DURSO v. SAMSUNG ELECTRONICS AMERICA, INC.
Filing
83
OPINION. Signed by Judge William J. Martini on 8/25/14. (gh, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
ROBERT N. DURSO, CATHIE COLE,
and DOUGLAS WALKER, individually
and on behalf of all other persons similarly
situated,
Docket No.: 12-cv-5352
OPINION
Plaintiffs,
v.
SAMSUNG ELECTONICS AMERICA,
INC.,
Defendant.
WILLIAM J. MARTINI, U.S.D.J.:
Defendant Samsung Electronics America, Inc. filed this motion to dismiss the
Second Amended Complaint (“SAC”). Plaintiffs opposed. There was no oral
argument. L. Civ. R. 78.1(b). For the reasons set forth below, the motion is granted
in part and denied in part.
I.
FACTUAL BACKGROUND
Plaintiffs represent a putative class of customers who purchased allegedly
defective Samsung front-loading washing machines, model numbers WF331ANW,
WF448AAW, WF1124XAU, WF328AAW, WF209ANWXAA, WF210ANW,
WF218ANWXAC, and WF206ANSW (the “Washers”). (SAC at ¶ 2). Named
Plaintiffs are individuals residing in New Jersey and Texas.
The SAC alleges that the Washers have a variety of defects. For example, the
Washers allegedly do not spin and drain properly. (SAC at ¶ 2). The Washers
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allegedly do not wash large items despite Samsung’s advertising that the Washers
have a “super capacity.” (Id.). The Washers allegedly do not properly clean clothes
and frequently display “error messages” to the user. (Id.). The SAC also complains
of frequent mold and mildew smells within the Washers and on clothes that were just
washed, frequent instances of premature failure of the pump, and collection of “pot
metal” in the hose. (Id.). Finally, the SAC complains of premature disintegration of
the rubber inside the washer, resulting in leaks and damage to clothing. (Id.). The
Plaintiffs also contend that the Washers require numerous service calls and repairs,
which frequently fail to correct the defects. (Id.).
Plaintiffs collectively allege that Samsung knew of the defects via several
channels. Aside from their own complaints to Samsung, the Plaintiffs point to
internet postings on Samsung’s website and various other third-party websites
detailing consumers’ problems with the Washers since at least 2009. (SAC ¶ 65).
Alternatively, the Plaintiffs allege that Samsung was aware of the problems through
its Global Service Partnership Network (“GSPN”) and its Service Bench warranty
database. (SAC ¶ 72). The SAC also alleges that Samsung knew the repairs it
performed on the Washers would not cure the defects and refused to offer customers
a refund or a replacement washer that would function properly. (Id.).
A.
Plaintiff Durso
Plaintiff Durso, a New Jersey resident, purchased a new Samsung frontloading washer (model number WF331ANW) from P.C. Richard & Son for
approximately $549.97 on November 8, 2011. (SAC ¶ 13). The advertising for this
washer and the user manual stated that the washer had “extra large capacity” and
was able to “wash a full set of your bedding, king-size comforter, or up to 26 bath
towels in a single load.” (SAC ¶ 15). When Durso attempted to wash a king-size
comforter, the washer would not spin properly. (SAC ¶ 16). He complained to
Samsung via telephone and had two service visits, but the technician ultimately
informed him that the unit could not spin properly when a king-size comforter was
being washed. (SAC ¶ 17).
B.
Plaintiff Cole
Plaintiff Cole, a Texas resident, purchased a new Samsung front-loading
washer (model number 209ANW/XAA02) from Lowe’s for over $500.00 in or about
May of 2010. (SAC ¶ 22). Cole claims that she purchased the Samsung washer
based on television advertisements showing the washer’s ability to handle a kingsize comforter, as well as the washer’s water efficiency. (SAC ¶ 29). Cole asserts
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that the washer did not function properly, leaving clothes smelling like mold and
mildew after washing. (SAC ¶ 24). Cole called Samsung to complain on four
occasions beginning in May 2010. (SAC ¶ 25). Samsung made service visits in July
and August 2010 but was unable to correct the problem. (SAC ¶ 26). In October
2010, Samsung replaced Cole’s washer with a different washer (model number
WF210ANW/XAA). (SAC ¶ 27). Cole claims that this machine is also defective
because it fails to clean clothes adequately unless the heavy duty cycle is used, leaves
clothes too wet to put in the dryer, and shakes violently at times. (SAC ¶ 28). Cole
does not allege that she notified Samsung about her problems with the second
washer.
C.
Plaintiff Walker
Plaintiff Walker, a Texas resident, owns a Samsung front-loading washer
(model number WF206ANS), which was manufactured in March 2007. (SAC ¶ 31).
Walker did not purchase this washer. He became the owner of the washer when he
purchased a home containing the washer. (See Plaintiffs’ Brief in Opposition to
Defendant’s Motion to Dismiss the Amended Class Action Complaint, ECF No. 33,
at 18). Walker claims the washer has numerous problems, including: emitting bad
odors that make the laundry room and clothes smell, a leaky door gasket that caused
the door to rust, an inadequate spin cycle that leaves clothes too wet, and failing to
clean clothes adequately, leaving them dingy at the end of a cycle. (SAC ¶¶ 33-37).
Walker complained to Samsung but does not say when. (SAC ¶ 38). Samsung told
Walker that his washer is no longer covered by warranty. (Id.).
II.
PROCEDURAL BACKGROUND
Plaintiffs filed an Amended Class Action Complaint (“ACAC”) on December
12, 2012. (ECF No. 12). Defendant filed a motion to dismiss, which Judge
Cavanaugh granted in part and denied in part on November 6, 2013 (“Cavanaugh
Opinion,” ECF No. 51). Plaintiffs filed a Second Amended Complaint (“SAC”) on
December 6, 2013. (ECF No. 54). Both the ACAC and the SAC contain the same
causes of action:
Count 1: Violation of the New Jersey Consumer Fraud Act (“NJCFA”)
Count 2: Violation of the Texas Deceptive Trade Practices Act (“DTPA”)
Count 3: Fraudulent Concealment/Nondisclosure
Count 4: Breach of Implied Warranties
Count 5: Breach of Express Warranties
Count 6: Negligent Misrepresentation
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Walker did not join in Counts 1 or 2 because he admits that he did not purchase
his washer but became the owner of his washer when he purchased a home
containing the washer. (Opposition Brief to Defendant’s Motion to Dismiss the
ACAC, ECF No. 33 at 18).
Also, of note, Judge Cavanaugh applied a choice of law analysis, finding that
the court should apply the law of the Plaintiffs’ home states wherever a conflict of
law exists. (Cavanaugh Opinion at 10-13).
Judge Cavanaugh dismissed the first five counts of the Complaint without
prejudice. In the SAC, Plaintiffs attempted to fortify the portions of the ACAC that
Judge Cavanaugh found deficient.
III.
LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a
complaint, in whole or in part, if the plaintiff fails to state a claim upon which relief
can be granted. The moving party bears the burden of showing that no claim has
been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding
a motion to dismiss under Rule 12(b)(6), a court must take all allegations in the
complaint as true and view them in the light most favorable to the plaintiff. See
Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d
Cir. 1998) (citing Warth v. Seldin, 422 U.S. 490, 501 (1975)).
Although a complaint need not contain detailed factual allegations, “a
plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires
more than labels and conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Thus, the factual allegations must be sufficient to raise a plaintiff’s right to relief
above a speculative level, such that it is “plausible on its face.” See id. at 570; see
also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008).
“[D]etermining whether a complaint states a plausible claim is context-specific,
requiring the reviewing court to draw on its experience and common sense.”
Ashcroft v. Iqbal, 556 U.S. 662, 663-64 (2009). A claim has “facial plausibility when
the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at
678 (citing Twombly, 550 U.S. at 556). While “[t]he plausibility standard is not akin
to a ‘probability requirement’ . . . it asks for more than a sheer possibility.” Id. at
678.
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IV.
DISCUSSION
A.
Fraud Actions
Judge Cavanaugh dismissed the three consumer fraud claims (Counts 1-3), in
part, because Plaintiffs failed to plead, pursuant to the heightened pleading standard
of Federal Rule of Civil Procedure 9(b), facts that plausibly demonstrated that
Samsung had knowledge of the alleged defects before Plaintiffs made their
purchases. In the ACAC, Plaintiffs plead that Samsung knew of the defects
“beginning no later than 2004” based upon nineteen internet postings, which
occurred after August 2011. (ACAC at ¶¶ 74-75, 89(c)). All of these postings
postdated Cole and Walker’s purchases, and fifteen of them post-dated Durso’s
purchase. (Cavanaugh Opinion at 17). The court held that these internet postings
were not sufficient to allege that Samsung knew of the defects.
In the SAC, Plaintiffs have added an additional basis for Samsung’s
knowledge. The SAC alleges that GSPN (Global Service Partnership Network)
Service Center received many requests for warranty service of the specific problems
that the Plaintiffs suffered. (SAC ¶ 68). It goes on to allege:
On information and belief, Samsung utilizes Service Bench online
software to track warranty claims which provides Samsung with the
ability to mine data for strategic information about its products and the
nature of repair claims. Consequently, Samsung should have been
aware of the large number of similar, repeat complaints received
regarding specific models and the failure of repairs attempted over and
over again to remedy those specific defects.
(SAC at ¶ 68).
Defendant argues that this allegation is still not specific enough to meet the
heightened pleading standard of Rule 9(b). The court finds Plaintiffs’ additional
factual allegations meet the Rule 9(b) standards.
Rule 9(b) states, “In alleging fraud . . . , a party must state with particularity
the circumstances constituting fraud.” 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 purpose of Rule 9(b) is to
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provide notice, not to test the factual allegations of the claim.” Morganroth &
Morganroth v. Norris, McLaughlin & Marcus, P.C., 331 F.3d 406, 414 n. 2 (3d Cir.
2003).
“Courts must be sensitive to the fact that application of Rule 9(b) prior to
discovery ‘may permit sophisticated defrauders to successfully conceal the details
of their fraud.’” Craftmatic Sec. Litig. v. Kraftsow, 890 F.2d 628, 645 (3d Cir. 1989)
(quoting Christidis v. Pennsylvania Mortgage Trust, 717 F.2d 96, 99-100 (3d Cir.
1983)); see also Rolo v. City Investing Co. Liquidating Trust, 155 F.3d 644, 658 (3d
Cir. 1998) (“Courts should . . . apply the rule with some flexibility and should not
require plaintiffs to plead issues that may have been concealed by the defendants.”).
“Particularly in cases of corporate fraud, plaintiffs cannot be expected to have
personal knowledge of the details of corporate internal affairs.” Craftmatic, 890
F.2d at 645 (citing Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1439 (9th Cir.
1987)). In such cases where Rule 9(b) is to be applied less strictly, the Plaintiffs
must plead that the necessary information lies within the defendants’ control and
their allegations must be accompanied by a statement of the facts upon which the
allegations are based. Id. at 645. Moreover, “[m]alice, intent, knowledge and other
conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b).
In other consumer fraud cases, courts in this district have found that internal
data regarding warranty claims suffices to plead knowledge under Rule 9(b). See,
e.g., Majdipour v. Jaguar Land Rover N. Am., LLC, 2013 WL 5574626 (D.N.J. Oct.
9, 2013); Feldman v. Mercedes-Benz USA, LLC, 2012 WL 6596830, at *11 (D.N.J.
Dec. 18, 2012). With its allegations that Samsung knew about the defects through
data within its exclusive control, Plaintiffs have plausibly plead that Samsung knew
of the Washers’ defects.
That the allegations are made on “information and belief” does not defeat the
claim, as the Defendant argues. (Moving Brief at 16). Under the Rule 9(b) standard,
the allegations suffice if they are more than conclusory and make a theoretically
viable claim “plausible.” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410,
1418 (3d Cir. 1997). Allegations that a corporate defendant had internal knowledge
of warranty claims is “not conclusory.” Majdipour, 2013 WL 5574626, at *18. The
Plaintiffs’ theory that Samsung knew about the defects through warranty claims and
the GSPN are plausible.
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B.
NJCFA
“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 plaintiff’s ascertainable loss.” Payan v. Greenpoint Mortg. Funding, Inc., 2010
WL 5253016, at *5 (D.N.J. 2010) (citing Bosland v.Warnock Dodge, Inc., 197 N.J.
543, 557 (2009)). Judge Cavanaugh found Plaintiff’s allegations deficient only as
to the ascertainable loss element. The Cavanaugh Opinion states:
Here, Plaintiff[] Durso [has] provided in [his] complaint how much [he]
paid for [his] Samsung Washer[]. However, [he has] failed to allege
how much comparable washers by Defendant’s competitors cost at the
time of purchase. Therefore, Plaintiff[] [has] not quantified the
difference in value between the washer promised and the actual washer
received. As such, Plaintiff[] [has] failed to adequately plead
ascertainable loss under the NJCFA. (ECF No. 51 at 14).
The Cavanaugh Opinion cited Green v. Green Mountain Coffee Roasters, Inc., 279
F.R.D. 275, 282 (D.N.J. 2011) for the proposition that a plaintiff alleging an NJCFA
claim for a defective machine must allege “how much he paid for [the machine] and
how much other comparable [machines] manufactured by Defendant’s competitors
cost at the time of purchase.” Id. at 282.
In the SAC, Durso fortified the allegations by alleging that a comparable
washer, the Frigidaire Affinity 3.7 ft.³ High Efficiency model, cost $799. (SAC at ¶
20). Additionally Plaintiff alleges that he had to spend money to have the king-size
comforters laundered when the washer failed to work as advertised. (SAC ¶ 20).
Samsung argues that “it is inexplicable how a washer costing 45% more than
Durso’s Samsung washer could possibly demonstrate his alleged ascertainable loss.”
(Moving Brief at 22). Plaintiff argues in opposition that: (1) Judge Cavanaugh
ignored Durso’s out of pocket loss; (2) the cost of laundering the king-size
comforters demonstrates an ascertainable loss; (3) buying a replacement washer at
$799 demonstrates an ascertainable loss.
Under the CFA, an “ascertainable loss,” is “a cognizable and calculable claim
of loss due to the alleged CFA violation.” Theidemann v. Mercedes-Benz, LLC, 183
N.J. 234, 249 (2005). “Ascertainable loss” is a broad concept that embraces more
than a monetary loss. Union Ink Co. v. AT&T Corp., 352 N.J. Super. 617, 646 (App.
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Div. 2002). An ascertainable loss may occur “when a consumer receives less than
what was promised.” Ibid; see also Miller v. Am. Family Publishers, 284 N.J. Super.
67, 90-91 (Ch. Div. 1995) (“For their money, they received something less than and
different from what they reasonably expected in view of defendant’s presentations.
That is all that is required to establish ascertainable loss.”).
Judge Cavanaugh applied a standard that too rigorously required Durso to actually quantify his loss. Plaintiff must merely allege that the loss is quantifiable. By
alleging that he paid $549.97 for a washer and that it did not wash a king-size comforter as promised, the Plaintiff has alleged that he received “less than what was
promised.” Theidemann, 183 N.J. at 249. Moreover, if the $799 washer is the cost
of a comparable washer, then the measure of damages is at least the $549.97 he paid
for the defective washer plus the $250.03 it would additionally cost to purchase a
washing machine that could wash a king-size comforter. Finally, the allegation that
he had to pay money to have his king-size comforter laundered also demonstrates an
ascertainable loss.
C.
DTPA
Judge Cavanaugh dismissed Cole’s DTPA claim on the grounds that she had
not plead “actual damages” essential to a cause of action under the Texas Deceptive
Trade Practices Act. Specifically, the Cavanaugh Opinion held that Cole’s claim that
her second washing machine was “of lesser value than the washer promised” was
“too ambiguous to sufficiently demonstrate actual damages.” (Cavanaugh Opinion
at 16-17). Plaintiff Cole fortified the SAC by alleging that she “incurred the out of
pocket costs of additional water and electricity required by the necessary and
continual use of the heavy duty cycle to get clothes clean using the replacement
washer.” (SAC at ¶ 30).
“Although the term ‘actual damages’ is not defined within the D.T.P.A., actual damages means those recoverable at common law.” Great State Petroleum, Inc.
v. Arrow Rig Serv., Inc., 706 S.W.2d 803, 807 (Tex. App. 1986). By pleading that
she paid more for more water and electricity than expected, Plaintiff has cured any
deficiency in the pleadings with regard to the actual damages element of her DTPA
claim.
D.
Walker’s Fraudulent Concealment Claim
Reliance upon Defendant’s deception is one of the elements of a fraudulent
concealment claim. Mitchell Energy Corp. v. Bartlett, 958 S.W.2d 430, 439 (Tex.
App. 1997). Samsung argues that Walker’s fraudulent concealment claim should be
8
dismissed because Walker does not allege that he relied upon any deceptive
advertising. Plaintiffs do not dispute this, acknowledging that Walker did not
purchase the washer from Samsung but that it came with a house that he purchased.
Because Walker has not plead reliance on any action of Samsung, Walker’s
fraudulent concealment claim is dismissed with prejudice.
E.
Negligent Misrepresentation
Defendant urges reconsideration of Judge Cavanaugh’s decision not to dismiss the negligent misrepresentation cause of action. Finding no error in Judge
Cavanaugh’s decision with respect to Cole or Durso, the court will deny the motion
with respect to their claims.
However, Walker’s claims should be dismissed. One of the elements of a
negligent misrepresentation claim is reliance upon a misrepresentation. Fed. Land
Bank Ass’n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991). Walker does not
allege that he viewed any advertisements about the washer. Because Walker has not
alleged any reliance, Samsung’s motion is granted with respect to Walker’s
negligent misrepresentation claim.
F.
Breach of Express and Implied Warranty Claims
It is useful to begin the discussion of the breach of express and implied
warranty claims by examining the underlying Limited Warranty that came with the
Washers. The Limited Warranty, which was located at the end of the User Manual,
stated, in relevant part:
This SAMSUNG product, as supplied and distributed by SAMSUNG
ELECTRONICS, INC. (SAMSUNG) and delivered new, within the
original carton to the original purchaser, is warranted by SAMSUNG
against manufacturing defects in materials and workmanship for a
limited warranty period of: One (1) year part and labor, Two (2) years
Control Board Parts, Three (3) years stainless tub part, Ten (10) years
washing motor part. This limited warranty begins on the original date
of purchase, and is valid on products purchased and used in the United
States. To receive warranty services, the purchaser must contact
SAMSUNG for problem determination and service procedures.
...................
SAMSUNG will repair, replace, or refund this product at our option and
at no charge as stipulated herein, with new or reconditioned parts or
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products if found to be defective during the limited warranty period
specified above. . . . Replacement parts and products assume the
remaining original warranty, or ninety (90) days, whichever is longer.
...................
EXCEPT AS SET FORTH HEREIN, THERE ARE NO
WARRANTIES ON THIS PRODUCT EITEHR EXPRESS OR
IMPLIED, AND SAMSUNG DISCLAIMS ALL WARRANTIES
INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY, INFRINGEMENT OR
FITNESS FOR A PARTICULAR PURPOSE.
(Washer User Manual, attached to the Declaration of Samsung’s Counsel (“User
Manual”) at 36-37).
i.
Plaintiffs’ Fortification of the Deficiencies in the ACAC Regarding
Breach of Warranty Claims
Judge Cavanaugh dismissed all the Plaintiffs’ express and implied warranty
claims in the ACAC because: (a) Plaintiffs failed to allege that they notified Samsung
of the defects within the one-year Limited Warranty period; (b) Plaintiffs did not
contest that the product came with a clear and conspicuous disclaimer of warranties
beyond the express one-year Limited Warranty period; (c) Plaintiffs failed to alleged
that the disclaimers were unconscionable. (Cavanaugh Opinion at 21). In the SAC,
Plaintiffs attempt to fortify these deficiencies with varying degrees of success
discussed below.
a. Notice to Samsung
1. Durso
In the SAC, Durso fortifies his allegations by noting that he called Samsung
about a month after he purchased his washer to complain about the defect. (SAC at
¶¶ 13, 17). Defendant concedes that Durso’s service call occurred within the oneyear Limited Warranty period.
2. Cole
Cole now alleges that she contacted Samsung several times within the first six
months of her purchase and that Samsung eventually replaced the original washer
with another defective model. (SAC at ¶¶ 25-28). Cole does not allege that she
complained about the second washer, and Samsung argues that this failure precludes
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her breach of warranty claims. Cole’s position is that Samsung already knew that
her first and second washers were defective and knowingly took ineffective steps
until the one-year warranty expired.
Under Texas’s Business and Commerce Code § 2.607, a plaintiff must provide
notice to the manufacturer of a defective product as a condition precedent to filing a
lawsuit for breach of express or implied warranty. U.S. Tire-Tech, Inc. v. Boeran,
B.V., 110 S.W.3d 194, 200 (Tex. App. 2003); Martin v. Home Depot U.S.A., Inc.,
369 F. Supp. 2d 887, 893 (W.D. Tex. 2005) (citing U.S. Tire-Tech, Inc. v. Boeran,
B.V., 110 S.W.3d 194, 199 (Tex. App. 2003)). The purpose of the notice requirement
is to give the seller the opportunity to inspect the product, determine whether it is
defective, and allow the seller a chance to cure the breach. Wilcox v. Hillcrest
Memorial Park of Dallas, 696 S.W.2d 423, 423 (Tex. App. 1985). Under Texas law,
the critical question is not whether Samsung knew that the washing machine was
defective, but whether Samsung knew that Cole considered Samsung to be in breach
of contract. E. Air Lines, Inc. v. McDonnell Douglas Corp., 532 F.2d 957, 972 (5th
Cir. 1976) (“The notice of the breach required is not of the facts, which the seller
presumably knows quite as well as, if not better than, the buyer, but of buyer’s claim
that they constitute a breach.”).
Cole has not met the notice requirement. To find otherwise would defeat the
purpose of the notice requirement. Even if Samsung knew that the second washer
had the defects of which Cole complaints, she cannot prove that Samsung knew she
considered the second washer to be in breach of contract without her having notified
Samsung. This is all the more true given that the problems with the second washer,
which were inefficiency, noise, and an unreliable spin cycle, were considerably less
severe than the mold problem with the first washer. Without alleging that she gave
Samsung notice of a continuing breach of contract with the replacement washer,
Plaintiff cannot plausibly allege that Samsung would not have refunded the washer
or replaced it with a non-defective one as the warranty required.
The court is cognizant that Plaintiff is alleging that Samsung pressured
Plaintiff into reticence by providing a washer that it knew would manifest its defect
after the expiration of the express warranty. The court is also cognizant that the notes
to Texas Commercial Code Section 2.607 state that the purpose of the notice
requirement is “to defeat commercial bad faith, not to deprive a good faith consumer
of his remedy.” Tex. Bus. & Com. Code Ann. § 2.607. However, consumer fraud
statutes can address this particular behavior and are better suited to do so than the
Uniform Commercial Code. Extending the breach of warranty claim to Cole’s case
would unnecessarily and imprudently dilute the notice requirement for a breach of
warranty claim.
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For these reasons, we find that Cole has not met the notice requirement for
bringing claims for breach of express or implied warranty. Cole’s claims for breach
of express and implied warranty are dismissed with prejudice.
3. Walker
Samsung argues that Walker cannot bring a cause of action for breach of
express or implied warranty because he notified Samsung outside the one-year
warranty period. The legal standard does not require that the complaint be made
within the Limited Warranty period; only within a reasonable amount of time. Tex.
Bus. & Com. Code Ann. § 2.607(c). Walker, however, never states when he notified
Samsung of the defect. The SAC notes only that his washing machine was
manufactured in March 2007 and that he complained to Samsung. Without pleading
when he complained to Samsung, there is no way to tell whether Walker gave notice
within a reasonable amount of time. Walker therefore has not plead satisfaction of
the notice requirement.
b. Clearness and Conspicuousness of Disclaimer
New Jersey law generally recognizes disclaimers and will enforce them as
long as they are clear and conspicuous. See N.J.S.A. 12A:2-316; Realmuto v. Straub
Motors, Inc., 65 N.J. 336, 341-42 (1974); Gladden v. Cadillac Motor Car Div., 83
N.J. 320, 331 (1980). To be conspicuous, a disclaimer must be “so written that a
reasonable person against whom it is to operate ought to have noticed
it.” Gladden, 83 N.J. at 331.
The disclaimer at issue was located on the last few pages of the User Manual.
(Declaration of Samsung’s Counsel (“Samsung Decl.”)). Plaintiffs argue that the
location of the disclaimer at the end of the User Manual meant that it was not disclosed to the Plaintiffs until the washer had been delivered and installed. (Opposition Brief at 31). The Complaint thus plausibly alleges that a reasonable person
would not have noticed the disclaimer.
The effect of this finding is that the disclaimer does not preclude Durso’s
claim for breach of express or implied warranty. Walker, however, cannot benefit
from this finding because he admits that he did not purchase the washer. The placement of the disclaimer in the User Manual thus would not be relevant to his acquisition of the washer.
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c. Unconscionability of Disclaimer
1. Durso
“In determining whether a contractual provision or clause is unconscionable,
courts look to two factors: 1) unfairness in the formation of the contract, or procedural unconscionability, and 2) excessively disproportionate terms, or substantive
unconscionability.” Alban v. BMW of N. Am., CIV. 09-5398 DRD, 2011 WL
900114, at *8 (D.N.J. Mar. 15, 2011) (citing Sitogum Holdings, Inc. v. Ropes, 352
N.J. Super. 555, 564-65 (Ch. Div. 2002)). “Procedural unconscionability ‘can include a variety of inadequacies, such as age, literacy, lack of sophistication, hidden
or unduly complex contract terms, bargaining tactics, and the particular setting existing during the contract formation process.’” Id. (quoting Sitogum Holdings, 352
N.J. Super. at 564). “Substantive unconscionability, on the other hand, ‘simply suggests the exchange of obligations so one-sided as to shock the court’s conscience.’”
Id. (quoting Sitogum Holdings, 352 N.J. Super. at 565).
Courts in this district have repeatedly found warranty disclaimers
unconscionable where class members have no meaningful choice in determining the
terms of a warranty, there is a gross disparity of power between the class and the
manufacturer, the terms of the warranty favor the manufacturer over the buyer, and
the manufacturer had knowledge of a defect. See Henderson v. Volvo Cars of N.
Am., LLC, CIV. 09-4146 (DMC), 2010 WL 2925913, at *9 n. 7 (D.N.J. July 21,
2010); In re Samsung DLP Television Class Action Litig., CIV. 07-2141GEB, 2009
WL 3584352, at *15-16 (D.N.J. Oct. 27, 2009); Payne v. Fujifilm U.S.A., Inc., 2007
WL 4591281 (D.N.J. Dec. 28, 2007). Apparently following the direction of these
district court cases, the Plaintiffs added the following allegations to the SAC:
Plaintiffs and the other members of the class had, and have, no meaningful choice in determining the time limits of the express and implied
warranties. Moreover, a gross disparity in bargaining power exists between Samsung and the Plaintiffs and other class members. . . . Samsung’s attempts to limit the express and implied warranty to one year,
as well as its attempt to disclaim all implied warranties is unconscionable under these circumstances.
(SAC at ¶¶ 70, 72).
Samsung’s argument that the SAC does not spell out how the “disparity in
bargaining power” existed is not convincing. Samsung submitted its User Manual
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with this motion, thus demonstrating that the SAC put Samsung on notice of the
allegation that the warranty’s being buried inside the User Manual was unconscionable. With the disclaimer located inside the User Manual, it is plausible that Durso
had no knowledge of it until his washer was delivered and installed. (See Opposition
Brief at 31). Moreover, the terms of the warranty grossly favor the seller. The buyer
would have no choice but to accept or reject the entire list of disclaimers of express
and implied warranties. These conditions demonstrate a disparity of power.
Plaintiffs have therefore plead that there was a disparity of power between the
class and the manufacturer, that the terms of the warranty favor the manufacturer
over the buyer, and that the manufacturer had knowledge of defects. Moreover, we
consider the allegation that Defendant slipped a warranty that lasted only a year into
a place where Plaintiffs were unlikely to see it. These allegations plausibly spell out
a claim of an unconscionable warranty disclaimer.
2. Walker
Under Texas law, a contractual clause is unenforceable if, “the clause involved
is so one-sided that it is unconscionable under the circumstances existing when the
parties made the contract.” In re Poly-Am., L.P., 262 S.W.3d 337, 348 (Tex. 2008)
(emphasis added). Since Walker made no contract with Samsung, he cannot prove
the existence of unconscionability where he is concerned. The court therefore finds
that Walker has not plead unconscionability.
This is the third version of the Complaint, and Walker still has not been able
to plead claims for breach of express and implied warranty. These claims are therefore dismissed with prejudice.
Having determined that only Durso has remedied the three defects with the
warranty claims that Judge Cavanaugh found, the court next turns to the Defendant’s
remaining argument that, with the facts alleged, Durso does not state a claim for a
breach of the implied warranty for a particular purpose or the implied warranty of
merchantability.
ii.
Implied Warranty for a Particular Purpose
“Where the seller at the time of contracting has reason to know any particular
purpose for which the goods are required and that the buyer is relying on the seller’s
skill or judgment to select or furnish suitable goods, there is . . . an implied warranty
that the goods shall be fit for such purpose.” N.J.S.A. § 12A:2-315. “To state a
claim for breach of the implied warranty of fitness for a particular purpose, a plaintiff
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must allege that: (1) the seller had reason to know the buyers’ particular purpose; (2)
the seller had reason to know that the buyer was relying on the seller’s skill or
judgment to furnish appropriate goods; and (3) the buyer must actually rely upon the
seller’s skill or judgment.” Pappalardo v. Combat Sports, Inc., CIV.A. 11-1320
MLC, 2011 WL 6756949 (D.N.J. Dec. 23, 2011) (citing Gumbs v. Int’l Harvester,
Inc., 718 F.2d 88, 92 (3d Cir. 1983)).
Defendant argues that Plaintiffs have failed to allege that Samsung had any
reason to know of any “particular purpose” that Plaintiffs had at the time of sale or
that they relied upon Samsung’s skill or judgment in making their purchase. This
argument is not persuasive. By advertising that the Washers could wash king-size
comforters, Samsung had reason to know that any purchaser of the Washers might
rely on the advertisements for the particular purpose of washing a king-size
comforter. Durso alleges that he did rely upon Samsung’s advertising that the washer
would specifically wash a king-size comforter. Durso has thus plead the elements
of a claim for a breach of implied warranty for a particular purpose.
iii.
Implied Warranty of Merchantability
The implied warranty of merchantability requires that the article is of the general kind described and reasonably fit for the general purpose for which it should
have been sold. Adams v. Peter Tramontin Motor Sales, Inc., 42 N.J. Super. 313,
321 (App. Div. 1956). “‘Merchantability’ requires that a product conform to its ordinary and intended use.” Montich v. Miele USA, Inc., 849 F. Supp. 2d 439, 458
(D.N.J. 2012). It does not require that the goods precisely fulfill the expectation of
the buyer. Instead, it only guarantees a minimum level of quality. Green v. Green
Mountain Coffee Roasters, Inc., 279 F.R.D. 275, 282 (D.N.J. 2011).
Here, the intended use of a washer is to thoroughly clean clothes. Durso does
not allege that the washer failed in its ordinary function of washing clothes. Therefore, his claim for breach of the implied warranty of merchantability will be dismissed.
IV.
CONCLUSION
For the reasons set forth above, the motion is granted with respect to Walker’s
claims. The motion is granted with respect to Cole’s warranty claims. The motion
is granted with respect to Durso’s claim for breach of the implied warranty of
merchantability. The motion is otherwise denied. All dismissed claims are
dismissed with prejudice. To clarify, the remaining claims are:
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Count 1: New Jersey Consumer Fraud Act (Durso only)
Count 2: Texas Deceptive Trade Practices Act (Cole only)
Count 3: Fraudulent Concealment/Nondisclosure (Durso and Cole only)
Count 4: Breach of Implied Warranty (Durso’s Breach of Implied Warranty
for a Particular Purpose claim only)
Count 5: Breach of Express Warranty (Durso only)
Count 6: Negligent Misrepresentation (Durso and Cole only)
/s/ William J. Martini
_____________________________
WILLIAM J. MARTINI, U.S.D.J.
Date: August 25, 2014
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