T.J. MCDERMOTT TRANSPORTATION CO., INC. v. CUMMINS, INC. et al
Filing
96
OPINION. Signed by Judge William H. Walls on 6/7/2016. (nr, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
T.J. McDERMOTT TRANSPORTATION Co.,
INC., DeMASE WAREHOUSE SYSTEMS, INC.,
HEAVY WEIGHT ENTERPRISES, INC., P&P
ENTERPRISES CO., LLC, YOUNG’S AUTO
TRANSPORT, iNC., ALLEN HARDWICK, and
JOSE VEGA,
Plaintiffs,
OPINION
Civ. No. 14-4209 (WHW) (CLW)
V.
CUMMINS, INC., CUMMINS EMISSION
SYSTEMS, INC., and PACCAR, INC. d/b/a
PETERBILT MOTOR COMPANY,
Defendants.
Walls. Senior District Judge
Plaintiff T.J. McDermott Transportation Co. filed this action on July 2, 2014, invoking
this Court’s diversity jurisdiction and alleging that tractors it purchased from Defendants had
defective engines. T.J. McDermott filed an amended complaint on September 2, 2014. ECF No.
17. Defendants moved to dismiss that complaint, and this Court partially granted and partially
denied that motion on March 11, 2014. ECF Nos. 37, 38. On December 29, 2015, Magistrate
Judge Waldor granted Plaintiff leave to file a Second Amended Complaint, ECF No. 69, and
Plaintiff did so on January 8, 2016. The Second Amended Complaint added Plaintiffs DeMase
Warehouse Systems, Heavy Weight Enterprises, Inc., P&P Enterprises, Co., Young’s Auto
Transport, Inc., Allen Hardwick, and Jose Vega. Id. They seek to certify classes on behalf of
purchasers in New Jersey, California, Florida, Georgia, Michigan, and Connecticut. Defendant
PACCAR now moves to partially dismiss that complaint. Decided without oral argument under
Fed. R. Civ. Pr. 78, the motion is granted in part and denied in part.
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FACTUAL AND PROCEDURAL BACKGROUND
The following facts are drawn from the Second Amended Complaint (“SAC”), ECF No.
69, unless otherwise noted. Plaintiffs allege that Defendants PACCAR and Cummins formed a
partnership in 2001 for the “development, design, manufacture, assembly, marketing and sale of’
tractors that used Cummins’s ISX15 engine. Id.
¶ 14. According to Plaintiffs, PACCAR’s
vehicles equipped with the ISX1 5 engine from model years 2007 through 2009 experienced
failures due to various problems relating to “exhaust gas recirculation (‘EGR’), the EGR valves,
diesel particulate filter (‘DPF’) systems and other sensors, and other piping and containment
components for the Aftertreatment System.” Id.
¶ 24. Plaintiffs assert that Defendants were
aware of these failures in part because the vehicles’ onboard diagnostics systems “store trouble
or fault codes and provide data to Defendants’ and/or their authorized service providers’
diagnostic computers.” Id.
¶ 19.
Despite these problems with earlier ISX1 5 models, Cummins “designed, manufactured,
marketed, assembled and sold” a 2010 ISX15 model (the “subject engines”). Id.
¶ 16. Plaintiffs
allege that Cummins designed these engines without “correcting the known problems with the
2007 through 2009 model year.. engines.” Id.
.
¶ 25. PACCAR then designed and marketed
tractors equipped with the 2010 15X15 engine (the “subject vehicles”). Id.
¶ 18. Plaintiffs assert
that Cummins “warranted to Plaintiffs that the 2010 1SX15 engines would be free from defects in
material and workmanship and that in the event a defect manifested, Cummins was obligated to
correct the defect.” Id.
¶ 26.
According to the complaint, Defendants “intentionally concealed” defects with the
subject vehicles, including persistent problems with (1) the engines’ gas recirculation system, (2)
the aflertreatment system’s diesel particulate filters, (3) the aflertreatment system’s hydrocarbon
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doser, (4) several of the engines’ sensors, and (5) other components in the aftertreatment
system’s piping and containment system. Id.
¶ 27.
Owners of the subject vehicles experienced
various problems “oflen before the 200,000 mile interval, at a high rate.” Id.
¶ 2$. Their tractors
“repeatedly and frequently broke down, failed to function properly, and failed to function
reliably and dependently.” Id.
¶ 32. Cummins issued seventeen technical service bulletins listing
problems with the subject engines from 2011 through 2014. Id.
¶ 29. Plaintiffs allege that these
defects were known to Defendants at the time of sale and that Defendants failed to disclose them.
Id. ¶J30-34.
Plaintiffs are companies and individuals that purchased the subject vehicles. Plaintiff T.J.
McDermott, a New Jersey corporation, purchased five subject vehicles between 2010 and 2011.
Id.
¶J 1, 36. Plaintiff DeMase, also a New Jersey corporation, purchased four subject vehicles in
2011. Id.
¶J 2, 37. Plaintiff Heavy Weight Enterprises, a Michigan corporation, bought one
subject vehicle in 2010. Id.
¶IJ 3, 38. Plaintiff P&P, a Connecticut corporation, also bought one
subject vehicle in 2010. Id.
¶J 4, 39. Plaintiff Young’s Transport, a Florida corporation, bought
two subject vehicles in 2012. Id.
subject vehicle in 2010. Id.
vehicle in 2013. Id.
¶J 5, 40. Plaintiff Hardwick, a Georgia resident, purchased a
¶J 6, 41. Plaintiff Vega, a California resident, purchased a subject
¶J 7, 42. These Plaintiffs experienced problems with the subject engines that
they claim resulted in “out-of-pocket costs of repair, towing and lodging costs, rental costs of
replacement vehicles, diminished value of Subject Vehicles, lost revenue, lost profit, and
goodwill” as well as “substantially diminished resale value and intrinsic value.” Id.
¶J 47, 4$.
Plaintiffs also seek to certify several classes and sub-classes. They propose a New Jersey
class consisting of all persons and entities in New Jersey who are “users, purchasers, subsequent
purchasers, owners, subsequent owners, and lessors” of a vehicle powered by a 2010 ISXY5
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engine, with a New Jersey subclass specifically relating to those whose vehicle was made by
PACCAR. Id.
¶ 50. They also seek to certify identical classes and subclasses for persons and
entities in the states of California and Florida. Id. Finally, Plaintiffs propose classes of 2010
ISX1 5 engine owners, without related subclasses for the states of Georgia, Michigan, and
Connecticut. Id.
On behalf of themselves and the putative classes, Plaintiffs assert (1) one count under the
New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1, against Cummins on behalf of the New Jersey
Class and against PACCAR on behalf of the New Jersey sub-class, id.
¶J 62-7 1, (2) one count of
breach of express warranty under New Jersey law against Cummins on behalf of the New Jersey
Class, Id.
¶J 72-86, (3) one count of breach of express warranty under California law against
Cummins on behalf of the California Class, Id.
¶JJ 87-100, (4) one count for violation of the
California Unfair Competition Law, Cal. Business and Professions Code
§
17200, against
Cummins on behalf of the California Class and against Cummins and PACCAR on behalf of the
California sub-class, Id.
¶J 101-109, (5) one count of breach of express warranty under Florida
law against Cummins on behalf of the Florida Class, Id.
of Florida’s Unfair and Deceptive Trade Practices Act,
¶J 110-124, (6) one count for violation
§
501.201, Florida Statutes, against
Cummins on behalf of the Florida Class and against PACCAR on behalf of the Florida sub-class,
Id.
¶J 125-132, (7) one count for breach of express warranty under Georgia law against Cummins
on behalf of the Georgia class, Id.
¶ 133-147, (8) one count for breach of express warranty
under Michigan law against Cummins on behalf of the Michigan class, Id.
¶ 148-162, (9) and
finally one count of breach of express warranty under Connecticut law against Cummins on
behalf of the Connecticut Class, Id.
¶J 163-177. On March 9, 2016, the parties stipulated to a
dismissal without prejudice of the claims against Cummins, subject to Cummins’s agreement to
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participate in discovery and toll the statute of limitations for claims asserted against it in the
Second Amended Complaint. See ECF No. 91.
PACCAR moves to dismiss (1) DeMase’s claim under the New Jersey Consumer Fraud
Act, (2) Vega’s claim under the California Unfair Competition Law, (3) Young’s Transport’s
claim under the Florida Deceptive and Unfair Trade Practices Act, and (4) all claims for
consequential and incidental damages under these laws. Mot. to Dismiss, ECF No. 77 at 8-13.
STANDARD OF REVIEW
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, ‘to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A
claim is plausible on its face “when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “A
pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of
action will not do. Nor does a complaint suffice if it tenders naked assertions devoid of further
factual enhancement.” Id. (internal quotations and alterations omitted). “[W]here the wellpleaded facts do not permit the court to infer more than the mere possibility of misconduct, the
complaint has alleged—but it has not ‘shown’—that the pleader is entitled to relief.” Id. at 679.
Federal Rule of Civil Procedure 9(b) provides that, “[i]n alleging fraud or mistake, a
party must state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ.
P. 9(b). The purpose of the heightened pleading standard is to require the plaintiff to “state the
circumstances of the alleged fraud with sufficient particularity to place the defendant on notice of
the precise misconduct with which it is charged.” frederico v. Home Depot, 507 F.3d 188, 200
(3d Cir. 2007). “To satisfy this heightened standard, the plaintiff must plead or allege the date,
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time and place of the alleged fraud or otherwise inject precision or some measure of
substantiation into a fraud allegation.” Frederico, 507 F.3d at 200. Normally, “Rule 9(b)
requires, at a minimum, that plaintiffs support their allegations.
.
.
with all of the essential
factual background that would accompany the first paragraph of any newspaper story
—
that is,
the who, what, when, where and how of the events at issue.” In re Suprema Specialties, Inc. Sec.
Litig., 43$ F.3d 256, 276-77 (3d Cir. 2006) (citations and quotation marks omitted). “Courts
should, however, apply the rule with some flexibility and should not require plaintiffs to plead
issues that may have been concealed by the defendants.” Rob v. City Investing Co. Liquidating
Trust, 155 F.3d 644, 658 (3d Cir. 199$) (citation omitted).
DISCUSSION
In its March 11, 2015 opinion addressing Defendants’ original motion to dismiss, the
Court held that choice of law analysis would be premature, noting that “the present factual record
is insufficient for choice of law analysis.” See Ti McDermott Transp. Co. v. Cummins, Inc., No.
14-4209, 2015 WL 1119475 at *4 (D.N.J. Mar. 11, 2015). This remains true, and the Court will
analyze each of Plaintiffs’ state law claims under the laws of that state for this motion. See id.
1. DeMase has adequately pled a claim under the NJCFA.
To state a claim under New Jersey’s Consumer Fraud Act, a plaintiff must allege (1) a
defendant’s unlawful conduct, (2) an ascertainable loss by the plaintiff, and (3) a causal
connection between the two. mt ‘1 Union of Operating Engineers Local No. 62 Welfare fund v.
Merck & Co., Inc., 192 N.J. 372, 389 (N.J. 2007). The NJCFA is to be “liberally construed in
favor of protecting consumers.” Barry v. Arrow Pontiac, Inc., 100 N.J. 57, 69 (N.J. 1985). In
light of this, motions to dismiss NJCFA claims are to be “approached with hesitation.” Ni
Citizen Action v. Schering-Plough Corp., 367 N.J. Super. 8, 13 (N.J. Ct. App. 2003). Fed. R. Civ.
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Pr. 9(b)’s heightened pleading standard applies to fraud claims under the NJCFA. Frederico v.
Home Depot, 507 f.3d 188, 200 (3d Cir. 2007).
PACCAR argues that DeMase has not pled facts with sufficient particularity to show an
ascertainable loss. Mot. to Dismiss at 11. This Court previously analyzed Plaintiff T.J.
McDermott’s claims and found that it “establishe[d] ascertainable loss by stating that it incurred
over $80,000 in post-warranty repair costs.” Ti McDermott, 2015 WI 1119475 at *7
Defendant argues that “no such similar facts have been provided” by DeMase. Mot. to Dismiss at
12. Plaintiffs first respond that DeMase is not obligated to independently plead ascertainable
losses because “McDermott’s allegations already establish that losses from purchasing the
Subject Vehicles are ascertainable.” Opposition Brief (“Opp. Br.”), ECF No. 82 at 16-17. They
also argue that DeMase has independently established that its losses are ascertainable, because it
has alleged that it would not have purchased the subject vehicles if it had been aware of the
defects. Opp. Br. at 16-17.
The “viability of a CFA claim.
.
.
‘often turns on the question of whether a plaintiff is
able to provide sufficient evidence of an ascertainable loss.” Mickens v. Ford Motor Co., No.
10-cv-5842, 2015 WI 5310755 at *6 (D.N.J. Sept. 10, 2015) (quoting Ferldns v.
DaimlerChryster Corp., 383 N.J. Super. 99, 105 (N.J. Ct. App. 2006). The requirement that a
plaintiff prove an ascertainable loss “has been broadly defined as embracing more than a
monetary loss.” Union Ink Co. v. AT&T Corp., 352 N.J. Super. 617, 646 (N.J. Ct. App. 2002).
An ascertainable loss occurs “when a consumer receives less than what was promised.” Id.
The Second Amended Complaint alleges that the subject vehicles’ “problems and defects
resulted in warnings, deratings, and shutdowns, requiring expensive repairs in an effort to
remediate the faults and frequent and excessive down times..
7
.
.“
SAC ¶ 32. It also specifically
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alleges that T.J. McDermott’s “out-of-pocket expenses for post-limited warranty repairs”
exceeded $80,000. Id.
¶ 71. Although there is no equivalent allegation specif’ing DeMase’s
losses in a dollar amount, the defects in DeMase’s tractors allegedly caused engine shutdowns
and required expensive repairs. This adequately alleges an ascertainable loss. “[B]y the time of a
summary judgment motion,” DeMase will be obligated to provide an estimate of damages and
show that its losses were “quantifiable or measurable,” but it is entitled to discovery in order to
make that showing. Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234, 249 (N.J. 2005); see
also Mickens, 2015 WL 5310755 at *6.
2. Vega had adequately pled a California UCL claim.
a. Unfair Competition Law Claims
The California Unfair Competition Law prohibits business practices that are “unlawful,
unfair, or fraudulent.” Cal. Bus. & Prof. Code
§
17200. Plaintiff Vega alleges that PACCAR’s
conduct violated all types. SAC ¶J 102-105. Unlawful practices are those that violate another
law; “the UCL ‘borrows’ violations of other laws and treats them as unlawful practices
independently actionable under the UCL.” Saldate v. Wilshire Credit Corp., 268 F.R.D. 87, 102
(E.D. Cal. 2010) (citing Farmers Ins. Exchange v. Superior Court, 2 Cal 4th 377, 383 (1992). A
practice is unfair if “the consumer injury is substantial, is not outweighed by any countervailing
benefits to consumers or to competition, and is not an injury the consumers themselves could
reasonably have avoided.” Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824, 838 (Cal.
Ct. App. 2006). To state a claim under the UCL, a plaintiff must plead that “(1) defendant
engaged in one of the practices prohibited by the statue; and (2) plaintiff suffered actual injury in
fact as a result of defendant’s actions.” Marolda v. Symantec Corp., 672 F. Supp. 2d 992, 1003
(N.D. Cal. 2009). The UCL allows a plaintiff to recover injunctive relief and restitution, but not
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damages. E.g. Asghari v. Volkswagen Group ofAmerica, Inc., 42 F. Supp. 3d 1306, 1324 (C.D.
Cal. 2013).
b. Vega has not adequately alleged unlawful conduct.
PACCAR first argues that Plaintiffs have failed to plead unlawful business practices
because they have not identified which statute, regulation, or ordinance was violated by their
conduct. Mot. to Dismiss at 9. Count Four alleges violations of each prohibition of the UCL.
With respect to the unlawful assertion, it states that “Defendants have violated the unlawful
prong of § 17200 by its violations as set forth below,” SAC ¶ 103, but does not identify any
specific law that PACCAR is alleged to have violated. A “violation of another law is a predicate
for stating a cause of action under the UCL’s unlawful prong.” Graham v. Bank ofAmerica,
N.A., 172 Cal. Rptr. 3d 218, 231 (Cal App. Div. 2014) (quotations omitted). In their opposition
to the motion to dismiss, Plaintiffs state that “PACCAR’s argument overlooks the breach of
warranty count in the SAC. Such an allegation would satisfy [the unlawful] prong.” Opp. Br. at
23, fu. 8. But the breachof warranty claim brought by Vega on behalf of the proposed California
class is brought only against Cummins, while the UCL violation is brought against PACCAR.
SAC
¶J 87-100. And even if Cummins’s alleged breach of expressed warranty could support a
UCL claim against PACCAR, the breach of warranty claim was dismissed by the Court
according to the parties’ March 9 stipulation. Stipulation, ECF No. 91. Finally, Plaintiffs’ other
claims against PACCAR that are brought under the laws of other states cannot be used to support
a claim under California’s UCL. See Hilton v. Apple Inc., No. 13-7674, 2014 WL 10435005 at
*3*4 (C.D. Cal. April 18, 2014). PACCAR is correct that Vega has failed to state a UCL
violation under the unlawful prong.
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c. Vega adequately alleges a violation based on PACCAR’s omission.
PACCAR next argues that Vega’s UCL claim does not meet the requirements for
pleading a violation based on an omission. Mot. to Dismiss at 9. Under California law, an
omission is actionable if it is “contrary to a representation actually made by the defendant, or an
omission of a fact the defendant was obliged to disclose.” Daugherty, 144 Cal. App. 4th at 83536; see also Wilson v. Hewlett-Packard Co., 668 f.3d 1136, 1141(9th Cir. 2012). PACCAR
argues that Vega has failed to show that it was obligated to disclose the alleged defects and so its
failure to disclose any such defects is not an actionable omission in the absence of a contrary
representation. Mot. to Dismiss at 9.
Relying on Ostreicher v. Alienware Corp., PACCAR argues that a manufacturer is only
obligated to disclose a defect if there has been “an affirmative misrepresentation or a safety
issue.” 322 F. App’x 489, 493 (9th Cir. 2009). Ostreicher relied on Daugherty, a decision of the
California Court of Appeals for the Second District, which held that the defendants had no duty
to disclose an alleged defect because the plaintiffs complaint “is devoid of factual allegations
showing any instance of physical injury or any safety concerns posed by the defect.” 144 Cal.
App. 4th at 836. Plaintiffs respond that “[s]uch a limited duty to disclose only arises when the
defect manifests after the warranty period expired, as was the case in Ostreicher.”
Opp. Br. at 24
ffi 11. They point to Decker v. Mazda Motor ofAmerica, Inc., where the Central District of
California held that a “proper reading of Daugherty reveals a two-step duty to disclose analysis”
under which a manufacturer has a duty to disclose (1) any defects that would have “caused the
consumer to not purchase the tproduct] if they had been disclosed” during the warranty period
and (2) defects relating to safety after the end of the warranty period. No. 11-873, 2011 WL
5101705 at *4 (C.D. Cal. Oct. 24, 2011). The year after Decker was decided, the Ninth Circuit
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stated that “California federal courts have generally interpreted Daugherty as holding that ‘[a]
manufacturer’s duty to consumers is limited to its warranty obligations absent either an
affirmative misrepresentation or a safety issue,” without citing Decker. Wilson, 668 F.3d at
1141.
This Court need not decide between these two conflicting interpretations of Daugherty,
because the complaint’s allegations raise a safety issue, which explicitly gives rise to a duty to
disclose under California law. Daugherty, 144 Cal. App. 4th at 836
The Second Amended Complaint asserts that the Subject Vehicles’ onboard diagnostic
systems “monitor and control all aspects of safety, emissions and performance” of the Subject
Engines. SAC ¶J 19, 69. The complaint alleges that, when “there are problems with the Subject
Engine or Afiertreatment Systems that require the Subject Vehicle be brought to one of
Defendants’ authorized service providers,” warning lights would be illuminated and “after a
short de-rated operating time, the Subject Engine is shut down by the on-board diagnostic
system.” Id.
¶ 20. The complaint also alleges that these “on-board diagnostic systems had
problems.” Id.
¶ 70. These assertions, along with the allegation that the subject engines
experienced “clogging” and “plugging” and would cause the tractors to shut down during use, id.
¶J 20, 29, raise the issue of safety. The existence of a defect that caused a safety risk would
trigger a duty to disclose and allow Vega to plead a UCL violation based on an omission.
Compare Marsildan v. Mercedes Benz USA, LLC, No. 8-4876, 2009 WL 8379784, at *6..7 (C.D.
Cal. May 4, 2009) (safety issue adequately alleged because “it is not implausible that [air intake
clogging] would cause ‘catastrophic engine.
.
.
failure’ while the car is on the road”) and Wilson,
668 f.3d at 1144 (no safety issue alleged where “it is difficult to conceive (and the complaint
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does not explain) how [laptops sold by defendant] could ignite if [the alleged defect renders
them] ‘unable to receive an electrical charge.”).
d. Vega adequately alleges reliance.
PACCAR further argues that Vega fails to allege reliance, noting that he “fails to state
that he viewed any promotional materials or advertisements from PACCAR prior to his
purchase.” Mot. to Dismiss at 10. A claim for fraud under the UCL requires a showing of actual
reliance. In re Tobacco II Cases, 46 Cal. 4th 298, 326 (Cal. 2009). Reliance may be established
by showing that, in the “absence [of a defendant’s misrepresentation] the plaintiff ‘in all
reasonable probability’ would not have engaged in the injury-producing conduct.” Id. at 327
(internal citation omitted). A plaintiff need not show “individualized reliance on specific
misrepresentations,” and the misrepresentation need not be “the sole or even the predominant or
decisive factor” in influencing a plaintiffs conduct. Id. at 326-27. A “presumption, or at least an
inference, of reliance arises wherever there is a showing that a misrepresentation was material,”
and “materiality is generally a question of fact.” Id. “Alleged defects that create ‘unreasonable
safety risks’ are considered material.” Daniel v. ford Motor Co., 806 F.3d 1217, 1225 (9th Cir.
2015).
Plaintiffs argue that reliance has been adequately pled because Vega alleges that he
“would not have purchased the Subject Vehicle.
.
.
or not have paid as much for the Subject
Vehicle” if “defendants [had] disclosed the defect with the Subject Engine.” SAC
¶ 107.
Plaintiffs also argue that the alleged defects should be considered material because they created
unreasonable safety risks. In its reply, PACCAR contends that the complaint fails to plead any
facts “related to Vega’s transaction and/or experiences” or any unreasonable safety risk. Reply
Br., ECF No. 85 at 7-9.
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Materiality of a misrepresentation is “a question of fact unless the fact misrepresented is
so obviously unimportant that the jury could not reasonably find that a reasonable man would
have been influenced by it.” In re Tobacco II Cases, 46 Cal. 4th at 327 (internal quotations
omitted). The alleged defects led to repeated engine shutdowns that rendered the tractors
unusable until they were repaired at a service provider. A defect that repeatedly renders a product
unusable is unlikely to be “obviously unimportant” to the consumer. Materiality can also be
inferred here because, as discussed, the Second Amended Complaint raises a safety issue. The
facts alleged in the Second Amended Complaint, taken as true for the purpose of a motion, raise
a question of fact as to materiality and an inference of materiality based on the issue of safety.
Cf Mc Vicar v. Goodman Global, Inc., No. 13-1223, 2015 WL 4945730 at *11 (C.D. Cal. Aug.
20, 2015) (In “some cases, for example, those involving automobile safety, it is fair to assume
that all of the purchasers of automobiles read some marketing materials regarding the product.”).
PACCAR’s motion to dismiss Vega’s UCL claim based on failure to plead reliance is denied.
e. Vega’s claim for restitution has been adequately pled.
Finally, PACCAR argues that Plaintiffs fail to make a valid claim for restitution because
Vega does not allege that he bought his vehicle directly from Defendant. PACCAR relies on
Asghari v. Volkswagen Group ofAmerica, Inc., where the Central District of California
dismissed a UCL claim for restitution because the plaintiff had bought an allegedly defective
vehicle from a third party and could not show that defendants obtained her money or property.
42 F. Supp. 3d 1306, 1324 (C.D. Cal. 2013). Asghari is distinguishable because the plaintiffs in
that case purchased their vehicles used, Id. at 1318, while Vega alleges that he purchased his
tractor new. SAC ¶ 42. To recover on a claim for restitution, Vega will have to produce
“evidence that supports the amount of restitution necessary to restore to the plaintiff any money.
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•
.
which may have been acquired by means of.
.
.
unfair competition.” Colgan v. Leatherman
Tool Group, Inc., 135 Cal. App. 4th 663, 697 (Cal. Ct. App. 2006). The allegation that Vega
purchased a new, rather than a used, tractor is sufficient to entitle him to discovery in order to
locate evidence that PACCAR is in possession of money acquired by means of unfair
competition.
3. Young’s Transport fails to allege conduct in the state of Florida.
The Florida Unfair and Deceptive Trade Practices Act prohibits “unfair, deceptive and/or
unconscionable practices which have transpired within the territorial boundaries of [Florida].”
Millennium Commc’n & fulfillment, Inc. v. Office ofAttorney Gen., 761 So. 2d 1256, 1262 (Fla.
Dist. Ct. App. 2000); FiveforEntm’t$.A. v. Rodriguez, 877 F. Supp. 2d 1321, 1330 (S.D. fla.
2012). A “consumer claim for damages under FDUTPA has three elements: (1) a deceptive act
or unfair practice; (2) causation; and (3) actual damages.” Rollins, Inc. v. Rutland, 951 So. 2d
860, 869 (Fla. Dist. Ct. App. 2006). PACCAR argues that Plaintiffs claim fails because it has
not shown that it suffered actual damages and it has not specified that the alleged purchase took
place in Florida. Mot. to Dismiss at 12-13. Young’s Transport has alleged that its vehicles
suffered a “diminution in value” and stated that it is a Florida corporation with its principal place
of business in Fort Myers, Florida. SAC ¶J 5, 132.
Young’s Transport has adequately alleged actual damages. The FDUTPA “allows for
recovery of the difference between the value of the defective.
non-defective.. . goods.
. .
.“
.
.
goods provided and the value of
Orkin Exterminating Co. v. DelGuidice, 790 So. 2d 1158, 1162
(Fla Dist. Ct. App. 2001). Young’s Transport alleges that the subject vehicles had defective
engines, identifies specific mechanical defects in the engines, and claims that these defects
diminished the value of the subject vehicles. SAC
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¶ 27,
131-132. In short, it alleges that the
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value of its defective tractors was less than the value of non-defective tractors would have been.
The allegation of these specific defects contain sufficient factual content to withstand a motion to
dismiss.
Next, PACCAR argues that Plaintiffs fail to allege sufficient activity within the state of
Florida to proceed under the FDUTPA. Plaintiffs assert that the claim is sufficiently pled because
the Second Amended Complaint “provides that Plaintiff Young’s Transport is a Florida
corporation.
.
.
and that Defendants knowingly and intentionally concealed their knowledge of
the problems and defects when the trucks were placed into the stream of commerce.” Opp. Br. at
18. They argue that “it is reasonable to infer that Defendants’ misconduct reached Florida
because any decision to purchase the trucks and subsequent injury occurred in Florida, which
would not have occurred had Defendants not concealed the material information in their
marketing campaign.” Id.
Plaintiffs cite four cases where courts have declined to dismiss FDUTPA claims on the
ground that injuries took place outside of Florida, Id., but in each of these cases the plaintiffs
alleged that at least some of defendants’ activities occurred within the state. Solyom v. World
Wide Child Care Corp., 14-80241-dy, 2015 WL 6167411 at *2..*3 (S.D. fIa. Oct 15, 2015)
(Defendants’ principal place of business was in Florida, and they were alleged to have hired
“unlicensed sales people” who made material misrepresentations while selling securities.); In re
Flonase Antitrust Litig., 692 F. Supp. 2d 524, 538 (E.D. Pa. 2010) (Plaintiffs alleged that “their
purchases and/or reimbursements of’ defendants’ medicine took place in Florida.); Carnival
Corp. v. Rolls-Royce PLC, No. $-23318-CIV, 2009 WL 3861450 at *6 (S.D. Fla. Nov. 17, 2009)
(“Plaintiffs’ Amended Complaint has alleged numerous actions that occurred in Florida.
.
Millennium Cornmc ‘n, 761 So. 2d at 1262 (“the allegations in this case reflect that the offending
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conduct occurred entirely within this state”). The mere assertion that Young’s Transport is a
Florida company that purchased Defendant’s tractors is insufficient to allege that the “unfair,
deceptive and/or unconscionable practices.
.
.
transpired within the territorial boundaries” of
Florida. Millennium Commc ‘ii, 761 So. 2d at 1262. As the Southern District of Florida has
explained, “pertinent question.. is not the citizenship of the {p]laintiff, but rather the
.
connection of the [d]efendants’ alleged activities with Florida.” Solyom, 14-80241-dy, 2015
WL 6167411 at *2*3. Alleging that Plaintiff, rather than Defendant, is a Florida company, on its
own, does not establish a connection between a defendant’s activities and that state. And alleging
that Young’s Transport’s principal place of business is in Florida is not equivalent to alleging
that the decision to purchase PACCAR tractors, or the purchase itself, took place in Florida.
Where FDUTPA complaints have failed to specify which actions occurred in Florida,
courts have granted motions to dismiss “with leave to re-plead to specify the location of the
conduct to make certain it occurred within the territorial boundaries of Florida.” five for Entm ‘t
S.A., 877 F. Supp. 2d at 1331. Because Plaintiffs have not pled that any of the subject vehicles
were purchased by Young’s Transport in Florida, Young’s Transport’s FDUTPA claim is
dismissed without prejudice. Plaintiffs are granted leave to file an amended complaint that pleads
the specific location of the conduct alleged in Young’s Transport’s FDUTPA claim within 90
days of the date of this order.
4. Plaintiffs’ claims for consequential and incidental damages are partially dismissed.
Defendant argues that all claims for consequential damages against PACCAR should be
dismissed because (1) PACCAR’s warranties included a damages limitation that is valid under
New Jersey law and (2) consequential damages are not available under either the UCL or
FDUTPA. Mot. to Dismiss at 13.
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Under New Jersey law, consequential damages may be limited by a disclaimer, and
PACCAR disclaimed consequential damages in its express warranties. See Chatlos Sys., Inc. v.
Nat’! Cash Register Corp., 635 f.2d 1081, 1083 (3d Cir. 1980); see also Kearney & Trecker
Corp. v. Master Engraving Co., Inc., 107 N.J. 584, 600 (N.J. 1987); Warranty, ECF No. 15-3. A
disclaimer of consequential and incidental damages may be invalidated “when the circumstances
of the transaction, including the seller’s breach [of warranty], cause the consequential damage
exclusion to be inconsistent with the intent and reasonable commercial expectations of the
parties..
.
.“
Kearney, 107 N.J. at 600. Previously, the Court found that this issue was
prematurely raised because it could not rule on whether PACCAR’s disclaimer was invalidated
without deciding the merits of T.J. McDermott’s claim for breach of express warranty. Ti
McDermott, 2015 WL 1119475 at *15. Defendant now claims that, because there is no longer
any “breach of warranty cause of action alleged against PACCAR,” the “damages limitation
should be enforced, and all claims for consequential damages against PACCAR should be
dismissed.” Reply Br. at 11.
This issue remains premature. Although Plaintiffs no longer bring a claim against
PACCAR for breach of express warranty, the Court cannot make a detennination as to the
“circumstances of the transaction,” including the “seller’s breach” and the “intent.
.
.
of the
parties.” Kearney, 107 N.J. at 600. These are disputed questions of fact that cannot be decided on
a motion to dismiss.
PACCAR is correct that consequential damages are not available under the FDUTPA or
the UCL. “Florida courts specifically reject the recovery of consequential damages under
FDUTPA.” Eclipse Medical, Inc. v. Am. Hydro-Surgicat Instruments, Inc., 262 F. Supp. 2d 1334,
1357 (S.D. Fla. 1999) (citing Urling v. Helms Exterminators, Inc., 468 So.2d 451, 454 (Fla. Dist.
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Ct. App. 1985). Similarly, “[r]elief under the UCL is limited to injunction and restitution.”
Marolda, 672 F. Supp. 2d at 1004; see Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th
1134, 1144 (Cal. 2003) (quotations and alternations omitted). Plaintiffs’ claims for consequential
damages under the FDUTPA and UCL are dismissed. Defendant’s motion to dismiss Plaintiffs’
claims for consequential damages under the NJCFA is denied.
CONCLUSION
Defendant PACCAR’s motions to dismiss are granted in part and denied in part. Plaintiff
Vega’s claim under the UCL, brought in Count Four, is dismissed only to the extent that it relies
on the “unlawful” prong of that statute. Plaintiff Young’s Transport’s claim under FDUTPA,
brought in Count Six, is dismissed without prejudice, and Plaintiffs are granted leave to amend
their complaint to specify the location of the activity alleged in that Count within 90 days of the
date of this order. Plaintiffs’ claims for consequential damages under the FDUTPA and UCL are
dismissed. The remainder of Defendant’s motion is denied. An appropriate order follows.
Date: June 7, 2016
States
18
iisthct Judge
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