In re: General Motors LLC Ignition Switch Litigation
Filing
199
MEMORANDUM OPINION re: (367 in 1:14-cv-05810-JMF) MOTION for Judgment as a Matter of Law Under FRCP 50(a) filed by General Motors LLC: that the Court concluded that no reasonable jury could find for Spain on her fraudulent misrepresentation claim and New GM's motion for judgment as a matter of law on that claim was GRANTED. (Signed by Judge Jesse M. Furman on 4/1/2016) (tn)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------------------------------------------------x
IN RE:
GENERAL MOTORS LLC IGNITION SWITCH LITIGATION
This Document Relates To:
Abney, et al. v. General Motors LLC, 14-CV-5810
-----------------------------------------------------------------------------x
04/01/2016
14-MD-2543 (JMF)
14-MC-2543 (JMF)
MEMORANDUM OPINION
JESSE M. FURMAN, United States District Judge:
The second bellwether trial in this multi-district litigation (“MDL”), familiarity with
which is presumed, involved claims brought by Plaintiffs Dionne Spain and Lawrence
Barthelemy against General Motors LLC (“Defendant” or “New GM”) stemming from a January
24, 2014 car accident involving Spain’s 2007 Saturn Sky. Spain’s car was manufactured by
General Motors Corporation (“Old GM”) — which filed for bankruptcy in 2009, a bankruptcy
from which New GM emerged. From March 14, 2016, to March 30, 2016, the case was tried
before a jury. On March 22, 2016, after Plaintiffs rested their case, New GM filed a motion,
pursuant to Rule 50 of the Federal Rules of Civil Procedure, for judgment as a matter of law on
all claims. (Docket No. 2602). On March 28, 2016, upon consideration of the parties’
submissions and oral arguments from counsel, the Court granted the motion in part and
dismissed Spain’s claim for fraudulent misrepresentation. (Trial Tr. 1757-58). The Court
indicated that it might explain its ruling in a later opinion. This is that opinion. 1
Rule 50 of the Federal Rules of Civil Procedure “imposes a heavy burden on a movant,
who will be awarded judgment as a matter of law only when ‘a party has been fully heard on an
1
The Court reserved judgment on the rest of New GM’s motion and submitted Plaintiffs’
other claims — under the Louisiana Products Liability Act — to the jury. On March 30, 2016,
the jury returned a verdict in New GM’s favor on those claims. (See Trial Tr. 2001-02).
issue during a jury trial and the court finds that a reasonable jury would not have a legally
sufficient evidentiary basis to find for the party on that issue.’” Cash v. Cty. of Erie, 654 F.3d
324, 333 (2d Cir. 2011) (quoting Fed. R. Civ. P. 50(a)(1)); accord Bucalo v. Shelter Island
Union Free Sch. Dist., 691 F.3d 119, 127-28 (2d Cir. 2012). As in “the analogous context of
summary judgment,” a court must consider the entire record as a whole in determining whether
the moving party meets that heavy burden. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S.
133, 150 (2000). Moreover, the court must “draw all reasonable inferences in favor of the
nonmoving party” and may not make credibility determinations or weigh the evidence. Id. That
is, although the whole record must be taken into consideration, the court “must disregard all
evidence favorable to the moving party that the jury is not required to believe” and should “give
credence to the evidence favoring the nonmovant.” Id. at 151; see also, e.g., Zellner v.
Summerlin, 494 F.3d 344, 371 (2d Cir. 2007) (stating that a Rule 50 motion may be granted only
if the court concludes that “a reasonable juror would have been compelled to accept the view of
the moving party” (internal quotation marks omitted)).
Applying those standards here, Spain’s fraudulent misrepresentation claim, brought under
Louisiana law, plainly failed as a matter of law. Significantly, there was — and is — no dispute
on several important points. First, in light of prior rulings by the Bankruptcy Court on New
GM’s motions to enforce the 2009 Sale Order (pursuant to which New GM purchased most of
the assets of Old GM and some, but not all, of its liabilities), Spain could not seek to hold New
GM liable on a fraudulent misrepresentation claim based on the conduct of Old GM. See, e.g., In
re Motors Liquidation Co., 529 B.R. 510, 583 (Bankr. S.D.N.Y. 2015). Thus, to prove her
claim, Spain had to show that New GM itself engaged in fraudulent misrepresentation; the jury
could not consider, let alone base its verdict on, the conduct of Old GM for purposes of
2
fraudulent misrepresentation. Second, as Plaintiffs’ counsel conceded during oral argument,
Spain could not premise her claim on “mere silence” (see Trial Tr. 1731), as Louisiana law
recognizes a “duty to disclose” untethered to any affirmative representation only where some
“special relationship” — concededly absent here (see id.) — exists between the parties. See
Kadlec Med. Ctr. v. Lakeview Anesthesia Assocs., No. Civ. A. 04-0997, 2005 WL 1309153, at *4
(E.D. La. May 19, 2005) (“[G]enerally, a duty to disclose information will not exist absent some
confidential, fiduciary, or other special relationship which, under the circumstances of the case,
justifies the imposition of a duty to disclose information.”).
Third, as Plaintiffs’ counsel also conceded, Spain had to show that she “individually
relied” either on an “affirmative misrepresentation” or a “half-truth” — that is, “that New GM
volunteered some communication, but omitted a material fact” — in order to prove her claim.
(Trial Tr. 1731-32 (emphasis added)). That is, Spain could not rely on any sort of “fraud-on-themarket” type argument under Louisiana law. See, e.g., Secs. Investor Protection Corp. v. BDO
Seidman, LLP, 222 F.3d 63, 73 (2d Cir. 2000) (observing that “federal courts repeatedly have
refused to apply the fraud on the market theory to state common law cases despite its wide
acceptance in the federal securities fraud context” because “common-law fraud claims require a
different analysis than those brought under the federal securities regulation scheme”); In re
Rezulin Prods. Liab. Litig., 524 F. Supp. 2d 436, 441 (S.D.N.Y. 2007) (observing that numerous
courts have declined to apply the fraud-on-the-market theory to state claw claims and seeing no
reason to believe “that Louisiana’s Supreme Court would reach a different result”). And finally,
there was no evidence of any “affirmative misrepresentation” by New GM upon which Spain
could have or did rely. (Trial Tr. 1734).
3
Under Louisiana law, therefore, Spain had to establish that she actually heard a statement
made by New GM and that the statement was only “half true” — that is, that it omitted material
information. See, e.g., Morris v. Nanz Enter., Inc., 929 So. 2d 115, 120 (La. Ct. App. 2006)
(holding that the plaintiffs’ fraud claim failed because they did not show that they had received
any direct communication from the defendant); see also Allgood v. R.J. Reynolds Tobacco Co.,
80 F.3d 168, 171 (5th Cir. 1996) (concluding that the plaintiff fell “far short of proving he [had]
actually relied upon” alleged misrepresentations because he could not prove that he had read
them). In addition, Spain had to prove that she herself actually (and reasonably) relied on the
half-truth to her detriment. See La Croix v. Recknagel, 89 So. 2d 363, 367 (La. 1956) (“[I]t is
incumbent upon him to establish the falsity of a material fact represented by the defendants . . .
and that he had a right to and actually did rely thereon.”). In light of those undisputed principles,
there was plainly no “legally sufficient evidentiary basis” for the jury to return a verdict for
Spain on her fraud claim. Cash, 654 F.3d at 333. Put simply, there was no evidence of even a
single communication or representation, let alone half-truth, made by New GM to Spain. It
follows that there was no evidence that Spain individually relied on any statement of New GM
when she decided to buy her car or drive it on the day of the accident. To the contrary, Spain
herself testified that she decided to buy the car because she saw it while driving by the Banner
Chevrolet dealership and “looked at the car as being a cute car instead of, you know, not looking
at anything else in regards to the car.” (Trial Tr. 364). Additionally, she conceded that all of her
“dealings on the purchase of” the car were “with Banner Chevrolet.” (Id. at 456). In short,
Spain failed to introduce any evidence from which the jury could have found that she
individually relied on any misrepresentation or half-truth of New GM.
4
In arguing otherwise, Spain pressed three primary arguments. First, relying principally
on Scott v. American Tobacco Co., 949 So. 2d 1266 (La. Ct. App. 2007), Spain argued that she
could premise her fraud claim on “the marketing campaign that New GM orchestrated.” (Trial
Tr. 1734; see Pls.’ Mem. Law Opp’n New GM’s Mot. J. Matter Law (Docket No. 2661) (“Pls.’
Opp’n”) 21; see also PX-3 (Statement of Facts), ¶ 10 (admitting that New GM “actively touted
the reliability and safety of cars equipped with the Defective switch” to the public “with a view
to promoting sales of used GM cars”)). But in the absence of evidence that Spain herself was
exposed to a New GM marketing campaign — evidence that was concededly absent in this case
(Trial Tr. 1741) — that argument is nothing more than a fraud-on-the-market argument, which
Spain (wisely) disavowed. Moreover, even on its own terms, it fails for two reasons. First,
whereas the record in Scott included evidence of a “five decade long” public relations campaign
“designed to distort the entire body of public knowledge” regarding the harms of smoking
tobacco “through indirect communications,” 949 So. 2d at 1277, this case included no
comparable evidence. Second, and more fundamentally, the holding in Scott, a consumer class
action, was expressly limited to the “question of reliance . . . by the class as a whole.” Id.
(emphasis added); see also id. at 1277-78 (holding that “the showing of reliance that must be
made to prove a causal connection between smoking and the class-wide reliance on
communications from the defendants need not include direct evidence of reliance by individual
consumers of defendants’ cigarettes” (emphasis added)). The Scott Court did not alter or
abrogate the well-established principle that, in an individual fraud case, the plaintiff must prove
that she herself actually relied on a misrepresentation or half-truth. To the contrary, it explicitly
noted that “[i]f and when individual class members assert individualized claims for money
damages, individual reliance may be at issue at that time.” Id. at 1277.
5
Second, Spain pointed to representations made at the point of sale (in 2013) by Banner
Chevrolet — specifically to a “Buyers Guide” that she signed in which Banner Chevrolet stated
that “MANUFACTURER’S WARRANTY STILL APPLIES” and listed “some major defects
that may occur in used motor vehicles” but did not disclose the possibility of an ignition switch
defect. (Pls.’ Opp’n 18-19; see Trial Tr. 1735, 1744-45; see also DX-3051, at 62-63). The
problem with that argument is that those statements were, as Spain’s counsel conceded, made by
Banner Chevrolet — not New GM — and Banner Chevrolet was “absolutely not an agent[,] . . .
not an employee[,] . . . not an extension of New GM.” (Trial Tr. 1743; accord id. at 1745).
Spain tried to get around that fundamental problem by arguing that the jury was “entitled to
infer” that Banner Chevrolet acted as “essentially the messenger,” passing information from New
GM to Spain. (Tr. 1744-45; see also id. at 1735). But there was no evidence in the record that
New GM provided any information to Banner Chevrolet, let alone did so with an understanding
or intent that it would be passed on to consumers. (Trial Tr. 1746). Moreover, Spain’s argument
finds no support in the law. To the contrary, the Court of Appeal of Louisiana rejected a similar
argument in Morris v. Nanz Enterprises, Inc. In that case, the defendant agreed to build a home
for a third party but allegedly failed to build the home in accordance with the plans and
specifications set out in the purchase agreement. See 929 So. 2d at 117. The third party later
sold the home to the plaintiffs, who sued the defendant for allegedly false and misleading
representations made in the original purchase agreement. See id. The court granted summary
judgment on plaintiffs’ fraudulent misrepresentation claim, concluding that the defendant “was
not a party to the sale of the home from the [third party] to the plaintiffs” and that the
“[p]laintiffs admit that they had no communication with [the defendant] prior to their purchase of
the home.” Id. at 120. So too here, New GM was not a party to the sale by Banner Chevrolet to
6
Spain of the used 2007 Saturn Sky and Spain admitted in her testimony at trial that she had no
communications with New GM prior to the purchase of the car.
Finally, Spain relied on her testimony that she would not have purchased the car if she
had been told about the defect. (Pls.’ Opp’n 19-20; see Trial Tr. 364, 405-06). That testimony,
she argued, demonstrated that she did rely on New GM’s misrepresentation to her detriment.
(See Pls.’ Opp’n 19-20 (“Had Ms. Spain known the truth, that the Saturn Sky had a defective
ignition switch . . . , she would not have purchased the car.”). But that theory is nothing more
than a repackaged theory of misrepresentation by mere silence — a theory that Spain conceded
she cannot pursue because she did not have a special or fiduciary relationship with New GM.
(See Trial Tr. 1731-32). Spain’s testimony about whether she would have purchased the car had
the defect been disclosed was therefore insufficient to save her fraudulent misrepresentation
claim from judgment as a matter of law. 2
2
In a footnote in her brief, Spain also argued that she could pursue her claim because she
allegedly relied on the car’s “‘appearance’ of safety.” (Pl.’s Opp’n 22 n.14). But Spain did not
actually testify that she relied on the car’s “appearance of safety.” Moreover, that argument is
also just a repackaged fraud-by-mere-silence argument; if accepted, it would undermine the
proposition that, absent a special relationship, some communication by the defendant is
necessary to maintain a fraud claim. Finally, the sole authority that Spain cited, In re Ford
Motor Co. Bronco II Prods. Liab. Litig., No. MDL-991, 1995 WL 491155, at *4 (E.D. La. Aug.
15, 1995), does not support the argument. There, the plaintiffs based their fraud claims on
specific communications (namely, advertisements) by the defendant. See id. And the only
authority cited by the Court was Bunge Corp. v. GATX Corp., 557 So. 2d 1376 (La. 1990), which
concerned the duty of a contractor to warn the buyer of a home about hazardous conditions in the
construction. The Court’s holding was quickly superseded by statute, see Curtis v. Branton
Indus., Inc., 944 So. 2d 716, 721 (La. Ct. App. 2006) (citing 1990 La. Acts No. 712 § 1), and, in
any event, has no application here, as the Court held in its Opinion and Order addressing New
GM’s motion for summary judgment that New GM had no independent post-sale duty to warn
Spain about any defects in her car, see In re General Motors Ignition Switch Litig., 14-MD-2543
(JMF), 2016 WL 874778, at *6 (S.D.N.Y. Mar. 3, 2016).
7
For those reasons, the Court concluded that no reasonable jury could find for Spain on
her fraudulent misrepresentation claim and New GM’s motion for judgment as a matter of law
on that claim was GRANTED.
SO ORDERED.
Date: April 1, 2016
New York, New York
8
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?