Reedy et al v. Phillips
Filing
21
MEMORANDUM OPINION AND ORDER granting in part and denying in part 6 MOTION to Dismiss Plaintiffs' Claims, granting in part and denying in part 7 MOTION to Dismiss or Strike Plaintiffs' Class Allegations (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
United States District Court
Southern District of Texas
ENTERED
March 20, 2018
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
CHRISTOPHER REEDY and T.C.
HOLDINGS DELAWARE, INC.,
Individually and On Behalf
of THOSE SIMILARLY SITUATED,
David J. Bradley, Clerk
§
§
§
§
§
§
§
§
§
§
§
§
Plaintiffs,
v.
PHILLIPS 66 COMPANY,
Defendant.
CIVIL ACTION NO. H-17-2914
MEMORANDUM OPINION AND ORDER
Plaintiffs
Delaware,
Inc.
Christopher
( "T. C.
Reedy
Holdings")
("Reedy")
(together,
and
T. C.
Holdings
"Plaintiffs")
bring
this action against Phillips 66 Company ("Phillips" or "Defendant")
for
strict
warranty
violation
products
of
of
liability,
merchantability,
the
Kansas
individually and on behalf
negligence,
breach
Consumer
of
all
of
breach
express
Protection
others
of
implied
warranty,
Act
and
( "KCPA")
I
similarly situated. 1
Pending before the court are Defendant Phillips 66 Company's Motion
to Dismiss Plaintiffs' Claims ("Motion to Dismiss")
No.
6)
(Docket Entry
and Defendant Phillips 66 Company's Motion to Dismiss or
Strike Plaintiffs' Class Allegations ("Motion to Strike")
1
(Docket
See Complaint
Class Action ("Plaintiffs' Complaint") ,
Docket Entry No. 1.
Plaintiffs' first four causes of action are
brought on behalf of a nationwide class. The cause of action under
the KCPA is brought on behalf of a Kansas sub-class.
Entry No. 7).
For the reasons stated below, the Motion to Dismiss
will be granted in part and denied in part,
and the Motion to
Strike will be granted in part and denied in part.
I.
Factual Allegations and Procedural History
Phillips produces, refines, markets, and distributes jet fuel
and aviation gas ( "avgas") . 2
based operators
( "FBOs")
Phillips distributes avgas to fixed-
and
aircraft owners and pilots. 3
the
FBOs
then sell
the
avgas
Plaintiff Christopher Reedy is a
trained pilot and a shareholder of plaintiff T.C. Holdings. 4
Holdings
aircraft. 5
owns
a
Beechcraft
to
Baron
aircraft
and
a
T.C.
Decathlon
Around August 23, 2017, Reedy spent $91.04 to purchase
23.95 gallons of Phillips avgas for the Decathlon aircraft at the
Miami County airport in Paola, Kansas. 6
Around August 30,
2017,
Reedy spend $390.37 to purchase 98.19 gallons of Phillips avgas for
the Baron aircraft at the same airport. 7
On September 12, 2017,
Reedy and Dave Cochran, an FAA-certified mechanic, took samples of
the
Phillips avgas
from the Baron and Decathlon aircrafts and
2
Plaintiffs' Complaint, Docket Entry No. 1, p. 3
3
Id. ~ 10.
4
Id. at 5 ~ 24.
5
Id. ~ 25.
6
Id. ~ 26.
7
Id. at 6 ~ 27.
-2-
~
8.
observed contamination in the form of solid particles. 8
Plaintiffs
allege that "[b]ecause of the serious and life-threatening risk
posed
by
contaminated
avgas,
along
with
the
serious
risk
of
property damage, Reedy and Cochran grounded the Baron and Decathlon
aircrafts until the contaminated avgas could be flushed from the
tanks
and
the
planes
could
undergo
thorough
inspections
and
maintenance." 9
In
September
("Signature"),
of
an
2017
discovered
FBO,
Signature
contaminated
Wichita and Olathe, Kansas,
Phillips
Flight
Support
avgas
at
its
locations and it halted the sale of
Phillips' avgas there. 10 By mid-September of 2017 Signature stopped
selling Phillips avgas at approximately twenty locations due to
contamination. 11 Plaintiffs allege that Reedy had no knowledge that
the avgas he purchased in August was defective or contaminated. 12
Plaintiffs
filed
their
Complaint
on
September
28,
2017,
bringing class action allegations pursuant to Federal Rules of
Civil
Procedure
Phillips'
including
23 (a)
and
distribution
the
amount
8
spent
contaminated
on
the
Id. ~~ 28-29.
9
of
23 (b) ( 3) . 13
Id. ~ 30.
lOid. at 4 ~~ 14-15.
llid. ~~ 16-17.
12Id. at 5-6 ~~ 26-27.
13
Id. at 6 ~ 32.
-3-
Plaintiffs
fuel
allege
caused
contaminated avgas
that
damages
and
the
maintenance and repair costs. 14
for
strict
products
Plaintiffs bring causes of action
liability,
negligence,
breach
of
implied
warranty, and breach of express warranty on behalf of themselves
and
all
others
similarly
situated
in
a
Nationwide
Class. 15
Plaintiffs bring a cause of action for violations of the Kansas
Consumer Protection Act ("KCPA") on behalf of themselves and all
other similarly situated members of a Kansas subclass. 16
Defendant
filed its Motion to Dismiss and Motion to Strike on November 7,
2017. 17
II.
Defendant's Motion to Dismiss
Defendant moves to dismiss Plaintiffs' Complaint under Federal
Rule
of
Civil
Procedure
12 (b) (1)
arguing
standing to assert any of their claims.
dismiss under Rule 12(b)
(6)
that
Plaintiffs
lack
Defendant also moves to
arguing that even if Plaintiffs have
standing to pursue their claims, Plaintiffs have failed to state a
claim for products liability and breach of express warranty, T.C.
Holdings has failed to state a claim under the KCPA and for breach
of implied warranty, and that Plaintiffs otherwise fail to properly
state a claim under the KCPA. 18
14
Id.
~ 31.
15
Id.
at 7
~
32.
17
See Motion to Dismiss, Docket Entry No. 6; Motion to Strike,
Docket Entry No. 7.
18
See Motion to Dismiss, Docket Entry No. 6, pp. 11, 15, 19,
20.
-4-
A.
Standing
Standing and class certification
claim-by-claim basis.
551,
563
(5th Cir.
James v.
2001).
must both be addressed on a
City of Dallas,
Texas,
254 F.3d
In a class action the general rule
remains that standing should be addressed before other matters
because
it
goes
to
the
court's
power
to
hear
a
claim,
and
Plaintiffs have not demonstrated that a different rule should apply
in this case.
See Cole v. General Motors Corp., 484 F.3d 717, 721
(5th Cir. 2007)
("Before we reach the questions regarding the class
certification, we must resolve the standing question as a threshold
matter
of
jurisdiction.");
Grant
ex
rel.
Gilbert, 324 F.3d 383, 390 (5th Cir. 2003)
Family
Eldercare
v.
("It goes without saying
that before seeking certification, representative plaintiffs still
must establish standing.") ; James, 254 F. 3d at 562-63.
"A litigant
must be a member of the class which he or she seeks to represent at
the time the class action is certified by the district court."
James, 254 F.3d at 562-63
559 (1975)).
(quoting Sosna v. Iowa,
95 S. Ct. 553,
"If the litigant fails to establish standing, he or
she may not seek relief on behalf of himself or herself or any
other
member
of
the
class."
Id.
at
563
(citing
0' Shea
v.
Littleton, 94 S. Ct. 669, 675 (1974)).
1.
Standard of Review- Fed. R. Civ. P. 12(b) (1)
Federal courts are "courts of limited jurisdiction,
having
'only the authority endowed by the Constitution and that conferred
-5-
by Congress. '"
Halmekangas v. State Farm Fire and Casualty Co. ,
603 F.3d 290, 292 (5th Cir. 2010).
"Under Rule 12 (b) (1), a claim
is 'properly dismissed for lack of subject-matter jurisdiction when
the
court
lacks
the
statutory
adjudicate' the claim."
Liability Litigation,
or
constitutional
power
to
In re FEMA Trailer Formaldehyde Products
668 F.3d 281, 286
(5th Cir. 2012)
(quoting
Home Builders Association, Inc. v. City of Madison, 143 F.3d 1006,
1010
(5th Cir.
1998)).
" [S] tanding and ripeness are essential
components of federal subject-matter jurisdiction."
In re Jillian
Morrison, L.L.C., 482 F. App'x 872, 875 (5th Cir. 2012).
When facing a challenge to subject matter jurisdiction and
other
challenges
on
the
merits,
courts
must
consider
the
Rule 12 (b) (1) jurisdictional challenge before addressing the merits
of the claim.
Alabama-Coushatta Tribe of Texas v. United States,
757 F.3d 484, 487 (5th Cir. 2014).
"[T]he party asserting federal
subject-matter jurisdiction[] has the burden of proving that this
requirement has been met.
Id.
"'Subject matter jurisdiction is
not defeated by the possibility that the complaint ultimately fails
to state a claim.'"
Energytec, Inc. v. Proctor, 516 F. Supp. 2d
660, 671 (N.D. Tex. 2007)
When
evaluating
(citations omitted).
jurisdiction,
courts
distinguish
"facial" and "factual" attacks under Rule 12(b) (1).
v.
Weinberger,
644
F.2d 521,
523
(5th Cir.
defense merely files a Rule 12(b) (1)
motion,
1981).
between
See Paterson
"[I] f
the
the trial court is
required merely to look to the sufficiency of the allegations in
-6-
the complaint because they are presumed to be true.
If those
jurisdictional allegations are sufficient the complaint stands.
a
defendant makes a
matter
'factual attack'
jurisdiction
testimony,
or
other
the
evidentiary
If
upon the court's subject
defendant
submits
affidavits,
materials."
Because
Defendant's motion relies only on the allegations in the Complaint
the motion is a facial attack and "[t]his Court must accept as true
all material allegations of the complaint, and must construe the
complaint in favor of the complaining party."
Williams v. Certain
Underwriters at Lloyd's of London, 398 F. App'x 44, 46
2010)
(quotations omitted).
(5th Cir.
Lack of standing must be determined
based on the complaint alone.
Barrera-Montenegro v. United States,
74 F.3d 657, 659 (5th Cir. 1996).
Standing requires that:
an injury in fact-an
.;"
(2)
(1) "the plaintiff must have suffered
invasion of a
legally protected interest
"there must be a causal connection between the injury
and the conduct complained of-the injury has to be fairly .
trace[able]
to the challenged action of the defendant,
and not
. th[e] result [of] the independent action of some third party
not before the court;" and (3)
merely
speculative,
favorable decision."
2130, 2136
(1992)
that
the
"it must be likely, as opposed to
injury
will
be
redressed
by
a
Lujan v. Defenders of Wildlife, 112 S. Ct.
(citations and quotations omitted).
The court
must evaluate the Plaintiffs' Article III standing on each claim.
Fontenot v. McCraw, 777 F.3d 741, 746 (5th Cir. 2015).
-7-
2.
Analysis
Plaintiffs
seek
compensation
for
"(1)
amounts
spent
on
contaminated avgas that had to be flushed from their aircrafts and
(2) costs of maintenance and repair that were necessary to account
for the presence of contaminated avgas in the aircrafts,
ensure the plane[s]
remained safe for further use." 19
and to
Defendant
argues that Plaintiffs lack standing to pursue their claims because
they
fail
Specifically,
to
satisfy
the
requirement. 20
injury-in-fact
Defendant argues that Plaintiffs have not alleged
actual harm, that their alleged future harm is too speculative to
support standing, and that costs incurred to protect against future
risk cannot confer standing. 21
a.
Actual Harm
Plaintiffs
significant
allege
risk"
aircrafts . . . and
the aircraft." 22
that
that
"avgas
"includes
purchasers
damages
to
are
the
put
at
systems
of
serious injury or death for those onboard
Plaintiffs allege that "[b]ecause of the serious
and life-threatening risk posed by contaminated avgas, along with
the serious risk of property damage, Reedy and Cochran grounded the
Baron and Decathlon aircrafts until the contaminated avgas could be
~
19
Plaintiffs' Complaint, Docket Entry No. 1, p. 6
20
See Motion to Dismiss, Docket Entry No. 6, pp. 12-15.
31.
21Id.
22
Plaintiffs' Complaint, Docket Entry No. 1, p. 5
-8-
~
22.
flushed
from
the
tanks
and
the
inspections and maintenance. " 23
planes
could undergo
thorough
Plaintiffs have not alleged any
actual harm to an aircraft, pilot, or any other person from the use
of Phillips'
contaminated avgas.
injury does not "actually exist."
Therefore,
Plaintiffs' alleged
Clapper v. Amnesty International
USA, 133 S. Ct. 1138, 1147 (2013)
b.
Economic Harm
Plaintiffs argue that they have alleged "the actual economic
harm suffered by Plaintiff Reedy when he paid for high-quality
avgas and instead received contaminated avgas. " 24
Defendant argues
that economic harm alone is not sufficient to confer standing in a
products liability case. 25
v.
The Fifth Circuit's analysis in Rivera
Wyeth-Ayerst Laboratories,
283 F.3d 315
(5th Cir.
2002),
is
applicable to this case:
The confusion arises from the plaintiffs' attempt to
recast their product liability claim in the language of
contract law. The wrongs they allege - failure to warn
and sale of a defective product - are products liability
claims.
Yet, the damages they assert-benefit of the
bargain, out of pocket expenditures - are contract law
damages. The plaintiffs apparently believe that if they
keep oscillating between tort and contract law claims,
23
Id. at 6
~
3 0.
24
Plaintiffs' Memorandum in Opposition to Defendant's Motion
to Dismiss Plaintiffs' Claims ("Opposition to Motion to Dismiss"),
Docket Entry No. 13, p. 10.
25
Defendant Phillips 66 Company's Reply Supporting its Motion
to Dismiss Plaintiffs'
Claims
("Reply Supporting Motion to
Dismiss"), Docket Entry No. 16, pp. 2-3.
-9-
they can obscure the fact that they have asserted no
concrete injury. Such artful pleading, however, is not
enough to create an injury in fact.
Rivera,
283
F.3d at
320-21
(internal citations omitted).
The
wrongs Plaintiffs allege -- strict products liability, negligence,
and breach of
express
and
implied warranties
liability claims under Kansas law.
are
products
Corvias Military Living, LLC v.
Ventamatic, Ltd., 54 Kan. App. 2d 169, 173, 397 P.3d 441, 445 (Kan.
Ct. App. 2017)
(citing K.S.A.
§
60-3302).
Because Plaintiffs seek
contractual damages, they have not alleged an injury in fact that
would provide standing for a products liability claim.
c.
Costs to Mitigate Future Harm
Defendant argues that Plaintiffs' costs incurred to flush its
gas
tanks
and
protect
against
future
airplanes also do not confer standing. 26
risk
of
to
the
Plaintiffs respond that
the cases Defendant cited are distinguishable
claims because "Plaintiffs'
damage
from Plaintiffs'
alleged harm is not reliant on the
potential criminal actions of a third party, or the actions of any
third party at all." 27
Even if the possible future harm is not reliant on a third
party,
to
have
standing based on
future
harm
Plaintiffs
must
establish that the harm is certainly impending and they have not
done so.
In Clapper the Court held that "Respondents' contention
26
Motion to Dismiss, Docket Entry No. 6, p. 13.
27
0pposition to Motion to Dismiss, Docket Entry No. 13, p. 13.
-10-
that they have standing because they incurred certain costs as a
reasonable reaction to a risk of harm is unavailing--because the
harm
respondents
Clapper,
133 S.
seek
Ct.
to
at 1151.
injury are not sufficient.
Plaintiffs
argue
avoid
"if
11
is
not
certainly
impending.
11
"Allegations of possible future
Id. at 1147
plane-engine
(quotations omitted) .
failure
is
not
an
imminent
threatened harm, it is difficult to imagine what is. 1128
Although
engine failure may be a consequence of operating aircrafts with
contaminated avgas,
establish that
consequence.
the
Plaintiffs
Phillips'
Because
avgas
fail
to present
would have
Plaintiffs'
facts
caused that
allegations
only
that
extreme
support
a
possible future injury instead of a certainly impending injury,
they cannot confer standing.
d.
KCPA Claim29
To have standing to sue under the KCPA the plaintiff must be
a consumer.
Doe 7 v. University of Kansas, Civil Action No. 16-
2458-JTM, 2017 WL 4037704 at *2 (D. Kan. Sept. 13, 2017); Hayes v.
Find Track Locate, Inc., 60 F. Supp. 3d 1144, 1151 (D. Kan. 2014).
"In order to be a consumer under the KCPA, one must have been a
28
Id. at 13.
29
The parties did not brief Plaintiffs' standing to bring a
claim under the Kansas Consumer Protection Act. However, because
a federal court always has jurisdiction to determine its own
jurisdiction, the court will evaluate Plaintiffs' standing to bring
this claim.
Steel Co. v. Citizens for a Better Environment, 118
S. Ct. 1003, 1024 (1998).
-11-
party to the contract for purchase."
1151.
"The
KCPA' s
protection
is
directly contract with suppliers
(citation omitted) .
Moreover,
Hayes,
60 F.
limited
to
Supp.
individuals
for goods or services."
"'aggrieved'
the
overlap.
be
a
constitutional
and
statutory
who
Id.
is a constitutional
component to statutory standing under the KCPA.
words,
3d at
In other
standing
requirements
If the consumer was not aggrieved, then there would not
sufficient
standing."
injury
in
fact
to
allow
Doe 7, 2017 WL 4037704 at *3.
for
constitutional
"Under that requirement,
the named plaintiff in a class action must allege and show that he
has been personally injured."
1210, 1216 (D. Kan. 1998).
Stein v. Sprint Corp., 22 F. Supp. 2d
Consumers who allege an economic loss
qualify as "aggrieved" under the KCPA.
Gonzalez v. Pepsico, Inc.,
489 F. Supp. 2d 1233, 1248-49 (D. Kan. 2007).
Plaintiffs allege that Plaintiff Reedy purchased avgas, but
nowhere in the Complaint do Plaintiffs allege that T.C. Holdings
purchased any avgas or otherwise entered a contract with Phillips. 30
Because
T.C.
Holdings
was
not
a
"party
to
the
contract
purchase," T.C. Holdings is not a consumer under the KCPA.
60 F. Supp. 3d at 2251.
Hayes,
Therefore, T.C. Holdings lacks standing
to bring a claim under the KCPA. 31
30
for
Plaintiff Reedy has standing to
See Plaintiffs' Complaint, Docket Entry No. 1, pp. 5-6
~~
26-
27.
31
Moreover, Plaintiffs do not oppose Defendant's motion to
dismiss T.C. Holding's KCPA claim.
-12-
bring a claim under the KCPA because he is a
consumer who has
allegedly suffered a loss as a result of a violation of the KCPA.
After carefully considering the parties' arguments the court
concludes that Plaintiffs cannot establish Article III standing for
their products liability claims -- which include their claims for
strict products liability, negligence, and breach of express and
implied warranty -- because they have not demonstrated injury in
fact or a certainly impending injury.
However, the court concludes
that Plaintiff Reedy has standing to bring claims under the Kansas
Consumer Protection Act.
B.
Failure to State a Claim
In
the
alternative,
Defendant
moves
to
dismiss
four
of
Plaintiffs' five causes of action for failure to state a claim upon
which relief may be granted.
Defendant does not move to dismiss
Plaintiff Reedy's breach of
implied warranty claim. 32
Because
Plaintiffs do not oppose Defendant's motion to dismiss Plaintiffs'
express
claims
warranty claims
will
be
and T. C.
dismissed
for
Holding's
failure
to
KCPA claim, 33
state
a
claim.
those
The
remaining claims under consideration for Defendant's Motion to
Dismiss are Plaintiffs' strict products liability and negligence
claims,
T.C.
Holdings'
implied warranty claim,
and Reedy's KCPA
32
Motion to Dismiss, Docket Entry No. 6, p. 6.
33
0pposition to Motion to Dismiss, Docket Entry No. 13, p. 8
n.2.
-13-
claim.
As discussed in Part A, the court will dismiss Plaintiffs'
strict products liability, negligence, and warranty claims for lack
of standing, but the court will nevertheless analyze those claims
under Rule 12(b) (6).
1.
Standard of Review- Fed. R. Civ. P. 12(b) (6)
Under
Rule
8
of
the
Federal
Rules
of
Civil
Procedure
a
pleading must contain "a short and plain statement of the claim
showing that the pleader is entitled to relief."
8(a) (2).
Fed. R. Civ. P.
A Rule 12(b) (6) motion tests the formal sufficiency of
the pleadings and is "appropriate when a defendant attacks the
complaint because it fails to state a legally cognizable claim."
Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001), cert.
denied sub nom.
Cloud v. United States,
122 S. Ct.
2665
(2002).
The court must accept the factual allegations of the complaint as
true, view them in a light most favorable to the plaintiff,
draw all reasonable inferences in the plaintiff's favor.
and
Id.
To defeat a motion to dismiss pursuant to Rule 12(b) (6),
a
plaintiff must plead "enough facts to state a claim to relief that
is plausible on its face."
s. Ct. 19 55
I
19 7 4 ( 2 0 0 7) .
Bell Atlantic Corp. v. Twombly,
127
"A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to draw
the reasonable
inference that
misconduct alleged."
(2009)
the defendant
Ashcroft v.
(citing Twombly,
127 S.
Iqbal,
129 S.
Ct. at 1965) .
-14-
is
liable for
Ct.
1937,
the
1949
"The plausibility
standard is not akin to a
for more
than a
unlawfully."
complaint
Id.
sheer possibility that
facts
liability,
that
it
are
'stops
possibility and plausibility of
defendant
'merely
short
has
of
the
to
acted
"Where a
consistent
entitlement
(quoting Twombly, 127 S. Ct. at 1966).
to dismiss,
a
(quoting Twombly, 127 S. Ct. at 1965) .
pleads
defendant's
'probability requirement,' but it asks
with'
line
a
between
relief. '"
Id.
When considering a motion
district courts are "limited to the complaint,
any
documents attached to the complaint, and any documents attached to
the motion to dismiss that are central to the claim and referenced
by the complaint."
PLC,
594
Lone Star Fund V (U.S.), L.P. v. Barclays Bank
F.3d 383,
387
(5th Cir.
2010).
"Federal
courts are
required to dismiss, pursuant to Federal Rule of Civil Procedure
12(b) (6), claims based on invalid legal theories, even though they
may be otherwise well-pleaded."
Flynn v.
State Farm Fire and
Casualty Insurance Co. (Texas), 605 F. Supp. 2d 811, 820 (W.D. Tex.
2009)
(citing Neitzke v. Williams, 109 S. Ct. 1827, 1832 (1989)).
"[W]hen the allegations in a complaint,
raise a
claim of
entitlement to relief,
however true,
could not
this basic deficiency
should . . . be exposed at the point of minimum expenditure of time
and money by the parties and the court."
F.3d 397, 401
(5th Cir. 2007)
Cuvillier v. Taylor, 503
(quoting Twombly, 550 U.S. at 558)
(quotations omitted); see also Exxon Mobil Corp. v. FX Networks,
LLC, 39 F. Supp. 3d 868, 870-71 (S.D. Tex. 2014).
-15-
2.
Analysis
a.
Strict Products Liability and Negligence Claims
Plaintiffs
allege
that
"[t]he
avgas
was
defective
and
inherently and unreasonably dangerous and unsafe for its intended
use
because
it
harmed
the
aircrafts
in
which
it
used. " 34
was
Defendant argues that "[b]ecause Plaintiffs have pleaded no facts
indicating
that
they
or
their
property
sustained
any
actual
physical harm, they have failed to state a products-liability claim
under either a negligence or strict-liability theory, and the Court
should therefore dismiss those claims." 35
Plaintiffs respond that:
Plaintiffs have alleged property damage and seek the
costs of "maintenance and repair that were necessary to
account for the presence of contaminated avgas in the
aircrafts."
(Complaint, ~ 31.)
These repair costs to
property other than the defective product are recoverable
under the Product Liability Act. 36
Defendant argues that "[o]ne mention of 'repair' in a 77-paragraph
complaint,
however,
does
not
provide
sufficient
underpinnings necessary to show property damage,
under even the
most liberal interpretation of Iqbal and Twombly. " 37
agrees.
factual
The court
For the same reasons that the court has already concluded
that Plaintiffs failed to establish an injury sufficient to support
~
34
Plaintiffs' Complaint, Docket Entry No. 1, p. 10
35
Motion to Dismiss, Docket Entry No. 6, p. 17.
36
0pposition to Motion to Dismiss, Docket Entry No. 13, p. 14.
37
Reply Supporting Motion to Dismiss,
p. 6.
-16-
48.
Docket Entry No.
16,
standing to bring a products liability claim, the court concludes
that Plaintiffs fail to state a claim under Rule 12(b) (6).
"For more than 35 years,
the Kansas Product Liability Act,
K.S.A. 60-3301 et seq., has governed all product liability actions,
consolidating
theory."
them
into one basis
Corvias Military,
for
54 Kan. App.
liability regardless
2d at 173.
of
The Kansas
Product Liability Act applies to actions based on "strict liability
in tort, negligence,
Id.
II
[and]
breach of express or implied warranty
(citing K.S.A. 60-3302(c)).
It applies to "any claim
or action brought for harm" and defines "harm" to include "property
damage,
personal injuries,
and death."
The definition of
"harm" "does not include 'direct or consequential economic loss'
caused by a defective product."
Id.
(quoting K.S.A. 60-3302(d)).
"Economic loss is defined as 'loss of use of the defective product,
cost of
replacing the product,
business,
I
II
and "repair"
loss of profits
to plaintiff's
costs.
(quoting Elite
See id.
Professionals, Inc. v. Carrier Corp., 16 Kan. App. 2d 625, 633, 827
P.2d 1195 (Kan. Ct. App. 1992)); Northwest Arkansas Masonry, Inc.
v. Summit Specialty Products, Inc., 29 Kan. App. 2d 735, 742, 31
P.3d 982
(Kan. Ct. App. 2001)
(" [E] conomic loss includes damages
for inadequate value, costs of repair, replacement costs, and loss
of use of the defective product.").
"applies
products."
to
both
consumer
and
The economic loss doctrine
commercial
buyers
of
defective
Northwest Arkansas Masonry, 29 Kan. App. 2d at 741.
-17-
Plaintiffs only seek damages for economic loss.
statements
that
the
avgas
"harmed
the
Plaintiffs'
aircrafts" 38
and
that
Plaintiffs "suffered property damage" 39 are conclusory allegations
but provide no
majority
of
facts
describing
Plaintiffs'
the
Complaint
damage
to property.
indicates
that
The
Plaintiffs'
property sustained no actual damage, only "threaten [ed] " damage and
"risk" of damage. 40
recoverable
and
Plaintiffs' argument that "repair" costs are
that
use
of
the
word
"repair"
indicates
an
allegation of damage fails because costs of repair are included in
economic loss.
Therefore, Plaintiffs have failed to state a claim
for products liability and negligence.
b.
T.C. Holdings' Implied Warranty Claim
Defendant argues that "T.C. Holdings' implied-warranty claim
must
be
dismissed
because
the
Complaint
fails
to
allege
the
required privity of contract between that Plaintiff and Phillips. " 41
Plaintiffs
do
not
Plaintiffs
argue
contend
instead
that
that
T. C.
Holdings
"Plaintiffs
is
have
a
consumer.
alleged
facts
supporting the reasonable inference that Defendant and Signature
are in an agency relationship and that, as a result, privity of
38
Plaintiffs' Complaint, Docket Entry No. 1, p. 10
39
Id. at 10
40
Id. at 1
41
Motion to Dismiss, Docket Entry No. 6, p. 19.
~
~
56.
1, 5
~
22, 6
~
30.
-18-
~
48.
contract exists between T.C. Holdings and Defendant to support a
valid implied-warranty claim." 42
The Kansas Product Liability Act applies to actions based on
breach of implied warranty.
K.S.A.
60-3302(c).
§
Under Kansas law
a plaintiff must allege contractual privity to bring an implied
warranty claim if the defective product only caused economic loss.
Shawnee County, Kansas v. Daimler Trucks North America LLC, Civil
Action No.
March 23,
App.
15-4006-RDR-KGS,
2015);
2d 609,
2015 WL 1299355,
Limestone Farms,
614,
29 P.3d 457,
Professional Lens Plan,
Inc.
74 2 ,
( Kan .
7 55 ,
6 7 5 P . 2d
887
Inc.
461
v.
*4-5
Ct. App.
2001)
Polaris Leasing Corp.,
19 8 4 ) ) .
(D.
Deere & Co.,
v.
(Kan.
at
Kan.
29 Kan.
(citing
234 Kan.
Courts have removed the
privity requirement for consumer transactions, but the requirement
remains for non-consumer transactions.
City of Winfield, Kansas v.
Key Equipment & Supply Co., Civil Action No. 11-1358-CM-KGS, 2012
WL 1207256 at *3
(D. Kan. April 11, 2012).
Relying on Meyers v. Garmin International, Inc., Civil Action
No. 13-2416-CM-GLR, 2014 WL 273983 at *7 (D. Kan. Jan. 24, 2014),
Plaintiffs argue that "[u]nder Kansas law, an agency relationship
can establish privity sufficient
claim. " 43
establish
to
state
an
implied warranty
Meyers recognized the general rule that plaintiffs must
privity
to
assert
an
implied
warranty
claim
in
42
0pposition to Motion to Dismiss, Docket Entry No. 13, p. 15.
43
Id. at 10.
-19-
nonconsumer transactions.
Meyers, 2014 WL 273983 at *7.
The court
held that the transaction was a consumer transaction and therefore
privity was
not
required.
In the alternative
the
court
reasoned "[e] ven if privity were required" plaintiffs alleged facts
sufficient
to
survive
a
motion
to
dismiss
because
plaintiffs
alleged an agency relationship and "[u]nder Kansas law, an agency
relationship can establish privity sufficient to state an implied
warranty claim."
Action Nos.
Id. (citing Dai tom, Inc. v. Pennwal t Corp. , Civil
80-2080,
Jan. 30, 1987)).
80-2087,
1987 WL
93958
at
*4-5
(D.
Kan.
However, the case that Meyers relied on for that
rule, Daitom, applied Pennsylvania, not Kansas, law.
1987 WL 93958 at *1
See Daitom,
("we first note that the parties agree that
Pennsylvania law governs this issue (as well as all of the other
legal issues presented .
. ) ") .
The court is
unaware of any
other Kansas case that allows an agency relationship to establish
privity.
Plaintiffs' Complaint alleges that Reedy purchased avgas for
two aircraft,
that T.C. Holdings owns the two aircraft, and that
Reedy is a shareholder of T. C. Holdings. 44
Because Plaintiffs have
alleged no facts demonstrating privity between T.C. Holdings and
Phillips, T.C. Holding's implied warranty claim will be dismissed.
Moreover, even if the court were to follow the Meyers' holding that
an agency relationship can establish privity, the court concludes
44
Plaintiffs' Complaint, Docket Entry No. 1, pp.
-20-
5-6~~
24-27.
that
Plaintiffs
between T. C.
have
Holdings
not
and
pled
facts
Phillips'
demonstrating any privity
agent,
Signature,
because
Plaintiffs do not allege that T.C. Holdings purchased any avgas.
Therefore this claim will be dismissed.
c.
Reedy's KCPA Claim
Plaintiffs allege that
74.
Phillips engaged in unconscionable and deceptive
acts and practices, by:
a.
Producing and
defective or
consumption;
distributing
contaminated
avgas that
and unfit
was
for
b.
Representing that its avgas was of high quality
when that was not the case; and
c.
Distributing avgas without properly testing it
or
applying
appropriate
quality
control
processes.
75.
The unfair and deceptive actions of Defendant were
committed in connection with consumer transactions;
namely, the distribution and sale of contaminated
avgas.
76.
Reedy and others suffered damages as a result of
Defendant's actions. 45
Defendant argues that Reedy's KCPA claim fails because the pleading
does not satisfy Rule 9(b) 's particularity requirement and because
it does not allege reliance. 46
Plaintiffs respond that under the
KCPA Reedy is not required to plead his claim with particularity or
~~
45
Id.
46
See Motion to Dismiss, Docket Entry No. 6, pp. 20-22.
at 12
74-76.
-21-
to allege reliance. 47
Both parties cite various cases from Kansas
district courts to support their arguments.
The
KCPA
"protect [s]
consumers
from
deceptive and unconscionable practices."
suppliers
K.S.A.
§
who
commit
50-623(b).
KCPA provides two paths for supplier liability
The
under Section
50-626 for "any deceptive act or practice," or under Section 50-627
for
"any unconscionable
50-627(a).
or practice."
Id.
§§
50-626(a),
To bring an action under the KCPA the plaintiff must
allege plausible facts
50-634 (b) .
act
That is,
that
the party is
"aggrieved."
K.S.A.
under both Sections 50-626 and 50-627 the
plaintiff must show that there was a causal connection between the
alleged violation of the KCPA and the claimed injury.
Finstad v.
Washburn University of Topeka, 252 Kan. 465, 471-73, 845 P.2d 685
19 9 3) . 48
( Kan.
For
claims
of
misrepresentation,
"Plaintiffs
generally demonstrate this causal connection through reliance on
47
See Opposition to Motion to Dismiss, Docket Entry No.
pp. 16-18.
48
13,
Finstad painstakingly analyzed the definition of the word
"aggrieved" to require a causal connection, and other courts have
followed its reasoning. See Weckhorst v. Kansas State University,
241 F. Supp. 3d 1154, 1177-78 (D. Kan. 2017); Queen's Park Oval
Asset Holding Trust v. Belveal, 394 P.3d 901, 2017 WL 2001609 at
*4-5 (Kan. Ct. App. May 12, 2017); Schneider v. Liberty Asset
Management, 45 Kan. App. 2d 978, 985, 251 P.3d 666, 671 (Kan. Ct.
App. 2011); and Rinehart v. Saint Luke's South Hospital, Inc.,
Civil Action No. 10-2209-SAC, 2011 WL 3348234 at *7-8 (D. Kan.
Aug. 3, 2011).
Plaintiffs' cited case, Midland Pizza, LLC v.
Southwestern Bell Telephone Company, Civil Action No. 10-2219-CMGLR, 2010 WL 4622191, predates these cases. Although the court in
Midland Pizza held that Section 50-626 states that a deceptive act
may be a violation "whether or not any consumer has in fact been
misled," the plaintiff must still allege that she is "aggrieved."
-22-
defendant's misrepresentations."
Action No.
2017).
to
Rasnic
v.
17-2064-KHV, 2017 WL 6406880 at *8
FCA US
(D.
LLC,
Civil
Kan. Dec. 15,
The parties dispute whether the KCPA requires a plaintiff
plead
its
standard.
court's
claims
After a
own
with
careful
research,
the
particularity
review of
court
under
the
Rule
9(b)
the cited cases and the
concludes
that
the
pleading
requirements under Section 50-626 and Section 50-627 of the KCPA
differ.
(i)
Section 50-626: Deceptive Act or Practice
Section 50-626 of the KCPA states "[n]o supplier shall engage
in any deceptive act or practice in connection with a consumer
transaction" and provides a lengthy,
nonexclusive list of which
deceptive acts and practices are violations of the Act.
§
50-626.
Section (b) (1)
include
states "[d]eceptive acts and practices
(1) Representations made knowingly or with reason
to know that
K.S.A.
" and lists seven examples of representations.
50-626 (b) (1).
§
Sections
(b) (2)
"[d]eceptive acts and practices include .
use,
in
any
falsehood,
willful
oral
or
written
and
(b) ( 3)
( 2)
representation,
of
exaggeration,
innuendo or ambiguity as to a material fact;
failure
to
state
a
material
fact,
or
50-626 (b) (2)- (b) (3).
Section
50-626 (b) (1)
does
state
the willful
the
concealment, suppression or omission of a material fact."
§§
K.S.A.
not
(3)
willful
K.S.A.
require
intent, while Sections 50-626(b) (2) and (b) (3) require intent.
-23-
the
See
K.S.A.
§§
50-626(b)(1)-(b)(3);
Doe
7,
2017
WL
4037704
at
*4
("Kansas courts have reviewed the legislative history behind the
KCPA, and distinguish Kan. Stat. Ann.
is
not
required--and
§§
(b) (2)
§
50-626(b) (1)--where intent
and
(b) (3)--where
intent
is
required.").
Plaintiffs argue that "there is no bright-line rule requiring
KCPA claims to be pleaded with Rule 9 particularity.
Indeed, cases
applying the particularity standard tend to center on fraudulent
misrepresentations." 49
Plaintiffs rely on Tomlinson v. Ocwen Loan
Servicing, LLC, Civil Action No. 15-01105-EFM-KGG, 2017 WL 3873754
(D. Kan. Sept. 5, 2017), and Rogers v. Bank of America, N.A., Civil
Action No. 13-1333-CM, 2014 WL 3091925 (D. Kan. July 7, 2014), to
argue that KCPA claims do not need to be plead with particularity. 50
Defendant
argues
that
"all
KCPA claims
must
meet
Rule
9 (b) 's
requirements--as the vast majority of Kansas federal courts have
held time after time. " 51
The court in Tomlinson cited Rogers and Sanchez v. Bank of
America, N.A., Civil Action No. 6:14-1142-JTM-TJJ, 2014 WL 5800203
(D. Kan. Nov. 7, 2014), to support the statement "[a]lthough some
of the claims sound in fraud, KCPA claims need not be pleaded with
particularity."
Tomlinson, 2017 WL 3873754 at *2.
The courts in
49
0pposition to Motion to Dismiss, Docket Entry No. 13, p. 16.
50
Id. at 17.
51
Reply Supporting Motion to Dismiss, Docket Entry No. 16, p. 8.
-24-
Sanchez and Rogers both reasoned that the KCPA does not require
particularity because "[t]he key difference is that the KCPA does
not include an
'intent to defraud'
requirement."
Rogers,
2014
WL 3091925 at *3; Sanchez, 2014 WL 5800203 at *6 (quoting Rogers,
2014 WL 3091925 at *3).
That conclusion was later rejected in
Doe 7, which held that the plaintiff is required to plead KCPA with
particularity in accordance with Rule 9(b)
because "intent is a
requirement for some violations of the KCPA[,]
[c]ontra Sanchez."
Doe 7, 2017 WL 4037704 at *4-5 (referencing Sections 50-626 (b) (2)
and (b) ( 3 ) ) .
Although
Defendant
is
correct
that
some
Kansas
federal
district courts have applied the Rule 9(b) pleading standard to all
KCPA claims,
the majority of
courts
only apply
pleading standard to claims under Section 50-626,
under Section 50-627.
Weckhorst,
applies
241
F.
the
Rule
9 (b)
not to claims
See, e.g., Doe 7, 2017 WL 4037704 at *4-5;
Supp.
to allegations
3d at
of
1176
deceptive
("[Rule
9 (b)'s]
provision
trade practices under
the
KCPA") (internal quotation omitted); Maxwell, 2017 WL 4037732 at *4
(holding that the plaintiffs adequately pled with the requisite
particularity
"deceptive
sections of the KCPA"
analysis
Rule 9(b)
logical
of
acts
or practices
that
violate
those
but did not mention particularity in its
the allegations
under Section 50-627) .
Requiring
particularity only for claims under Section 50-626 is
because
"deceptive
acts
and
practices"
deal
with
misrepresentations, while "unconscionable acts" do not necessarily
-25-
Therefore, the court concludes that
include any representations.
Plaintiffs must plead claims under Section 50-626 of the KCPA with
particularity in accordance with Rule
"must
set
forth
the
time,
place,
9 (b)
and
--
i.e.,
contents
of
Plaintiffs
the
false
representation, the identity of the party making the false statements and the consequences thereof.
II
Weckhorst, 241 F. Supp. 3d at
1176 (citation omitted).
In addition
to
Rule
9 (b), s
particularity
requirement,
to
adequately plead a violation of Section 50-626(b) (2) or (b) (3) the
plaintiff
WL
4037732
must
allege
at
*5;
"willful
11
CitiMortgage,
misconduct.
Inc.
v.
White,
No. 112,098, 2016 WL 199059 at *2-3, 364 P.3d 579
Jan.
15,
2016).
Plaintiffs
do
not
identify
Maxwell,
Civil
2017
Action
(Kan. Ct. App.
the
particular
subsection of Section 50-626 under which they bring claims, fail to
meet the particularity requirements of Rule 9(b), and do not allege
that Defendant acted willfully.
Plaintiffs thus fail to state a
claim under Section 50-626 of the KCPA.
Because it is possible
that Plaintiffs could plead facts that might cure this deficiency,
the court will grant Plaintiffs leave to amend their Complaint as
to this claim.
(ii) Section 50-627: Unconscionable Act or Practice
Section 50-627 of the KCPA states that "[n]o supplier shall
engage in any unconscionable act or practice in connection with a
consumer transaction.,,
K. S .A.
§
50-627 (a) .
Sections 50-627 (b) (1)-
(b) (6) provide a list of nonexclusive examples of unconscionable
-26-
acts.
K.S.A.
50-627,
plaintiffs
§
50-627 (b).
must
To state a claim under Section
allege
deceptive bargaining conduct.
unequal
Rasnic,
bargaining
power
and
2017 WL 6406880 at
*8;
Tomlinson, 2017 WL 3873754 at *4; Louisburg Building & Development
Co., L.L.C. v. Albright, 45 Kan. App. 2d 618,
616
(Kan. Ct. App. 2011).
646,
252 P.3d 597,
Plaintiffs are bound by this pleading
requirement even if they allege one of the listed violations under
subsections of 50-627 (b) (1)- (b) (6).
Because Plaintiffs fail
Rasnic, 2017 WL 6406880 at *8.
to allege unequal bargaining power and
deceptive bargaining conduct, and the requisite causal connection,
they have failed to state a claim under Section 50-627 of the KCPA.
The
court
will
allow
Plaintiffs
to
amend
their
Complaint
to
properly allege a violation of this section of the KCPA.
III.
Defendant's Motion to Strike
Defendant argues that:
(1)
the Complaint demonstrates that
Plaintiffs cannot maintain nationwide class claims for products
liability and breach of warranty claims because a
class would
require the court to apply the laws of all fifty states;
(2)
the
Kansas class allegations under the KCPA should be stricken because
individual
questions
of
law
and
fact
will
predominate
common
questions; and (3) Plaintiffs lack standing "to pursue representative claims for putative class members who allegedly were injured
in [states outside Kansas]". 52
52
See Motion to Strike, Docket Entry No. 7, pp. 11, 12-13, 20.
-27-
A.
Standard of Review
Federal
Rule
of
Civil
"determine by order whether
action."
Procedure
to
23
requires
certify the
Fed. R. Civ. P. 23(c) (1) (A).
courts
action as
a
to
class
Courts have wide discretion
in determining whether to certify a class, but they must exercise
that discretion within the bounds of Rule 23.
Castano v. American
Tobacco Co., 84 F.3d 734, 740 (5th Cir. 1996)
(citing Gulf Oil Co.
v. Bernard, 101 S. Ct. 2193, 2200 (1981)).
"[T]he question is not
whether the plaintiff or plaintiffs have stated a cause of action
or will prevail on the merits, but rather whether the requirements
of Rule 23 are met."
2140, 2153
(1974)
Eisen v. Carlisle and Jacquelin,
94 S. Ct.
(quoting Miller v. Mackey International,
Inc.,
452 F.2d 424, 427 (5th Cir. 1971)).
"An action may proceed only if
the
demonstrates
party
seeking
certification
that
all
four
requirements of Rule 23(a) are met, and that at least one of three
requirements of Rule 23 (b)
are met."
Vizena v.
Railroad Co., 360 F. 3d 496, 503 (5th Cir. 2004)
Union Pacific
(per curiam); see
also Gene and Gene LLC v. BioPay LLC, 541 F.3d 318, 325 (5th Cir.
2008)
(party seeking certification bears the burden of proof).
Under Rule 23{a) the party seeking certification must demonstrate,
first, that:
(1) the class is so numerous that joinder of all members
is impracticable;
(2) there are questions of law or fact common to the
class;
-28-
(3) the claims or defenses of the representative parties
are typical of the claims or defenses of the class; and
( 4) the representative parties will fairly and adequately
protect the interests of the class.
Rule
23(b)
states
in
relevant
part
that
a
class
action
is
appropriate if the moving party establishes the prerequisites set
forth in Rule 23(a) and if:
the court finds that the questions of law or fact common
to class members predominate over any questions affecting
only individual members [(predominance)] , and that a
class action is superior to other available methods for
fairly and efficiently adjudicating the controversy
[ (superiority)] .
Fed R. Civ. P. 23 (b) (3).
The
party
seeking
class
certification
must
affirmatively
demonstrate compliance with Rule 23 and "be prepared to prove that
there are in fact sufficiently numerous parties, common questions
of law or fact, etc."
2541,
2551
court
is
(2011) .
Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct.
Certification is proper only if "'the trial
satisfied,
prerequisites
of
after
Rule
23(a)
a
rigorous
have
been
analysis,
that
the
satisfied.'"
"Frequently that 'rigorous analysis' will entail some overlap with
the merits of the plaintiff's underlying claim."
Defendant
cites
Federal
Rules
of
Civil
Id.
Procedure
12 (f) ,
12 (b) ( 6) , and 23 (d) ( 1) (D) as the bases for its Motion to Strike. 53
The court concludes the appropriate standard is Rule 12(b) (6), and
the court will treat Defendants' Motion to Strike as a motion to
53
Id. at 1.
-29-
dismiss.
attacks
A Rule 12(b) (6) motion is "appropriate when a defendant
the
complaint
because
it
fails
to
state
a
legally
cognizable claim."
See Ramming v. United States, 281 F.3d 158, 161
(5th Cir.
"The existence of an ascertainable class of
2001) .
persons to be represented by the proposed class representative is
an implied prerequisite of Federal Rule of Civil Procedure 23.
Where it is facially apparent from the pleadings that there is no
ascertainable
class,
a
district
allegation on the pleadings."
court
may
dismiss
the
class
John v. National Security Fire and
Casualty Co., 501 F.3d 443, 445
(5th Cir. 2007)
The court must
"evaluate carefully the legitimacy of the named plaintiff's plea
that
he
is
a
proper
class
representative
under
Rule
23 (a)."
General Telephone Co. of the Southwest v. Falcon, 102 S. Ct. 2364,
2372
(1982) .
"Sometimes the issues are plain enough from the
pleadings to determine whether the interests of the absent parties
are fairly encompassed within the named plaintiff's claim,
and
sometimes it may be necessary for the court to probe behind the
pleadings before coming to rest on the certification question."
Id.; Castano, 84 F. 3d at 744 ("A district court certainly may look
past the pleadings to determine whether the requirements of rule 23
have been met."); see also Myart v. Glosson, Civil Action No. SA14-831-XR,
20,
2014)
("Courts have cited Falcon and John to strike or dismiss
[under
Rule
12 (f)
2014
or
WL
Rule
6612008,
12 (b) (6)]
at
*5
(W.D.
class-action
-30-
Tex.
Nov.
allegations
from
a
complaint
when
the
pleadings
clearly
fail
to
support the minimum requirements of Rule 23.")
B.
allege
facts
to
(citations omitted).
Analysis
1.
Plaintiffs' Nationwide Class Claims
"All persons
The Complaint defines a "Nationwide Class" as:
and/or entities who purchased Phillips' contaminated avgas in the
United States and all owners of aircrafts that were filled with
Phillips'
argues
contaminated avgas in the United States ." 54
that
Nationwide
Plaintiffs'
Class
claims
should be
on
behalf
of
stricken because
their
Defendant
proposed
Plaintiffs
cannot
satisfy Federal Rule of Civil Procedure 23(b) (3), which requires
that the court find "that 'questions of law or fact common to the
class
members
[must]
predominate
over
any
questions
individual members'" before certifying a class. 55
affecting
Defendant argues
that resolving Plaintiffs' claims would "require the Court to apply
the products-liability and warranty laws of all fifty states--which
means individual questions of law and fact will predominate over
common ones. " 56
54
55
Plaintiffs respond that "Defendant's motion should
See Plaintiffs' Complaint, Docket Entry No. 1, p. 7
~
32.
See Motion to Strike
Docket Entry No. 7
pp. 11-16.
Plaintiffs do not dispute that this is the applicable subsection of
Fed. R. Civ. P. 23(b).
I
I
56
See id. at 11.
Defendant argues that this court, as a
federal court sitting in diversity, must apply Texas's choice of
law rule. See id. at 11-12 (citing Cole, 484 F.3d at 724; Danner
v. Staggs, 680 F.2d 427, 429 (5th Cir. 1982). Under Texas law, in
the absence of a choice of law clause, the Texas Supreme Court
(continued ... )
-31-
be denied as premature" because
uplaintiffs have not moved for
class certification," uDefendant has yet to file an Answer," and
u [n] o
discovery
uDefendant' s
premise:
has
motion
taken
fails
because
it
Plaintiffs
is
argue
centered on a
that
flawed
that the Court will necessarily be forced to apply the
laws of all 50 states." 58
reveal
place." 57
that
Defendant
Plaintiffs reason that u[d]iscovery may
distributed
locations in less than all 50 states.
its
contaminated
[and]
avgas
to
information on the
geographic scope of Defendant's contaminated avgas remains within
Defendant's exclusive control. " 59
Defendant responds that
Plaintiffs do not deny that the nationwide class
they have alleged (and now try to shy away from) fails to
56
( • • • continued)
applies
the
umost-significant
relationship
test"
from
the
Restatement (Second) of Conflict of Laws to determine which state's
laws apply.
Danner, 680 F. 2d at 429 (The test urequires a
determination of what state has the 'most significant relationship'
to the occurrence and the parties under general principles set
forth in s 6 of the Restatement (Second).").
T.C. Holdings is a
Delaware corporation with its principal place of business in
Kansas, Reedy is a Kansas resident who bought avgas in Kansas, and
Phillips is a Delaware corporation with its principal place of
business in Texas. See Complaint, Docket Entry No. 1, p. 2 ~~ 2-4.
Plaintiffs allege that contaminated avgas was found or purchased in
various states and bring products liability and warranty claims on
behalf of avgas purchasers nationwide. See Complaint, Docket Entry
No. 1, p. 7 ~ 32.
Thus it is unlikely, and Plaintiffs do not
argue, that Texas law would apply to every transaction.
57
Plaintiffs' Memorandum in Opposition to Defendant's Motion
to Dismiss or Strike Plaintiffs' Class Allegations (uopposition to
Motion to Strike"), Docket Entry No. 12, p. 4.
58
Id.
at 5.
59Id.
-32-
meet Rule 23's predominance requirement. They likewise
do not dispute that Texas's choice-of -law rules mean that
various other states' product-liability and warranty laws
will apply to resolve the proposed nationwide class's
claims. Neither do Plaintiffs refute that the productsliability and warranty laws indeed vary from state-tostate, as Phillips has described. Instead, they ask the
Court to defer ruling on the class issues until
later--even though it is clear from the face of their
Complaint that common questions of law and fact will not
predominate. 60
Plaintiffs'
argument that the court may not engage in the
class certification analysis at the pleading stage lacks merit
because,
as
discussed above,
district
courts may evaluate
sufficiency of class allegations at the pleading stage.
the predominance requirement of Rule
establish that issues
generalized proof,
23 (b) (3),
the
To satisfy
Plaintiffs must
in the class action that are subject to
and thus applicable to the class as a whole,
predominate over issues that are subject only to individualized
proof.
Corp.,
See Castano,
84 F.3d at 741; Allison v.
151 F.3d at 419,
predominance
425
requirement
is
(5th Cir.
"more
1998).
stringent"
Citgo Petroleum
Rule 23 (b) (3) 's
and
"far
demanding than" the commonality requirement of Rule 23(a).
Products,
"[C]ommon
Inc.
v.
issues
individual cases."
Windsor,
must
117 S.
constitute
Ct.
a
2231,
2243,
significant
2250
part
more
Amchem
(1997).
of
the
Jenkins v. Raymark Industries, Inc., 782 F.2d
468, 472 (5th Cir. 1986).
60
Defendant Phillips 66 Company's Reply Supporting its Motion
to Dismiss or Strike Plaintiffs'
Class Allegations
("Reply
Supporting Motion to Strike") , Docket Entry No. 17, p. 10 (internal
citations omitted) .
-33-
The Fifth Circuit recognizes that "in a class action governed
. variations in state law may
by the laws of multiple states .
swamp any common issues and defeat predominance."
at 724
(internal quotations omitted)
In
741) .
Cole
GM
argued
that
Cole, 484 F.3d
(citing Castano, 84 F.3d at
the
district
court
erred
in
certifying a nationwide class of owners of vehicles with defective
airbags because of variations in state substantive express and
implied warranty law.
Id.
at 718,
724-25.
The Fifth Circuit
agreed:
We conclude that plaintiffs did not sufficiently
demonstrate the predominance requirement because they
failed both to undertake the required "extensive
analysis" of variations in state law concerning their
claims and to consider how those variations impact
predominance.
Plaintiffs' assertion of predominance
relied primarily on the textual similarities of each
jurisdiction's applicable law and on the general
availability of legal protection in each jurisdiction for
express and implied warranties. Plaintiffs' largely
textual presentation of legal authority oversimplified
the required analysis and glossed over the glaring
substantive legal conflicts among the applicable laws of
each jurisdiction.
As we explain below, there are numerous variations in the
substantive laws of express and implied warranty among
the fifty-one jurisdictions that the plaintiffs failed to
"extensively analyze" for their impact on predominance. 61
Id. at 725-26 (citations omitted) .
Other courts have also rejected
class certification when the laws of different states will apply to
1\\Specifically, the laws of the jurisdictions vary with
regards to (1) whether plaintiffs must demonstrate reliance,
(2) whether plaintiffs must provide notice of breach, (3) whether
there must be privity of contract, ( 4) whether plaintiffs may
recover
for
unmanifested
vehicle
defects,
(5)
whether
merchantability may be presumed and
(6)
whether warranty
protections extend to used vehicles." Cole, 484 F.3d at 726.
6
-34-
individual class members.
See, e.g., In re Bridgestone/Firestone,
Inc., 288 F.3d 1012, 1018 (7th Cir. 2002).
In this action different state products liability laws will
apply to the class members' strict liability and negligence claims.
Castano, 84 F.3d at 742 n.15 ("Products liability law also differs
among states.
Among
the
Some states do not
states
variations.").
Lapray,
strict
liability.
that have adopted the Restatement,
there are
Different warranty laws will also apply to class
members' claims.
v.
Cole, 484 F.3d at 724-26; Compaq Computer Corp.
135 S.W.3d 657,
681
members are domiciled in the
Columbia.
be
recognize
(Tex.
2004)
("The putative class
fifty states and the District of
All these fifty-one relevant jurisdictions are likely to
interested in ensuring that
their
consumers
compensated for a breach of warranty.") .
are
adequately
Plaintiffs have failed to
"extensively analyze" these variations in state substantive law for
their impact on predominance.
Cole, 484 F.3d at 725-26.
Instead,
Plaintiffs argue that discovery may reveal a class of plaintiffs
that reside
states
at
in less
issue
may
than fifty states and that
have
overlapping
laws
therefore
with
only
"the
minor
distinctions. " 62
The court concludes that the burden of applying the products
liability and warranty laws of each class member's state defeats
predominance and, thus, nationwide class certification.
62
See Cole,
0pposition to Motion to Strike, Docket Entry No. 12, p. 5.
-35-
484 F.3d at 724-25; Castano at 752; Spence v. Gloack, Ges.m.b.H.,
227 F.3d 308, 316 (5th Cir. 2000).
Because Plaintiffs have failed
to satisfy Rule 23(b) (3) 's predominance requirement, the court will
grant Defendant's Motion to Dismiss as to all claims asserted by
Plaintiffs on behalf of a putative Nationwide Class for strict
products
liability,
negligence,
express
and
and
implied
warranties. 63
2.
Plaintiffs' Kansas Class Claim
Section 50-634(d) of the KCPA states that "[a]
consumer who
suffers loss as a result of a violation of this act may bring a
class
action
for
the
damages
caused
by
an
act
or
practice:
(1) Violating any of the acts of practices specifically proscribed
in K.S.A.
50-626,
50-627
Complaint
defines
a
Kansas
II
K.S.A.
subclass
as:
§
50-634 (d) (1)
"All
persons
The
and/or
entities who purchased Phillips' contaminated avgas in Kansas and
all
owners
of
aircrafts
that
contaminated avgas in Kansas." 64
were
filled
with
Phillips'
Defendant argues that Plaintiffs'
KCPA claims based on misrepresentation should be dismissed because
each class member must establish an individual causal connection
63
In the last section of its Motion to Strike, Defendant argues
that Plaintiffs lack standing to bring claims on behalf of a class
under the laws of states other than Kansas. See Motion to Strike,
Docket Entry No. 7, pp. 18-20.
Because the court will dismiss
Plaintiffs' nationwide class for failure to satisfy Rule 23(b) (3),
the court will not address these arguments.
64
Plaintiffs' Complaint, Docket Entry No. 1, p. 7
-36-
~
32.
and
therefore
predominate
u[c]ommon
in
these
questions
of
circumstances. " 65
law
and
fact
Defendant
cannot
argues
that
Plaintiffs' KCPA claims based on unconscionable acts also require
individualized inquiries of each class member, rendering the claim
uinappropriate for class treatment under Rule 23 (b) (3) ." 66
a.
Section 50-626: Deceptive Act or Practice
Each class member must be aggrieved to have a cause of action
under the KCPA.
Johnson v. MKA Enterprises,
No. 112,049, 2015 WL 4487037 at *5,
2015) .
Inc.,
Inc.,
353 P.3d 470
Civil Action
(Kan. Ct. App.
The court in Johnson relied on Benedict v. Altria Group,
241 F.R.D.
668
(D.
Kan.
2007),
to conclude that because
u[t]he evidence to establish this causal connection will vary from
class member to class member .
element under
the
KCPA will
. the causal connection/reliance
destroy most
because of the individualized fact issues."
241 F.R.D. at 677-80).
class
Id.
certifications
(citing Benedict,
Nieberding v. Barrette Outdoor Living, Inc.
limited the holding of Benedict:
The Court believes that the holding in Benedict is
limited to misrepresentation cases and that suits
alleging omission of a material fact present questions
suited to class actions.
. the Court believes that
proving causation on an individual basis is not required
in every case under § 50-626. Specifically, the Court
believes that an individualized showing is not required
in an omission case, such as the one alleged here. To
prevail on an omission claim, a plaintiff must show that
the defendant had a duty to disclose a umaterial" fact.
65
Motion to Strike, Docket Entry No. 7, p. 17.
66
Id. at 18.
-37-
302 F.R.D. 600, 615 (D. Kan. 2014).
above,
different
subsections
of
As discussed in Part B.2.c. (i)
Section
50-626
have
different
pleading requirements but Plaintiffs have not specified under which
subsections of Section 50-626 they bring their causes of action.
Individualized allegations are necessary for some,
subsections
of
Section 50-626.
Because
the
but not all,
court
will
allow
Plaintiffs to amend their Complaint as to the KCPA claims,
the
court will allow Plaintiffs to reallege the Kansas subclass in an
amended complaint.
b.
Section 50-627: Unconscionable Act or Practice
Section 50-627 of the KCPA provides a nonexclusive list of
acts or practices that are considered unconscionable.
627(b) (1)-(b) (7).
K.S.A. 50-
Defendant argues that "only one could possibly
apply to Plaintiffs'
namely,
assertions
that
Phillips's
alleged conduct deprived Plaintiffs of a 'material benefit from the
subject of the transaction. '" 67 Defendant cites Nieberding to argue
that
this
"material
benefit"
subsection
necessarily
requires
individualized inquiries of each class member and therefore is not
suitable for class certification as a matter of law. 68
In Nieberding the court held:
Defendants argue that the issue of whether each
plaintiff was able to receive a "material benefit" from
67
Id.
68
Id.; Reply Supporting Motion to Strike, Docket Entry No. 17,
(citing K.S.A.
§
50-627 (b) (3)).
p. 16.
-38-
purchasing the railing product is not suitable for class
certification
because
it
requires
individualized
inquiries into each class member's subjective belief.
The Court agrees . . . . As a result, the Court concludes
that a showing of unconscionability through the material
benefit factor is not suitable for Rule 23(b) (3)
certification.
However, plaintiff also argues that the alleged
defect means that the price for the [product] grossly
exceeded what
was
readily obtainable
in similar
transactions. This factor for unconscionability can be
shown objectively, with common proof. Defendants do not
argue
otherwise.
Furthermore,
causation
under
§ 50-634(d) presents no problems-should plaintiff prove
that defendants acted unconscionably in selling the class
a product that "grossly" exceeded its worth, that will
necessarily have caused harm to the class.
Thus, the
Court
concludes
that
common
issues
predominate
plaintiff's unconscionability claim under the KCPA.
Nieberding, 302 F.R.D. at 616.
As with Section 50-626, different
pleading requirements to bring a class action apply to different
subsections of Section 50-627.
Again Plaintiffs have not specified
under which subsection of Section 50-627 they seek to bring a cause
of action.
Because the court will allow Plaintiffs to amend their
Complaint for the KCPA claims, the court will allow Plaintiffs to
reallege the Kansas class claims for this section of the KCPA as
well.
IV.
Conclusion and Order
For the reasons stated above, Defendant Phillips 66 Company's
Motion to
Dismiss
Plaintiffs'
Claims
GRANTED IN PART and DENIED IN PART.
products
liability
and
negligence
-39-
(Docket
Entry No.
6)
is
Plaintiffs' claims for strict
are
DISMISSED
for
lack
of
standing pursuant to Federal Rule of Civil Procedure 12(b) (1) and
for failure to state a claim under Rule 12 (b) ( 6) .
Plaintiffs'
claim for breach of express warranty is DISMISSED for
lack of
standing pursuant to Rule 12(b) (1) and because Plaintiffs do not
oppose Defendant's motion to dismiss that claim.
Plaintiffs' claim
for breach of implied warranty is DISMISSED as to Reedy for lack of
standing pursuant to Rule 12 (b) ( 1)
and is DISMISSED as to T. C.
Holdings for lack of standing pursuant to Rule 12(b) (1)
failure to state a claim under Rule 12(b) (6).
under
the
KCPA
Rule 12 (b) (1)
motion
to
is
DISMISSED
for
lack of
and for
T.C. Holding's claim
standing pursuant
to
and because Plaintiffs do not oppose Defendant's
dismiss
that
claim.
Defendant's
motion
to
dismiss
Reedy's KCPA claim is DENIED, and Plaintiffs' request to amend as
to that claim is GRANTED.
to Strike Plaintiffs'
Defendant Phillips 66 Company's Motion
Class Allegations
GRANTED IN PART and DENIED IN PART.
liability,
negligence,
and
(Docket Entry No.
7)
is
Plaintiffs' strict products
warranty
claims
on
behalf
of
a
Nationwide Class are DISMISSED because Plaintiffs cannot establish
predominance,
a necessary prerequisite for class certification.
Although the court is skeptical that Plaintiff Reedy can maintain
a KCPA claim on behalf of himself and putative Kansas subclass
members, the court will allow Reedy twenty days from the entry of
this Memorandum Opinion and Order in which to amend his Complaint
to properly allege a claim under Sections 50-626 and 50-627 of the
-40-
KCPA
and
to
properly
define
a
Kansas
subclass
and
move
for
certification demonstrating that he can meet the requirements of
Federal Rule of Civil Procedure 23(a) and (b).
SIGNED at Houston, Texas, on this the 20th day of March, 2018.
SIM LAKE
UNITED STATES DISTRICT JUDGE
-41-
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