.LEXIS l2530l,*10Il (D.N.J.Oct.31,2011). After
recognizing these decisions, the Stewart court then went on to highlight decisions of the l’hird
8
Circuit Court of Appeals, also cited to by Plaintiffs here, where plaintiffs were allowed to
represent a class suffering injuries distinct from their own as long as they resulted from the same
policy or practice of the defendant. See Baby Neal for and by Kanter v. Casey. 43 F.3d 48. 58
(3d. Cir. 1994) (“where an action challenges a policy or practice, the named Plaintiffs suffering
one specific injury Iiom the practice can represent a class suffering other injuries,
SO
long as all
the injuries are shown to result from the practice.”); Haas v. Pittsburgh Nat’l Bank, 526 F.2d
1083, 1088-89 (3d. Cir. 1975) (notwithstanding the fact that plaintiff lacked standing to pursue a
particular claim, she could assert that claim in a putative class action where she did have
standing to pursue two closely related claims against the same defendant.).
Ultimatel. the court in Stewart determined that although the plaintiffs did not have
standing to bring claims related to products they did not purchase themselves, dismissal was
inappropriate at such an early stage in the litigation because whether or not those plaintiffs may
represent a class of plaintiffs who do have standing was not yet before the court. This Court
agrees and finds that dismissal of Plaintiffs’ claims related to products Plaintiffs did not purchase
or defects Plaintiffs did not suffer would be premature at this time. As such, Defendant’s motion
to dismiss Plaintiffs’ claims for lack of standing is denied.
b. Consumer Fraud Claims
Plaintiffs assert consumer fraud claims under both New Jersey amI Texas law. Defendant
argues that Plaintiffs have failed to adequately state claims under both the NJCFA and the DTPA
and therefore those claims should be dismissed. As a threshold matter. before addressing the
consumer fraud claims, this Court must determine whether a choice of law analysis is
appropriate at the motion to dismiss stage of this litigation and if so, which la\v applies.
9
i.
Choice of Law
Plaintiffs believe it is premature for this Court to resolve choice of law issues at this early
stage of litigation and cite to a number of decisions in this District postponing the choice of law
analysis. See Harper v. LG Electronics USA, Inc., 595 F. Supp. 2d 486 (D.N.J. 2009); In re K
Dur Antitrust Litigation, 338 F. Supp. 2d 517 (D.N.J. 2004); Samsung DLP Television Class
ijjtgion, Civ, No. 07-2141, 2009 U.S. Dist. LEXIS 100065, at *3 (D.N.J. Oct. 27,
2009). Dei’endant points to other decisions in this District, including the Third Circuit Court of
Appeals. in which the court determined choice of law analysis to be appropriate at the motion to
dismiss stage. See Feldman v. Mercedes-Benz USA. LLC, 2012 U.S. Dist. LEXIS 178924 *13
(D N J Dcc 18, 2012), Weske v Samsung Elecs Am Inc 2012 U S Dist 1 IZXIS 32289 *12
,
(D.N.J. Mar. 12, 2012); Cooper v. Samsung Elecs. Am.. Inc., 2008 U.S. Dist. LEXIS 7581()
(D N I Sept 30 2008) alrd 374 F App
\
250 (3d Cu 2010)
the couit in Hiipci though
deferring choice of law anal sis, noted that “some choice of law issues many not require a full
factual record and may be amenable to resolution on a motion to dismiss.” 595 F. Supp 2d. at
49 1
.
IEssentiallv. courts in this District have interpreted Harper to require a threshold inquiry
into whether a choice of law analysis is appropriate at the motion to dismiss stage or requires a
fuller factual record. See Snyderv. Farnam Cos., 792 F. Supp. 2d 712. 718 (D.NJ. 2011).
Plaintiffs fail to explain or even address what other thcts are necessary to decide the
choice of law issue. Harper is distinguishable from the present case because it involved twentyfour plaintiffs from thirteen different states. 595 F. Supp. 2d 486. This case. at present. only
involves four named plaintiffs and two different states. As such, this Court finds that the current
factual record is sufficient to engage in a choice of law analysis.
10
A federal district court sitting in diversity must apply the forum state’s choice of law
lulLs Su. Kla\on Co
Stento Elec Mtg Co 313 U 5 487 496-97 (1941) (n Siw \tt.l
Ins. Co. v. Liberty Mut. Ins. Co.. 960 F.2d 377. 379 (3d Cir. 1992). Tn conductimi a choice of
law analysis, New Jersey employs the most significant relationship” test. jv.Canp
Jaycee, 197 N.J. 132, 155 (2008) (‘In balancing the relevant elements of the most
significant relationship test, we seek to apply the law of the state that has the strongest
connection to the case’). The most significant relationship test consists of two prongs. The
first prong requires a determination as to whether an ‘actual conflict” exists between New
Jersey law and the law of the competing state. Id. at 143. if no actual conflict exists. the
inqun as ovci and Ne Jersey Ia apphes g In r Fo’d
or Co
110 F 3d 9s4 96 (3d
Cir. 1997). If there is a conflict, the inquiry proceeds to the second prong ol the test,
Conflicts do exist between the New Jersey and Texas laws. For instance, the DTPA
requires that a plaintiff prove reliance on alleged misrepresentations. ‘fex. Bus. & Corn. Code
§
I 7.46(b)(24). Treble damages are discretionary under the DTPA and are only available
when a plaintiff establishes that the wrongful act was committed knowingly. jcj. at 1 7.50.
Attorneys fees are available to both plaintiffs and defendants under the DTPA, Id. at
§ 1 7.50(c),
and the i)TPA has a two year statute of limitations. Id. at
§ 1 7.565.
In contrast,
the NJCFA does not require a showing of reliance. Cooper. 2008 U.S. Dist. LEXIS 75810
at *6, Treble damages and attorneys’ fees are mandatory under the NJCFA, hut the NJCFA
does not permit a defendant to recover attorneys’ fees, N.J.S.A, 56:8-2, and the statute of
limitations for NJCFA claims is six years. N.J.S.A. 2A: 14-I. As an actual conflict exists
between the laws of the two states, the Court must proceed to the second prong of the test.
11
The second prong of the significant relationship test, as applied to consumer fraud
claims, requires the Court to consider factors set forth in Section 148 of the Restatement
(Second) of Conflicts of Law. See Agostino v. Quest Diagnostics Inc.. 256 F.R.D. 437.
462
(D.N.J. 2009). Section 148 has two subsections. See Feldman. 2012 U.S. 1)isl. LEXIS
178924 at
*
15. Section 148(l) uoverns when the defendant made the iraudulent
representations in the same state in which the consumer’s reliance occurred. Id. Section
148(2) applies “when the misrepresentations and the reliance occurred in different states.”
Id. Plaintiffs do not make clear where the alleged misrepresentations were made. However,
this Court chooses to follows Third Circuit precedent and the decisions of a number of other
courts in this District in finding that the alleged misrepresentations were made at the
DL IL nd ml s hLadqual ILl’, not in thc
[)ist. LEXIS 1 78924 at
consumLi
s homc statc’ Sc
L
g LJilmin 2012 1
16: Cooper. 374 F. App’x at 255: Nikolin v. Samsuigj1ccs.Am..
Inc.. No. 10-1456, 2010 U.S. Dist. LEXIS1 10942, at *3_4 (D.N..l. Oct. 18. 2010). Thus. the
Court will apply Section 148(2).
Under Section 148(2). courts consider the following six factors:
(a) the place or places, where the plaintiff acted in reliance upon the defendant’s
representations,
(h) the place where the plaintiff received the representations,
(c) the place where the defendant made the representations.
(d) the domicil, residence, nationality, place of incorporation and place of business
of the parties.
(e) the place where the tangible thing which is the subject of the transaction between
the parties was situated at the time, and
(f) the place where the plaintiff is to render performance under a contract which he
has been induced to enter by the false representations of the defendant.
Restatement (Second) of Conflict of Laws
§
148(2), As to the Texas Plaintiffs, factors (a),
(b), (e), and (t) all occurred in Texas and therefore weigh in favor of applying Texas law.
12
As discussed above, this Court finds any alleged misrepresentations would have been made
at Defendant’s headquarters and therefore factor (c) weighs in favor of New Jersey. As for
factor (d), Plaintiffs reside in Texas and Defendant’s headquarters are located in New
Jersey. This factor also therefore tips in favor of New Jersey. As four of the six factors
weigh in favor of applying the law of Plaintiffs’ home state, this Court will apply Texas law
to the Texas Plaintiffs consumer fraud claims. In doing so, “this court follows a long line
of cases in this Circuit holding that a consumer’s home state law should apply to
transactions that ‘bear no relationship to New Jersey other than the location of [the
defendant’s] headquarters.” Feldman, 2012 U.S. Dist. LEXTS 178924 at *18 (quoting
Cooper, 374 F. App’x at 225); see also Nikolin, 2010 U.S. Dist. LEXIS 110942, at *4;
Agostino 1, 256 F.R.D. at 464; Warma Witter Kreisler, Inc., 2010 U.S. Dist. LEXTS 34584, at
*
1-2 (D.N.J. Apr. 8, 2010); Tn re Philips/Magnavox TV Litig.. No. 09-3072, 2010 U.S. Dist.
LFXTS 91343. at *9l0 (D.NJ. Sept. 1.2010).
ii.
NJCFA Claim
Defindant asserts that Durso and Fast’s NJCFA claims fail because Plaintiffs have not
alleged an ascertainable loss or proximate causation.
To succeed on a claim under the
NJCFA, plaintiffs carry the burden of showing each of three elements: (1) an unlawful
practice by defendant, (2) an ascertainable loss on the part of plaintiffs, and (3) a causal
relationship between the defendant’s unlawful conduct and the plaintiffs’ ascertainable loss.
Coxv.Sears Roebuck & Co.. 138 N..1. 2. 24 (1994).
a. Ascertainable Loss
“Under the [NJCFA], a plaintiff must demonstrate an ascertainable loss,’ which is
defined as ‘a cognizable and calculable loss due to the alleged [NJCFA1 violation.”’ Solo v.
13
Bed Bath & Beyond. Inc., 2007 U.S. Dist. LEXIS 31088, *78 (D.N.J. April 26. 2007)
(quoting Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234, 249 (2005)). “Tn a
misrepresentation case. a plaintiff may show ascertainable loss by either out-of-pocket
loss
or a demonstration of loss in value.” Green, 279 F.R.D. at 281 (quoting Thiedernann, 183
N.J. at 248). An actionable loss is not ‘hypothetical or illusory.” Thiedemann, 183 NJ. at
248. “What New Jersey Courts require for that loss to be ascertainable’ is for the consumer to
quantify the difference in value between the promised product and the actual product receivcd.’
Smajlaj v. Campbell Soup Co.. 782 F. Supp. 2d 84 (D.N.J. 2011).
In Green, the plaintifPs NJCFA claim was premised on the dcfendants alleged
misrepresentation about its coffee brewing system. 279 F.R.D. at 278. The court found that the
plaintiff did not sufficiently plead ascertainable loss, as he ‘fail[edj to allege how much he paid
for his brewer and how much other comparable brewers manufactured b Defendant’s
competitors cost at the time of purchase.” Id. at 282. Here, Plaintiffs Durso and Fast have
provided in their complaint how much they paid for their Samsung Washers. 1-lowever. they
have failed to allege how much comparable washers by Defendant’s competitors cost at the time
of purchase. l’herethre. Plaintiffs have not quantified the difftrence in value
between
the washer
promised and the actual washer received. As such, Plaintiffs have failed to adequately plead
ascertainable loss under the NJCFA. Count one otPlalntitts complaint is therefore dismissed
without prejudice.
b. Proximate Causation
Under the NJCFA, a plaintiff must demonstrate that his or her ascertainable loss was
“attributable to conduct made unlawful by the [Act].” Thiedemann. 183 N.J. at 246. A
plaintiff must therefore “plead and prove a causal nexus between the alleged act of consumer
14
fraud and the damages sustained.’ New Jersey Citizen Action v. Schering-Plough Cop, 367
N.J. Super. 8, 15 (N.J. App. Div. 2003). In Mecalley v. Samsung Elecs. Am.. Inc., 2008 U.S.
Dist. LEXIS 28076, at
*
26 (D.N.J. Mar. 31, 2008), the court fiund a plaintiffs
assertion that
had the alleged defect been disclosed, consumers would not have purchased the defendant’s
product sufOcient
to
establish the requisite causal connection. It is clear from the ACI\C, that ii’
Plaintiffs had been made aware of the alleged defects in Samsung’s Washers. they would not
have purchased them. As such, Defendant’s motion to dismiss the NJCFA on grounds that a
causal connection has not been established is denied.
iii.
DTPA
Defendant asserts Cole’s DTPA claim fails as a matter of law because (a) it is beyond the
statute of limitations; (b) Cole fails to adequately plead reliance; and (c) Cole does not
adequately plead actual damages. As a threshold matter. I)eftndant argues that Cole’s [Yl’PA
2
claim is barred by DTPA’s two-year statute of limitations. Tex. Bus. & Com. Code
§
17.565.
According to the ACAC., Cole became aware of the alleged defects with her original washer as
early as May 2010 and Samsung provided her with a new washer in October 2010. (ACAC ¶(
34-36). The ACAC, however, was not filed until December 17, 2012, more than two years after
her discovery of the alleged defects. Although Cole’s DTPA claim related to her original washer
is time-barred. Cole also alleges that her replacement washer is defl.ctivc. Since Samsung cannot
establish Cole discovered the defects in the replacement washer pnor to December 17. 201 0.
Coles DTPA claim for the replacement washer is not defeated by the DTPA’s statute of
limitations. See Eshleman v. Shield. 764 S.W.2d 776, 777 (Tex. 1989) (In construing section
17.565, the Supreme Court of Texas recognized the defendant bears the burden of establishing
2
Plaintiff Walker does not assert a claim under the DTPA.
15
when the plaintiff discovered or should have discovered the acts giving rise to the cause of
action.),
Defendant alleges that Cole fails to sufficiently plead reliance under the i)TPA. In order
to state a claim under the DTPA, a plaintiff “must demonstrate that she ‘would not have entered
into the transaction had the information been disclosed.” Nikolin. 2010 U.S. Dist. LEXIS
110942 at *18 (quoting Paterson v McMickle, 191 S W 2d 819, 827 (‘1 cx App 2006)) As
alleged in the ACAC. one reason Cole decided to purchase a Samsung washer was because she
was impressed by television advertisements claiming they used less water than other washers.
(ACAC
¶ 38).
Although Cole relied on this in purchasing the original machine, and her claim
related to that machine is time-barred, it is as a result of this reliance that Cole ended up with the
replacement washer and therefore the Court will consider it. According to the ACAC, unless
Cole uses the heavy duty cycle, which requires the use of more water and electricity, her
daughter’s bibs do not get clean. (ACAC
¶ 37).
Based on these facts. it is clear that Cole would
not have purchased the initial washer if she knew that it would require a cycle requiring the use
of more water to adequately clean clothes. As such, the Court linds that Cole has adequately
pled reliance under the DTPA.
Defendant asserts that Cole’s DTPA claim fails because she does not allege actual
damages. “[Aictual damages are required to state a cause of action under the [DTPA1.”
McM mus ‘,cai s Rocbuck and Co 2003 Te\ App I F XIS 7462
10 (1 C\ App \ug 28
2003). (‘ole claims she suffered damages because she had to pui’chase new cloihes to replace
those that were ruined b the odor emitted by the original washer. (ACAC ¶ 39). Cole does not
allege she had to purchase any new clothes as a result of the replacement washer or at what cost.
Cole also claims that her washer is “of lesser value than the washer promised.” (ACAC ¶ 39).
16
The Court finds that Cole’s claims are too ambiguous to sufficiently demonstrate actual
damages. Cole’s DTPA claim is therefore dismissed without prejudice.
iv.
FED. R. Civ. P. 9(b)’s heightened pleading requirement.
Defendant asserts that Plaintiffs’ fraud—based claims are subject to dismissal pursuant to
FED. R. Civ. P. 9(b)’s heightened pleading requirement. Rule 9(h) states: “In alleging fraud or
mistake, a party must state with particularity the circumstances constituting fraud or mistake.”
“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.” Frederico v. Home Depot. 507 F.3d 188. 200 (3d Cir. 2007). The Court agrees
with Defendant that the ACAC does not “provide sufficient factual allegations to establish that
Samsung knew
of
the [alleged defects] prior to the sale at issue in this litigation.” Weske. 20 12
U.S. Dist. LEXIS 32289. *1718
Plaintiffs claim that Samsung knew of the alleged defects “beginning no later than 2004.”
(ACAC
only
¶ 89(c)).
However, Plaintiffs do not provide any factual basis for this assertion. The
customer complaints referenced in the ACAC. aside from Plaintiffs’ own complaints, are
internet postings which occurred after August 2011. (ACAC ¶ 74—75).
All
ol these postings
postdate Fast, Cole and Walker’s purchases and fifteen of them postdate Durso’s purchase.
Although the Court recognizes that at this early stage of litigation, prior to discovery, facts in the
sole possession of Defendant are difficult to access, there is not enough in the ACAC for the
Court to draw an inference that the Washers were defective from the time of manufhcture and
that Samsung knew that fact as early as 2004. See Tatum
v.
Chrysler Group LLC. 2011 U.S.
Dist. LEXIS,
*
hard to
by before discovery hut dismissing complaint for lack of specificity under Rule
come
15-1 $ (D.N.J, Mar. 28, 2011) (recognizing that facts in defendant’s possession are
17
9(b) because facts were insufficient for Court to draw inference that the braking systems were
defective at time of manufacture); Weske, 2012 U.S. Dist. LEXIS 32289 at * 17 (court dismissed
fraudulent concealment claims tor lack of specificity under Rule 9(b) acknowledging that
plaintiffs “need not allege specific intormation that is exclusively within Samsung’s knowledge
or control. but they must still allege facts suggesting fraudulent concealment and must still
explain why the additional missing information lies exclusively within Samsung’ s control”).
Thereibre, Plaintiffs’ fraud-based claims, specifically (1) violation of the NJCFA (Count One);
(2) violation of the DTPA (Count Two); and (3) fraudulent concealment (Count Three)
arc
dismissed without prejudice pursuant to Fed. R. Civ, P. 9(b).
c. Negligent Misrepresentation
The Court finds it appropriate to analyze Plaintiffs’ negligent misrepresentation claim
under the notice pleading standard of Fed. R. Civ. P. 8(a). ge Dewey v. Volkwagen AG. 55 F.
Supp. 2d 505. 529 (D.N.J. 2008). Plaintiffs concede that a negligent misrepresentation claim
based on alleged omissions by Samsung fails as a matter of law because Plaintiffs and Samsung
do not have a fiduciary relationship.
Henderson v. Volvo Cars ofN. Am. LLC, 201() U.S.
Dist. LEXIS 73624, *33_36 (D.N.J. July 21. 2010); Alin v. /-\m. Honda Motor Co.. 2010 U.S.
Dist, LEXIS 32584, *3738 (D.N.J. Mar. 31, 2010). However. Plaintiffs have sufficiently pled a
claim for negligent misrepresentation based on affirmative misrepresentations. Under New
Jersey law a “cause of action for negligent misrepresentation may exist when a party negligently
provides false information.” Karu v. Feldman, 119 N.J. 135. 574 (1990). “To prevail on a
negligent misrepresentation claim, a plaintiff must prove that the defendant negligently made an
incorrect statement, upon which the plaintiffjustifiably relied,” Alexander v. CIGNA
F. Supp. 427. 44() (D.N.J. 1998) (citing I-I. Rosenblum, Inc. v. Adler, 93 N.J. 324 (1983)).
18
991
In the ACAC, Durso asserts that the advertising for the washer. as well as the User
Manual provided that it “can wash a king-size comforter, .in a single load” and that he relied on
.
this statement in selecting a Samsung washer. (ACAC
¶j 15, 18, 19). Fast alleges that she
“relied upon Samsung’s advertising and literature indicating that Samsung’s machines were
efficient and top of the line appliances” but that the machine she purchased was inefficient and
required the use of extra water and electricity to sufficiently clean her clothes. (ACAC ¶j 27, 29,
30). Cole alleges she relied on television ads claiming Samsung machines used less water than
other washers in purchasing her machine and that her washer requires additional water and
electricity to adequately clean clothes. (ACAC
¶J 37,
38). The Court finds these facts are
sufficient to allege proximate cause and reliance with respect to a claim for negligent
misrepresentation under the Rule (8)(a) standard. As such, Plaintiffs’ negligent
misrepresentation claim based on affirmative misrepresentations survives the motion to dismiss.
d. Breach of Implied and Express Warranty Claims
Defendant argues that Plaintiffs implied warranty claims should be dismissed as they are
expressly disclaimed. New Jersey law generally recognizes disclaimers and will enforce them as
long as they are clear and conspicuous.
N.J.S.A. I 2A:2-3 1 6: Realmuto v. Straub Motors.
inc., 65 NJ. 336, 341-42 (1974). Samsung’s disclaimer is located at the end of the user manual
and appears in all capital letters as follows:
EXCEPT AS SET EORTI1 HEREIN, THERE ARE NO WARRANTIES ON THIS
PRODUCT EITHER EXPRESS OR IMPLIED AND SAMSUNE DISC I AIMS Al I
\ ‘\RR \M ILS INCLUDING BUT NO F IMl fED 10 NY IMPI lED
ARRANT 1ES OF MERCI IAN FABII ITY, IM’RINGEMEN I OR I I FNESS I OR A
PARTICULAR PURPOSE.
(Def.’s Dccl. Ex. A, ECF No. 10). Plaintiffs have not provided an argument as to why the
disclaimer is not clear and conspicuous.
19
However, Plaintiffs do argue that Samsung’s attempts to disclaim all implied warranties
and limit all express and implied warranties to a one-year period is unconscionable. Plaintiffs
cite to this Court’s decision in Henderson v. Volvo Cars of N. Am.. LLC, No, 09-4146, 2010
U.S. Dist. LEXIS 73624 (D.N.J. July 21, 2010) to support their
argument.
In Henderson. this
Court allowed the plaintiffs’ express warranty claim to survive the motion to dismiss stage.
i4.
at *26, This Court acknowledged that a manufacturer’s mere knowledge that a part will
ultimately fail after the expiration of a warranty period is insufficient to prove that the time
limitation is unconscionable. Id. However, the plaintiffs in Henderson had alleged additional
claims to support their unconscionability argument, including that the class members had no
meaningful choice in determining the time limitations and a gross disparity in bargaining power
existed between Samsung and class members. Id. at n.6. Thus, based on the plaintiffs
unconscionability argument. this Court chose not to dismiss the express warranty claim.
Here, Plaintiffs’ unconscionability argument is based on two basic contentions: (1) that
Samsung allegedly had knowledge of the defect prior to the sale of the Washers; and (2) that
Samsung’ s repair services were allegedly employed to intentionally mask the underlying defect
until after the expiration of the warranty. As this Court stated in Henderson. a manufacturer’s
mere knowledge that a part will fail after the warranty period is insufficient to prove that the
limitation is unconscionable. The Court finds Plaintiffs’ second contention about Samsung’s
repair services to be an unsupported conclusory allegation without sufficient factual support. As
such, Plaintiffs’ unconscionability argument is not supported by sufficient facts to save
Plaintiffs’ warranty claims from dismissal.
The ACAC is also factually deficient with respect to the manifestation of the defects and
the notice provided to Samsung. It is not clear from the ACAC whether the defects manifested
20
and whether Samsung was notified within the one-year warranty period. For example. as to
Durso, the ACAC states that he “attempted to wash a king size comforter and the washer would
not spin properly” and that he complained to Samsung,” hut it does not provide even an
appa o\im ilion of v hcn these tv o
cnts
OCCUI
acd (AC \C
“
1 6 1 7)
Simil u h
is to
I
1st tilL
ACAC provides that ‘the washing machine does not function properly” and that “Fast called and
complained to Samsung directly,” but does not state when the defect first manifested or when the
call was made. (ACAC
¶ 24, 26).
The ACAC also states that the machine was serviced by
Sears on December 30, 2011, more than a year after the February 19. 2010 purchase date.
(ACAC jJ 22, 25). Although it is true. as Plaintiffs’ assert. that “this does not establish that
Fast’s complaints were not registered prior thereto,” (Pls.’ Opp’n Br. 48 n. 1 0), the ACAC
nonetheless ftiils to make clear when, in fact, such complaints were registered. The ACAC does
plead sufficient facts as to Cole’s first washer. It provides the dates Cole complained to
Samsung as well as the dates of service visits. (ACAC
J[ 34,
35). However, it fails to provide
when the defect in the second washer appeared and when Samsung was notified. Without these
facts, it is difficult for the Court to assess whether Plaintiffs’ claims are brought within or outside
the warranty period.
Generally, the ACAC is factually deficient to support Plaintiffs’ claims for breach of
implied and express warranties. First, Plaintiffs do not sufficiently contest the validity of
Samsung’s express disclaimer of all implied warranties. Second, Plaintiffs do not ofiir a valid
basis. beyond Samsung’s alleged knowledge of a defect, to support their unconscionabilitv
argument. Finally, the ACAC does not provide sufficient facts to demonstrate precisely when
the defects manifi,sted themselves and when Samsung was notified of the defects. Specifically,
it is unclear whether the defects appeared and Samsung was notified within the one—year
21
warranty period. For these reasons. Count Four (Breach of Implied Warranties) and Count Five
(Breach of Express Warranties) are dismissed without prejudice.
e. Motion to Strike Class Allegations
Defendant argues that Plaintiffs’ class allegations should be stricken because Plaintiffs
cannot satisfy the requirements of predominance. typicality and numerositv. Dismissal of class
claims prior to discovery and a motion to certify the class by plaintiff is the exception rather than
thc iulc See Ehihart v Synthes (USA) No 07-01237 2007 U S DIst L 1 XN 94760
7-9
(D.N.J. Dec. 21, 2007) (motion to strike highly disfavored and dismissal of class allegations
should be done rarely); Gutierrez v. Johnson & Johnson, Inc., No. 01-5302, 2002 U.S. Dist.
LEXIS 15418. *16(D.N.J. 2002)(citingAbdallahv. Coco-ColaCo., 1999 U.S. Disi. LEXIS
23211 (D.Ga. July 16. 1999) (dismissal of class allegations at this stage should he done rarely:
the better course is to deny the
motion
because “the shape and lbrm of a class action evolves
only through the process of discover.”). In Andrews v. Home Depot U.S.A. Inc.. this Court
found the dismissal of class action allegations to be premature at the motion to dismiss stage.
Civ. A. 03CV5200, 2005 WL 1490474, at *3 (D.N.J. June. 23, 2005). As in Andrews. the Court
finds that dismissal of Plaintiffs’ class action allegations at this stage of the litigation would be
premature and is not appropriate. Therefore, Defendant’s Motion to Strike Plaintiffs’ class
allegations is denied.
IV.
ICONCLUSION
For the tbregoing reasons. Defendant’s Motion to I)ismiss is granted in part and denied in
part. 1)cfendants Motion to Strike Plaintiffs Class Allegations is denied. Counts Onc. Two.
Three. Four and Five of Plaintiffs’ Amended Class Action Complaint are
(liSflhiSSCd without
prejudice. Plaintiffs are granted leave to file a second amended complaint. An appropriate
Order accompanies this Opinion.
lvi. Cavanaugh,
Date:
Original:
cc:
November
2013
Clerks Office
Hon. James B. Clark. U.S.M.J.
All Counsel of Record
File
23
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