Opinion
Case No. 6:22-cv-499-RBD-EJK
2023-03-28
Tom RILEY; Heather Shrum; Gary Ambrose; and Sherry Kilburn, Plaintiffs, v. GENERAL MOTORS, LLC, Defendant.
Taylor C. Bartlett, Pro Hac Vice, Jeanie Sleadd, Pro Hac Vice, William Lewis Garrison, Jr., Heninger Garrison Davis, LLC, Birmingham, AL, Steve Jackson, Pro Hac Vice, Jackson and Tucker, PC, Birmingham, AL, Jason Richard Fraxedas, Matthew S. Mokwa, The Maher Law Firm, P.A., Winter Park, FL, for Plaintiffs. John Nadolenco, I, Pro Hac Vice, Mayer Brown LLP, Los Angeles, CA, Archis Ashok Parasharami, Pro Hac Vice, Jonathan Samuel Klein, Mayer Brown LLP, Washington, DC, Justin B. Weiner, Pro Hac Vice, Bush Seyferth PLLC, Troy, MI, for Defendant.
Taylor C. Bartlett, Pro Hac Vice, Jeanie Sleadd, Pro Hac Vice, William Lewis Garrison, Jr., Heninger Garrison Davis, LLC, Birmingham, AL, Steve Jackson, Pro Hac Vice, Jackson and Tucker, PC, Birmingham, AL, Jason Richard Fraxedas, Matthew S. Mokwa, The Maher Law Firm, P.A., Winter Park, FL, for Plaintiffs. John Nadolenco, I, Pro Hac Vice, Mayer Brown LLP, Los Angeles, CA, Archis Ashok Parasharami, Pro Hac Vice, Jonathan Samuel Klein, Mayer Brown LLP, Washington, DC, Justin B. Weiner, Pro Hac Vice, Bush Seyferth PLLC, Troy, MI, for Defendant. ORDER ROY B. DALTON JR., United States District Judge
Before the Court are Defendant General Motors, LLC's ("GM") motions to dismiss (Doc. 47) and compel arbitration (Doc. 35).
BACKGROUND
The factual allegations in the Complaint are taken as true for the purposes of the motion to dismiss and presented in the light most favorable to Plaintiffs. See Hill v. White, 321 F.3d 1334, 1335 (11th Cir. 2003).
Between 2014 and 2017, Plaintiffs bought cars manufactured by GM. (Doc. 41, ¶¶ 19, 41, 58, 77.) Each car came with a standard three-year, 36,000-mile express limited warranty. (Id. ¶¶ 21, 43, 59, 78.) Plaintiffs later noticed deterioration in their cars' paint. (Id. ¶¶ 29, 49, 66, 87.) They brought their cars in for repair, but GM refused to fully pay to repair them under the warranty. (Id. ¶¶ 30-32, 49-51, 67, 70-72, 87, 89.)
So Plaintiffs sued GM, alleging: (1) breach of express warranty; (2) violations of the Magnuson-Moss Warranty Act ("MMWA"); (3) equitable and injunctive relief; (4) unjust enrichment; (5) fraud; (6) violations of Florida's Deceptive and Unfair Trade Practices Act ("FDUTPA"); (7) strict products liability for design defect; (8) violations of California's unfair competition law; (9) violations of Mississippi's consumer protection law; and (10) negligent misrepresentation. (Id. ¶¶ 174-271.) They assert claims on behalf of a putative nationwide class and Florida (Tom Riley and Gary Ambrose), California (Heather Shrum), and Mississippi (Sherry Kilburn) subclasses. (Id. ¶ 171.) GM now moves to dismiss on both jurisdictional and failure to state a claim grounds and to compel arbitration for one of the named Plaintiffs. (Docs. 35, 47.) With briefing complete (Docs. 46, 54, 62), the matter is ripe.
STANDARDS & ANALYSIS
I. Jurisdiction
A. Personal Jurisdiction
First, GM moves to dismiss the claims of one of the named Plaintiffs, Sherry Kilburn, for lack of personal jurisdiction. (Doc. 47, pp. 23-25.) The Court looks to the state long-arm statute to find a basis for personal jurisdiction. See Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 626 (11th Cir. 1996). Florida's long-arm statute provides specific personal jurisdiction in several enumerated ways, such as committing a tort in this state, entering into a contract in this state, or injuring someone in this state. Fla. Stat. § 48.193(1). Here, Kilburn bought her car in Mississippi and lives in Tennessee, and she otherwise alleges no facts to bring her claim within the Florida long-arm statute. (Doc. 41, ¶¶ 11, 77, 87); See Smith v. Trans-Siberian Orchestra, 728 F. Supp. 2d 1315, 1320 (M.D. Fla. 2010). So Kilburn fails to establish that the Court has personal jurisdiction. Her individual claims and those she raises on behalf of a putative Mississippi subclass (Counts I-V, IX, X) are due to be dismissed and Kilburn terminated as a party. Counts I-V as brought individually by the other named Plaintiffs and on behalf of nationwide and California and Florida putative classes are addressed below.
There is no question that the Court lacks general jurisdiction over GM, which is "at home" in Delaware and Michigan, not Florida. (Doc. 41, ¶ 12); See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011); Daimler AG v. Bauman, 571 U.S. 117, 137, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014).
This dismissal is without prejudice for lack of jurisdiction, but the Court will not permit Kilburn to amend because amendment would be futile. See In re Fundamental Long Term Care, Inc., 873 F.3d 1325, 1347 (11th Cir. 2017).
B. Subject Matter Jurisdiction
Next, GM moves to dismiss the MMWA class claims for lack of subject matter jurisdiction, arguing that the four (now down to three) named Plaintiffs do not meet the MMWA's numerosity requirement for class actions. (Doc. 47, p. 22.) Plaintiffs counter that the Class Action Fairness Act ("CAFA"), confers jurisdiction over all the claims. (Doc. 54, pp. 16-19.)
The MMWA allows a federal class action only if the number of named plaintiffs is over 100. 15 U.S.C § 2310(d)(3)(c). Yet CAFA permits a class action where the amount in controversy exceeds five million dollars and any member of a class of plaintiffs is diverse from any defendant. 28 U.S.C. § 1332(d)(2). The Eleventh Circuit has not ruled on how CAFA, which was enacted after the MMWA, affects the MMWA's 100-plaintiff requirement. But several district courts in this circuit have concluded that allowing CAFA to provide a basis for jurisdiction where the 100-plaintiff rule was not met would impermissibly render parts of the MMWA redundant and override parts without explicit Congressional intent. See, e.g., Lewis v. Mercedes-Benz USA, LLC, 530 F. Supp. 3d 1183, 1206-07 (S.D. Fla. 2021); Inouye v. Adidas Am., Inc., No. 8:22-cv-416, 2023 WL 2351654, at *8-9 (M.D. Fla. Mar. 3, 2023); Monopoli v. Mercedes-Benz USA, LLC, No. 1:21-cv-1353, 2022 WL 409484, at *6 (N.D. Ga. Feb. 10, 2022).
Though there is no binding case law, the Court agrees with the persuasive Lewis opinion that the plain text of the MMWA that requires 100 named plaintiffs for a class action to be brought in federal court is not overridden by CAFA. See Lewis, 530 F. Supp. 3d at 1206-07. So the MMWA claim (Count II), on behalf of all putative classes, is due to be dismissed for lack of subject matter jurisdiction. The Court will address Riley, Ambrose, and Shrum's individual MMWA claims below.
This dismissal is without prejudice for lack of jurisdiction, but the Court will not permit amendment because allowing Plaintiffs to add 97 additional named plaintiffs would be unfairly prejudicial. See In re Fundamental, 873 F.3d at 1347.
C. Standing
Rounding out their jurisdictional arguments, GM asserts that Plaintiffs lack standing to bring their common law claims on behalf of a putative national class (Counts I-V) because they did not suffer injuries in states other than those where they bought their cars. (Doc. 47, pp. 22-23.) The Court agrees.
Before certifying a class, "the district court must determine that at least one named class representative has Article III standing to raise each class subclaim." Prado-Steiman v. Bush, 221 F.3d 1266, 1279-80 (11th Cir. 2000). Named plaintiffs in class actions are "prohibited from asserting claims under a state law other than that [from] which the plaintiff's own claim arises." Feldman v. BRP US, Inc., No. 17-61150, 2018 WL 8300534, at *6 (S.D. Fla. Mar. 28, 2018); See Wave Length Hair Salons of Fla., Inc. v. CBL & Assocs. Properties, Inc., No. 2:16-cv-206, 2017 WL 10604140, at *5-6 (M.D. Fla. Apr. 11, 2017).
The parties agree that the law of the state of purchase governs. (Doc. 47, p. 4 n.3; Doc. 54, p. 19); See Tershakovec v. Ford Motor Co., 546 F. Supp. 3d 1348, 1371 (S.D. Fla. 2021). The remaining named Plaintiffs bought their cars in Florida (Riley and Ambrose) and California (Shrum). (Doc. 41, ¶¶ 19, 41, 58.) So they have standing to bring claims on behalf of putative subclass members who bought cars in those states. Prado-Steiman, 221 F.3d at 1279-80. But this does not extend to consumers who bought their cars in other states. See Wave, 2017 WL 10604140, at *5-6; Feldman, 2018 WL 8300534, at *6. So the claims on behalf of the putative nationwide class in Counts I-V are due to be dismissed. Riley, Ambrose, and Shrum's individual claims and claims on behalf of California and Florida subclasses in those counts are addressed below.
This dismissal is without prejudice for lack of jurisdiction, but the Court will not permit amendment because it would be futile. See In re Fundamental, 873 F.3d at 1347.
A plaintiff must plead "a short and plain statement of the claim." Fed. R. Civ. P. 8(a)(2). On a motion to dismiss under Rule 12(b)(6), the Court limits its consideration to "the well-pleaded factual allegations." La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004). The factual allegations must "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The Court must accept the factual allegations as true and construe them "in the light most favorable" to the plaintiff. See United Techs. Corp. v. Mazer, 556 F.3d 1260, 1269 (11th Cir. 2009).
A. Express Warranty & MMWA
First, GM argues the breach of warranty (Count I) and individual MMWA (Count II) claims fail because Plaintiffs do not sufficiently allege they complied with the warranty terms, specifically, that they presented their cars for repair within the warranty's three-year period. (Doc. 47, pp. 4-6.) Plaintiffs counter that the durational limits on the warranties are unconscionable. (Doc. 54, pp. 5-6.) The Court agrees with GM.
A warranty may limit the remedies available to a buyer. See Fla. Stat. § 672.316(4); Cal. Com. Code § 2719(1)(a). Such limitations may include a time requirement for making a warranty claim for repair. See, e.g., Brisson v. Ford Motor Co., 349 F. App'x 433, 434 (11th Cir. 2009) (applying Florida law); Lessin v. Ford Motor Co., No. 3:19-cv-1082, 2021 WL 3810584, at *3 (S.D. Cal. Aug. 25, 2021) (applying California law). As to unconscionability, a provision is unconscionable when it is both procedurally and substantively unconscionable. See Pendergast v. Sprint Nextel Corp., 592 F.3d 1119, 1134 (11th Cir. 2010) (applying Florida law); Poublon v. C.H. Robinson Co., 846 F.3d 1251, 1260 (9th Cir. 2017) (applying California law).
Here, to obtain repairs under the limited warranty Plaintiffs had to take their cars to an authorized dealer "within the warranty period [ ] [to] request the needed repairs." (Doc. 36-1, p. 10; Doc. 36-2, p. 10; Doc. 36-3, p. 10.) But Riley and Shrum fail to allege they sought repairs within the warranty period. (See Doc. 41, ¶¶ 30, 49.) And while Ambrose alleges he noticed paint issues while the car was under warranty and the dealership failed to document his concerns, even he does not affirmatively allege that he brought his car to the dealership or requested repairs during the warranty period. (Id. ¶ 66.) So their only shot is arguing that the warranty is unconscionable. While Plaintiffs make this argument in their briefing (Doc. 54, pp. 5-6), the Complaint is silent on any allegations that the warranty is unconscionable (see Doc. 41). To proceed on a claim of unconscionability, Plaintiffs "must plead facts that plausibly support such a claim," and they did not. Trudel v. Lifebit Biotech, No. 8:22-cv-1823, 2022 WL 16695171, at *4 (M.D. Fla. Nov. 3, 2022).
As Plaintiffs are being permitted to replead this claim, Ambrose should take the opportunity to clarify this allegation.
So the remainder of Count I (Riley, Ambrose, and Shrum's individual claims and the Florida and California putative subclass claims) and Count II (Riley, Ambrose, and Shrum's individual MMWA claims) are due to be dismissed without prejudice and with leave to amend. On repleader, Plaintiffs must allege facts to support a showing that the warranty time limits are unconscionable.
Both parties agree that MMWA claims rely on state law, so if the express warranty claims fail, the MMWA claims do also. (See Doc. 47, p. 7; Doc. 54 p. 6 n.6); Foster v. Chattem, Inc., No. 6:14-cv-346, 2014 WL 3687129, at *2 (M.D. Fla. July 24, 2014).
This will require a showing of both substantive and procedural unconscionability. See Basulto v. Hialeah Auto., 141 So. 3d 1145, 1159 (Fla. 2014); Baltazar v. Forever 21, Inc., 62 Cal.4th 1237, 200 Cal.Rptr.3d 7, 367 P.3d 6, 11 (2016). Substantive unconscionability exists when warranty provisions themselves are "so outrageously unfair as to shock the judicial conscience." Gainesville Health Care Ctr., Inc. v. Weston, 857 So. 2d 278, 284-85 (Fla. 1st DCA 2003) (cleaned up); See Poublon, 846 F.3d at 1261. Procedural unconscionability may arise from unequal bargaining power. See Gainesville, 857 So. 2d at 284; Poublon, 846 F.3d at 1260. But Courts have found that more than mere knowledge of a defect at the time of sale is required. See Licul v. Volkswagen Grp. of Am., Inc., No. 13-61686, 2013 WL 6328734, at *2 (S.D. Fla. Dec. 5, 2013) (applying Florida law); Aberin v. Am. Honda Motor Co., No. 16-cv-4384, 2018 WL 1473085, at *7 (N.D. Cal. Mar. 26, 2018) (applying California law).
B. Equitable and Injunctive Relief
Second, GM argues the claim for equitable and injunctive relief (Count III) fails because, among other things, there is an adequate remedy at law. (Doc. 47, p. 21.) Injunction plaintiffs must establish "the absence of an adequate remedy at law." Bolin v. Story, 225 F.3d 1234, 1242 (11th Cir. 2000); See Dep't of Fish & Game v. Anderson-Cottonwood Irrigation Dist., 8 Cal. App. 4th 1554, 1564, 11 Cal.Rptr.2d 222 (1992). Here, Plaintiffs seek injunctive relief to require GM to: (1) repair the cars; (2) offer to repurchase the cars; and (3) recall all cars with the defective paint. (Doc. 41, ¶ 195.) But money damages can cover these costs. See Pinon v. Daimler AG, No. 1:18-cv-3984, 2019 WL 11648560, at *33 (N.D. Ga. Nov. 4, 2019); Sharma v. Volkswagen AG, 524 F. Supp. 3d 891, 908 (N.D. Cal. 2021) (applying California law). So Plaintiffs have not established the absence of an adequate remedy at law, and the remaining portion of Count III (Riley, Ambrose, and Shrum's individual claims and the Florida and California putative subclass claims) is due to be dismissed with prejudice.
This dismissal is with prejudice because amendment would be futile. See In re Fundamental, 873 F.3d at 1347.
C. Unjust Enrichment
Third, GM argues that the express warranties preclude Plaintiffs' unjust enrichment claim (Count IV). (Doc. 47, pp. 7-9.) Plaintiffs argue that the money they seek from GM is outside the scope of the warranty and therefore recoverable. (Doc. 54, pp. 5-6.) "[A] plaintiff cannot pursue a quasi-contract claim for unjust enrichment if an express contract exists concerning the same subject matter." Diamond "S" Dev. Corp. v. Mercantile Bank, 989 So. 2d 696, 697 (Fla. 1st DCA 2008); see also Paracor Fin., Inc. v. Gen. Elec. Cap. Corp., 96 F.3d 1151, 1167 (9th Cir. 1996) (applying California law). Here, despite Plaintiffs' protestations, the same subject matter is covered by the warranty and unjust enrichment claims, and Plaintiffs do not articulate a benefit GM received from Plaintiffs outside the scope of the warranty (such as extracontractual overpayments or costs, as in the inapplicable cases Plaintiffs cite). (Doc. 41, ¶¶ 194-204; Doc. 54, p. 6.) So Count IV is barred as a matter of law, and the remainder of Count IV (Riley, Ambrose, and Shrum's individual claims and the Florida and California putative subclass claims) is due to be dismissed with prejudice.
D. Fraud
Fourth, GM argues Plaintiffs' fraudulent concealment claim (Count V) fails because the economic loss rule bars recovery. (Doc. 47, pp. 9-13.) The Court agrees.
In Florida, the economic loss "rule applies only in the products liability context." Tiara Condo. Ass'n v. Marsh & McLennan Co., 110 So. 3d 399, 407 (Fla. 2013). And "[f]raudulent concealment claims in the products liability sphere that seek to recover only economic damages are clearly barred by Florida's economic loss rule." Vazquez v. Gen. Motors, LLC, No. 17-22209, 2018 WL 447644, at *6 (S.D. Fla. Jan. 16, 2018); Burns v. Winnebago Indus., Inc., No. 8:13-cv-1427, 2013 WL 4437246, at *4 (M.D. Fla. Aug. 16, 2013) (explaining the reasoning for this conclusion).
Under California law, "where a purchaser's expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only economic losses." Robinson Helicopter Co., 34 Cal.4th 979, 22 Cal.Rptr.3d 352, 102 P.3d 268, 272 (2004). There is a "narrow" exception to this general rule "limited to a defendant's affirmative misrepresentations on which a plaintiff relies and which expose a plaintiff to liability for personal damages independent of the plaintiff's economic loss." Id., 22 Cal.Rptr.3d 352, 102 P.3d at 276. But district courts applying California law have differed on whether this exception should apply to cases of fraudulent concealment. Compare Mosqueda v. Am. Honda Motor Co., Inc., 443 F. Supp. 3d 1115, 1133-34 (C.D. Cal. 2020) (applying economic loss rule), with Clenney v. FCA US LLC, No. 22-cv-547, 2022 WL 2197074, at *3 (N.D. Cal. June 20, 2022) (declining to apply the economic loss rule). This determination has primarily turned on whether there are damages beyond economic loss (or potential liability for those damages) and whether affirmative misrepresentations have been made. See, e.g., Traba v. Ford Motor Co., No. 2:18-cv-808, 2018 WL 6038302, at *4 (C.D. Cal. June 27, 2018) ("Plaintiffs have not alleged 'damages independent of [their] economic loss,' rendering the Robinson exception inapplicable here.").
Here, Plaintiffs seek only economic damages (Doc. 41, ¶ 217) and, as discussed below, do not sufficiently allege affirmative misrepresentations, so Plaintiffs' claim is barred by the economic loss rule. See Vazquez, 2018 WL 447644, at *6; Mosqueda, 443 F. Supp. 3d at 1133-34. Count V is barred as a matter of law, and the remainder of Count V (Riley, Ambrose, and Shrum's individual claims and the Florida and California putative subclass claims) is due to be dismissed with prejudice.
The Ninth Circuit has certified the specific question of whether fraudulent concealment claims are barred by the economic loss rule to the California Supreme Court and it is currently pending. See Rattagan v. Uber Technologies, Inc., 19 F.4th 1188, 1193 (9th Cir. 2021); Rattagan v. Uber Techs., Inc., No. S272113, 2022 Cal. LEXIS 490 (Feb. 9, 2022). But until such resolution is reached, the Court finds persuasive the reasoning of courts applying the economic loss rule to similar claims, because Plaintiffs' damages do not extend beyond damage to their cars.
E. Consumer Protection Statutes
1. FDUTPA
Fifth, GM argues that the FDUTPA claim (Count VI) fails because it is time-barred. (Doc. 47, pp. 16-20.) The Court agrees.
A claim under FDUTPA is subject to a four-year statute of limitations. See Fla. Stat. § 95.11(3)(f); Sutton v. Canon USA, Inc., No. 3:08-cv-49, 2009 WL 10670005, at *2 (M.D. Fla. Mar. 31, 2009). "[A] Rule 12(b)(6) dismissal on statute of limitations grounds is appropriate only if it is apparent from the face of the complaint that the claim is time-barred." La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004) (cleaned up). The time starts running when the product is purchased, See S. Motor Co. of Dade Cnty. v. Doktorczyk, 957 So. 2d 1215, 1218 (Fla. 3d. DCA 2007), but can be tolled if a plaintiff can show "successful concealment of the cause of action and fraudulent means to achieve that concealment . . . [and plaintiff] has pursued his rights diligently," Fedance v. Harris, 1 F.4th 1278, 1287 (11th Cir. 2021) (cleaned up) (applying Florida law). "The fraudulent means alleged must go beyond mere non-disclosure, and must constitute active and willful concealment." Licul v. Volkswagen Grp. of Am., No. 13-61686, 2013 WL 6328734, at *6-7 (S.D. Fla. Dec. 5, 2013) (applying Florida law).
Here, Florida Plaintiffs Ambrose and Riley allege they bought their vehicles in March 2014 and October 2016, respectively. (Doc. 41, ¶¶ 19, 58.) So it is clear from the Complaint that the four-year statute of limitations expired before they sued in 2022. (See Doc. 1); Fla. Stat. § 95.11(3)(f); La Grasta, 358 F.3d at 845. While Plaintiffs refer to concealment multiple times in their FDUTPA allegations, they allege no specific facts to show how GM actively and willfully concealed their cause of action. (See Doc. 41, ¶¶ 223, 225, 227, 229); Fedance, 1 F.4th at 1287; Licul, 2013 WL 6328734, at *6-7. These allegations are insufficient to toll the statute of limitations, so Count VI is due to be dismissed as time-barred. Because Plaintiffs may allege additional facts to support tolling under the doctrine of fraudulent concealment, this dismissal is without prejudice, and with leave to replead.
2. California Unfair Competition Law
Sixth, GM argues that the California unfair competition claim (Count VIII) fails because (1) Plaintiffs do not identify a factual representation likely to deceive a reasonable consumer as necessary for misrepresentation-based claims and (2) GM had no duty to disclose as necessary for omission-based claims. (Doc. 47, pp. 16-18.)
The California unfair competition law ("UCL") prohibits "unlawful, unfair or fraudulent business act[s] or practice[s]." Cal. Bus. & Prof. Code § 17200. Claims under the fraudulent prong of the UCL are "distinct from common law fraud." Nazemi v. Specialized Loan Servicing, LLC, No. 2:22-cv-5006, 2022 WL 17220707, at *3 (C.D. Cal. Oct. 31, 2022) (applying California law). Fraud-based UCL claims may be based on theories of misrepresentation or omission. See Apodaca v. Whirlpool Corp., No. 13-00725, 2013 WL 6477821, at *7 (C.D. Cal. Nov. 8, 2013) (applying California law).
First, misrepresentation-based claims under the UCL require Plaintiffs to show GM made a factual representation likely to deceive a reasonable customer. See In re Tobacco II Cases, 46 Cal.4th 298, 93 Cal.Rptr.3d 559, 207 P.3d 20, 29 (2009). But representations that amount to puffery are not actionable the UCL. See Peviani v. Natural Balance, Inc., 774 F. Supp. 2d 1066, 1072 (S.D. Cal. 2011) (applying California law). "While product superiority claims that are vague or highly subjective often amount to nonactionable puffery, misdescriptions of specific or absolute characteristics of a product are actionable." Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1145 (9th Cir. 1997) (cleaned up) (applying California law). Whether an alleged misrepresentation constitutes puffery is a question of law appropriate for resolution on a Rule 12(b)(6) motion. See Newcal Indus., Inc. v. Ikon Off. Sol., 513 F.3d 1038, 1053 (9th Cir. 2008) (applying California law).
Here, Plaintiffs allege GM represented its cars as "reliable, endurable, of good finish, of high fit, of professional grade, and exceptional quality." (See, e.g., Doc. 41, ¶ 23.) But these statements are highly subjective, do not identify specific characteristics of the cars, and are unlikely to deceive a reasonable consumer. See Southland Sod Farms, 108 F.3d at 1145. So Plaintiffs have failed to establish this element of their misrepresentation-based UCL claims.
Plaintiff's allegations that the warranty represented that paint defects "are normally corrected during new vehicle preparation" is also not likely to deceive customers because the following sentence clearly instructs a consumer to advise the dealer as soon as possible if they discover a paint defect. (Doc. 36-1, pp. 26-27; Doc. 41, ¶¶ 112-15.)
Second, omission-based claims under the UCL require GM to have a duty to disclose. Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824, 835, 51 Cal.Rptr.3d 118 (2006). This duty can arise when "the defendant has exclusive knowledge of material facts not known or reasonably accessible to the plaintiff." Collins v. eMachines, Inc., 202 Cal. App. 4th 249, 255, 134 Cal.Rptr.3d 588 (2011). Here, Plaintiffs allege GM had a duty to disclose because of its "superior knowledge" of the defect. (Doc. 41, ¶ 212). In support Plaintiffs allege that (1) GM conducted five specific tests on the paint that would have revealed the defect; (2) there were many complaints about the class vehicles posted to online forums GM actively monitors and responds to; (3) GM issued at least one technical service bulletin addressing paint defects on class vehicles; and (4) GM attempted to repair some class vehicles before some of the Plaintiffs' purchases. (Doc. 41, ¶¶ 122-23, 126-28, 131-35, 143-45.) This is sufficient to establish GM's superior knowledge and trigger the duty to disclose. See Garcia v. Gen. Motors LLC, No. 1:18-cv-1313, 2018 WL 6460196, at *11-12 (E.D. Cal. Dec. 10, 2018) (applying California law).
Because the misrepresentation-based claims fail, Count VIII is due to be dismissed without prejudice. Plaintiffs may amend this claim to identify specific, actionable misrepresentations, or to rely solely on their omission-based UCL claims, which are adequately pled.
F. Strict Products Liability
Seventh, GM argues that the design defect claim under California law fails because the economic loss rule bars recovery. (Doc. 47, pp. 20-21.) The Court agrees. "Damages available under strict products liability [under California law] do not include economic loss . . . without any claim of personal injury or damages to other property." Jimenez v. Superior Court, 29 Cal.4th 473, 127 Cal.Rptr.2d 614, 58 P.3d 450, 456 (2002) (cleaned up). Shrum only seeks damages for economic loss and makes no claims of personal injury or damage to other property. (Doc. 41, ¶¶ 53, 236-238); See Jimenez, 127 Cal. Rptr.2d 614, 58 P.3d at 456. So Count VII is due to be dismissed with prejudice.
III. Arbitration
With the motion to dismiss resolved, the Court turns to GM's motion to compel arbitration of Riley's claims. (Doc. 35.) When Riley bought his car, he entered into a Retail Purchase Agreement ("Agreement"); the Agreement includes an arbitration provision ("Provision") that states:
You and the Dealership agree that neutral and binding arbitration on an individual basis only will be the sole method of resolving any claim, dispute or controversy (collectively, "Claims") that either Party has arising from Purchaser/Dealership Dealings . . . Claims include, but are not limited to the following: (1) Claims in contract, tort, regulatory, statutory, equitable, or otherwise; (2) Claims relating to any representations, promises, undertakings, warranties, covenants or service; (3) Claims regarding the interpretation, scope, or validity of this Agreement, or arbitrability of any issue; (4) Claims between you and the Dealership; and (5) Claims arising out of or relating to your application for credit, this Agreement and/or any and all documents executed, presented or negotiated during Purchaser/Dealership Dealings, or any resulting transaction, service, or relationship, including that with the Dealership, or any relationship with third parties who do no sign this Agreement that arises out of the Purchaser/Dealership Dealings.(Doc. 35-1, p. 7.) GM is not a party to the Agreement. (Id. at 4-7.) But GM asserts that it may enforce the Provision against Riley because: (1) arbitrability is a question for an arbitrator; and (2) even if the Court decides arbitrability, state law principles permit GM to enforce the Agreement. (Doc. 35, pp. 5-23.) The Court addresses each argument in turn.
Riley also executed a Retail Installment Sale Contract that contains a separate arbitration provision. (Doc. 35-1, pp. 8-13.) But GM seeks to compel arbitration based on the Provision in the Agreement, so that is the provision the Court will address. (See Doc. 35.)
A motion to compel arbitration is treated as a motion to dismiss for lack of jurisdiction under Federal Rule of Civil Procedure 12(b)(1), and the Court may consider matters outside the four corners of the complaint, including the arbitration agreement. See Schriever v. Navient Sols., Inc., No. 2:14-cv-596, 2014 WL 7273915, at *2 (M.D. Fla. Dec. 19, 2014). The first step in analyzing whether to grant a motion to compel arbitration is "to determine whether the parties agreed to arbitrate the dispute." Klay v. PacifiCare Health Sys., Inc., 389 F.3d 1191, 1200 (11th Cir. 2004).
First, GM argues a delegation clause in the Provision means that issues of arbitrability, including whether GM can enforce the Agreement as a non-signatory, are for an arbitrator to decide, not the Court. (Doc. 35, pp. 8-13.) Parties may "agree by contract that an arbitrator, rather than a court, will resolve threshold arbitrability questions." Henry Schein, Inc. v. Archer & White Sales, Inc., — U.S. —, 139 S. Ct. 524, 527, 202 L.Ed.2d 480 (2019). But "question[s] of arbitrability" are limited in scope and "whether the parties are bound by a given arbitration clause" is for the Court to decide. Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002). Here, the Provision includes a delegation clause identifying that "claims regarding the interpretation, scope, or validity of this Agreement, or arbitrability of any issue" are covered by the Provision. (Doc. 35-1, p. 7.) But GM is not a signatory to the Agreement, so whether GM can enforce the Provision against Riley is a question for this Court. (See Doc. 35-1); Howsam, 537 U.S. at 84, 123 S.Ct. 588. And whether a non-party to an arbitration agreement can enforce that agreement is governed by state law. See Lawson v. Life of the S. Ins. Co., 648 F.3d 1166, 1170-71 (11th Cir. 2011).
GM cites out-of-circuit case law to assert that whether a non-signatory can enforce an arbitration agreement is an arbitrability question that can be delegated to an arbitrator. (See Doc. 35, pp. 11-13.) But the Eleventh Circuit has not squarely decided this issue and the Court is not persuaded by GM's argument. The question of whether a non-signatory can compel a signatory to arbitrate is a question of whether the parties have agreed to arbitrate, and that is a question for the Court. See Dasher v. RBC Bank (USA), 745 F.3d 1111, 1116 (11th Cir. 2014) ("[W]hile doubts concerning the scope of an arbitration clause should be resolved in favor of arbitration, the presumption does not apply to disputes concerning whether an agreement to arbitrate has been made." (cleaned up)); Klay, 389 F.3d at 1200.
Turning to state law, under Florida law generally, "a non-signatory to a contract containing an arbitration agreement cannot compel a signatory to submit to arbitration." Rolls-Royce PLC v. Royal Caribbean Cruises LTD., 960 So. 2d 768, 770 (Fla. 3d DCA 2007). But there are exceptions, and GM argues it can enforce the Provision as a non-signatory applying the state law principles of equitable estoppel and third-party beneficiary. (Doc. 35, pp. 13-22.) The Court takes each in turn.
As to equitable estoppel, a non-signatory can compel arbitration when: (1) "the signatory . . . must rely on the terms of the written agreement in asserting its claims against the nonsignatory; or (2) when there are allegations of concerted action by both a nonsignatory and one or more of the signatories to the contract." Allscripts Healthcare Sols., Inc. v. Pain Clinic of Nw. Fla., Inc., 158 So. 3d 644, 646 (Fla. 3d DCA 2014) (cleaned up). Here, Riley brings claims for breach of warranty, unjust enrichment, fraud, and FDUTPA violations. (Doc. 41, ¶¶ 174-81, 199-230.) Nowhere does Riley reference the Agreement. And that Plaintiffs bought their cars from different entities and reference no purchase agreements or contracts with those entities suggests they are not relying on any that might exist in bringing their claims. So Riley does not rely on the Agreement to make his claims. Allscripts, 158 So. 3d at 646. Next, the thrust of Riley's claims is that GM knew of a paint defect, concealed it from consumers, and refused to pay for repairs. (See, e.g., Doc. 41, ¶¶ 177, 201, 207-09.) Riley does not contend the dealership played any part in the manufacturing or testing process or that it knew of the defect when it sold him the car. While the warranty required Riley to present his vehicle to an authorized dealer for repair, which he did, he alleges it was GM, not the dealership, that failed to cover the costs of such repair. (Id. ¶¶ 30-32.) As Riley alleges no concerted action between GM and the dealership, the doctrine of equitable estoppel does not apply. Allscripts, 158 So. 3d at 646.
As to the third-party beneficiary doctrine, "a nonsignatory may invoke an arbitration provision where the nonsignatory falls within an identified class of persons expressly intended to benefit from the arbitration agreement." Olson v. Fla. Living Options, Inc., 210 So. 3d 107, 110 (Fla. 2d DCA 2016). "A third party is an intended beneficiary . . . if the parties to the contract intended to primarily and directly benefit the third party." Fla. Power & Light Co. v. Rd. Rock, Inc., 920 So. 2d 201, 203 (Fla. 4th DCA 2006). The Provision is an agreement between Riley and the dealership, defined as the "applicable dealership, together with its parents, subsidiaries, affiliates, predecessors, successors, and assigns, and each of their respective owners, directors, officers, managers, employees, vendors and agents." (Doc. 35-1, p. 7.) GM does not fall into those categories. See Technicable Video Sys., Inc. v. Americable of Greater Mia., Ltd., 479 So. 2d 810, 812 (Fla. 3d DCA 1985). Nor does GM identify what direct benefit Riley and the dealership intended to bestow upon it via the Agreement. (See Doc. 35.) So GM is not a third-party beneficiary. Because GM is not a signatory to the Agreement and has not successfully shown that an exception applies, GM's motion to compel arbitration is due to be denied.
GM argues the Provision's requirement to arbitrate claims that "arise[ ] out of or relate[ ] to . . . any relationship with third parties who do not sign this Agreement that arises out of the Purchaser/Dealership Dealings" brings GM into a class of persons intended to benefit from the Agreement. (Doc. 35, p. 22); See Olson, 210 So. 3d at 110. But this portion of the Provision is about the scope of disputes to be arbitrated by the identified parties (Riley and the dealership) and does not change the fact that GM is not one of those identified parties.
Because GM has no grounds to enforce the Provision as a non-signatory, the Court has no reason to reach the question of whether the dispute between GM and Riley would be covered by the scope of that Agreement.
CONCLUSION
Accordingly, it is ORDERED AND ADJUDGED:
1. GM's motion to dismiss (Doc. 47) is GRANTED IN PART AND DENIED IN PART:
a. The Motion is GRANTED in that Kilburn's individual and Mississippi subclass claims in Counts I-V, IX, and X are DISMISSED WITHOUT PREJUDICE but without leave to amend. The Clerk is DIRECTED to terminate Kilburn as a party.
b. The Motion is GRANTED in that the nationwide class claims in Counts I-V are DISMISSED WITHOUT PREJUDICE and without leave to amend.
c. The Motion is GRANTED in that the Florida and California subclass claims for violating the MMWA (Count II) are DISMISSED WITHOUT PREJUDICE and without leave to amend.
d. The Motion is GRANTED in that Riley, Ambrose, and Shrum's individual and Florida and California subclass claims for breach of express warranty (Count I) are DISMISSED WITHOUT PREJUDICE and with leave to replead.
e. The Motion is GRANTED in that Riley, Ambrose, and Shrum's individual claims for violating the MMWA (Count II) are DISMISSED WITHOUT PREJUDICE and with leave to replead.
f. The Motion is GRANTED in that Riley, Ambrose, and Shrum's individual and Florida and California subclass claims for equitable and injunctive relief (Count III) are DISMISSED WITHOUT PREJUDICE and without leave to amend.
g. The Motion is GRANTED in that Ambrose, Riley, and Shrum's individual and Florida and California subclass claims for unjust enrichment (Count IV) are DISMISSED WITH PREJUDICE.
h. The Motion is GRANTED in that Ambrose, Riley, and Shrum's individual and Florida and California subclass claims for fraudulent concealment (Count V) are DISMISSED WITH PREJUDICE.
i. The Motion is GRANTED in that Ambrose and Riley's individual and Florida subclass claims for violations of FDUTPA (Count VI) are DISMISSED WITHOUT PREJUDICE and with leave to replead.
j. The Motion is GRANTED in that Shrum's individual and California subclass claims for strict products liability (Count VII) are DISMISSED WITH PREJUDICE.
k. The Motion is GRANTED in that Shrum's individual and California subclass claims for violating California's unfair competition law (Count VIII) are DISMISSED WITHOUT PREJUDICE and with leave to replead.
l. In all other respects, the Motion is DENIED.
2. By Monday, April 10, 2023, Plaintiffs may file a second amended complaint to replead: (1) Riley, Ambrose, and Shrum's individual and Florida and California subclass claims for breach of express warranty (Count I); (2) Riley, Ambrose, and Shrum's individual claims for violating the MMWA (Count II); (3) Ambrose and Riley's individual and Florida subclass claims for violations of FDUTPA (Count VI); and (4) Shrum's individual and California subclass claims for violating California's
unfair competition law (Count VIII). Kilburn's claims, nationwide class claims, Mississippi subclass claims, MMWA class claims of any sort, and Counts III, IV, V, VII, IX, and X in their entirety may not be repled.
3. GM's motion to compel arbitration (Doc. 35) is DENIED.
4. GM's motion to strike the putative nationwide class allegations (Doc. 48) is DENIED AS MOOT given this Order's dismissal of those claims.
5. Plaintiffs' motion to supplement their opposition to GM's motion to dismiss (Doc. 70) is DENIED AS MOOT given this Order's resolution of the motion to dismiss.
6. Plaintiffs' motion to revise (Doc. 71) their motion to amend the Complaint (Doc. 55) is DENIED AS MOOT given the Court's previous denial of the motion to amend (Doc. 56) and in light of leave to amend as provided for in this Order.
DONE AND ORDERED in Chambers in Orlando, Florida, on March 28, 2023.