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Miller v. General Motors, LLC

United States District Court, E.D. Michigan, Northern Division

June 7, 2018

AMY MILLER, et al., individually, and on behalf of all others similarly situated, Plaintiffs,
v.
GENERAL MOTORS, LLC, Defendant.

          Patricia T. Morris Magistrate Judge.

          ORDER GRANTING MOTION TO DISMISS AND DISMISSING COMPLAINT WITHOUT PREJUDICE

          THOMAS L. LUDINGTON UNITED STATES DISTRICT JUDGE.

         On December 14, 2017, Plaintiffs filed a 23-count complaint on behalf of themselves and others similarly situated alleging that they purchased or leased certain GM vehicles with defective power liftgate struts that can unexpectedly fail, causing the liftgate to suddenly fall on people attempting to access the rear compartment. Compl. ¶ 1, ECF No. 1. Plaintiffs purchased or leased their vehicles in Michigan, Illinois, Massachusetts, Oregon, and Washington. The complaint alleges breaches of express and implied warranties, violations of state consumer protection laws, fraudulent omission, and unjust enrichment. On March 5, 2018, Defendant filed the instant Motion to Dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), or for a more definite statement pursuant to rule 12(e). ECF No. 19. Plaintiffs responded on April 9, 2018, and Defendant replied on April 30, 2018. ECF Nos. 27, 28.

         I.

         When adjudicating a motion to dismiss for failure to state a claim under rule 12(b)(6), the Court construe's the complaint in the non-movant's favor and accepts all of Plaintiff's factual allegations as true. See Lambert v. Hartman, 517 F.3d 433, 439 (6th Cir. 2008). The facts set forth herein are derived from the allegations in Plaintiff's complaint.

         The vehicles containing the liftgate defect are: 2010-2012 GMC Acadia, 2010-2012 Buick Enclave, 2010 Saturn Outlook, 2010-2012 Chevrolet Traverse, 2010-2012 Cadillac SRX, 2010-2012 Chevrolet Equinox, and 2010-2012 GMC Terrain (collectively, the “Class Vehicles”). Compl. ¶ 1. “Each of the Class Vehicles shares a common defect: power liftgate struts that prematurely wear because the design allows dirt and debris to compromise the seals on the pressurized cylinder, allowing pressurized gas to escape (the ‘Power Liftgate Defect').” Id. ¶ 2. The liftgate struts “fail without warning, causing injury to anyone in the path of the liftgate and hindering the owner's ability to use their rear compartment because the liftgate will not remain open.” Id. GM had notice of the defect since at least 2010, when it issued the first of several “Technical Service Bulletins” (TSBs) to dealers regarding power liftgates. Id. ¶ 6. GM “likely had notice and knowledge” of the defects prior to that based on recalls issued by three other auto manufacturers of power liftgate struts from the same supplier, Stabilus, Inc., beginning in 2006. Id.

         GM did not disclose the defect at the time of purchase, and Plaintiffs purchased their vehicles with the erroneous understanding that they would be safe and reliable. Plaintiff Miller “owns a 2010 Chevrolet Traverse with the Power Liftgate Defect, ” which was not disclosed to her at the time of the purchase in 2014, despite GM's knowledge of the defect. Id. ¶ 19-20. Plaintiff Graham “owns a 2011 Chevrolet Equinox with the Power Liftgate Defect, ” which was not disclosed to him at the time of the purchase, despite GM's knowledge of the defect. Id. ¶ 22-23. Plaintiff Leonard owns a 2012 Chevrolet Traverse which she purchased in 2012. Id. ¶ 25. Within the period of GM's express warranty, the liftgate on Plaintiff Leonard's vehicle “struggled to open and required manual assistance.” Id. ¶ 26. Plaintiff Luse owns a 2011 GM Terrain which he purchased in 2013. Id. ¶ 29. On numerous occasions within the period of GM's express warranty, the power liftgate on Plaintiff Luse's vehicle collapsed unexpectedly, once striking Mr. Luse on the shoulder. Id. ¶ 30. Plaintiff Arnadi owns a 2012 Chevrolet Equinox, which he purchased in 2012. Id. ¶ 33. The power liftgate on Mr. Arnadi's vehicle “suddenly collapsed from the full-open position on multiple occasions.” Id. ¶ 34. “On one such occasion, the collapsed liftgate smashed Mr. Arnadi into the vehicles rear bumper” and he was “forced to use his back to raise the liftgate and free himself.” Id.

         The GM owner's manual for the Class Vehicles warns: “You or others could be injured if caught in the path of the power liftgate. Make sure there is no one in the way of the liftgate as it is opening and closing.” Id. ¶ 42. The GM owner's manual for the Class Vehicles also states: “If you power open the liftgate and the liftgate support struts have lost pressure, the lights will flash and a chime will sound. The liftgate will stay open temporarily, then slowly close. See your dealer/retailer for service before using the liftgate.” Id. ¶ 43. Plaintiffs alleged that the defect in the liftgates causes them to drop suddenly, with no lights, chimes, or any other user warnings. Id.

         In July 2010, GM issued a TSB (technical service bulletin) notifying dealers, but not owners, of multiple problems with the power liftgates. Id. ¶ 44. Another TSB was issued to GM dealers in June 2013 acknowledging that dirt and debris were wearing the strut seals, and instructing dealers conducting strut replacements to change the orientation of the rod such that the rod faced downward, thereby preventing debris accumulation. Id. ¶ 45. GM issued a March 2014 TSB which noted customer complaints related to the liftgates on the 2010-2014 Cadillac SRX, Chevrolet Equinox, and GMC terrain. Id. ¶ 47.

         In June 2015, GM recalled the 2007-2012 GMC Acadia, 2008 to 2012 Buick Enclave, 2007-2010 Saturn Outlook, and 2009-2012 Chevrolet Traverse. Id. at ¶ 48. GM specified that the “vehicles have a condition in which the gas struts that hold the liftgate up may prematurely wear, ” because the struts “are orientated in a way that allows dirt particles to penetrate between the piston rod and the guiding bushing package.” Id. ¶ 48. In conjunction with the recall, GM acknowledged that the Prop Rod Recovery system may be unable to prevent a liftgate with prematurely worn gas struts from falling too quickly. Id. ¶ 49.

         GM's recall was limited to the remedy of a “reflash” (reprogramming) of the liftgate actuator motor control unit with a new software calibration. Id. ¶ 7. Dealers were instructed to verify that the liftgate stayed up and, if not, to replace the struts for free within 90 days of the software upgrade. Id. ¶ 51. If the struts failed after 90 days, customers were required to pay for the repair. Id. GM admitted in its recall notice to the National Highway Traffic Safety Administration (NHTSA) that the struts were defective because they allow dust and dirt to collect in the strut rod seals, causing those seals to fail. Id. ¶ 8. GM agreed to replace the struts only if they failed at the time of the repair or within 90 days thereafter. Id. ¶ 9. GM's recall was limited to four models, despite GM's knowledge that other models contained the same or similar struts and were the subject of consumer complaints and TSBs. Id. ¶ 10. The new software calibration failed to resolve the problem. Id. ¶ 11. GM did not recall the 2010-2014 Cadillac SRX, Chevrolet Equinox, and GMC Terrain vehicles, despite acknowledging in a TSB that those vehicles also had struts prone to premature wear. Id. ¶ 56.

         Plaintiffs' complaint details a number of recalls and NHSTA investigations of Ford, Toyota, and Honda vehicles equipped with struts manufactured by Stabilus, the same company that manufactured GM's struts. Id. ¶ 58-81. These NHSTA investigations and recalls took place as early as 2006. Following Honda's 2012 recall, NHTSA opened an Equipment Query Investigation into Stabilus to determine which other companies had purchased the defective struts. Id. ¶ 77. In its response, Stabilus stated that it supplied struts for “nearly all vehicles produced in North America” but that no other manufacturer received the “same” struts as those that were recalled. Id. “NHTSA closed the investigation, in large part based on Stabilus's claim that most struts that were similar to the recalled struts were aftermarket parts not manufactured by Stabilus.” Id. ¶ 81. By the end of 2012, the NHTSA had received 28 complaints of sudden falls of power liftgates in GM vehicles, 9 of which were related to vehicles GM subsequently recalled. Id. ¶ 85. These consumer complaints included reports of head injuries and a broken wrist. Id. ¶ 88.

         GM extensively advertised the benefits of their power liftgate. Id. ¶ 93. Numerous advertising materials for the Class Vehicles advertised the power liftgate for easy loading and unloading of the rear compartment. Id. ¶ 95-100. The brochure for the GMC Terrain reads: “Programmable Power Liftgate Helping you take advantage of its easy cargo access, Terrain offers an available programmable power liftgate. It opens and closes with the touch of a button to the height you select. Electronic obstacle detection can stop and reverse liftgate motion to prevent damage.” Id. ¶ 99.

         II.

         Plaintiffs' complaint contains 23 counts leading to five categories of claims for relief. First, Plaintiffs allege that GM breached its Express Limited Warranty that it would repair or replace defects in material or workmanship free of charge if they became apparent during the warranty period. Plaintiffs seek redress for the breach of the express warranty pursuant to: 1) the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301, et seq.; 2) Mich. Comp. Laws § 440.2313; 3) 810 Ill. Comp. Stat. 5/2-313 and 5/2A-210; 4) Mass. Gen. Laws ch. 106, §§ 2-313 and 2A-210; 5) Or. Rev. Stat. §§ 72.3130 and 72a.2100; and 6) Wash. Rev. Code § 62A.2-313 and 62A.2A-210 (count 1, 3, 8, 12, 17, and 21).

         Second, Plaintiff alleges that GM breached the Implied Warranty of Merchantability because, at the time of sale and at all times thereafter, the vehicles were not in merchantable condition, would not pass without objection in the trade, and were not fit for the ordinary purpose for which vehicles were used. Plaintiffs seek redress for the breach of the Implied Warranty of Merchantability pursuant to: 1) the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301, et seq.; 2) Mich. Comp. Laws §§ 440.2314, 440.2862; and 3) Mass. Gen. Laws ch. 106, §§ 2-314 and 2A-212 (count 4 and 13).

         Third, Plaintiffs allege that GM violated state consumer protection laws by intentionally and knowingly omitting information regarding the liftgate defect, that would be material to a reasonable person considering whether to purchase the vehicles and how much to pay for them. Plaintiffs allege that they justifiably relied on these omissions and that, had they been aware of the defect, they would have not purchased the vehicles at all or would have paid less for the vehicles. Plaintiffs also allege that GM knowingly sold vehicles with a defective liftgate that was essentially unusable for the purposes for which it was sold. Plaintiffs seek to recover under the Michigan Consumer Protection Act, Mich. Comp. Laws §§ 445.901-445.922 (count 2), the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. 505/1, et seq. (count 7), the Massachusetts Regulation of Business Practices for Consumer Protection Act, Mass. Gen. Laws ch. 93A, §§ 1, et seq. (count 11), the Oregon Unlawful Trade Practices Law, Or. Rev. Stat. §§ 646.605, et seq. (count 16), and the Washington Consumer Protection Act, Wash. Rev. Code §§ 19.86.010, et seq. (Count 20).

         Fourth, Plaintiffs assert five counts of common law fraudulent omission on behalf of the Michigan, Illinois, Massachusetts, Oregon, and Washington classes (count 5, 9, 14, 18, and 22). The factual allegations giving rise to the fraudulent omission claims are essentially identical to the allegations giving rise to the claims for violations of the state consumer protection statutes.

         Finally, Plaintiffs assert five counts of unjust enrichment on behalf of the Michigan, Illinois, Massachusetts, Oregon, and Washington classes (count 6, 10, 15, 19, and 23). In each of these counts Plaintiffs allege that GM has wrongfully benefitted from knowingly selling and leasing defective vehicles at inflated prices due to GM's concealment of the liftgate defect, that it is inequitable and unconscionable for GM to retain these benefits, and that the amount of the unjust enrichment should be disgorged and returned to Plaintiffs.

         III.

         A pleading fails to state a claim under Rule 12(b)(6) if it does not contain allegations that support recovery under any recognizable legal theory. Ashcroft v. Iqbal, 556 U.S. 662, 678, (2009). In considering a Rule 12(b)(6) motion, the Court construes the pleading in the non-movant's favor and accepts the allegations of facts therein as true. See Lambert v. Hartman, 517 F.3d 433, 439 (6th Cir. 2008). The pleader need not have provided “detailed factual allegations” to survive dismissal, but the “obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). In essence, the pleading “must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face” and “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678-79 (quotations and citation omitted).

         IV.

         A.

         Defendant argues that Plaintiffs' express warranty claim fails because the GM Limited Warranty is not an “Express Warranty” under the UCC. Mot. at 7, ECF No. 19. Rather, Defendant argues that the GM Limited Warranty is a “repair or replace” warranty which “covers repairs to correct any vehicle defect . . . due to materials or workmanship occurring during the warranty period.” Id. Defendant also contends that Plaintiffs have not pled a breach of the Limited Warranty because they do not allege that: “(i) they experienced the alleged liftgate defect during the warranty period; (ii) they presented their vehicles to GM for repair during the warranty period; and (iii) GM refused or failed to repair their vehicles.” Id. at 8.

         Plaintiff argues that the GM Limited Warranty can be read as either a contractual promise to repair, or as an express warranty, and that it should be construed against the drafter. Resp. at 4, ECF No. 27. Plaintiffs also argue that the existence of an express warranty is typically a jury question, which cannot be summarily decided on the pleadings. Id. Plaintiffs also contend that they were excused from availing themselves of the Limited Warranty's exclusive remedy provision because doing so would have been futile. Id. at 5.

         Under the Michigan Uniform Commercial Code (UCC), express warranties by the seller are created as follows:

(a) An affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
(b) A description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
(c) A sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model

         Mich. Comp. Laws Ann. § 440.2313 (emphasis added).

         A “repair-or-replace” provision in a vehicle sales contract that does not “explicitly state that [the] plaintiff's vehicle will be free from defects, but rather states that the manufacturer will repair or replace any defects that arise during the specified period, ” does not constitute an “express warranty” within the meaning of the Michigan UCC, MCL § 440.2313. Grosse Pointe Law Firm, PC v. Jaguar Land Rover N. Am., LLC, 317 Mich.App. 395, 404 (2016), appeal denied, 500 Mich. 1017 (2017). Although the repair-or-replace provision is a “promise made by the seller to the buyer which relates to the goods and becomes a part of the basis of the bargain, ” it does not create an express warranty “that the goods shall conform to the affirmation or promise.Id. (emphasis added).

         As the court noted in Grosse Pointe, “goods cannot ‘conform to a promise to repair or replace because such a promise says nothing about the character or quality of the goods, but rather identifies a remedy if the buyer determines that the goods are defective.” Id.; see also Garvin, Uncertainty and Error in the Law of Sales: The Article Two Statute of Limitations, 83 B. U. L. Rev. 345, 379 (2003) (“All [express and implied warranties] go to the quality of the goods at tender. None goes to the remedies, which come about only if a warranty is breached.”); DeWitt, Action Accrual Date for Written Warranties to Repair: Date of Delivery or Date of Failure to Repair? 17 U. Mich. J.L. Reform 713, 722 n.35 (1984) (“A repair provision relates not to the goods and their quality, but to the manufacturer and its obligation to the purchaser.”).

         Similarly, under the identical provision in the Illinois UCC, a “limited repair warranty” promising “only that the manufacturer will repair or replace defective parts during the warranty period”-without any promise that the product will “conform to some affirmation, promise, description, sample or model” does not constitute an “express warranty” within the meaning of the Illinois UCC, 810 Ill. Comp. Stat. 5/2-313. Darne v. Ford Motor Co., 2017 WL 3836586, at *5 (N.D. Ill. Sept. 1, 2017) (quoting Mydlach v. DaimlerChrysler Corp., 875 N.E.2d 1047 (Ill. 2007)).

         Plaintiffs rely on one case from the Supreme Court of Pennsylvania which reached the opposite conclusion when interpreting an identical provision under Pennsylvania law. Resp. at 5 (citing). However, even that court recognized that a limited “repair-or-replace” warranty “does not create a classic warranty that fits neatly within the UCC view of warranties” because it does not “warran[t] that ...


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