RIAUBIA v. HYUNDAI MOTOR AMERICA

Filing 22

MEMORANDUM AND OPINION. SIGNED BY HONORABLE C. DARNELL JONES, II ON 8/22/17. 8/22/17 ENTERED & E-MAILED.(fdc)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JOSHUA RIAUBIA, individually
and for all persons similarly situated,
Plaintiff,
v.
HYUNDAI MOTOR AMERICA,
Defendant.

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CIVIL ACTION
NO. 16-5150

Jones II, J.

August 22, 2017
MEMORANDUM

Plaintiff Joshua Riaubia purchased a 2015 Hyundai Sonata Limited in August of 2014.
That vehicle, along with various other models, comes equipped with a “Smart Trunk,” a feature
that is advertised by Hyundai Motor America (“Defendant” or “HMA”) as being able to
“automatically open the trunk fully, or at least wide enough for a person to deposit bulky items
into the trunk – such as shopping bags, duffle bags, and sports equipment – without having to put
the items down or manually open the trunk lid.” Compl. ¶ 3. Plaintiff claims that, despite those
representations, “the Smart Trunk is defective in that it will frequently fail to open more than a
few inches,” and sometimes it “never open[s] more than a crack.” Id. at ¶ 4. Riaubia is a citizen
of Pennsylvania, and HMA is a California corporation. Id. at ¶¶ 9-10.
To recover for damages caused by this alleged defect, Plaintiff brings a series of claims
under federal and state law on behalf of himself and a putative class of purchasers of various
Hyundai models equipped with the same allegedly defective Smart Trunk feature: (1) violation
of California’s Unfair Competition Law; (2) violation of California’s False Advertising Law; (3)
violation of California’s Consumer Legal Remedies Act; (4) breach of express warranty under
Pennsylvania law; (5) breach of implied warranty of merchantability under Pennsylvania law; (6)

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violation of the federal Magnuson-Moss Warranty Act, and, in the alternative, (7) unjust
enrichment.
Defendant has moved to dismiss the Complaint pursuant to Federal Rule 12(b)(6) on
various grounds, including lack of standing and failure to allege a defect, or any wrongful act.
Defendant also challenges Plaintiff’s right to bring an alternative unjust enrichment claim or
pursue a nationwide class action under California law. For the following reasons, the motion is
denied in all respects.
STANDARD OF REVIEW
In deciding a Rule 12(b)(6) motion, courts must “accept all factual allegations as true,
construe the complaint in the light most favorable to the plaintiff, and determine whether, under
any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v.
County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (internal quotation marks and citation
omitted). Nevertheless, “[t]hreadbare recitals of the elements of a cause of action, supported by
mere conclusory statements, do not suffice.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d
Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
This standard, which applies to all civil cases, “asks for more than a sheer possibility that
a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678. “[A]ll civil complaints must now set
out sufficient factual matter to show that the claim is facially plausible.” Fowler, 578 F.3d at
210 (internal quotation marks omitted). “A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 556 (2007)).

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DISCUSSION
Plaintiff has successfully defended against HMA’s 12(b)(6) motion. Contrary to
Defendant’s assertions, Riaubia has standing to bring this class action. And the Complaint states
consumer-fraud and warranty claims, as well as a properly pleaded alternative unjust enrichment
claim.
I.

Plaintiff Has Standing to Bring this Class Action
To establish Article III standing in a class action, at least one of the named plaintiffs must

show “(1) an ‘injury in fact,’ (2) a sufficient ‘causal connection between the injury and the
conduct complained of,’ and (3) a ‘likel[ihood]’ that the injury ‘will be redressed by a favorable
decision.’” Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353, 358–59 (3d Cir. 2015) (citing
Susan B. Anthony List v. Driehaus, 134 S. Ct. 2334, 2341 (2014) (alterations in original)
(quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). Riaubia has standing to
bring this class action because, like the absent class members, he has allegedly suffered
economic injury from purchasing a vehicle of the same make with the same allegedly nonconforming Smart Trunk feature. See Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353 (3d Cir.
2015) (finding that the named plaintiff had standing to represent absent class members based on
his own alleged injury).
HMA does not disagree that Plaintiff has standing to bring his own claim; rather it
challenges his standing to represent absent class members that suffered the same injury but from
purchasing different vehicle models. Def.’s Opening Br. 4-6. Defendant’s argument is
unavailing. “[O]nce the named parties have demonstrated they are properly before the court,”
adequacy of representation becomes “one of compliance with the [class certification] provisions
of Rule 23, not one of Article III standing.” Neale, 794 F.3d at 361 (citing In re Prudential, 148

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F.3d 283, 307 (3d Cir.1998) (quoting Goodman v. Lukens Steel Co., 777 F.2d 113, 122 (3d
Cir.1985), aff’d, 482 U.S. 656 (1987)).
The more persuasive cases cited by the parties confirm this rule in class actions where,
like this one, absent members were allegedly injured by the same non-conforming feature of
different models of the same product, manufactured or distributed by the same defendants based
on uniform representations. See, e.g., NECA-IBEW Health & Welfare Fund v. Goldman Sachs &
Co., 693 F.3d 145, 158 (2d Cir. 2012) (“But whether [the named plaintiff] has ‘class standing’—
that is, standing to assert claims on behalf of purchasers of Certificates from other Offerings, or
from different tranches of the same Offering—does not turn on whether [the plaintiff] would
have statutory or Article III standing to seek recovery for misleading statements in those
Certificates’ Offering Documents.”) (emphasis in original); Marcus v. BMW of N. Am., LLC, 687
F.3d 583, 599 (3d Cir. 2012) (“When a class includes purchasers of a variety of different
products, a named plaintiff that purchases only one type of product satisfies the typicality
requirement if the alleged misrepresentations or omissions apply uniformly across the different
product types.”).
Defendant improperly relies on a dissenting opinion in Gratz v. Bollinger, 539 U.S. 244
(2003), an equal protection case involving the use of race in college admissions, for the
proposition that a named plaintiff’s and absent class members’ “injury-in-fact” must have been
caused by the identical product. Def.’s Br. at 4. In Gratz, Justice John Paul Stevens, writing for
a minority, raised the issue of Article III standing sua sponte on the grounds that the named
plaintiff had not alleged any “real and immediate” personal injury, only a “conjectural or
hypothetical” one, and that his alleged injury as a potential transfer student did not give him
standing to represent an absent class of college freshman because the university used different

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race-based admissions standards for transfer students and freshmen applicants. Gratz, 539 U.S.
at 260-63. The Court’s majority disagreed, and concluded that the named plaintiff’s own injury
was sufficient for standing and that any difference in the use of race in transfer versus freshman
undergraduate admissions did not “implicate a significantly different set of concerns” to
undermine the named plaintiff’s standing or his adequacy to represent the class under Rule 23.
Id. at 261-65. Similarly, there is no indication in this case that the differences across the various
vehicle models of the same make raise a sufficiently “different set of concerns” to undermine
Riaubia’s standing to bring this class action.
II.

Plaintiff Sufficiently Pleaded a Defect for Consumer-fraud and Warranty Claims
The parties agree, for purposes of this motion, that the Complaint sufficiently alleges all

the elements of the various consumer-fraud and breach-of-warranty claims except one: a
wrongful act. Defendant’s main argument is that Plaintiff has failed to allege a defect, because
the Smart Trunk admittedly opens “hands-free”—no matter how wide—as alleged in the
Complaint. HMA contends that this is enough to conform to the alleged warranties and
consumer protection laws. Def.’s Br. 1, 7-11. It argues that Plaintiff’s “subjective”
dissatisfaction with how narrowly the trunk opens does not amount to a breach or violation.
And, in any event, the alleged defect does not “substantially impair” the value of the vehicle to
justify any remedy beyond repair or replacement as provided under HMA’s written warranty. Id.
at 8-10.
Defendant misses the mark because, on a 12(b)(6) motion, this Court must accept the
factual allegations as true. See Phillips, 515 F.3d at 233. Indeed, according to the Complaint,
Defendant represented throughout various media that the Smart Trunk would open wide enough,
on its own, to allow someone to place their bags inside without having to manually lift the hatch.

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See Compl. ¶¶ 20-74. On those allegations, it is plausible that the alleged defect could be a
breach of the alleged warranties or relevant consumer protection laws. Ultimately, whether or
not the alleged defect amounts to a breach or violation will be a question for the fact-finder and
cannot form the basis for disposing of these claims on a 12(b)(6) motion.
Nor is the written warranty a barrier to relief since Plaintiff has sufficiently pleaded that,
in spite of multiple attempts to repair or replace the defective part, the Smart Trunk still does not
conform to the alleged descriptions. See Compl. ¶¶ 75-91. Whether the written warranty has, in
fact, failed its “essential purpose,” as required to allow for additional remedies, will also be a
question for the fact-finder. See Robinson v. Freightliner LLC, No. 08-CV-761, 2010 WL
887371, at *4 (M.D. Pa. Mar. 10, 2010) (“[w]hether a limited warranty has failed its essential
purpose is a question of fact for the jury.”) (quoting Woolums v. Nat’l RV, 530 F. Supp. 2d 691,
701 (M.D. Pa. 2008). Plaintiff has sufficiently pleaded a wrongful act under the alleged
warranty and consumer fraud laws and thus those claims survive this 12(b)(6) motion. 1
III.

Plaintiff Properly Pleads Unjust Enrichment in the Alternative

At this stage in the litigation, neither party disagrees that a contract, including a limited
warranty, applies here. They disagree, however, whether this fact alone is dispositive in deciding
to dismiss the alternative unjust enrichment claim.
The weight of authority, as cited by the parties, confirms Plaintiff’s right to plead an
alternative unjust enrichment claim under Federal Rule 8, although ultimately Plaintiff will be
able to recover on the basis of only one of these legal theories. See, e.g., Powers v. Lycoming
Engines, No. 06-cv-2993, 2007 WL 2702705, at *3 (E.D. Pa. Sept. 12, 2007) (Savage, J.)

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Defendant also argues that the vehicles with the allegedly defective Smart Trunk are “generally considered
merchantable” because they “provide safe, reliable transportation.” Def.’s Br. 7-8. As Plaintiff astutely observes,
however, Defendant’s assertion is based on an “antiquated view of cars” because consumers today “expect more
than just safety and reliable transportation” when they select one vehicle over another. Pl.’s Br. 18 n.12.

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(“plaintiffs are permitted to plead their unjust enrichment claim as an alternative to their breach
of contract claim.”) (citing Enters. v. Pittsburgh Water & Sewer Auth., 103 F.3d 1165, 1175 (3d
Cir. 1997); Retail Brand All., Inc. v. Rockvale Outlet Ctr., LP, No. 06-cv-01857, 2006 WL
3061136, at *5 (E.D. Pa. Oct. 26, 2006) (Stengel, J.). The unjust enrichment claim therefore also
survives this 12(b)(6) motion.
IV.

Choice-of-Law Issues Are Not Yet Ripe for Resolution
Finally, Defendant prematurely attempts to dismiss the claims under California law using

a choice-of-law analysis. As Plaintiff correctly notes, however, courts in the Third Circuit have
consistently held that deciding a conflict-of-laws question requires a factual record and is
therefore inappropriate for resolution on a motion to dismiss. See In re: Domestic Drywall
Antitrust Litig. Civil Action, No. 13-cv-2437, 2016 WL 3769680, at *5 (E.D. Pa. July 13, 2016)
(declining to undertake a choice-of-law analysis in a nationwide class action at the motion to
dismiss stage) (citing Graboff v. The Collern Firm, No. 10-cv-1710, 2010 WL 4456923, at *8
(E.D. Pa. Nov. 8, 2010) (“Due to the complexity of [choice of law] analysis, when confronted
with a choice of law issue at the motion to dismiss stage, courts within the Third Circuit have
concluded that it is more appropriate to address the issue at a later stage in the proceedings.”)
(alteration supplied). As the Honorable Michael Baylson noted in In re: Domestic Drywall,
Defendant’s “arguments are serious and merit consideration, but it is premature for the Court to
rule on these issues at this time.” Id.
In conclusion, Defendant’s motion to dismiss the Complaint is denied in all respects.
BY THE COURT:

/s/ C. Darnell Jones, II
C. Darnell Jones, II J.

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