KEARNEY v. BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT et al
Filing
18
OPINION. Signed by Judge William H. Walls on 8/29/18. (cm, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
DAVE KEARNEY, JAMES BARR, and ROBIN
SCHOENE,
OPINION
Civ. No. 17-13544 (WHW-CLW)
Plaintiffs,
V.
BAYERISCHE MOTOREN WERKE
AKTIENGESELLSCHAFT, and BMW of NORTH
AMERICA, LLC,
Defendants.
Walls, Senior District Judge
In this putative class action involving allegedly defective sunroofs, Defendant BMW of
North America (“BMW NA”) moves to dismiss the Amended Complaint under Federal Rules of
Civil Procedure 8, 9, and 12(b)(6). ECF No. 12. Plaintiffs Dave Keamey, James Barr, and
Robin $choene (collectively, “Plaintiffs”) oppose. ECF No. 15. Decided without oral argument
under federal Rule of Civil Procedure 78, the motion is granted in part and denied in part.
FACTUAL AND PROCEDURAL BACKGROUND’
1. Overview
Plaintiffs initiated this action with a December 22, 2017 class-action complaint. ECF No.
1. An Amended Class Action Complaint (the “Amended Complaint”) followed on March 13,
2008. ECF No. 7. The Amended Complaint alleges that BMW NA and Bayerische Motoren
Werke Aktiengesellschaft (“BMW AG”) (together, “Defendants”) violated common and
statutory law by selling and leasing vehicles equipped with defective sunroofs and moonroofs
(the “Defective Sunroofs”) that are prone to sudden, unexpected explosion or shattering. Am.
Unless stated otherwise, all facts are drawn from the Amended Complaint, ECF No. 7.
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Compi. ¶J 1—3, ECF No. 7. Specifically, it alleges that Defendants “wrongfully and intentionally
concealed” problems with the Defective Sunroofs, exposing Plaintiffs and class members to “a
shower of glass.
.
.
and forcing them to incur out of pocket costs to repair or replace the
Defective Sunroofs” and other vehicle parts. Id.
The Amended Complaint is based in part on an October 2017 Consumer Reports
investigation detailing “complaints of exploding sunroofs across numerous brands, including
BMW.” Id. ¶4. Many of those complaints relate to panoramic sunroofs, which have grown in
popularity over the past decade; Defendants began installing them in 2004. Id.
¶J 5—6.
One
month after the Consumer Reports investigation, two United States Senators requested
information from BMW and others regarding sunroof safety. Id.
¶ 7.
Affected vehicles include the following model years when equipped with a sunroof or
moonroof:
•
model year (“MY”) 2005—2018 BMW 3 series;
•
MY 2005—2018 BMW 5 series;
•
MY 2004—2018 BMWX5s;
•
MY2005—2018X3s;
•
MY 2009—2018 BMW Xis;
•
MY 2008—2018 MINI Clubmans;
•
MY 2006—2018 MINI Coopers;
•
MY 2011—2018 MINI Countrymans;
•
MY 2009—2018 MINI Hardtops; and
•
MY 2013—2018 MINI Pacemans.
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(collectively, the “Class Vehicles”). Id.
¶ 10.
Panoramic sunroofs and moonroofs are not
standard features in Defendants’ base models; they are featured as part of an upgrade. Id.
¶ 16.
Defendants have neither warned Class Vehicle owners about the defect, nor agreed to cover
replacement of the Defective Sunroofs under the Class Vehicles’ applicable warranties. Id.
¶J
11—12, 15.
2. The Parties and Proposed Classes
Plaintiff Dave Kearney is a California resident and owner of a panoramic sunroofequipped 2012 BMW X5, which he purchased on July 21, 2015. Id.
¶ 24.
Plaintiff James Barr is
a Texas resident and owner of a panoramic sunroof-equipped 2017 Mini Cooper Hardtop. Id.
¶
26. Plaintiff Robin Schoene is a Maryland resident, former owner of a panoramic sunroofequipped BMW X3, and current owner of a panoramic sunroof-equipped 2013 BMW 328i. Id.
¶J 28—31.
BMW AG is a German company with its principal place of business in Munich. Id.
36. BMW NA is a Delaware corporation with its corporate headquarters in New Jersey. Id.
¶
¶
37. MINI USA is an unincorporated division of BMW NA that markets and sells vehicles under
the MINI brand name. Id.
Plaintiffs bring this action on behalf of themselves and members of the following
proposed class and sub-classes:
•
Nationwide Class: All persons or entities in the United States that purchased, leased,
own, or owned a Class Vehicle (the “Nationwide Class” or “Class”);
•
California Sub-Class: All persons or entities that purchased or leased a Class Vehicle in
the State of California and all persons or entities in the State of California that purchased,
leased, own, or owned a Class Vehicle;
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•
Song-Beverly Sub-Class: All persons or entities that purchased or leased a Class
Vehicle in the State of California;
•
Texas Sub-Class: All persons or entities that purchased or leased a Class Vehicle in the
State of Texas and all persons or entities in the State of Texas that purchased, leased,
own, or owned a Class Vehicle; and
•
Maryland Sub-Class: All persons or entities that purchased or leased a Class Vehicle in
the State of Maryland and all persons or entities in the State of Maryland that purchased,
leased, own, or owned a Class Vehicle. Id.
¶ 85.
3. Factual Allegations
While driving his vehicle on January 26, 2017, Plaintiff Barr heard a loud sound and
“noticed a hole in his sunroof,” which he replaced for approximately S 1,274. Id.
¶ 27.
The
sunroof in Schoene’s X3 shattered on some unspecified date, causing glass to fall “on top of her
and throughout her vehicle.” Id.
“exploded.” Id.
¶J 30—3 1.
¶ 28.
In January 2018, the sunroof ofher 2013 BMW 328i
For now, it appears that Kearney’s sunroof remains intact. Id.
¶J 24—
25. Defendants never warned any of the Plaintiffs of the Defective Sunroofs and the
corresponding safety hazards associated with their Class Vehicles. Id.
¶J 25, 27, 31.
Plaintiffs
paid higher purchase prices for their Class Vehicles than they would have for a vehicle not
equipped with a Defective Sunroof, and Bar and Schoene incurred damages related to repair
costs, lost time, lost use of their Class Vehicles, and expenses associated with obtaining
alternative transportation. Id.
¶J 25, 27—28, 31.
Defendants have “refused to repair or replace
the Defective Sunroofs free of charge” for Class Members and have “not recalled the Class
Vehicles to replace the Defective Sunroofs.” Id.
¶ 49.
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Plaintiffs and Class Members would not have purchased their vehicles, would have paid less for
them, or would not have purchased an upgrade that included a Defective Sunroof. Id.
¶ 32.
Plaintiffs claim that the Class Vehicles are equipped with Defective Sunroofs, exposing
Class Members to the risk of sudden explosion or shattering. Id. ¶41. “Incidents involving
exploding sunroofs”—including those installed in BMW NA’s vehicles—”have occurred in
every month of the year in every part of the country.” Id.
¶ 42.
American consumers have filed
over 850 related complaints with the federal government, although it is unclear what portion of
these relate to the Class Vehicles. Id.
¶ 46.
Part of the problem appears to stem from the
“panoramic” nature of the Defective Sunroofs; “the bigger the expanse of glass, the harder to
ensure it won’t shatter.” Id. ¶45 (quoting Jeff Plungis and Thomas Germain, Exploding
Sunroofs: Danger Overhead, Consumer Reports at 2 (Oct. 12, 2017)).
The shattering and/or exploding sunroofs have attracted federal-government attention. In
April 2016, the National Highway Traffic Safety Administration (“NHTSA”) commenced an
investigation of BMW and other auto manufacturers regarding sunroof issues, requiring the
manufacturers to provide the NHT$A with various categories of related information. Id.
¶ 51.
Senators Blumenthal and Markey made similar requests for information in November 2017. Id.
¶ 52.
Consumers who purchased Class Vehicles have filed a number of complaints with the
NHTSA. Id.
¶fflJ 62, 65.
Defendants provided warranty coverage for the Class Vehicles, including under a New
Vehicle Limited Warranty (“NVLW”), which covers “defects in materials or workmanship to the
first retail purchaser and each subsequent purchaser for 4 years or 50,000 miles, whichever
occurs first.” Id.
¶ 13.
The NVLW promised to repair or replace covered defective parts at no
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cost. Id. “These warranties were provided in Class Vehicle window labels, owner’s manuals
and brochures, and advertised on Defendants’ websites.” Id.
¶
14.
Plaintiffs claim that Defendants failed to warn consumers of the risks associated with the
Defective Sunroofs, and that Defendants concealed the Class Vehicles’ defect even though they
knew or should have known about it as early as 2002. Id.
¶J 57, 69.
That knowledge came from
pre-production testing and analysis, “early consumer complaints,” “aggregate warranty data
compiled from” and “repair order and parts data received from” dealers, consumer complaints to
NHTSA, and “testing performed in response to consumer complaints.” Id.
¶ 58.
Defendants
became aware of the defect “shortly afier production of the Class Vehicles commenced.
through sources not available to Plaintiffs and members of the classes.” Id.
¶ 60.
Despite knowing the risks associated with the Defective Sunroofs, Defendants “failed to
inform Class Vehicle owners and lessees prior to purchase or lease.
.
.
or during the express
warranty period that the Defective Sunroofs were defective and may explode or shatter,” and that
they had been inadequately tested. Id.
¶J 67—68.
“None of the advertisements reviewed or
representations received by Plaintiffs and members of the Classes contained any disclosure
relating to the Defective Sunroofs and associated safety risk.” Id.
¶ 32.
Further, Defendants are
“not acknowledging or resolving the issue,” and continue to include the Defective Sunroofs as a
“premium feature in the Class Vehicles.” Id.
¶J 43, 61.
Because Defendants “profit significantly
from upselling these” Defective Sunroofs as part of their upgraded or luxury packages, they are
“incentivized to sell vehicles containing the Defective Sunroofs.” Id.
¶ 44.
BMW and other
carmakers “have tried to explain away and conceal the defect, by informing consumers that the
exploding sunroofs are caused by a rock or some other foreign object,” but this explanation has
been met with skepticism by at least one mechanical engineer who assessed the claim. Id.
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¶ 47.
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Plaintiffs assert claims for:
(1)
fraud (Count 1);
(ii)
negligent misrepresentation (Count 2);
(iii)
breach of express warranty (Count 3);
(iv)
breach of implied warranty (Count 4);
(v)
violation of the Magnuson-Moss Warranty Act (“MMWA”) (Count 5);
(vi)
unjust enrichment (Count 6);
(vii)
violation of California’s Consumers Legal Remedies Act (“CLRA”) (Count 7);
(viii)
violation of California’s Unfair Competition Law (“UCL”) (Count 8);
(ix)
violation of California’s Song-Beverly Consumer Warranty Act (Count 9);
(x)
violation of the Texas Deceptive Trade Practices-Consumer Protection Act (“DTPA”)
(Count 10);
(xi)
violation of Maryland’s Consumer Protection Act (“MCPA”) (Count 11); and
(xii)
violation of New Jersey’s Consumer Fraud Act (“NJCFA”) (Count 12).
STANDARD OF REVIEW
Rule 12(b)(6) allows for dismissal where the non-moving party fails to state a claim upon
which relief can be granted. “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.”
Ashcroftv. 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
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assertions devoid of further factual enhancement.” Id. (internal quotation marks omitted).
“[W]here the well-pleaded 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.
In assessing a plaintiffs claims, a district court may consider the allegations of the
complaint, as well as documents attached to or specifically referenced in the complaint. See
Sentinel Trust Co. v. Universal Bonding Ins. Co., 316 F.3d 213, 216 (3d Cir. 2003); Charles A.
Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure
§ 1357 at 299 (3d
ed. 2014). “A ‘document integral to or explicitly relied on in the complaint’ may be considered
‘without converting the motion [to dismiss] into one for summary judgment.” Mete v. fed.
Reserve Bank ofN. Y, 359 F.3d 251, 256 n.5 (3d Cir. 2004) (citing In re Burlington Coat factoty
Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)).
DISCUSSION
1. Choice of Law
BMW NA first argues that Plaintiffs cannot pursue a nationwide class under New Jersey
law because they are not New Jersey residents, did not purchase or drive their cars here, and did
not sustain any injury here. ECF No. 12-1 at 5—7. According to BMW NA, this affects
Plaintiffs’ NJCFA claim as well as their claims for fraud, negligent misrepresentation, breach of
express warranty, breach of implied warranty, and unjust enrichment claims on behalf of the
Nationwide Class, because those claims do not invoke the laws of any particular state and must
be construed as claims under New Jersey law. Id. at 5. Thus, under a choice-of-law analysis,
Plaintiffs’ fraud, negligent misrepresentation, and consumer-protection claims can be brought
only under the laws of their home states. Id. at 7. Plaintiffs respond that a choice-of-law
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analysis is premature at this stage, particularly because “discovery is needed to further develop
facts relevant to the analysis.” ECF No. 15 at 6—7.
A choice-of-law analysis is not necessarily premature. This Court has engaged in choiceof-law analyses at the motion-to-dismiss stage in similar cases. See, e.g., Skeen v. BMW ofN.
Am., Civ. No. 13-1531, 2014 WL 283622, at *4(D.N.J. Jan. 24, 2014);Majdipour v. Jaguar
Land Rover N Am., LLC, Civ. No. 12-7849, 2013 WL 5574626, at *6 (D.N.J. Oct. 9, 2013).
While courts in this district have, in certain circumstances, found choice-of-law analyses
premature at the motion-to-dismiss stage, they have done so where either (i) the defendant failed
to explain why there was a conflict between the laws of different relevant jurisdictions, or
(ii) key facts relevant to a choice-of-law analysis were not available. See, e.g., In re Volkswagen
Timing Chain Prod. Liab. Litig., Civ. No. 16-2765, 2017 WL 1902160, at *10 (D.N.J. May 8,
2017) (refusing to conduct choice-of-law analysis where “Defendant has failed to explain how
Plaintiffs’ common law claims conflict among their home states”); Prudential Ins. Co. ofAm. v.
Goldman, Sachs & Co., Civ. No. 12-6590, 2013 WL 1431680, at *5 (D.N.J. April 9, 2013)
(noting that the court “will benefit from acquiring further details regarding” the location of
certain actions and discussions relevant to plaintiffs’ claims). Here, by contrast, BMW NA
devotes much of its briefing to choice-of-law analyses, including the issue of whether New
Jersey laws conflict with those of Plaintiffs’ home states, and Plaintiffs fail to identify any
additional facts this Court needs to conduct its own analysis. The Court concludes that a choice
of-law analysis is appropriate now.
When sitting in diversity, a district court applies the choice-of-law rules of its forum
state—here, New Jersey—to determine which law controls. Klaxon Co. v. Stentor Elec. Mfg.
Co., Inc., 313 U.S. 487, 496 (1941); Maniscalco v. Brother Int’l (USA) Corp., 709 F.3d 202, 206
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(3d Cir. 2013). “New Jersey has adopted the ‘most significant relationship’ test set forth in the
Restatement (Second) of Conflict of Laws. This is a two-part test.” Maniscalco, 709 f.3d at 206
(citing F. V. ex ret. T V. v. Camp Jaycee, 197 N.J. 132, 142—43 (2008)). “[T]he first step is to
determine whether an actual conflict exists. That is done by examining the substance of the
potentially applicable laws to determine whether ‘there is a distinction’ between them.” Camp
Jaycee, 197 N.J. at 143 (quoting Lebegern v. forman, 471 f.3d 424, 430 (3d Cir. 2006) (further
citation omitted)). “If there is not an actual conflict, the inquiry is over and, because New Jersey
would apply its own law in such a case, a federal court sitting in diversity must do the same.”
Lebegern, 471 F.3d at 42$. “If, however, an actual conflict is found to exist, the inquiry
proceeds to the second step.” Cooper v. Samsung Elecs. Am., Inc., 374 F. App’x 250, 254 (3d
Cir. 2010).
“Under the second part of the inquiry, the court must determine which jurisdiction has the
‘most significant relationship’ to the claim.” Maniscalco, 709 F.3d at 207 (quoting Camp
Jaycee, 197 N.J. at 144). To make that determination, courts look to the Second Restatement,
which “provides specific guidance for resolving particular types of cases.” Camp Jaycee, 197
N.J. at 140; see atso Montich v. Miele USA, Inc., $49 F. $upp. 2d 439, 446 (D.N.J. 2012) (court
“must weigh the factors set forth in the Restatement section that corresponds to Plaintiffs cause
of action”). “The Second Restatement assessment takes place on an issue-by-issue basis. It is
qualitative, not quantitative.” Camp Jaycee, 197 N.J. at 143 (citations omitted). “{I]n balancing
the relevant elements of the most significant relationship test,” courts should “apply the law of
the state that has the strongest connection to the case.” Id. at 155.
Plaintiffs do not specify in the Amended Complaint what particular law applies to Counts
1—4, while BMW NA claims that the Court should apply the laws of Plaintiffs’ home states.
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Given that a federal court sitting in diversity will apply the law of its forum state, see Phillips
Petroleum Co. v. Shutts, 472 U.S. 797, 821 (1985), the states with potentially applicable laws for
Counts 1—4 include New Jersey, California, Maryland, and Texas. See Rob v. City Investing Co.
Liquidating Trust, 155 F.3d 644, 659 (3d Cir. 1998) (citation omitted) (“Until the putative class
is certified, the action is one between the [named plaintiffs] and the defendants. Accordingly, the
first Amended Complaint must be evaluated as to these particular plaintiffs.”). The Court must
determine whether the laws of California, Maryland, and Texas conflict with those of New
Jersey regarding Counts 1—4 and, if so, which states have “the strongest connection to the case.”
Camp Jaycee, 197 N.J. at 155.
a. Common-law fraud (Count 1)
BMW NA contends that New Jersey law conflicts with that of California, Texas, and
Maryland regarding Plaintiffs’ common-law fraud claims. A common-law fraud claim under
New Jersey law has five elements. Those are: “(1) a material misrepresentation of a presently
existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that
the other person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting
damages.” Stockroom, Inc. v. DydacompDev. Corp., 941 F. Supp. 2d 537, 546 (D.N.J. 2013)
(citing Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610 (1997)).
The first step in the choice-of-law inquiry is to determine whether the “substance of the
potentially applicable laws” conflict. Camp Jaycee, 197 N.J. at 143. Under California law,
“[t]he elements of fraud are: (1) a misrepresentation (false representation, concealment, or
nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to induce
reliance; (4) justifiable reliance; and (5) resulting damage.” Robinson Helicopter Co., Inc. v.
Dana Corp., 34 Cal. 4th 979, 990 (2004). “To prevail on a cause of action for common law
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fraud under Texas law, a plaintiff must prove that the defendant (1) made a misstatement or
omission (2) of material fact (3) with the intent to defraud (4) on which the plaintiff relied, and
(5) which proximately caused the plaintiff injury.” In re Enron Corp. Secs. Derivative &
“ERISA “Litig., 540 F. Supp. 2d 759, 770 (S.D. Tex. 2007). And “[i]n order to state a claim for
common law fraud in Maryland, a plaintiff must allege (1) that the defendant made a false
representation to the plaintiff, (2) that its falsity was either known to the defendant or that the
representation was made with reckless indifference as to its truth, (3) that the misrepresentation
was made for the purpose of defrauding the plaintiff, (4) that the plaintiff relied on the
misrepresentation and had the right to rely on it, and (5) that the plaintiff suffered compensable
injury resulting from the misrepresentation.” Legore v. One West Bank, FSB, $98 F. Supp. 2d
912, 919 (D. Md. 2012).
While a common-law fraud action under New Jersey law requires “reasonable reliance”
by the plaintiff, see Stockroom, 941 F. Supp. 2d at 546, under Texas law “a plaintiffs reliance on
the defendant’s fraudulent conduct must be justifiable as well as actual.” Haralson v. E.F.
Hutton Group, Inc., 919 F.2d 1014, 1025 (5th Cir. 1990) (overruled on other grounds). In cases
alleging fraudulent concealment—i.e., nondisclosure in the face of a duty to disclose—Maryland
requires “justifiable reliance” as well. See Blondetl v. Littlepage, 413 Md. 96, 119 (2010). As
does California. Riverisland Cold Storage, Inc. v. Fresno-Madera Prod. Credit Assn., 55 Cal.
4th 1169, 1183 (2013) (“showing of justifiable reliance” required for “all forms of fraud”).
That difference in the “reliance” element is material, as “[j]ustiflable reliance’ represents
a lesser burden on fraud plaintiffs that what ‘reasonable reliance’ might imply.” 3eing Metals
& Minerals Imp./Exp. Corp. v. Am. Bus. Ctr., Inc., 993 F.2d 1178, 1186 (5th Cir. 1993) (citation
omitted); see also Voilas v. GMC, 170 F.3d 367, 377 (3d Cir. 1999) (noting that “justifiable
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reliance generally connotes a subjective standard, while ‘reasonable reliance’ usually suggests an
objective standard and, possibly, some measure of a duty to investigate on the part of the
claimant”) (citing field v. Mans, 516 U.S. 59, 70—75 (1995)); Restatement (Second) of Torts
§
545A (1977). Regarding Count 1, there is an actual conflict between New Jersey law and the
laws of California, Texas, and Maryland.
Turning to the second step of the analysis, the Court must look to the applicable section
of the Second Restatement to determine which state has the “most significant relationship” to
this case with respect to the consumer fraud allegations. Maniscalco, 709 F.3d at 207; Camp
Jaycee, 197 N.J. at 140. “Where a fraud or misrepresentation claim has been alleged, the court
looks to the factors found in
§ 148 of the Restatement (Second) of Conflict of Laws.”
Maniscalco, 709 f.3d at 207. Subsection (2) applies because “[P]laintiffis’] action[s] in reliance
took place in whole or in part in a state other than that where the false representations” are
alleged to have been made. Restatement (Second) of Conflict of Laws
§ 148(2) (1971); see
Maniscatco, 709 F.3d at 207—08. Under this subsection, the Court considers the following
factors:
(1) the place, or places, where the plaintiff acted in reliance upon the defendant’s
representations,
(2) the place where the plaintiff received the representations,
(3) the place where the defendant made the representations,
(4) the domicile, residence, nationality, place of incorporation and place of business of
the parties,
(5) the place where a tangible thing which is the subject of the transaction between the
parties was situated at the time, and
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(6) 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). “The relative importance of each of the
factors in a given case ‘should be determined in light of the choice-of-law principles stated in
§6
[of the Restatement].” Maniscalco, 709 F.3d at 207 (quoting Restatement (Second) of Conflict
of Laws
§ 148 cmt. e). Those principles are “(1) the interests of interstate comity; (2) the
interests of the parties; (3) the interests underlying the field of tort law; (4) the interests of
judicial administration; and (5) the competing interests of the states.” Camp Jaycee, 197 N.J. at
147 (internal citation and quotation marks omitted).
Plaintiff Keamey is a California resident, and purchased his Class Vehicle in California
in July 2015. Am. Compi. ¶ 24. Factors 1, 2, and 5 clearly weigh in favor of California having
the “most significant relationship” to Plaintiff Kearney’s fraud claim. Factor 4 is neutral and
factor 6 is irrelevant. Only the third factor weighs in favor of New Jersey, assuming BMW NA
can be said to have made representations from its principal place of business. Regardless, the
balance of factors weighs clearly in favor of applying California law.
The Court reaches the same conclusion regarding Plaintiffs Barr and $choene. New
Jersey has virtually no connection to Barr’s and $choene’s claims, while Barr and Schoene are
residents of Texas and Maryland, respectively, and $choene purchased her Class Vehicle in
Maryland. Am. Compl.
¶J 26—29. While the Amended Complaint does not specify where Barr
purchased his Class Vehicle, the Court concludes nonetheless that, between Texas and New
Jersey, Texas has the “most significant relationship” to Barr’s claim.
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b. Negligent Misrepresentation (Count 2)
BMW NA next argues that New Jersey negligent-misrepresentation law is in conflict
with that of California, Texas, and Maryland. To establish a claim for negligent
misrepresentation, a plaintiff must show “[a]n incorrect statement, negligently made and
justifiably relied on, which results in economic loss.” Konover Const. Corp. v. East Coast
Const. $ervs. Corp., 420 F. Supp. 2d 366, 370 (D.N.J. 2006) (citations omitted). BMW NA
claims that while New Jersey law permits negligent-misrepresentation claims in cases involving
omissions, California requires a positive assertion. ECF No. 12-1 at 9. It further argues that
California, Texas, and Maryland all have shorter limitations periods applicable to negligentmisrepresentation claims. Id. at 10.
i. New Jersey and Calfornia law conflict, and Calfornia has the “most
significant relationship” to Kearney negligent-misrepresentation claim.
The Court agrees that New Jersey and California law are in conflict. “Under California
law, a negligent misrepresentation claim requires a positive assertion, not merely an omission.
An implied assertion or representation is not enough.” In re Vizio, Inc., Consumer Privacy
Litig., 238 F. Supp. 3d 1204, 1230 (C.D. Cal. 2017) (citations omitted). In contrast, New Jersey
law permits negligent-misrepresentation claims that are “based on the defendant’s silence or
suppression of truth than on some affirmative misrepresentation,” and “the required duty of
disclosure may.
.
.
arise in any situation called for by good faith and common decency.”
Highlands Ins. Co. v. Hobbs Group, LLC, 373 F.3d 347, 355 (3d Cir. 2004).
Having found that New Jersey and California law conflict, the Court must determine
which state has the “most significant relationship” to Plaintiff Kearney’s claim. As already
discussed, that state is California.
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ii. BMWNA has not shown that New Jersey law conflicts with that of Texas
and Maiyland.
BMW NA’s only argument regarding conflict between New Jersey law and that of Texas
and Maryland is that the states apply different limitations periods—New Jersey’s is six years,
while Texas’s is two years and Maryland’s is three years. ECF No. 12-1 at 10; see Milestone
Properties, Inc. v. Federated Metals Corp., 867 S.W.2d 113, 119 (Tex. App. 1993); G&M Oil
Co. v. Glenfed Fin. Corp., 782 F. Supp. 1085, 1088 (D. Md. 1991). Maryland’s limitations
period runs from the date “when the claimant in fact knew or reasonably should have known of
the wrong.” Booth Glass Co.
V.
Huntingfleld Corp., 304 Md. 615, 619 (1985). A similar
discovery rule exists in Texas and New Jersey. See Quigley v. Bennett, 256 S.W.3d 356, 360
(Tex. App. 2008) (stating that discovery rule can “defer accrual of a cause of action until the
plaintiff knew or, exercising reasonable diligence, should have known of the facts giving rise to
the cause of action”); RTCMortg. Trust 1994N-] v. Fidelity Nat’l Title Ins. Co., 58 F. Supp. 2d
503, 543 (D.N.J. 1999) (noting that “the accrual of a cause of action is delayed until the injured
party discovers, or by the exercise of reasonable diligence and intelligence should have
discovered, that he may have a basis for an actionable claim”). Each state therefore applies an
identical or near-identical discovery rule to negligent-misrepresentation claims.
While there is a facial conflict between the applicable statutes of limitations in New
Jersey, Maryland, and Texas, that does not automatically trigger step two of the choice-of-law
analysis; it is settled that “where the application of either state’s law would yield the same result,
no conflict exists to be resolved.” High v. Balun, 943 F.2d 323, 325 (3d Cir. 1991); see also
McCarrell v. Hoffman-La Roche, Inc., 227 N.J. 569, 585 (2017) (“When application of the forum
state’s or another state’s statute of limitations results in the same outcome, no conflict exists, and
the law of the forum state governs.”).
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Plaintiffs filed the initial complaint in this action on December 22, 2017 and have
specifically pled tolling of applicable statutes of limitations based on, among other things, the
discovery rule. Am. Compl.
¶J 78—84.
Plaintiff Barr’s sunroof shattered in January 2017 and,
although the Amended Complaint does not specify the date of purchase, it cannot have been long
before January 2017 because his Class Vehicle was a 2017 model year. Id. at 27. The Amended
Complaint claims that Plaintiff Schoene has owned at least two BMWs with sunroof problems;
an X3 that she purchased in 2003, and a 32$i that she purchased in June 2017. Id.
only the second vehicle is a Class Vehicle that is the subject of this lawsuit. Id.
vehicle’s sunroof “exploded” in January 2018. Id.
¶J 28—3 1.
¶ 10.
But
That
¶ 31.
Based on the facts alleged in the Amended Complaint, there is no statute-of-limitations
conflict because Plaintiffs Barr and Schoene purchased their Class Vehicles less than two years
before filing this action, and thus complied with even the shortest of the potentially applicable
limitations periods. Even if BMW NA made some earlier misrepresentations, based on the facts
alleged the discovery rule would bring Plaintiffs Barr and Schoene within any applicable statute
of limitations. Because there is no statute-of-limitations conflict, the Court will apply New
Jersey law to Plaintiffs’ negligent-misrepresentation claim.
c. NJCFA (Count 12)
Plaintiffs assert a violation of the NJCFA in Count 12 on behalf of the Nationwide Class.
Am. Compi.
¶J 279—294.
BMW NA argues that Plaintiffs cannot pursue an NJCFA claim on
behalf of the Nationwide Class because none of the named Plaintiffs have any connection to
New Jersey. ECF No. 12-1 at 5—7. It further argues that the NJCFA conflicts with the
consumer-fraud statutes of California, Texas, and Maryland, and that the Court should apply the
laws of Plaintiffs’ home states instead. Id. at 11.
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Defendant is correct that the NJCFA conflicts with the consumer-fraud statutes of
Plaintiffs’ home states. See Majdipour, 2013 WL 5574626, at *7 (concluding NJCFA conflicts
with California’s Unfair Competition Law and Consumer Legal Remedies Act because the
California statutes both require a showing of reliance); Durso v. Samsung Elecs. Am., Inc., Civ.
No. 12-5352, 2013 WL 5947005, at *7 (D.N.J. Nov. 6, 2013) (concluding NJCFA conflicts with
DTPA for the same reason); Avram v. SamsungEtecs. Am., Inc., Civ. No. 11-6973, 2013 WL
3654090, at *19 (D.N.J. July11, 2013) (concluding NJCFA conflicts with Maryland’s Consumer
Protection Act because the latter requires scienter). As already discussed, Plaintiffs’ home states
bear the “most significant relationship” with each Plaintiff’s claim. Because the consumer-fraud
statutes of Plaintiffs’ home states will apply to the allegations in Count 12, and because Counts
7, 8, 10, and 11 allege violations of those statutes, Count 12 is dismissed.
d. Plaintiffs’ New Jersey Warranty Claims (Counts 3—4)
BMW NA argues that the laws of Plaintiffs’ home states should apply to Plaintiffs’
breach-of-warranty claims. Instead of offering a state-by-state analysis, BMW NA simply cites a
few cases noting that state warranty laws oflen vary. ECF No. 12-1 at 13—14; see Payne v.
FujiFilm USA, Inc., Civ. No. 07-385, 2010 WL 2342388, at *9 (D.N.J. 2010). None of these
cases compare New Jersey law to that of California, Texas, or Maryland. Mere reference to
inapplicable cases is insufficient to establish that a conflict of law exists. See Dat Ponte v. Am.
Mortg. Exp. Corp., Civ. No. 04-2152, 2006 WL 2403982, at *5 (D.N.J. Aug. 17, 2006) (stating
that “[w]here the parties fail to point out or establish any difference in the laws of the various
jurisdictions involved in a particular case, it is proper for the court to apply the law of the
forum”). The Court will apply New Jersey law to Plaintiffs’ warranty claims.
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2. Lumping
BMW NA argues that the Amended Complaint should be dismissed because it
improperly “lumps” the two Defendants together in violation of Federal Rules of Civil Procedure
8 and 9(b). ECF No. 12-1 at 19—21. Specifically, BMW NA accuses Plaintiffs of failing to
differentiate among the two Defendants when laying out their allegations. The Court is not
persuaded. While Plaintiffs do use the terms “Defendants” and “BMW” throughout the
Amended Complaint to refer to BMW NA and BMW AG collectively, they make sufficiently
particularized allegations against each entity.
The Amended Complaint clearly sets out the corporate structures of and relationships
between Defendants BMW NA and BMW AG. Specifically, regarding BMW NA, Plaintiffs
allege that it has its headquarters in Woodcliff Lake, New Jersey, from which it “advertises,
markets and sells automobiles under the BMW brand name throughout the United States,” and
that “MiNI USA is an unincorporated division of BMW NA” that “advertises, markets and sells”
MINI-brand vehicles throughout the United States. Am. Compl.
¶ 37.
BMW NA’s parent
company, Defendant BMW AG, is headquartered in Munich, Germany, and “designs, develops,
manufactures, [and] sells luxury automobiles under the BMW and MINI brand names.” Id.
¶ 36.
In addition, “BMW NA and MINI acted as authorized agents, representatives, servants,
employees and/or alter egos of BMW AG.” Id.
¶ 38.
Plaintiffs also make specific allegations
regarding BMW NA. As example, “BMW NA and MINI made decisions related to
advertisement, marketing, sales, warranties, and recalls of vehicles under the BMW and MINI
brand names.
.
.
.“
Id.
¶ 40.
From Plaintiffs’ pleading, it is understood that BMW AG is BMW NA’s corporate
parent; that the former is located in Munich; that the latter is located in New Jersey; that the
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former is generally responsible for the design and manufacture of the Class Vehicles; and that
the latter advertises and distributes those Class Vehicles in the United States. Plaintiffs have
therefore achieved some level of differentiation among Defendants by specifying their corporate
relationship, location, and respective responsibilities.
By identifying the Defendants’ respective roles in designing, producing, marketing, and
selling the Class Vehicles, Plaintiffs have avoided the pleading deficiency at issue in Certain
Underwriters at Lloyd’s, London v. U-Line Corp., Civ. No. 13-3203, 2013 WL 5503672, at *6
(D.N.J. Oct. 1, 2013), on which BMW NA primarily relies. In that product-liability case, the
plaintiff failed to identify the respective roles of the two defendants in producing the
refrigerator/freezer at issue; as the court put it, plaintiffs “must at least plead, in some minimal
capacity, how [the two defendants] are involved with this particular product.” Id. Plaintiffs have
done so here. This ruling accords with the Third Circuit’s recognition that further pre-discovery
differentiation among related defendants is difficult when, as here, “factual information is
peculiarly within the defendant’s knowledge or control,” and that courts have accordingly
“relaxed” their applications of Rule 9(b) in these circumstances. Craftmatic Secs. Litig. v.
Kraftsow, 890 f.2d 628, 645 (3d Cir. 1989).
3. Unjust Enrichment (Count 6)
BMW NA argues next that Count 6, alleging unjust enrichment, must be dismissed
because Plaintiffs did not purchase their Class Vehicles directly from BMW NA, and thus did
not confer any pecuniary benefit on it. ECF No. 12-1 at 15—16. In response, Plaintiffs stipulate
to the voluntary dismissal of this claim. ECF No. 15 at 34. Count 6 is dismissed.
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4. Statutory Consumer-Protection Claims (Counts 7, 8, 10, 11)
BMW NA argues that Plaintiffs’ remaining statutory consumer-protection claims fail
because (i) they make insufficient allegations regarding BMW NA’s knowledge of the defect at
issue; (ii) generic statements and “puffery” cannot support these claims; (iii) Plaintiffs have pled
neither reliance nor a misrepresentation or omission; and (iv) Plaintiffs have not alleged facts
demonstrating “active concealment.” ECF No. 12-1 at 2 1—28.
Federal Rule of Civil Procedure 9(b) governs Plaintiffs’ fraud-based claims. It provides:
“In alleging fraud or mistake, a party must state with particularity the circumstances constituting
fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be
alleged generally.” Fed. R. Civ. P. 9(b). The purpose of Rule 9(b) is to place defendants on
notice of the precise misconduct with which they are charged, and to safeguard defendants
against specious charges. Seville Industrial Machinery Corp. v. Southmost Co., 742 F.2d 786,
791 (3d Cir. 1984). “To satisfy this heightened 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). “Further, the plaintiff must allege who made the purported misrepresentations and what
specific misrepresentations were made.” Id. In other words, to satisfy Rule 9(b), a plaintiff must
“plead the who, what, when, where and how: the first paragraph of any newspaper story.”
Institutional Investors Grp. v. Avaya, Inc., 564 F.3d 242, 253 (3d Cir. 2009) (internal quotation
marks omitted).
Plaintiffs plead a fraud-by-omission case, and “in cases where the fraud alleged is the
fraudulent omission of information within the exclusive control of the Defendant, the [Rule 9(b)]
standard is relaxed.” Gray v. BMW ofN. Am., LLC, 22 F. Supp. 3d 373, 385 (D.N.J. 2014). That
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is because “a plaintiff in a fraud by omission suit will not be able to specify the time, place, and
specific content of an omission as precisely as would a plaintiff in a false representation claim.”
Falkv. Gen. Motors Corp., 496 F.Supp.2d 1088, 1098—99 (N.D. Cal. 2007).
a. BMW NA’s Knowledge
Under both the CLRA and UCL, “a manufacturer is not liable for a fraudulent omission
concerning a latent defect.
.
.
unless the omission is ‘contrary to a representation actually made
by the defendant, or an omission of a fact the defendant was obliged to disclose.” Wilson v.
Hewlett—Packard Co., 668 F.3d 1136, 1141(9th Cir. 2012) (quoting Daugherty v. Am. Honda
Motor Co., Inc., 51 Cal. Rptr. 3d 118, 126 (Cal. Ct. App. 2006)). A duty to disclose can arise in
four ways: “(1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the
defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the
defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes
partial representations but also suppresses some material facts.” LiMandri v. Judkins, 60 Cal.
Rptr. 2d 539, 543 (Cal. Ct. App. 1997). The latter three possibilities are at issue here, as
Plaintiffs have not alleged any fiduciary relationship. All three scenarios presuppose that BMW
NA had knowledge of the defect.2
BMW NA argues that the Amended Complaint fails to adequately allege that it knew of
the purported defect in the Defective Sunroofs, because Plaintiffs only cite to twelve anonymous
consumer complaints lodged with NHT$A; unspecified blogs and websites on which consumers
discussed their experiences with Defective $unroofs; and assertions that “[b]ased on pre
2
Texas and Maryland law also contain a knowledge requirement in omission cases. See Resnick v. Hyundai
MotorAm., Inc., Civ. No. 16-593, 2017 WL 1531192, at *20 (C.D. Cal. April 13, 2017) (“Under the Texas DTPA,
there is no duty to disclose if the defendant did not know the material information at the time of the transaction.”)
(citation omitted); Amata v. Toyota Motor Sales, USA., Inc., Civ. No. 12-168, 2013 WL 12248140, at *6 (CD. Cal.
April 29, 2013) (dismissing MCPA claim where plaintiffs failed to allege defendant was aware of defect at time of
sale).
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production testing, pre-production design or failure mode analysis,
.
.
.
early consumer
complaints made to Defendants’ network of exclusive dealers, aggregate warranty data compiled
from those dealers, consumer complaints to dealers and NHTSA, and testing performed in
response to consumer complaints,” BMW NA knew or should have known of the problems
posed by their Defective Sunroofs. Plaintiffs respond that they “specifically allege that despite
long having knowledge of the defect involving the sunroofs, as evidenced by multiple sources,
[BMW NA] withheld such information from Plaintiffs.” ECF No. 15 at 12.
Under Rule 9(b), “[m]alice, intent, knowledge, and other conditions of a person’s mind
may be alleged generally.” fed. R. Civ. P. 9(b). “Although Rule 9(b) permits knowledge to be
averred generally, plaintiffs must still plead the events which they claim give rise to an inference
of knowledge.” Devaney v. Chester, $13 f.2d 566, 56$ (2d Cir. 1987).
Here, Plaintiffs allege that “[b]ased on pre-production testing, pre-production design or
failure mode analysis,
.
.
.
early consumer complaints made to Defendants’ network of exclusive
dealers, aggregate warranty data compiled from those dealers, consumer complaints to dealers
and NHTSA, and testing performed in response to consumer complaints,” BMW NA knew or
should have known of the problems posed by their Defective Sunroofs. Am. Compl.
¶ 5$.
They
list twelve specific consumer complaints filed with NHTSA between 2002 and 2017, all but one
of which involved a Class Vehicle, Id.
¶ 65, and assert that BMW NA “regularly monitor[s]
NHT$A website and complaints filed therein,” Id.
¶ 63.
the
By the time Plaintiff Keamey purchased
his Class Vehicle, eight of the twelve NHTSA complaints listed in the Amended Complaint had
been made. Am. Compi.
¶ 65.
Plaintiffs Barr and $choene purchased their vehicles later.
According to the Amended Complaint, “there are multiple blogs and websites where consumers
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have complained about” Defective Sunroofs in the Class Vehicles. Id.
¶ 66.
Plaintiffs do not
specify the names of those blogs or websites or provide dates of consumers’ posts. Id.
Plaintiffs’ knowledge-related allegations are sufficient to withstand BMW NA’s motion.
Plaintiffs plead that BMW NA monitored the NHT$A complaint log and became aware of
numerous sunroof-related complaints being made well before Plaintiffs purchased their vehicles;
that both pre-sale and post-complaint testing revealed the problem; and that BMW NA’s dealer
network supplied additional information about the Defective Sunroofs. Courts have found
similar knowledge-related allegations sufficient. Compare Cirulli v. Hyundai Motor Co., Civ.
No. 08-0854, 2009 WL 5788762, at *4 (C.D. Cal. June 12, 2009) (finding knowledge adequately
pled based on allegation that defendant tracked NHTSA complaint database and therefore
became aware of problem with its vehicles); with Gotthelfv. Toyota Motor Sales, US.A., Inc.,
Civ. No. 11-4429, 2012 WL 1574301, at *18 (D.N.J. May 3, 2012) (finding insufficient
allegations of knowledge where NHTSA complaints filed after plaintiff purchased vehicle at
issue); and David v. Volkswagen Group ofAm., Inc., Civ. No. 17-11301, 2018 WL 1960447, at
*7 (D.N.J. April 26, 2018) (“Plaintiffs allegations that Defendant was on notice of defects
because of consumer complaints, a letter to the [NHTSA], and a recall of the Volkswagen Beetle
fail to support his claim because these events do not involve the 2014 Touareg and/or
occurred after Plaintiff made his purchase.”).
b. Generic Statements and Puffery
BMW NA next argues that “generic statements and ‘puffery’ cannot form the basis of a
misrepresentation claim.” ECF No. 12-1 at 24—25. True enough. But Plaintiffs have pled a
fraud-by-omission case, not a fraud-by-affirmative-misrepresentation case. See Am. Compl.
32—3 3. The relevant question is whether BMW NA had a duty to disclose the information
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Plaintiffs claim they omitted, not whether its statements qualify as “generic” or “puffery.” See
Johnson v. Nissan N. Am., Inc., 272 F. $upp. 3d 1168, 1183—84 (N.D. Cal. 2017) (declining to
dismiss action under CLRA and CLA despite lack of “any specific affirmative misrepresentation
or misleading advertisement” where plaintiff alleged that defendant concealed information it had
a duty to disclose); Md. Code. Ann. Corn. Law
§ 13-301(9) (MCPA claim includes “omission of
any material fact”); Tex. Bus. & Corn. Code Ann.
§ 1 7.46(b)(24) (Texas DPTA covers
“omission of any material fact”). BMW NA’s citations to cases involving affirmativemisrepresentation claims are inapposite.
c. Reliance
Plaintiffs allege that they relied on the expectation that “the Class Vehicles would be
equipped with a sunroof/moonroof that was free from defects and safe to operate” and that they
and the Class Members would have (i) declined to purchase the Class Vehicles; (ii) paid less for
them; or (iii) had the Defective Sunroofs replaced during their applicable warranty periods had
they known about the defect. Am. Compl.
¶JJ 33, 74, 104. BMW NA contends that these
allegations are insufficient to state consumer fraud claims because Plaintiffs “do not allege
exposure to specific representations regarding their vehicles’ sunroofs,” and therefore “cannot
plausibly claim they would have even been aware of the allegedly omitted information.
.
.
ECF No. 12-1 at 27.
BMW NA primarily relies on (i) 9th Circuit cases stating that Plaintiffs must show both
that, had the omitted information been disclosed, they would have been aware of it and behaved
differently; and (ii) a District of New Jersey case dismissing a plaintiff’s California consumer
protection claims for failure to plead reliance. ECF No. 12-1 at 27; ECF No. 16 at 4—5; Daniel v.
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ford Motor Co., 806 f.3d 1217, 1225 (9th Cir. 2015); Montich v. Miele USA, Inc., 849 F. Supp.
2d 439, 452—53 (D.N.J. 2012). BMW NA does not address Texas or Maryland law.
Regarding Plaintiffs’ California-law claims, reliance may be shown by alleging “that, had
the omitted information been disclosed, one would have been aware of it and behaved
differently.” Daniel, 806 F.3d at 1225 (citation omitted). Regarding the second prong, “[t]hat
one would have behaved differently can be presumed, or at least inferred, when the omission is
material,” and “[aJlleged defects that create unreasonable safety risks are considered material.”
Id. BMW NA does not dispute that a reasonable consumer would find exploding sunroofs to
“create unreasonable safety risks” and be considered material. It does dispute that Plaintiffs have
pled that they would have been aware of the information BMW NA allegedly withheld.
Plaintiffs allege that they received BMW NA’s misrepresentations “prior to and at the
point of their Class Vehicle purchase or lease, including [via] advertising, the owner’s manual
and the New Vehicle Limited Warranty pamphlet.” Am. Compl.
¶ 74.
This allegation is
sufficient to plead the first reliance prong in Daniel. See In re Toyota Motor Corp., 790 F. $upp.
2d 1152, 1169 (declining dismissal of UCL claim on reliance grounds where plaintiffs alleged
that they viewed advertisements in multiple formats). In the cases cited by BMW NA, by
contrast, it appears that the plaintiffs failed to allege this exposure. See Montich, 849 F. Supp. 2d
at 452—53 (dismissing for failure to plead reliance where plaintiff neither alleged that she saw
any pre-purchase advertisements or representations or that she would have behaved differently if
she had been aware of the defect); Resnick, 2016 WL 9455016 at *10 (dismissing where
“Plaintiffs fail[ed] to plead sufficient facts indicating that they were aware of these online
representations or advertisements”); see also Ehrlich, 801 F. Supp. 2d at 920 (dismissing for
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failure to plead reliance where the complaint was “devoid of allegations that Plaintiff would have
plausibly been aware” of the defect before purchase).
d. Fraudulent Concealment
Next, BMW NA argues that “Plaintiffs’ summary claims of fraudulent concealment are
easily dispensed” because “they do not allege facts showing anything other than non-disclosure.”
ECF No. 12-1 at 27. BMW NA again addresses only California law. It refers to Gray v. Toyota
Motor Sates, U.S.A. for the proposition that “[a] claim of fraudulent concealment requires an
affirmative act seeking to suppress information in the public domain or obscure consumers’
ability to discover it.” Civ. No. 08-1690, 2012 WL 313703, at *3 (C.D. Cal. Jan. 23, 2012). In
so arguing, BMW NA misapprehends the Gray court’s analysis.
As discussed, under California law “a failure to disclose can constitute actionable fraud in
four circumstances: (1) when the defendant is in a fiduciary relationship with the plaintiff
(2) when the defendant has exclusive knowledge of material facts not known to the plaintiff;
(3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the
defendant makes partial representations but also suppresses some material facts.” Id. In other
words, in those four circumstances a party has a duty to disclose. Id. Defendants’ quote from
Gray refers only to the fourth circumstance. Id. at * 10 (“At best, these allegations suggest only
that when customers expressed dissatisfaction with their mileage, Toyota’s customer service
representatives suggested ways in which it could be improved. Plaintiffs do not allege that
Toyota sought to suppress information in the public domain or obscure consumers’ ability to
gauge their own mileage.”). Plaintiffs here primarily allege that the second circumstance is at
issue, and BMW NA’s quotation from Gray is irrelevant. See, e.g., Am. Compl.
¶ 57
(“Knowledge and information regarding the defect in the Defective $unroofs were in the
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exclusive and superior possession of Defendants and their dealers.”). Because Plaintiffs allege
nondisclosure and BMW NA’s exclusive possession of information regarding the defect, their
Amended Complaint satisfies at least the second duty-to-disclose circumstance described in
Gray.
BMW NA’s motion to dismiss Counts 7, 8, 10, and 11 is denied.
5. Common-Law Fraud (Count 1)
Regarding Count 1, BMW NA again contends that Plaintiffs fail to satisfy Rule 9(b)’ s
“heightened pleading standards.” ECF No. 12-1 at 16—20. BMW NA claims that the Amended
Complaint “merely recites conclusions and parrots statutory language,” “fails to allege basic
details as to Plaintiffs’ vehicle purchases,” and makes “conclusory allegations on information
and belief’; BMW NA does not, however, tie any of these claimed deficiencies to any particular
element of Plaintiffs’ fraud claims. Id. Plaintiffs respond that their pleading satisfies Rule 9(b),
particularly in light of the fact that its requirements are relaxed in cases alleging fraudulent
omissions. ECF No. 15 at 10—16. The Court has already detailed the elements of California’s,
Texas’s, and Maryland’s applicable common-law fraud actions.
To begin with, BMW NA’s contention that Plaintiffs’ conclusory state-of-mind
allegations are insufficient ignores that, under Rule 9(b), “[m]alice, intent, knowledge, and other
conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b). It is true that
“{aJlthough Rule 9(b) permits knowledge to be averred generally, plaintiffs must still plead the
events which they claim give rise to an inference of knowledge.” Devaney, $13 F.2d at 568. But
as already discussed, Plaintiffs do so here—they allege that BMW NA knew of the problems
posed by their Defective $unroofs long before Plaintiffs purchased their vehicles and chose to
conceal those problems from Plaintiffs.
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BMW NA points out that Plaintiff Schoene does not state the model year for her BMW
X3, whether the BMW X3 was new or used at the time of purchase, where she purchased the
BMW X3, or the date when her sunroof allegedly shattered,” and that Plaintiff “Barr does not
state whether he purchased a new or used vehicle or when and where he purchased his vehicle.”
ECF No. 12-1 at 17. The Court agrees that, absent a clarifying amendment, Plaintiff Schoene’ s
BMW X3 cannot be a Class Vehicle because she purchased it in 2003, and it is only BMW X3s
that are model year 2005 or later that are part of Plaintiffs’ Class Vehicles definition. Am.
Compl.
¶ 2$.
But Plaintiff Schoene’s 2013 BMW 328i is indisputably a Class Vehicle, and so
her claim survives. Id.
¶ 29.
Regarding Plaintiff Barr’s fraud claim, the Court is not convinced
that he must plead the precise date and location of his Class Vehicle purchase in order to state a
fraud claim under Rule 9(b), as those facts would do little to illuminate for BMW NA the
misconduct with which it is charged.
Finally, pleading upon information and belief is undoubtedly permissible. McDermott v.
Clondalkin Group, Inc., 649 Fed. Appx. 263, 267—68 (3d Cir. 2016). And where the plaintiff
“does not rely on boilerplate and conclusory allegations and he accompanies his legal theory
with allegations that make his theoretically viable claim plausible,” those allegations can survive
a Rule 12(b)(6) motion to dismiss. See id. at 26$ (reversing dismissal where plaintiffs
allegations “do not paraphrase in one way or another the pertinent.
.
.
elements of the claims”
but instead “explain how {defendant] allegedly breached the contract”) (emphasis in original).
That is the case here, and BMW NA fails to identify any elements of Plaintiffs’ fraud claims that
are unmet as a result of this claimed pleading deficiency.
BMW NA’s motion to dismiss Count 1 is denied.
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6. Negligent Misrepresentation (Count 2)
BMW NA contends that the economic-loss rule, which precludes recovery in tort of
pecuniary losses, bars Plaintiffs’ negligent-misrepresentation claims. ECF No. 12-1 at 28—30.
Plaintiffs respond that their claims fall into recognized exceptions to the economic-loss rule.
ECF No. 15 at 34—7. As discussed, California law will apply to Plaintiff Keamey’s negligentmisrepresentation claim, and New Jersey law will apply to Plaintiffs Barr’s and $choene’s
claims. Plaintiffs do not claim any injuries other than those to their Class Vehicles.
Under California law, the economic-loss rule applies to negligent-misrepresentation
claims. Shahinian v. Kimberly-Clark Corp., Civ. No. 14-8390, 2015 WL 4264638, at *8_9 (C.D.
Cal. July 10, 2015). “Generally, under the ‘economic loss’ rule, a plaintiff who suffers only
pecuniary injury as a result of the conduct of another cannot recover those losses in tort. Instead,
the claimant is limited to recovery under the law of contract.” Apollo Grp., Inc. v. Avnet, Inc., 58
F.3d 477, 479 (9th Cir. 1995). One exception to the economic-loss rule applies in productsliability cases, where “the rule may be overcome by allegations of personal injury or damages to
other property besides the defective product.” United Guar. Mortg. Indem. Co. v. Countrywide
Fin. Corp., 660 F. $upp. 2d 1163, 1181 (C.D. Cal. 2009) (citations omitted).
Plaintiffs claim that a third exception exists “where the threat of physical harm to the
plaintiff is sufficiently grave.” ECF No. 15 at 35 (citing Strumlaufv. Starbucks Corp., 192 F.
$upp. 3d 1025, 1035—36 (N.D. Cal. 2016)). That assertion is based on a California Supreme
Court case called Robinson Helicopter Co., Inc. v. Dana Corp., in which that court held that a
helicopter parts supplier who knowingly provided false certifications to a helicopter
manufacturer certifying that its parts complied with strict specifications could be sued under a
fraud theory notwithstanding the economic-loss rule. 34 Cal. 4th 979 (2004). But the Robinson
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Helicopter court noted that its holding was “narrow in scope and limited to a defendant’s
affirmative misrepresentations on which a plaintiff relies and which expose a plaintff to liability
for personal damages independent of the plaintffs economic loss.” Id. at 993 (emphasis added).
That is not the case here, and the economic-loss rule will bar Plaintiff Keamey’s negligentmisrepresentation claim.
New Jersey also recognizes that “[gJenerally speaking, tort principles are better suited to
resolve claims for personal injuries or damages to other property,” and that “[c]ontract principles
more readily respond to claims for economic loss caused by damage to the product itself.”
Alloway v. Gen. Marine Indus., L.F., 149 N.J. 620, 627 (1997). Accordingly, “a tort cause of
action for economic loss duplicating the one provided by the U.C.C. is superfluous and
counterproductive.” Id. at 641. Plaintiffs assert that, in New Jersey, the economic-loss rule does
not bar tort actions under theories of fraud or negligent misrepresentation. They are correct. See
Coastal Group v. Dryvit Sys., 274 N.J. Super. 171, 177 (App. Div. 1994) (noting that the
economic loss doctrine “only precludes claims brought under tort principles which are
inconsistent with the remedies authorized under the UCC” and that “the UCC expressly
preserves a buyer’s right to maintain an action for fraud and misrepresentation”). Plaintiffs
Barr’s and Schoene’s negligent-misrepresentation claims under New Jersey law survive.
7. Express Warranty Claim (Count 3)
BMW NA contends that Plaintiffs’ express-warranty claims fail because (i) the NVLW
does not cover design defects; (ii) Plaintiffs did not present their vehicles for repair; and
(iii) Plaintiffs have not pled that BMW NA created or breached a warranty by representation.
ECF No. 12-1 at 3 0—34. As discussed, the Court will apply New Jersey law to the expresswarranty claims at this stage. Under New Jersey law, “to state a claim for breach of express
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warranty, Plaintiffs must properly allege: (1) that Defendant made an affirmation, promise or
description about the product; (2) that this affirmation, promise or description became part of the
basis of the bargain for the product; and (3) that the product ultimately did not conform to the
affirmation, promise or description.” Francis F. Parker Memorial Home, Inc. v. Georgia—Pacific
LLC, 945 F. Supp. 2d 543, 568 (D.N.J. 2013).
According to BMW NA, the NVLW covers only “defects in materials or workmanship,”
and not design defects, whereas the language of the Amended Complaint routinely refers to
design defects and is only “sprinkle[d].. with conclusory ‘materials and workmanship’
.
verbiage.” Id. at 31; see Am. Compl.
¶ 13.
Plaintiffs correctly note in response that courts in
this District routinely refuse to distinguish between design defects and defects in materials or
workmanship at the pleading stage, particularly where, as here, the plaintiff asserts both and
alleges facts supporting both explanations. E.g., In re Volkswagen Timing Chain Prod. Liab.
Litig., 2017 WL 1902160, at *12; Aim v. Am. Honda Motor Co., Civ. No. 16-2765, 2010 WL
1372308, at *6 (D.N.J. Mar. 31, 2010) (“At the pleading stage, where the distinction between
defect in design and defect in materials or workmanship is a matter of semantics, and sufficient
facts are alleged to assert both, the defendant’s characterization of the nature of the claim
prediscovery should not control whether the complaint survives.”); Cox v. Chrysler Grp., LLC,
Civ. No. 14-7573, 2015 WL 5771400, at *6 (D.N.J. Sept. 30, 2015).
Next, BMW NA claims that it cannot have breached the NVLW if it upheld its
obligations thereunder, and that Plaintiffs must have presented their vehicles to BMW NA in
order for it to have failed to honor the NVLW. ECF No. 12-1 at 32—33. Plaintiffs respond by
pointing to language in the Amended Complaint asserting that Plaintiffs Barr and Schoene
incurred repair and/or replacement costs after their sunroofs shattered; they also note that
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Plaintiff Keamey’s sunroof has not yet shattered. ECF No. 15 at 25—26. Plaintiffs do not dispute
that the warranty at issue is one of repair. See Am. Compi.
¶ 13 (“Defendants promised to repair
or replace covered defective parts arising out of defects in materials and/or workmanship,
including the Defective Sunroofs
. .
.
.“).
But none of Plaintiffs’ allegations claim that they
presented their vehicles to BMWNA for repair. BMW NA cannot have breached the NVLW if it
never had the opportunity to comply with it. See Herbstman v. Eastman Kodak Co., 6$ N.J. 1,
12 (1975) (“We do not agree.
. .
that Kodak’s express ‘warranty’ was that the camera would be
free of mechanical defects. Rather, the language used contemplated that such defects might occur
and, if so, Kodak would repair them.”). Similarly, Plaintiff Keamey’s express-warranty claim
must be dismissed because he does not claim to have experienced any sunroof-related issues with
his Class Vehicle. BMW NA’s motion to dismiss Count 3 is granted.
8. Implied Warranty Claim (Count 4)
Regarding Plaintiffs’ implied-warranty claims, BMW NA contends that (i) Plaintiff
Barr’s vehicle remains merchantable; (ii) Plaintiff Schoene’s claim is time-barred; and
(iii) Plaintiff Keamey’s claim must fail because he is not in privity with BMW NA and his
vehicle has never malfunctioned. ECF No. 12-1 at 34—36. In New Jersey, the implied warranty
that comes with the purchase of a car “is simply a guarantee that [it] will operate in a safe
condition and substantially free of defects and, therefore, where a car can provide safe, reliable
transportation, it is generally considered merchantable.” Henderson v. Volvo Cars ofN. Am.,
LLC, Civ. No. 09-4146, 2010 WL 2925913, at *9 (D.N.J. July 21, 2010).
PlaintiffBarr. BMW NA makes much of Plaintiff Barr’s allegation that he “heard a large
pop and noticed a hole in his sunroof,” Am. Compl.
¶ 27, and the difference in nature between an
“exploding” or “shattering” sunroof and one which has a hole in it. The Court declines to attach
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the same significance to this semantic distinction, as a sudden “loud pop” and “hole in [a]
sunroof’ undoubtedly affects whether a vehicle is safe for ordinary use, which is a key
determinant of merchantability. Green v. BMWoIN Am., Civ. No. 11-4220, 2013 WL 5287314,
at *2 (D.N.J. Sept. 17, 2013). BMW NA’s argument that Barr’s vehicle continues to “fulflll[]
the ordinary purpose of a car” and thus remains merchantable simply because Barr continues to
own the vehicle is similarly unavailing. ECF No. 12-1 at 35—36. That Barr continues to own his
Class Vehicle does not necessarily mean that it is fit for ordinary use.
PlaintiffSchoene. Regarding Schoene, BMW NA argues that she did not experience any
sunroof-related issues with her Class Vehicle until after the NVLW expired, and therefore cannot
state an implied-warranty claim. ECF No. 12-1 at 36. Plaintiffs respond that Schoene’s claims
should survive because the implied-warranty limitation period is unconscionable. ECF No. 15 at
29—32; Am. Compi.
¶ 132. Relevant allegations include that BMW NA was aware that its
sunroofs were defective by the time Plaintiffs purchased their vehicles and had exclusive
knowledge of the defect; that there was a “gross disparity in bargaining power” between
Plaintiffs and Defendants; and that the time limitations were determined by Defendants, not
Plaintiffs. Id.
Implied warranties of merchantability are limited to the same term as any express
warranty. N.J. Stat. Ann.
§ 1 2A:2-3 17. Where the alleged breach involves a latent defect that
manifests outside the period covered by the warranty, a plaintiff may sometimes state a claim if
he alleges that the warranty was unconscionable. Henderson v. Volvo Cars ofN. Am., LLC, Civ.
No. 09-4146, 2010 WL 2925913, at *7 (D.N.J. July 21, 2010). In New Jersey, the question
whether a contractual provision is unconscionable is a matter of law for the Court. Collins v.
Uniroyal, Inc., 64 N.J. 260, 267 (1974). But if a court thinks a contractual clause maybe
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unconscionable, “the parties shall be afforded a reasonable opportunity to present evidence as to
its commercial setting, purpose and effect.” N.J.S.A. 12A:2-302(2).
Unconscionability may be either “substantive” or “procedural.” In New Jersey, courts
will find a contract term to be substantively unconscionable if the term is “excessively
disproportionate,” involving an “exchange of obligations so one-sided as to shock the court’s
conscience.” Delta Funding Corp. v. Harris, 189 N.J. 28, 55 (2006) (Zazzali, J., concurring in
part and dissenting in part) (citing Sitogum Holdings, Inc. v. Ropes, 352 N.J. Super. 555, 565
(Ch. Div. 2002). They will find it procedurally unconscionable depending on various
“inadequacies,” including “lack of sophistication,” “bargaining tactics, and the particular setting
existing during the contract formation process.” Id. Tn New Jersey, if the contract at issue is a
contract of adhesion, the court should consider four factors: “the subject matter of the contract,
the parties’ relative bargaining positions, the degree of economic compulsion motivating the
‘adhering’ party, and the public interests affected by the contract.” Id.
Courts in this District have declined to resolve similar unconscionability claims at the
motion-to-dismiss stage. See, e.g., Henderson, 2010 WL 2925913, at *9 (permitting
unconscionability claim to proceed on allegations that the manufacturer knew a part would fail
after warranty expiration and that plaintiffs “had no meaningful choice in determining” time
limitations due to a “gross disparity in bargaining power”); In re Ford Motor Co. E-350 Van.
Prods. Liab. Litig., MDL No. 03-4558, 2008 WL 4126264, at *20 (D.N.J. Sept. 2, 2008); Skeen,
2014 WL 283628, at *14 (permitting plaintiffs’ claim of unconscionability to proceed past the
motion-to-dismiss stage where they “claim[ed] that Defendants knew the timing chain tensioners
would fail and manipulated the warranty terms to avoid paying for it”). The Court concurs and
will not dismiss Plaintiff Schoene’s implied-warranty claim.
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FlaintffKearney. Applying California law, BMW NA argues that Kearney’s implied-
warranty claim must fail because Kearney purchased a used Class Vehicle and thus is not in
privity with BMW NA. Because the Court applies New Jersey law to Plaintiffs’ implied
warranty claims on this motion, and because New Jersey does not require privity between a
plaintiff and defendant in implied-warranty claims, this argument fails. Spring Motors Dist., Inc.
v. Ford Motor Co., 98 N.J. 555, 561 (1985).
Next, BMW NA insists that Kearney’s implied warranty claim must be dismissed
because his sunroof has not malfunctioned. Am. Compl.
¶J 24—25. Plaintiffs offer no authority
permitting a warranty claim to proceed where the plaintiff had not yet manifested some injury;
they cite only cases where latent defects manifested outside the time period of the applicable
warranty, but before initiating litigation. E.g., In re Volkswagen Timing Chain, 2017 WL
1902160, at *15. An allegation that Kearney’s sunroof is likely defective is insufficient to
sustain his warranty claims. See Yost v. Gen. Motors Corp., 651 F. $upp. 656, 658 (D.N.J. 1986)
(dismissing warranty claim where plaintiff only alleged that a “potential leak is ‘likely’ to cause
damage and ‘may’ create potential safety hazards”). This rationale provides an alternative basis
for dismissing Plaintiff Kearney’s express warranty claim, discussed earlier. It also requires
dismissal of Kearney’s Song-Beverly Consumer Warranty Act claim because he offers no
indication that his Class Vehicle is not “fit for the ordinary purposes for which such” vehicle is
used. Cal. Civ. Code
§ 1791.1.
Accordingly, Count 4 is dismissed as to Plaintiff Kearney, and Count 9 is dismissed.
9. MMWA Claim (Count 5)
Count 5 of Plaintiffs’ Amended Complaint pleads a violation of the MMWA.
“Maguuson—Moss is a remedial statute designed to protect the purchasers of consumer goods
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from deceptive warranty practices.” Robinson v. Kia Motors Am., Inc., Civ. No. 13-006, 2015
WL 5334739, at *14 (D.N.J. Sept. 11,2015). BMW NA contends that Plaintiffs’ MMWA claim
fails because (i) their state-law warranty claims fail, and (ii) there are fewer than 100 named
plaintiffs. ECF No. 12-1 at 38—39.
As Plaintiffs point out, courts routinely permit putative class actions with fewer than 100
named plaintiffs to proceed with MMWA claims where, as in this case, the court has jurisdiction
under some other statute. See, e.g., Kia Motors, 2015 WL 5334739, at *14 (allowing MMWA
claims to proceed with five named plaintiffs); see also Smith v. Vanguard Dealer Srvcs., LLC,
Civ. No. 09-03 1, 2009 WL 2152096, at *3 (D.N.J. July 14, 2009) (describing 100-plaintiff
requirement as a “jurisdictional provision”).
Here, because the Court denies BMW NA’s motion to dismiss Plaintiffs Barr’s and
Schoene’s implied-warranty claims, their MMWA claims survive as well. But because the Court
grants BMW NA’s motion to dismiss all of Plaintiff Keamey’s warranty claims, Keamey’s
MMWA claim must fail as well. Count 5 is dismissed as to Plaintiff Keamey.
10. DTPA Claim (Count 10)
Finally, BMW NA claims that Count 10 must be dismissed because Plaintiff Barr failed
to give written notice to BMW NA at least 60 days before filing suit, as required by the Texas
DTPA. ECF No. 12-1 at 39. Barr sent a letter to Defendants on the same day that Plaintiffs filed
the Amended Complaint. Am. Compl.
¶ 253.
Plaintiffs respond that the “consequence for not
complying with the notice requirement is not dismissal, but abatement of the action during the
statutory notice period.” ECF No. 15 at 37. Plaintiffs are correct. See Hines v. Hash, 843
S.W.2d 464, 468—69 (Tex. 1992) (concluding that “it is not necessary to the purpose of notice
to dismiss plaintiffs action if notice is not given” and “that if a plaintiff files an action for
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damages under the DTPA without first giving the required notice, and a defendant timely
requests an abatement, the trial court must abate the proceedings for 60 days”). BMW NA’s
motion to dismiss Count 10 is denied.
CONCLUSION
BMW NA’s motion to dismiss is granted as to Counts 3, 6, 9, and 12 in their entirety, and
as to Counts 2, 4, and 5 regarding Plaintiff Keamey only. The remainder is denied. Plaintiffs are
granted 45 days from the date of this opinion to seek leave to amend the Amended Complaint if
they wish. An appropriate order follows.
DATE:
9’f t
District Court Judge
(,1
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