Opinion
CASE NO. 20-60432-CIV-SINGHAL
2021-03-30
Jason NUWER, Mark Minkowitz, Amarillis Ginoris, Christina Vigoa, and Kevin Van Allen on behalf of themselves and all others similarly situated, Plaintiffs, v. FCA US LLC f/k/a Chrysler Group LLC, a Delaware limited liability company, Defendant.
Alissa Del Riego, John Gravante, III, Peter Prieto, Matthew Weinshall, Podhurst Orseck P.A., Benjamin Jacobs Widlanski, Kozyak Tropin Throckmorton LLP, Miami, FL, Gail Ann McQuilkin, Harley Shepard Tropin, Katherine Ann Mitchell, Meaghan E. Goldstein, Rachel Sullivan, Robert J. Neary, Kozyak, Tropin & Throckmorton, P.A., Coral Gables, FL, George Franjola, Law Office of George Franjola, Ocala, FL, Michael A. Burger, Pro Hac Vice, Santiago Burger, LLP, Rochester, NY, for Plaintiffs. Michael Roland Holt, Scott M. Sarason, Rumberger Kirk & Caldwell, Steven Craig Jones, Wilson Elser Moskowitz Edelman & Dicker, Miami, FL, Fred J. Fresard, Pro Hac Vice, Ian K. Edwards, Pro Hac Vice, Klein, Thomas & Lee LLC, Troy, MI, Paul T. Stewart, Pro Hac Vice, Dykema Gossett PLLC, Ann Arbor, MI, for Defendant.
Alissa Del Riego, John Gravante, III, Peter Prieto, Matthew Weinshall, Podhurst Orseck P.A., Benjamin Jacobs Widlanski, Kozyak Tropin Throckmorton LLP, Miami, FL, Gail Ann McQuilkin, Harley Shepard Tropin, Katherine Ann Mitchell, Meaghan E. Goldstein, Rachel Sullivan, Robert J. Neary, Kozyak, Tropin & Throckmorton, P.A., Coral Gables, FL, George Franjola, Law Office of George Franjola, Ocala, FL, Michael A. Burger, Pro Hac Vice, Santiago Burger, LLP, Rochester, NY, for Plaintiffs.
Michael Roland Holt, Scott M. Sarason, Rumberger Kirk & Caldwell, Steven Craig Jones, Wilson Elser Moskowitz Edelman & Dicker, Miami, FL, Fred J. Fresard, Pro Hac Vice, Ian K. Edwards, Pro Hac Vice, Klein, Thomas & Lee LLC, Troy, MI, Paul T. Stewart, Pro Hac Vice, Dykema Gossett PLLC, Ann Arbor, MI, for Defendant.
ORDER
RAAG SINGHAL, UNITED STATES DISTRICT JUDGE
THIS CAUSE is before the Court on Defendant FCA US LLC's Motion to Dismiss First Amended Complaint (DE [31]) and supplemental memorandum of law (DE [32]). The motion having been fully briefed and argued by counsel, the matter is ripe for review. For the reasons discussed below, the motion is denied.
I. BACKGROUND
Plaintiffs Jason Nuwer ("Nuwer"), Mark Minkowitz ("Minkowitz"), Amarillis Ginoris ("Ginoris"), Christina Vigoa ("Vigoa"), and Kevin Van Allen ("Van Allen") (collectively, "Plaintiffs") filed a class action complaint against FCA US LLC f/k/a Chrysler Group, LLC ("Chrysler") and Grammer Industries, Inc. ("Grammer") alleging that Chrysler sold and leased automobiles equipped with defective headrests that were manufactured by Grammer. The headrests contain an active head restraint system ("AHR") which is designed to engage in a rear-end collision and catch the occupant's head to prevent whiplash. (DE [10] ¶ 1). Plaintiffs allege that Chrysler manufactured, advertised, and sold certain classes of vehicles despite knowledge that the AHR contained a defective plastic bracket that is prone to break down prematurely causing the AHR to deploy without warning or external force from a collision and forcefully strike the back of the occupant's head. (Id. ¶¶ 2-3, 61).
Plaintiffs have invoked jurisdiction under the Class Action Fairness Act ("CAFA") and 28 U.S.C. § 1332(d). They also allege federal question jurisdiction because Plaintiffs bring federal claims under the Magnuson-Moss Act. They allege supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367. (DE [10], ¶ 47).
Plaintiffs voluntarily dismissed their claims against Grammer (DE [52]) after discovery revealed no basis for this Court to exercise personal jurisdiction over Grammer.
The vehicles in question are described in the First Amended Complaint (DE [10] ¶ 16).
Plaintiffs are residents of Florida, New York, and Arizona who purchased or leased Chrysler vehicles from dealerships within the United States. Minkowitz alleges that his passenger side headrest deployed during normal operations in 2018, resulting in a $700 repair bill (Id. ¶ 96). None of the remaining named Plaintiffs experienced a headrest malfunction. Nevertheless, Plaintiffs allege that the defective AHR poses a serious risk of harm because it is substantially certain to malfunction and deploy when the vehicle is in normal use. (Id. ¶ 61).
Nuwer, Ginoris, and Vigoa are the "Florida Plaintiffs", Minkowitz is the "Arizona Plaintiff", and Van Allen is the "New York Plaintiff."
Plaintiffs allege a nationwide class (excluding California) and subclasses comprised of Florida, Arizona, and New York residents who currently own or have owned or leased vehicles equipped with headrests containing the defective AHR (DE [10] ¶ 126).
Plaintiffs allege that Chrysler advertised the AHR as a "standard and effective safety feature" despite knowledge of the AHR's defect (Id., ¶¶ 40, 68-71, 77-90). Plaintiffs claim to have been damaged by purchasing or leasing vehicles that were of a lesser standard, grade, and quality than Chrysler represented and that they did not receive vehicles that met "ordinary and reasonable consumer standards" for safety. (Id. at ¶ 104-105). As a result, Plaintiffs allege they and the proposed class members "were deprived of the benefit of their bargain" by paying more for their vehicles than they would have if Chrysler had disclosed the defective AHR. (Id. ). Plaintiffs also allege out-of-pocket damages incurred in replacing headrests damaged by the deployment of the AHR. (Id. ¶ 107).
The First Amended Complaint seeks relief under Florida, Arizona, and New York law. The Florida Plaintiffs allege violation of Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"), Fla. Stat. § 501.201, et seq. (Count I). Minkowitz alleges violation of Arizona Consumer Fraud Act, Ariz. Rev. Stat. Ann. § 44-1522 (Count II). Van Allen alleges violation of New York General Business Law, N.Y. Gen. Bus. Law. § 350 (Count III). Count IV alleges fraud by concealment on behalf of the New York and Arizona Plaintiffs and subclass. And on behalf of all Plaintiffs and class members, the First Amended Complaint alleges violations of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq. (Count VI) and unjust enrichment (Count VIII).
Counts V, VII, IX, and X of the First Amended Complaint sought relief against Grammer Industries and have been voluntarily dismissed.
II. MOTION TO DISMISS
Chrysler moves to dismiss the First Amended Complaint on the grounds of (1) lack of standing, (2) failure to state a claim under state law upon which relief can be granted, (3) failure to plead fraud with particularity, (4) failure to state a claim under Magnuson-Moss, and (5) statute of limitations. Each of these grounds is set forth in more detail below. A. Lack of Standing
To establish standing, a plaintiff must show "(1) an injury in fact; (2) a causal connection between the injury and the alleged misconduct; and (3) a likelihood that the injury will be redressed by a favorable decision." L.M.P. on behalf of E.P. v. Sch. Bd. of Broward Cty., Fla. , 879 F.3d 1274, 1281 (11th Cir. 2018) (citing Lujan v. Defs. of Wildlife , 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). "At the pleading stage, the plaintiff must clearly allege facts demonstrating each of these elements." Gesten v. Burger King Corp. , 2017 WL 4326101, at *1 (S.D. Fla. Sept. 27, 2017) (citing Spokeo, Inc. v. Robins , 578 U.S. 330, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016), as revised (May 24, 2016)).
"Injury in fact is a constitutional requirement." Spokeo, Inc., 136 S. Ct. at 1547–48 (quotations omitted). "To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’ " Id. at 1548 (quoting Lujan , 504 U.S. at 560, 112 S.Ct. 2130 ). "For an injury to be particularized, it must affect the plaintiff in a personal and individual way." Spokeo, Inc., 136 S. Ct. at 1548 (internal quotations and citations omitted). To be concrete, "the injury must be ‘de facto’; that is, it must actually exist." Id. at 1549. " ‘Concrete’ is not, however, necessarily synonymous with ‘tangible.’ " Id. at 1549. Finally, "to satisfy the injury prong of Article III standing, a plaintiff must present specific, concrete facts showing that the challenged conduct will result in a demonstrable, particularized injury to the plaintiff." Miccosukee Tribe of Indians of Fla. v. Fla. State Athletic Comm'n, 226 F.3d 1226, 1228–29 (11th Cir. 2000) (cleaned up and internal quotations omitted). "An allegation of an abstract injury will not suffice." Id.
A defendant may make a facial or a factual attack on standing. Stalley ex rel. U.S. v. Orlando Reg'l Healthcare Sys., Inc., 524 F.3d 1229, 1232 (11th Cir. 2008). "A facial attack on the complaint requires the court to merely look and see if the plaintiff has sufficiently alleged a basis for subject matter jurisdiction, and the allegations in his complaint are taken as true for purposes of the motion." Id. A factual attack uses materials extrinsic from the complaint, such as affidavits or testimony. Id. Chrysler has made a facial attack on Plaintiffs’ standing.
Chrysler argues all Plaintiffs except Minkowitz lack standing because they do not show an injury in fact. Only Minkowitz's vehicle experienced a malfunction of the AHR. Chrysler, therefore, argues that the remaining Plaintiffs’ injuries are merely hypothetical and insufficient to establish standing. Further, Chrysler maintains that the threat of a malfunction is not an imminent harm sufficient to establish standing. The Court disagrees.
The First Amended Complaint alleges that the AHRs installed in Plaintiffs’ vehicles contain a bracket made of a substandard plastic that is prone to breaking and cracking over time, thus allowing the AHR to be spontaneously deployed. (DE [10], ¶¶ 58-62). Plaintiffs argue that even if their AHRs did not deploy, they nevertheless suffered economic injury because the existence of a latent defect in the head restraint system deprived them of the "benefit of the bargain" at the point of sale. As the Eleventh Circuit has noted, "economic injury qualifies as a concrete injury." Debernardis v. IQ Formulations, LLC, 942 F.3d 1076, 1084 (11th Cir. 2019) (loss of benefit of the bargain constitutes a concrete injury-in-fact to establish standing). The injury alleged in this case is not the deployment of the AHR; it is the purchase of a vehicle with a latent defect. The alleged injury occurred at the time of purchase. See In re Aqua Dots Prod. Liab. Litig., 654 F.3d 748, 751 (7th Cir. 2011) (parents whose children did not swallow toy containing adulterated adhesive had standing to sue because they paid more for the toys than they would have, had they known the latent risk of the toy); Melton v. Century Arms, Inc., 243 F. Supp. 3d 1290, 1299 (S.D. Fla. 2017) (plaintiffs had standing to sue for unmanifested defect in rifles manufactured by defendant because loss of benefit of the bargain occurred at point of sale).
Chrysler argues that the four Plaintiffs whose headrests did not deploy allege only hypothetical injury and, therefore, these Plaintiffs cannot establish standing. They cite Clapper v. Amnesty Intern. USA, 568 U.S. 398, 133 S.Ct. 1138, 185 L.Ed.2d 264 (2013), and Hall v. Omega Flex, Inc., 2014 WL 12496551 (S.D. Fla. Jan. 17, 2014), for the proposition that a risk of harm that is not certain to occur cannot support standing. In Clapper , attorneys and human rights organizations sought a declaration that Section 702 of the Foreign Intelligence Surveillance Act of 1978 (FISA), 50 U.S.C. § 1881a, which permitted government surveillance of telephone calls with foreign nationals, violated, among other things, the First and Fourth Amendments. The plaintiffs argued they had Article III standing because there was a substantially reasonable likelihood that their communications would be intercepted sometime in the future. The Court held that the threat of future injury was too speculative to create standing. 568 U.S. at 416-17, 133 S.Ct. 1138. In Hall , the defendant manufactured a flexible piping used to transport natural and propane gas in residential and commercial buildings. The plaintiffs alleged that direct or indirect lightning strikes could enable the gas within the piping to ignite from the resulting electrical charge. 2014 WL 12496551, at *1. The district court concluded that the risk of fire due to lightning strikes was not an impending injury and, therefore, the plaintiffs failed to establish Article III standing.
Clapper and Hall are distinguishable from the present case. In Clapper , future surveillance depended upon variables that could not be predicted. Thus, the Court "decline[d] to abandon [its] usual reluctance to endorse standing theories that rest on speculation about the decisions of independent actors." 568 U.S. at 414, 133 S.Ct. 1138. In Hall , the court found the intervention of a lightning strike to ignite a fire too remote and speculative to establish standing. 2014 WL 12496551, at *1. By contrast, the defect alleged in the present case existed within the headrest when the vehicle was purchased and requires no intervening occurrences for the defect to manifest. Plaintiffs have cited consumer complaints and a National Highway Traffic Safety Association ("NHTSA") investigation into the AHR to support their claims that the AHR is likely to deploy without warning. No intervening factors are involved to cause the headrests to deploy. (DE [10] ¶¶ 6, 84-87). Plaintiffs’ allegations that the latent defect in the AHR deprived them of the benefit of the bargain meets the injury-in-fact requirement under Eleventh Circuit law. Debernardis , 942 F.3d 1076. The Court concludes that Plaintiffs have alleged facts sufficient to establish Article III standing.
B. Failure to State a Claim Upon Which Relief Can Be Granted
Chrysler moves to dismiss the First Amended Complaint pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted. Chrysler raises the following arguments: (1) the claims brought by Nuwer, Ginoris, Vigoa, and Van Allen fail because their vehicles did not manifest the alleged defect: (2) the Florida Plaintiffs’ FDUTPA claim (Count I) is insufficiently pled; (3) the fraudulent concealment claim under Arizona law (Count IV) fails to state a claim because of a lack of predicate relationship with Chrysler; (4) the fraudulent concealment claim (Count IV) under New York law is barred by the economic loss doctrine and because Chrysler had no duty to disclose; (5) Van Allen's claim under N.Y. Bus. Law § 350 (Count III) fails for failure to allege reliance upon a specific advertisement; and (6) the unjust enrichment claim (Count VIII) fails to state a claim because Plaintiffs did not confer a benefit upon Chrysler.
To survive a motion to dismiss, "factual allegations must be enough to raise a right to relief above the speculative level" and must be sufficient "to state a claim for relief that is plausible on its face." Bell Atl. Corp v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "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." Ashcroft v. Iqbal , 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). "The mere possibility the defendant acted unlawfully is insufficient to survive a motion to dismiss." Sinaltrainal v. Coca-Cola Co. , 578 F.3d 1252, 1261 (11th Cir. 2009), abrogated on other grounds by Mohamad v. Palestinian Authority , 566 U.S. 449, 132 S. Ct. 1702, 182 L.Ed.2d 720 (2012).
In considering a Rule 12(b)(6) motion to dismiss, the court's review is generally "limited to the four corners of the complaint." Wilchombe v. TeeVee Toons, Inc. , 555 F.3d 949, 959 (11th Cir. 2009) (quoting St. George v. Pinellas County , 285 F.3d 1334, 1337 (11th Cir. 2002) ). The court must review the complaint in the light most favorable to the plaintiff, and it must generally accept the plaintiff's well-pleaded facts as true. See Hishon v. King & Spalding , 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984); Am. United Life Ins. Co. v. Martinez , 480 F.3d 1043, 1057 (11th Cir. 2007). But "[c]onclusory allegations, unwarranted deductions of facts or legal conclusions masquerading as facts will not prevent dismissal." Jackson v. Bellsouth Telecommunications , 372 F.3d 1250, 1262 (11th Cir. 2004) (citation omitted); see also Iqbal, 129 S. Ct. at 1949 ("[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions").
1. Lack of Manifested Defect
Chrysler moves to dismiss the claims of Plaintiffs Nuwer, Ginoris, Vigoa, and Van Allen because their headrests never deployed or, in other words, never manifested a defect. It argues that manifestation of the alleged defect is required to state claims for relief under Florida and New York law. The Court disagrees.
Plaintiff Minkowitz lives in Arizona; his is the only vehicle that suffered a headrest deployment.
a. Florida law
In Collins v. DaimlerChrysler Corp., 894 So. 2d 988 (Fla. 5th DCA 2004), the plaintiff sued under FDUTPA alleging that she purchased a Chrysler automobile equipped with seatbelts that contained buckles which, due to an alleged design defect, were unreasonably dangerous and unfit for ordinary use as a passenger restraint system. Like the Plaintiffs in this case, Collins alleged she based her decision to purchase a Chrysler in part on Chrysler's advertising of its automobiles’ safety features. Collins never suffered an injury or physical manifestation of the defect. She sought damages from Chrysler for the diminished value of her vehicle, "measured as the difference in the market value of the automobile in the condition in which it was delivered, and its market value in the condition in which it should have been delivered." Id. at 989.
In reversing the trial court's dismissal of the case, the court stated, "[w]e see no requirement in FDUTPA that a defect manifest itself by failing to operate in an emergency or by causing injury." Id. at 990. Collins’ claim that she did not get what she bargained for was sufficient to state a claim under FDUTPA. So too, in this case, the injury complained of is diminution of value of Plaintiffs’ automobiles caused by the alleged defect in the AHR, i.e., the loss of the benefit of the bargain. Deployment of the AHR is not a requirement to recover those damages.
The Eleventh Circuit has recognized that FDUTPA covers damages for loss of the benefit of the bargain. In Carriuolo v. General Motors Co. , 823 F.3d 977 (11th Cir. 2016), the Eleventh Circuit addressed a class certification order and noted that the purchase of automobiles whose safety ratings had been misrepresented deprived the plaintiffs of the benefit of the bargain and that FDUTPA provided a remedy for diminution of market value Id. at 986-87. The court stated, "The injury occurs at the point of sale because the false statement allows the seller to command a premium on the sales price." Id. at 987. In In re General Motors LLC Ignition Switch Litig., 2016 WL 3920353, at * 26 (S.D.N.Y. Jul. 15, 2016), the court considered whether a Florida plaintiff could pursue a FDUTPA claim in the absence of a manifested defect and held that she could: "Put simply, the FDUTPA injury inquiry – as interpreted by the Carriuolo court – focuses on what the defendant did, not what harm the individual plaintiff suffered. That is directly in line with the benefit-of-the-bargain theory." Id.
Chrysler cites Kia Motors Am. Corp. v. Butler, 985 So. 2d 1133, 1138-39 (Fla. 3rd DCA 2008) as support for its argument that Florida law requires a defect to manifest itself before a claim could be actionable. In Kia Motors , the plaintiff alleged premature wear of front brakes on vehicles sold by the defendant and sought damages for economic losses including the difference between the price paid for each vehicle and the value of the vehicle as delivered. The plaintiff sought to represent owners whose brakes had worn out and those whose brakes had performed satisfactorily. The court reversed the trial court's certification of the class and noted three reasons why the case could not proceed as a class action. One of the reasons given was that class recovery could not be had on behalf of persons whose brakes did not manifest a defect. Id. at 1139.
At least one court has addressed the tension between Kia Motors and Carriuolo :
Admittedly, there is some tension — if not conflict — in the cases interpreting Florida law, but the Court concludes that Plaintiffs (and the Carriuolo court) have the better of the argument. In the first place, Kia is not as persuasive as New GM contends. The Kia court stated that Florida "firmly aligned [itself] with" the jurisdictions holding that defect manifestation is required in Ortiz v. Ford Motor Co. , 909 So.2d 479 (Fla. Dist. Ct. App. 2005). See Kia , 985 So.2d at 1139. But Ortiz did not clearly so hold. Instead, the court there simply found that the differences in brake models
would make it difficult to prove a defect for all models on a class-wide basis; it also found that class treatment was not a superior method of adjudication because the plaintiff had "failed to present proof demonstrating the manageability of the putative class which is based on an economic recovery of a product that is merely failure-prone." 909 So. 2d at 481. That does not amount to holding that manifestation of a defect is required for an individual FDUTPA claim.
In re Gen. Motors LLC Ignition Switch Litig. , 2016 WL 3920353, at * 27 (denying motion to dismiss FDUTPA claim brought by plaintiff whose vehicle did not manifest alleged defect). This Court, likewise, concludes that the Kia Motors court did not specifically consider or analyze whether FUDTPA permits recovery where a defect did not manifest itself but the plaintiff alleged benefit-of-the-bargain damages. The Collins and Carriuolo courts did make that analysis and concluded that FDUTPA does allow a claim for damages in the absence of a manifested defect. See also In re: Takata Airbag Prod. Liab. Litig. , 193 F. Supp. 3d 1324, (S.D. Fla. 2016) (at motion to dismiss stage, plaintiffs’ allegations that airbags contained unstable propellant stated a manifestation of injury to support FDUTPA claim). At the pleading stage, this Court is constrained to rule likewise.
Chrysler relies on In re: Toyota Motor Corp. Unintended Acceleration Mktg. , 2012 WL 12929769, 2012 U.S. Dist. LEXIS 189744, at *234-254 (C.D. Calif. May 4, 2012) for support that Kia Motors requires dismissal of the Florida Plaintiffs’ FDUTPA claims. Although the Toyota court discusses and analyzes Collins and Kia Motors in great detail and concludes that a claim for unmanifested defect cannot be made under FDUTPA, that case was decided before Carriuolo .
b. New York law
Chrysler moves to dismiss all of the claims brought on behalf of Plaintiff Van Allen and the putative New York class on the ground that New York law does not permit an action for damages arising from a latent defect when the defect has not been manifested. Chrysler argues that Plaintiffs have failed to state a claim under New York law because the alleged defect in the AHR did not manifest by deploying. Chrysler relies upon Frank v. DaimlerChrysler Corp. , 292 A.D.2d 118, 741 N.Y.S.2d 9 (N.Y. App. 2002). In Frank , the plaintiff brought a class action alleging the design of an automobile seat was defective and susceptible to a rearward collapse in the event of a rear-end collision. None of the proposed class members suffered personal injuries as a result of the alleged defect. Thus, the class was comprised of people whose vehicles did not manifest the defect. The plaintiff alleged negligence, negligent misrepresentation, violation of N.Y. Gen. Bus. Law §§ 349 and 350, common law fraud, and breach of implied warranty and sought compensatory damages for the class measured by the cost of repairing each vehicle. The appellate court reasoned that the lack of a manifested injury was fatal to the claims under New York law and affirmed dismissal of the complaint:
In sum, plaintiffs have not been involved in any accidents and have not suffered any personal injuries or property damage. Moreover, plaintiffs do not allege that any seat has failed, been retrofitted or repaired, nor have plaintiffs attempted to sell, or sold an automobile at a financial loss because of the alleged defect. We find, therefore, that the motion court properly dismissed the first through sixth causes of action as the result of plaintiffs’ failure to plead any
actual injury, and properly dismissed the seventh cause of action for civil conspiracy since no independent cause of action exits for such a claim.
Id. at 128, 741 N.Y.S.2d 9. Significantly, the Frank court acknowledged that economic injury would be an actual injury that would support a claim for relief.
There are no cases from the New York state courts that address Frank. But later federal court cases recognized the Frank court's acknowledgement that a claim for economic damages could be made even in the absence of a manifested defect. In In re Ford Motor Co. E-350 Van Prod. Liab. Litig. (No. II), 2011 WL 601279 (D.N.J. Feb. 16, 2011), the court denied dismissal of a New York plaintiff's claim that his Ford van suffered from a defect that gave the vehicle an "unsafe tendency to roll over." The court stated:
The court in Frank did not limit actual injury to personal injury or property damage from malfunction or manifestation of defect but expressly stated that plaintiffs in Frank also failed to allege any repair or sale at diminished value. Frank, 741 N.Y.S.2d at 17. Thus, the court in Frank contemplated that actual injury could be asserted under circumstances where the alleged defect might not have manifested itself to cause injury.
Ford Motor Co. E-350 Van Litig., 2011 WL 601279, at *71. Likewise, in Toyota Motor Corp. Unintended Acceleration Mktg., 2012 WL 12929769, 2012 U.S. Dist. LEXIS 189744, the court stated that "on balance, the Court concludes that the highest court of the state of New York would be likely to find actionable those claims based on a financial loss because of the alleged defect, as reflected in a reduced value on sale." Id. 2012 WL 12929769 , 2012 U.S. Dist. LEXIS 189744 at *264.
In the present case, Plaintiffs do make the barest allegations of economic injury. They allege they would not have paid the price they did for their vehicles if they had known about the alleged AHR defect (¶ 105), that the alleged defect diminished the value of their vehicles (¶ 104), that they "received vehicles of lesser standard, grade and quality than represented (¶ 105), and that they incurred out-of-pocket expenses in replacing the headrests (¶ 107). It is clear from Frank that Plaintiffs will be required to prove actual economic injury to recover under New York law. Although the allegations of economic loss are sparse and border on conclusory, at this stage in the pleadings the Court finds that Plaintiffs have met their burden of stating a claim for injuries that would support a claim under New York law.
2. Failure to Adequately Plead FDUTPA Claims
Chrysler moves to dismiss the Florida Plaintiffs’ claims under FDUTPA, Fla. Stat. § 501.201 et seq. for failure to adequately plead recoverable damages. Chrysler argues that the claims for damages in the First Amended Complaint are asserted "in a speculative manner uncorroborated by any factual allegation." "In the context of FDUTPA, ‘actual damages’ are defined as ‘the difference in the market value of the product or service in the condition in which it was delivered and its market value in the condition in which it should have been delivered according to the contract of the parties.’ " ADT LLC v. Vivint, Inc., 2017 WL 5640725, at *5 (S.D. Fla. Aug. 3, 2017) (quoting Rodriguez v. Recovery Performance & Marine, LLC , 38 So. 3d 178, 180 (Fla. 3d DCA 2010) ). "This is because ‘the act is intended to protect a consumer from unfair or deceptive acts or practices which diminish the value or worth of the goods or services purchased by the consumer." Id. Diminution of value is the standard for determining actual damages under FDUTPA. James v. Yamaha Motor Corp., 2016 WL 3083378, at * 13 (S.D. Fla. 2016). Plaintiffs have pled diminution of value of their vehicles due to the allegedly defective AHR. Although Plaintiffs did not specify the amount of diminution they are claiming, actual diminution in value and the amount will be a matter of proof. At this stage, Plaintiffs have adequately pled actual damages under FDUTPA.
3. Fraudulent Concealment
c. Arizona Law
Chrysler argues that the Arizona Plaintiffs’ claim for fraudulent concealment under Arizona law must be dismissed for failure to allege the necessary foundational relationship with Chrysler. The First Amended Complaint alleges that Minkowitz "purchased [his vehicle] new from Airpark Chrysler in Scottsdale, Arizona, a dealership authorized by Chrysler to sell Dodge Caravan vehicles, in October 2013. This dealership operates as an agent of Chrysler." (DE [10] ¶ 22). Minkowitz alleges that Chrysler fraudulently concealed its knowledge of problems with the AHR while simultaneously advertising the AHR as a standard safety feature. (DE [10] ¶¶ 176-89). Chrysler argues it was not a "party to the transaction" where Minkowitz purchased his vehicle and, therefore, no claim can be made against Chrysler for fraudulent concealment. Alternatively, Chrysler argues that Minkowitz has failed to satisfy his burden of pleading a plausible basis for concluding that the selling dealer acted as an agent of Chrysler.
Under Arizona law, a "party to a transaction who by concealment or other action intentionally prevents the other from acquiring material information is subject to the same liability to the other, for pecuniary loss as though he had stated the nonexistence of the matter that the other was thus prevented from discovering." Wells Fargo Bank v. Ariz. Laborers, Teamsters and Cement Masons Local No. 395 Pension Tr. Fund, 201 Ariz. 474, 38 P.3d 12, 34 (2002) (citing Restatement (Second) of Torts § 550 (1976) ). Fraudulent concealment is "characterized by deceptive acts or contrivances intended to hide information, mislead, avoid suspicion, or prevent further inquiry into a material matter." Wells Fargo, 38 P.3d at 35. Liability for fraudulent concealment may be found "even in the absence of a fiduciary, statutory, or other legal duty to disclose." Lerner v. DMB Realty, LLC , 234 Ariz. 397, 322 P.3d 909, 916 (Ariz. Ct. App. 2014) (quoting Wells Fargo Bank, 38 P.3d at 21 ).
The Court concludes that Plaintiffs have alleged facts sufficient to support a claim for fraudulent concealment under Arizona law, to at least survive a motion to dismiss. Garcia v. Chrysler Grp. LLC, 127 F. Supp. 3d 212, 237 (S.D.N.Y. 2015) (complaint alleging Chrysler knew of a defect and made deliberate decision not to disclose it in attempt to mislead vehicle purchasers stated a claim for fraudulent concealment under Arizona law). Additionally, the Court finds that Plaintiffs’ allegations of fraudulent concealment meet the heightened pleading standards of Rule 9(a), Federal Rules of Civil Procedure.
d. New York Law
Chrysler argues that Van Allen's claim for fraudulent concealment is barred by New York's economic loss doctrine. Under New York law, recovery in tort is not available "to a downstream purchaser where the claimed losses flow from damage to the property that is the subject of the contract." Bocre Leasing Corp. v. Gen. Motors Corp (Allison Gas Turbine Div.), 84 N.Y.2d 685, 621 N.Y.S.2d 497, 645 N.E.2d 1195, 1199 (1995). The economic loss doctrine applies to cases sounding in negligence and strict liability, but it is not clear that this same rule extends to tort claims sounding in fraud brought under New York law." Computech Int'l, Inc. v. Compaq Computer Corp., 2004 WL 1126320, at *10 (S.D.N.Y. May 21, 2004).
Neither party cites a case from New York addressing the issue, although both parties cite federal cases supporting their respective positions. See, id. ("In the absence of any articulation to the contrary by the New York courts, the economic loss doctrine will not be presumed to extend to fraud claims and, thus, will not bar CTI's fraud claim here"); Elkind v. Revlon Consumer Prod. Corp., 2015 WL 2344134, at *12 (E.D.N.Y. May 14, 2015) ("The economic loss doctrine does not apply, however, to Plaintiffs’ intentional misrepresentation claim"); Orlando v. Novurania of Am., Inc., 162 F. Supp. 2d 220, 225 (S.D.N.Y. 2001) (economic loss doctrine bars recovery for benefit of the bargain under fraudulent misrepresentation theory); Kalimantano GmbH v. Motion in Time, Inc., 939 F. Supp. 2d 392, 416-17 (S.D.N.Y. 2013) (dismissing fraud claim pursuant to New York's economic loss rule).
New York appellate courts have not spoken on whether New York law would recognize a fraud exception to the economic loss rule. The weight of recent case law from various federal district courts, however, concludes that New York's economic loss rule would not bar a claim for fraudulent concealment. In re Takata Airbag Products Liab. Litig., 462 F. Supp. 3d 1304, 1320 (S.D. Fla. 2020) ; In re Volkswagen Timing Chain Prod. Liab. Litig., 2017 WL 1902160, at *18 (D.N.J. May 8, 2017) ; Fed. Deposit Ins. Corp. for First NBC Bank v. Murex LLC, 2018 WL 2694431, at *8 (S.D.N.Y. Jun. 5, 2018) ; Weisblum v. Prophase Labs, Inc. , 88 F. Supp. 3d 283, 297 (S.D.N.Y. 2015). This Court concludes likewise.
Chrysler next argues that Van Allen's claim for fraudulent concealment under New York law must be dismissed because under New York law a fraudulent concealment claim requires a duty to disclose. This is the general rule. "A cause of action to recover damages for fraudulent concealment requires, in addition to scienter, reliance, and damages, a showing that there was a fiduciary or confidential relationship between the parties which would impose a duty upon the defendant to disclose material information and that the defendant failed to do so." Wallkill Med. Dev., LLC v. Catskill Orange Orthopaedics, P.C., 178 A.D.3d 987, 989–90, 115 N.Y.S.3d 67 (2019). However, "New York recognizes a cause of action to recover damages for fraud based on concealment, where the party to be charged has superior knowledge or means of knowledge, such that the transaction without disclosure is rendered inherently unfair." Miele v. Am. Tobacco Co., 2 A.D.3d 799, 803, 770 N.Y.S.2d 386 (2003). "Although normally this duty to disclose arises in the context of ‘direct business transactions,’ courts also impose the duty on ‘a manufacturer who has exclusive knowledge of a product defect or danger.’ " Greene v. Gerber Prod. Co., 262 F. Supp. 3d 38, 72 (E.D.N.Y. 2017) (quoting Woods v. Maytag Co. , 807 F. Supp. 2d 112, 125 (E.D.N.Y. 2011) ); see also Miele , 770 N.Y.S.2d at 390–91 (allegations that tobacco company defendants suppressed and disregarded test results not favorable to the tobacco industry and failed to disclose the addictive and dangerous nature of cigarettes supported claim for fraudulent concealment).
Plaintiffs in this case allege that Chrysler, the manufacturer, had superior knowledge about the defective AHR and the dangers the defect posed to consumers but concealed that information from consumers. (DE [10] ¶¶ 79-83). This is sufficient to state a claim for fraudulent concealment under New York law.
4. N.Y. General Business Law § 350
Chrysler moves to dismiss Van Allen's claim under N.Y. General Business Law § 350 on the ground that Van Allen has failed to allege reliance on a specific advertisement. To state a claim for false advertising under § 350, a plaintiff must show "(1) that the act, practice, or advertisement was consumer-oriented; (2) that the act, practice, or advertisement was misleading in a material respect, and (3) that the plaintiff was thereby injured." Ackerman v. Coca-Cola Co., 2010 WL 2925955, at *22 (E.D.N.Y. July 21, 2010). Chrysler argues that Van Allen's allegations are "hopelessly generalized and vague" and say "nothing about the type of warranties or advertisements, or where he was exposed to them, or when." In response, Plaintiffs point out that the First Amended Complaint alleges that Chrysler's brochures and advertisements marketed Chryslers’ safety features in general and, more specifically, touted the AHR as a safety feature offering injury protection in rear-end collisions. (DE [10] ¶¶ 68-72). The First Amended Complaint also alleges that Van Allen "was aware of, reviewed, or heard Chrysler's warranties and advertisements publicizing its reputation for safety and reliability." (DE [10] ¶ 31). And the First Amended Complaint alleges that Chrysler knew that AHR was defective and prone to deploy in the absence of a rear-end collision. (DE [10] ¶¶ 8-9).
"To successfully assert a claim under General Business Law §§ 349 or 350, a party must allege that its adversary has engaged in consumer-oriented conduct that is materially misleading, and that the party suffered injury as a result of the allegedly deceptive act or practice." New World Sols., Inc. v. NameMedia Inc., 150 F. Supp. 3d 287, 330 (S.D.N. Y 2015) (quoting Yellow Book Sales & Distrib. Co. v. Hillside Van Lines, Inc., 98 A.D.3d 663, 950 N.Y.S.2d 151, 153 (N.Y. 2012) ). "Additionally, neither Section 349 nor 350 require proof of reliance, ... nor proof that defendants intended to mislead consumers." Id. (citations omitted). Van Allen has met these standards and has pled a claim for violation of New York General Business Law § 350.
5. Unjust Enrichment
Chrysler moves to dismiss Plaintiffs’ unjust enrichment claims for failure to state a claim upon which relief can be granted. Chrysler argues that (1) Plaintiffs did not confer a benefit upon Chrysler to support an unjust enrichment claim and (2) Plaintiffs have an adequate remedy at law and, thus, their unjust enrichment claims cannot stand. In response, Plaintiffs argue that a benefit has been conferred upon Chrysler because Plaintiffs paid more for their vehicles than they were worth based on their belief that the vehicles were safe and without a safety defect and that their purchase of the vehicles through Chrysler-authorized dealers was not too attenuated.
The Court concludes that Plaintiffs’ unjust enrichment claims cannot be dismissed at this juncture. Under the laws of Arizona, Florida, and New York, "a direct benefit is conferred on an automotive manufacturer where a plaintiff purchases or leases his vehicle from a dealership affiliated with the automotive manufacturer." In re Takata Airbag Prod. Liab. Litig. , 462 F. Supp. 3d at 1326. Plaintiffs have pled that they purchased or leased their vehicles from authorized Chrysler dealers. (DE [10] ¶¶ 18, 21, 24, 27, and 30). Additionally, Plaintiffs are entitled to plead unjust enrichment as an alternative theory. Id.; In re: FCA US LLC Monostable Electronic Gearshift Litig., 446 F. Supp. 3d 218, 228-29 (E.D. Mich. 2020) (recognizing that Florida courts permit alternative pleading of unjust enrichment claims).
C. Magnuson-Moss Warranty Act
Chrysler moves to dismiss Plaintiffs’ claims under the Magnuson-Moss Warranty Act (MMWA) for failure to allege valid state law warranty claims. A MMWA claim can only survive if the plaintiff pleads a valid state law warranty claim. Melton, 243 F. Supp. 3d at 1304. Chrysler argues that the First Amended Complaint fails to state a claim for breach of express warranty because Plaintiffs fail to allege which terms of their express warranties were breached or how they were breached. Second, Chrysler argues that the claims of the New York and Florida Plaintiffs must be dismissed for failure to give prior notice of the breach of express warranty claims. Finally, Chrysler argues that the First Amended Complaint fails to state a claim for breach of implied warranty because it lacks allegations of privity between Plaintiffs and Chrysler.
1. Express Warranty Claims
The First Amended Complaint identifies the express warranty terms relied upon by Plaintiffs and describes the alleged breach:
Chrysler provides a written express warranty to each consumer who purchases or leases a Class Vehicle directly from Chrysler. The warranty specifically covers "the cost of all parts and labor needed to repair any item on your vehicle when it left the manufacturing plant that is defective in material, workmanship or factory preparation."
Chrysler, however, continues to deny and conceal that its AHR has a defect. Specifically, Chrysler takes the position that its warranty does not cover the repair or replacement of the AHR system. According to Chrysler, the costs for those repairs should be borne entirely by its customers.
(DE [10] ¶¶ 110-11). The alleged defect in the AHR is pled throughout. Plaintiffs have pled the existence of a written express warranty and the method of breach. These allegations prevent the Court from dismissing the claim on the pleadings.
As this Court has previously held, Plaintiffs were not required by Florida law to provide Chrysler with pre-suit notice. See Fla. Stat. § 672.607(3)(a) (stating that "the buyer must ... notify the seller ...); Toca v. Tutco, LLC, 430 F. Supp. 3d 1313, 1323 (S.D. Fla. 2020) (citing PB Prop. Mgmt., Inc. v. Goodman Mfg. Co., Inc., 2014 WL 12640371, at *3-4 (M.D. Fla. Aug. 14, 2014) ("Plaintiffs are correct in their assertion that notice is required to be given to the seller , not the manufacturer, under Florida law.") (emphasis in original)). As Chrysler is the manufacturer not the seller, notice was not required under Florida law.
New York law contains a requirement that notice be given within a reasonable time. N.Y. U.C.C. Law § 2-607(3). Plaintiffs argue that filing the complaint may be considered notice. In re Ford Motor Co. E-350 Van Products Liab. Litig. (No. II) , 2010 WL 2813788, at *72 (D.N.J. Jul. 9, 2010) ("This Court agrees that under New York law, the filing of a complaint could constitute sufficient notice.") (citing Panda Capital Corp. v. Kopo Int'l, Inc., 242 A.D.2d 690, 662 N.Y.S.2d 584, 596 (1997) and Silverstein v. R.H. Macy & Co., 266 A.D. 5, 40 N.Y.S.2d 916, 920 (1943) ). At this stage in the litigation, this is enough; the Court will consider the reasonableness of the notice given at summary judgment. 2. Implied Warranty Claims
Chrysler argues the implied warranty claims must be dismissed because Plaintiffs have failed to allege privity with Chrysler. Privity is a required element of a breach of implied warranty. Brisson v. Ford Motor Co., 349 Fed. Appx. 433, 434 (11th Cir. 2009) (Florida); Tomasino v. Estee Lauder Co., 44 F. Supp. 3d 251, 262 (E.D.N.Y. 2014) (New York); Chaurasia v. GMC, 212 Ariz. 18, 126 P.3d 165, 171-72 (Ariz. Ct. App. 2006) (Arizona law).
Plaintiffs’ vehicles were purchased or leased from authorized Chrysler dealers. Plaintiffs contend the dealers were operating as agents of Chrysler:
Chrysler dealerships operate as agents of Chrysler. Upon information and belief, technicians, mechanics, and other employees receive job training from Chrysler at training facilities; technicians follow instructions published and disseminated by Chrysler when diagnosing and repairing vehicle issues; service managers’ report to Chrysler each time a fault is detected in a vehicle brought in for service or repair; and Chrysler approves or denies payment for services and repairs provided under warranty.
(DE [10] ¶ 43). Chrysler argues that members of its dealer network are not considered agents. This is a factual determination and the Court concludes that resolution at this stage would be premature. Plaintiffs have alleged sufficient facts to withstand a motion to dismiss.
D. Statute of Limitations
Chrysler moves to dismiss the FDUTPA and unjust enrichment claims brought by Plaintiffs Ginoris and Vigoa. The statute of limitations for both causes of action is four years. Fla. Stat. § 95.11(3)(f) (four-year period for claims founded upon statutory liability); Fla. Stat. § 95.11(3)(k) (four-year period for equitable action not founded on written instrument). Ginoris purchased a Chrysler vehicle in early 2013 and Vigoa purchased her vehicle in January 2014 (DE [10] ¶ 27). This action was filed in February 2020.
The Court has taken judicial notice of Florida Department of Motor Vehicle records that show Ginoris purchased her vehicle in early 2013. (DE [33] [34]).
Plaintiffs acknowledge that the statute of limitations has expired but argue the statute should be tolled due to Chrysler's alleged fraudulent concealment of the defect. "In order to establish fraudulent concealment sufficient to toll the statute, the plaintiff must show ‘both successful concealment of the cause of action and fraudulent means to achieve that concealment.’ " Berisford v. Jack Eckerd Corp., 667 So. 2d 809, 811 (Fla. 4th DCA 1995) (quoting Nardone v. Reynolds, 333 So. 2d 25, 39 (Fla. 1976) modified on other grounds, Tanner v. Hartog, 618 So. 2d 177 (Fla. 1993) ). "[G]enerally the fraud must be of such a nature as to constitute active concealment to prevent inquiry or elude investigation or to mislead a person who could claim a cause of action...." Nardone , 333 So.2d at 25.
Plaintiffs allege Chrysler knew about the allegedly defective AHR but failed to disclose or acknowledge the defect. In one instance, Chrysler allegedly issued a public statement denying the existence of the defect. Plaintiffs also allege that Chryslers’ dealers denied the existence of the defect to customers. Based upon these allegations, the Court concludes that Plaintiffs have pled sufficient facts to permit Ginoris’ and Vigoa's claims to proceed beyond the Motion to Dismiss stage.
Chrysler also argues that Plaintiff Minkowitz’ claim under the Arizona Consumer Fraud Act was filed beyond the Act's one-year statute of limitations. Ariz. Rev. Stat. Ann. § 12-541(5). Chrysler argues because Minkowitz’ headrest deployed in 2018, his claim is untimely. But the date of the deployment is not necessarily the date of accrual of the cause of action. "The statute of limitations has been interpreted to begin running when the defrauded party discovers or with reasonable diligence could have discovered the fraud." Mister Donut of Am. v. Harris , 150 Ariz. 321, 723 P.2d 670, 672 (1986). "When discovery occurs and a cause of action accrues are usually and necessarily questions of fact for the jury.’ " Syntelco Limited v. Reish, 2017 WL 11513278, at *3 (D. Ariz. 2017) (quoting Doe v. Roe, 191 Ariz. 313, 955 P.2d 951, 961 (1998) ).
Minkowitz alleges that Chrysler concealed the defect in the AHR by telling him no recall had been issued and that he would be responsible for the cost of repair. (DE [10] ¶¶ 81, 89-103). It is not clear from the Plaintiffs’ First Amended Complaint that Minkowitz’ cause of action accrued at the time the headrest deployed. "The statute of limitations is an affirmative defense that is ‘properly raised in a motion to dismiss where it appears from the face of the complaint that the claim is barred,’ but the motion should not be granted "unless it appears certain plaintiff will not be entitled to relief under any set of facts susceptible of proof under the claims stated." " Syntelco Limited, 2017 WL 11513278, at *4 (quoting Anson v. Am. Motors Corp. , 155 Ariz. 420, 747 P.2d 581, 582 (Ariz. Ct. App. 1987) ). Because it is not clear from the pleadings when the statute began to run on Minkowitz’ ACFA claim, the Court cannot determine at this stage whether the statute has run.
III. CONCLUSION
The Court having considered the Motion and for the foregoing reasons, it is hereby
ORDERED AND ADJUDGED that Defendant's Motion to Dismiss First Amended Complaint (DE [31]) is DENIED.
DONE AND ORDERED in Chambers, Fort Lauderdale, Florida, this 30th day of March 2021.