United States District Court, E.D. Michigan, Southern Division
IN RE GENERAL MOTORS AIR CONDITIONING MARKETING AND SALES PRACTICES LITIGATION ALL CASES
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART DEFENDANT'S MOTION TO DISMISS (ECF #35)
MATTHEW F. LEITMAN, UNITED STATES DISTRICT JUDGE
In this
putative consolidated class action, seventeen plaintiffs from
thirteen states bring a variety of claims against Defendant
General Motors Company (“GM”) arising out of
alleged defects in the air conditioning systems of their GM
vehicles. GM has now moved to dismiss most of Plaintiffs'
claims. (See Mot. to Dismiss, ECF #35.) For the reasons that
follow, GM's motion is GRANTED IN PART and DENIED IN
PART.
I
GM is
one of the world's leading automakers. Plaintiffs are
consumers who purchased various GM vehicles under the
Chevrolet, GMC, and Cadillac brands (the “Class
Vehicles”).[1] Plaintiffs claim that the air conditioning
systems in the Class Vehicles are defective and that GM's
efforts to repair the defects have failed. More specifically,
Plaintiffs assert that the Class Vehicles “have a
serious defect that causes the [air conditioning systems] to
(a) crack and leak refrigerant; (b) lose pressure within the
[air conditioning system]; and (c) fail to properly function
to provide cooled air into the [v]ehicle's passenger
cabin” (the “AC Defect”). (Am. Compl. at
¶3, ECF #24 at Pg. ID 1013.) According to Plaintiffs,
the AC Defect “inhibits Plaintiffs['] …
expected, comfortable, and safe use of their [v]ehicles, and
requires [them] to go months without functioning [air
conditioning] while waiting for replacement parts, and to pay
for equally defective replacement parts that themselves are
susceptible to failure.” (Id. at ¶10, Pg.
ID 1015.) Plaintiffs further allege that the AC Defect
“also creates a safety risk for Plaintiffs …
because [the defect] subjects the occupants of the [v]ehicles
to unsafely high temperatures and can lead to decreased
visibility due to fogging of the windows and an inability to
use the [air conditioning system] to de-fog the
windows.” (Id. at ¶11, Pg. ID 1015.)
Finally, Plaintiffs claim that GM “knew” of the
AC Defect before Plaintiffs purchased or leased their
vehicles but “failed to disclose and actively concealed
the [defect] from [Plaintiffs] and the public.”
(Id. at ¶12, Pg. ID 1015-16.)
II
Plaintiffs
filed their First Amended Consolidated Master Class Action
Complaint (the “First Amended Complaint”), the
operative pleading in this action, on August 14, 2018. (See
Am. Compl., ECF #24.) The named Plaintiffs are as follows:
• Rodney Martin, an Alabama resident who
“purchased a new 2015 Chevrolet Silverado” from
an “authorized GM dealer” in Alabama in 2015.
(See Id. at ¶¶ 23-24, Pg. ID 1020);
• Kenneth Gay, an Arizona resident who “purchased
a new 2014 Chevrolet Silverado” from an
“authorized GM dealer” in Arizona in 2013. (See
Id. at ¶¶ 32-33, Pg. ID 1022);
• Carl Williams, a California resident who
“purchased a new [2014 Chevrolet Silverado]” in
California in 2014. (See Id. at ¶43, Pg. ID
1024);
• Clarence Larry, a California resident who
“purchased a new 2015 Chevrolet Tahoe” from
“an authorized GM dealer” in California in 2015.
(See Id. at ¶¶ 54-55, Pg. ID 1028);
• Erica Wolfe, a Florida resident who “purchased a
certified pre-owned 2015 Chevrolet Tahoe … with an
extended warranty” from “an authorized GM
dealer” in Florida in 2016. (See Id. at
¶¶ 68-69, Pg. ID 1031);
• Andrew C. Hill, a Florida resident who
“purchased a new 2014 Chevrolet Silverado” from
“an authorized GM dealer” in Florida in 2014.
(See Id. at ¶¶ 79-80, Pg. ID 1033);
• Richie Ainsworth, a Louisiana resident who
“purchased a used 2014 Chevrolet Silverado” from
“an authorized GM dealer” in Louisiana in 2015.
(See Id. at ¶¶ 87-88, Pg. ID 1035);
• James Won, a New Jersey resident who purchased (1)
“a new 2015 Chevrolet Suburban” from an
“authorized GM dealer” in New York in 2014, (2) a
“second Chevrolet Suburban” from an authorized GM
dealer in New York in 2015, (3) “a third new 2015
Chevrolet Suburban” from an “authorized GM
dealer” in New Jersey in 2016, and (4) a “a 2016
Cadillac Escalade” from an “authorized GM
dealer” in New Jersey in 2016. (See Id. at
¶¶ 99-103, Pg. ID 1037-38.)
• Hayes Ellis, an Alabama resident who purchased a
“new 2014 GMC Sierra” from an “authorized
GM dealer” in Oklahoma in 2014. (See Id. at
¶¶ 119-20, Pg. ID 1041);
• Billy Frank, a Tennessee resident who purchased a new
“2015 Chevrolet Suburban” in Tennessee in 2015.
(See Id. at ¶¶ 129-30, Pg. ID 1043);
• John O'Brien, a Tennessee resident who purchased a
new “2014 GMC Sierra” in Tennessee in 2013. (See
Id. at ¶¶ 141-42, Pg. ID 1046);
• Marcus Bell, a Texas resident who purchased a
“new 2014 GMC Sierra” from an “authorized
GM dealer” in Texas in 2013. (See Id. at
¶¶ 152-53, Pg. ID 1049);
• Aaron and Jan Howard, Washington residents who
purchased a “new 2014 Chevrolet Silverado” from
an “authorized GM dealer” in Washington in 2013.
(See Id. at ¶¶ 162-63, Pg. ID 1051);
• Leslie Griffin, a Georgia resident who purchased a
“certified pre-owned 2015 Chevrolet Suburban”
from an “authorized GM dealer” in Georgia in
2016. (See Id. at ¶¶ 175-76, Pg. ID
1053-54);
• Edilberto Gomez, a Florida resident who purchased a
“new 2015 Chevrolet Silverado” from an
“authorized GM dealer” in Florida in 2016. (See
Id. at ¶¶ 185-86, Pg. ID 1056); and
• Corey Steketee, a Michigan resident who purchased a
“new 2014 GMC Sierra” from an “authorized
GM dealer” in Michigan in 2013. (See Id. at
¶¶ 195-96, Pg. ID 1058).
These
Plaintiffs bring claims for breach of the Class Vehicles'
express and implied warranties, unjust enrichment, fraud, and
violations of the consumer protection laws of various states.
GM moved to dismiss Plaintiffs' claims on November 13,
2018. (See Mot. to Dismiss, ECF #35.) The Court held a
hearing on the motion on June 25, 2019.
III
GM
moves to dismiss Plaintiffs' claims pursuant to Federal
Rule of Civil Procedure 12(b)(6). “To survive a motion
to dismiss” under Rule 12(b)(6), “a complaint
must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its
face'” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 570 (2007)). A claim is facially plausible when
a plaintiff pleads factual content that permits a court to
reasonably infer that the defendant is liable for the alleged
misconduct. See Id. When assessing the sufficiency
of a plaintiffs claim, a district court must accept all of a
complaint's factual allegations as true. See Ziegler
v. IBP Hog Mkt, Inc., 249 F.3d 509, 512 (6th Cir. 2001).
“Mere conclusions, ” however, “are not
entitled to the assumption of truth. While legal conclusions
can provide the complaint's framework, they must be
supported by factual allegations.” Iqbal, 556 U.S. at
664. A plaintiff must therefore provide “more than
labels and conclusions, ” or “a formulaic
recitation of the elements of a cause of action” to
survive a motion to dismiss. Twombly, 550 U.S. at
555. “Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
suffice.” Iqbal, 556 U.S. at 678.
IV
GM
moves to dismiss nearly all of Plaintiffs' claims on
several different grounds.[2] In the motion to dismiss, GM separates
its arguments into four categories:
• “Plaintiffs' Express and Implied Warranty
Claims Should be Dismissed.” (Mot. to Dismiss, ECF #35
at Pg. ID 1705-17);
• “Plaintiffs' Claim of Unjust Enrichment
Should be Dismissed.” (Id. at Pg. ID 1717-20);
• “Plaintiffs' Fraudulent Concealment Claims
Should be Dismissed” (Id. at Pg. ID 1720-28);
and
• “Plaintiffs' Claims Under the Consumer
Protection Statutes Should be Dismissed.” (Id.
at Pg. ID 1728-42.)
The
Court will address each of these categories in turn below.
A
1
In
Counts 11, 12, 19, and 35 of the First Amended Complaint,
Plaintiffs Carl Williams, Clarence Larry, Leslie Griffin, and
James Won allege that GM breached the express “Limited
Warranty” of the vehicles they purchased. (See Am.
Compl., ECF #24 at Counts 11, 12, 19, and 35.) These
“bumper-to-bumper” Limited Warranties provide
that GM will pay for any necessary “repairs to correct
any vehicle defect … related to materials or
workmanship occurring during the warranty period.”
(Limited Warranty, ECF #35-2 at Pg. ID 1755.[3]) The
“warranty period” for these vehicles is “3
years or 36, 000 miles, whichever comes first.”
(Id.; see also, e.g., Am. Compl. at
¶602, ECF #24 at Pg. ID 1194, describing the “new
vehicle three-year and 36, 000-mile Limited Warranty”).
Likewise,
Plaintiffs Carl Williams, Clarence Larry, Erica Wolfe, Andrew
C. Hill, Edilberto Gomez, Leslie Griffin, Richie Ainsworth,
Corey Steketee, James Won, Hayes Ellis, and Marcus Bell claim
GM breached their vehicles' implied warranties. (See Am.
Compl., ECF #24 at Counts 13, 14, 18, 20, 25, 28, 31, 37, and
42.) Under the terms of the Limited Warranty, any implied
warranties are limited in duration to the same period (three
years or 36, 000 miles, whichever occurs first) that applies
to the Limited Warranty: “[A]ny implied warranty of
merchantability or fitness for a particular purpose
applicable to this vehicle is limited in duration to the
duration of this written warranty.” (Limited Warranty,
ECF #35-2 at Pg. ID 1764; emphasis in original.)
2
GM
argues that all Plaintiffs - with the exception of Plaintiff
Carl Williams[4]- cannot state a viable breach of express
or implied warranty claim because the air conditioning
systems in their vehicles did not allegedly fail until after
their warranties expired. (See Mot. to Dismiss, ECF #35 at
Pg. ID 1706; see also Id. at Pg. ID 1714, discussing
expiration of implied warranties.) The Court agrees.
To
maintain a claim for breach of an express or implied
warranty, a plaintiff must, among other things, “seek
warranty service within the [] period contained in the
… [w]arranty.” In re Ford Motor Co. Speed
Control Deactivation Switch Prods. Liab. Litig., 2007 WL
2421480, at *7 (E.D. Mich. Aug. 24, 2007) (noting that
plaintiffs' breach of express and implied warranty claims
“fail[ed]” because “[n]one of the named
Plaintiffs allege[d] that they sought warranty service
… within the three-year warranty period”); see
also In re OnStar Contract Litig., 600 F.Supp.2d
861, 877-79 (E.D. Mich. 2009) (dismissing breach of express
warranty claim where plaintiffs “fail[ed] to allege
that they sought service for the OnStar equipment in their
vehicle, or actually incurred any problems with same, within
the durational limits specified in their respective express
warranties”).[5]
Here,
no Plaintiff (other than Carl Williams) alleges that his or
her air conditioning system failed and/or that he or she
sought warranty coverage related to the air conditioning
system during the durational limits covering the express and
implied warranties. Indeed, the air conditioning systems in
many of the named Plaintiffs' vehicles did not fail until
tens of thousands of miles after they reached the 36,
000-mile durational limit under their
warranties.[6] Because Plaintiffs' warranties expired
before their air conditioning systems allegedly failed, they
have failed to state viable breach of express or implied
warranty claims.
3
Plaintiffs
counter that their express and implied warranty claims are
viable because “[a]ny time and mileage limits set forth
in the [Limited] Warranty [are] unconscionable” and
therefore unenforceable as a matter of law. (Resp. to Mot. to
Dismiss, ECF #43 at Pg. ID 1907; see also Id. at Pg.
ID 1917-18, discussing unconscionability of implied
warranties.) The Court disagrees.
“A
plaintiff must allege both substantive and procedural
unconscionability when claiming a breach of warranty based on
the theory of unconscionability.” Rivera v. Ford
Motor Co., 2017 WL 3485815, at *3 (E.D. Mich. Aug. 15,
2017). “A contract is substantively unconscionable if
its provisions are so outrageously unfair as to shock the
judicial conscious.” Id. at *4. In assessing
procedural unconscionability, a court asks: “[W]hat is
the relative bargaining power of the parties, their relative
economic strength, the alternative sources of supply, in a
word, what are their options?” Andersons, Inc. v.
Horton Farms, Inc., 166 F.3d 308, 322 (6th Cir. 1998)
(applying Michigan law); see also Smith v. Ford Motor
Co., 749 F.Supp.2d 980, 993 (N.D. Cal. 2010) (applying
California law and explaining that “[t]he procedural
element of unconscionability focuses on two factors:
oppression and surprise. Oppression arises from an inequality
of bargaining power which results in no real negotiation and
an absence of meaningful choice”).[7]
“Unconscionability is ultimately a question of law for
the court.” Id.
Plaintiffs
fail to plausibly allege procedural unconscionability. They
contend that the durational limits in the express and implied
warranties are procedurally unconscionable because
“there was unequal bargaining power between GM and
Plaintiffs … as Plaintiffs … had no other
options for purchasing warranty coverage other than directly
from GM.” (Resp. to Mot. to Dismiss, ECF #43 at Pg. ID
1908.) But as GM aptly points out, “the auto industry
is one of the most competitive marketplaces that
exists.” (Mot. to Dismiss, ECF #35 at Pg. ID 1709.) An
individual seeking to purchase one of the Class Vehicles has
many other options - sometimes within walking distance of his
local GM dealership - if he is unhappy with the warranty that
GM provides. For this reason, “the clear weight of
authority” has rejected the argument that a vehicle
“warranty [is] procedurally unconscionable because
[consumers] had no meaningful choice in determining the time
limits [of the warranty].” Majdipour v. Jaguar Land
Rover N. Am., LLC, 2013 WL 5574626, at *20 (D.N.J. Oct.
9, 2013) (dismissing breach of express warranty claim and
rejecting argument that warranty was procedurally
unconscionable); see also Rivera, 2017 WL 3485815, at *4
(rejecting argument that durational limits in automobile
warranty were unconscionable and noting that “such
limitations are … routinely enforced by the
courts”).[8]
Plaintiffs
respond that even if the automobile marketplace is
competitive, the bargaining power here was especially unequal
- and the warranty limitations were therefore procedurally
unconscionable - because GM knowingly failed to disclose the
AC Defect to Plaintiffs and the public. In support of that
argument, Plaintiffs rely on In re Porsche Cars N. Am.,
Inc., 880 F.Supp.2d 801 (S.D. Ohio 2012). In In re
Porsche, an automobile manufacturer moved to dismiss the
plaintiffs' breach of warranty claims on the ground that
the plaintiffs' claims were barred by the warranty's
durational limits. The district court rejected that argument
and held that “Plaintiffs ha[d] alleged sufficient
facts to state a prima facie case [that the durational limits
in the warranties were] unconscionab[le].” Id.
at 822. The court concluded that “when a manufacturer
is aware that its product is inherently defective and the
buyer has no notice of or ability to detect the problem,
there is perforce a substantial disparity in the parties'
relative bargaining power.” Id. (emphasis in
original; internal quotation marks omitted).
The
Court respectfully disagrees with and is not persuaded by
In re Porsche. In re Porsche conflates a difference
in knowledge with a difference in bargaining power.
Bargaining power comes primarily from having viable
alternatives in the marketplace, and a vehicle consumer with
many options - like the Plaintiffs here - has real and
substantial bargaining power even where a seller like GM
knowingly fails to disclose a defect. That is why the
“majority” of courts have ruled that a
seller's “presale knowledge [of an alleged defect,
] … standing alone, is insufficient to establish
procedural unconscionability.” Rivera, 2017 WL
3485815, at *4. The Court joins that majority. Plaintiffs
have also failed to plausibly allege that the warranties'
durational limits are substantively unconscionable.
Plaintiffs insist that the limits are substantively
unconscionable because “GM knew of the defect and did
not disclose it.” (Mot. to Dismiss, ECF #43 at Pg. ID
1908.) But “[c]ourts have routinely rejected express
warranty claims premised on [this] theory.”
Chiarelli v. Nissan N. Am., Inc., 2015 WL 5686507,
at *7 (E.D.N.Y. Sept. 25, 2015) (“The case law is clear
[] that a defendant's knowledge of a latent defect does
not render unconscionable a limitation contained in an
express warranty.”).[9] As the United States Court of Appeals
for the Second Circuit persuasively explained:
[V]irtually all product failures discovered in automobiles
after expiration of the warranty can be attributed to a
“latent defect” that existed at the time of sale
or during the term of the warranty. All parts will wear out
sooner or later and thus have a limited effective life.
Manufacturers always have knowledge regarding the effective
life of particular parts and the likelihood of their failing
within a particular period of time. Such knowledge is easily
demonstrated by the fact that manufacturers must predict
rates of failure of particular parts in order to price
warranties and thus can always be said to “know”
that many parts will fail after the warranty period has
expired. A rule that would make failure of a part actionable
based on such “knowledge” would render
meaningless time/mileage limitations in warranty coverage.
Abraham v. Volkswagen of Am., Inc., 795 F.2d 238,
250 (2d Cir. 1986).
For all
of the reasons explained above, the Court DISMISSES all of
Plaintiffs' express and implied warranty claims (Counts
11, 12, 13, 14, 18, 19, 20, 25, 28, 31, 35, 37, and 42)
except for the warranty claims of Carl Williams, the only
Plaintiff who alleges that his air conditioning system failed
during the term of his warranty.[10]
B
In
Counts 11-14 of the First Amended Complaint, Plaintiff Carl
Williams alleges that his air conditioning system failed
during the term of his express and implied warranties and
that GM breached those warranties when it failed to
adequately repair the AC Defect. (See Am. Compl. at
¶¶ 42-53, ECF #24 at Pg. ID 1024-28; see also
Id. at Counts 11-14.) GM moves to dismiss these
claims on several grounds. (See Mot. to Dismiss, ECF
#35 at Pg. ID 1710-13, 1716-17.) The Court will address each
of these arguments separately.
1
GM
first argues that the Court should dismiss Williams'
breach of express warranty claims because Williams
“does not plead facts sufficient to show that GM
actually breached the Limited Warranty.” (Id.
at Pg. ID 1710.) GM says that it “complied with the
promises in the express warranty by paying for repairs made
to [Williams'] vehicle” and that Williams' air
conditioning system is currently working. Thus, GM insists
that Williams cannot maintain claims for breach of the
Limited Warranty. (Id.) The Court disagrees.
Williams
plausibly alleges that GM has not adequately repaired his
vehicle and that his vehicle will therefore require
additional repair work in the future. More specifically,
Williams alleges that GM has addressed the AC Defect by
installing “equally defective replacement parts [that]
leaves the [air conditioning system] susceptible to repeated
failure.” (Am. Compl. at ¶230, ECF #24 at Pg. ID
1067.) Williams further alleges that:
GM's proposed “fixes” for the AC System have
proven inadequate. Because GM discontinued the refrigerant
hose originally installed in Class Vehicles due to the
hose's purported inability to withstand the pressures to
which it is exposed, GM required Class members whose AC
Systems failed to purchase a redesigned hose supposedly
manufactured to specifications sufficient to avoid cracking
during ordinary and intended use. GM also required its
customers to install a line bracket to restrain the hose.
These repairs were ineffective, however, because other AC
System components, such as the condenser, also crack and
spring leaks.
(Id. at ¶232, Pg. ID 1067-68.) Finally,
Williams alleges that he did have his air conditioning system
repaired once, that the repair did not work, and that he
needed to have his vehicle serviced a second time. (See
Id. at ¶¶ 49-50, Pg. ID 1026.) Taken
together, at the motion to dismiss stage, Williams plausibly
alleges that GM breached the express Limited Warranty by not
sufficiently repairing his air conditioning system. The Court
therefore DENIES GM's motion to dismiss Williams'
breach of express warranty claims (Counts 11 and 12) on this
ground.
2
GM next
argues that the Court should dismiss Williams' breach of
express warranty claims because Williams did not comply with
the terms of his warranty. GM says that the Limited Warranty
required Williams to provide GM with “written notice of
the purported defect and an opportunity to repair [his]
vehicle[] prior to filing suit, ” but Williams failed
to provide that pre-suit notice. (Mot. to Dismiss, ECF #35 at
Pg. ID 1711.) The Court disagrees.
The
provision of the Limited Warranty on which GM relies is
titled “State Warranty Enforcement Laws.”
(Limited Warranty, ECF #35-2 at Pg. ID 1789.) It states that:
Laws in many states permit owners to obtain a replacement
vehicle or a refund of the purchase price under certain
circumstances. The provisions of these laws vary from state
to state. To the extent allowed by state law, GM requires
that you first provide us with written notification of any
service difficulty … so that we have an opportunity to
make any needed repairs before you are eligible for the
remedies provided by these laws.
(Id.; emphasis added.)
The
Court cannot conclude at this time, as a matter of law, that
this provision applies to Williams' claims. The provision
is included in a section of the Limited Warranty that appears
to relate to claims under state “lemon
laws.”[11] But Williams is neither bringing a
“lemon law” claim nor seeking any “remedies
provided by [state lemon laws].” Id. Moreover,
Williams is not seeking a “replacement vehicle”
or a “refund of his purchase price.” For these
reasons, it is not clear that the notice provision GM relies
upon is applicable here. The Court therefore DENIES GM's
motion to dismiss Williams' express warranty claims
(Counts 11 and 12).
3
Williams
brings two implied warranty claims: one under
California's Song-Beverly Consumer Warranty Act (see Am.
Compl. at ¶¶ 519-32 (Count 13), ECF #24 at Pg. ID
1177-79) and one under California's commercial code (see
Id. at ΒΆΒΆ ...