Opinion
Case No. 5:19-cv-06129-SRB
01-28-2020
Terry BISHOP, DVM; Rodney, Janeen, Chad, and Aaron Naedler, and Naedler Farms II; Daniel and Erin Richards; Bernard and Denise Robillard, and Robillard Flat Farms, Inc., on behalf of themselves and all others similarly situated, Plaintiffs, v. DELAVAL INC., DeLaval International AB, and DeLaval Holding AB, Defendants.
Arend R. Tensen, Pro Hac Vice, Cullenberg & Tensen, PLLC, Lebanon, NH, Bradley Wilders, Patrick J. Stueve, Jillian R. Dent, Stueve Siegel Hanson, LLP, Kansas City, MO, Daniel Charles Perrone, III, Pro Hac Vice, Perrone Law PLLC, Staten Island, NY, for Plaintiffs. Erika A. Dirk, Pro Hac Vice, Erin Vaughn Bolden, Pro Hac Vice, Jonathon M. Studer, Pro Hac Vice, Lynn Hagman Murray, Shook, Hardy & Bacon, LLP, Chicago, IL, Gregory K. Wu, Robert T. Adams, Shook, Hardy & Bacon, LLP, Kansas City, MO, for Defendants.
Arend R. Tensen, Pro Hac Vice, Cullenberg & Tensen, PLLC, Lebanon, NH, Bradley Wilders, Patrick J. Stueve, Jillian R. Dent, Stueve Siegel Hanson, LLP, Kansas City, MO, Daniel Charles Perrone, III, Pro Hac Vice, Perrone Law PLLC, Staten Island, NY, for Plaintiffs.
Erika A. Dirk, Pro Hac Vice, Erin Vaughn Bolden, Pro Hac Vice, Jonathon M. Studer, Pro Hac Vice, Lynn Hagman Murray, Shook, Hardy & Bacon, LLP, Chicago, IL, Gregory K. Wu, Robert T. Adams, Shook, Hardy & Bacon, LLP, Kansas City, MO, for Defendants.
ORDER
STEPHEN R. BOUGH, UNITED STATES DISTRICT JUDGE Before the Court is Defendant DeLaval Inc.'s Partial Motion to Dismiss Amended Class Action Complaint. (Doc. #35). For reasons discussed below the motion is granted in part and denied in part.
I. BACKGROUND
Plaintiffs in this case are dairy farmers who purchased, financed, leased, and/or rented classic model voluntary milking system ("VMS") robots allegedly "designed to optimize quality milk yield" in a "cow-friendly, hygienic and efficient way." (Doc. #26, ¶ 1). Plaintiffs bring this action on behalf of themselves and others similarly situated and seek certification of a nationwide class and various state subclasses. Plaintiffs purchased the VMS robots either directly from dealerships owned by Defendants DeLaval Inc., DeLaval International AB ("DeLaval International") and DeLaval Holding AB ("DeLaval Holding") (collectively "Defendants"), or through authorized dealers. Plaintiffs allege generally that Defendants employed a uniform marketing scheme to conceal defects of the VMS robots and misrepresented the historical performance and features of the VMS robots to induce Plaintiffs to purchase the VMS robots. Plaintiffs allege "[a]fter inducing dairy farmers to purchase classic model VMS robots, [Defendants] delivered a product that was defectively designed, was not free from defects in material and workmanship, failed to conform to [Defendants'] express and implied warranties ..., and failed to perform as uniformly advertised, marketed and represented[.]" (Doc. #26, ¶ 11).
Plaintiffs bring fourteen claims against Defendants: 1) breach of contract; 2) breach of implied warranty of merchantability; 3) breach of implied warranty of fitness for a particular purpose; 4) breach of express warranty; 5) strict products liability; 6) negligence; 7) fraudulent inducement; 8) negligent misrepresentation; 9) fraudulent concealment; 10) violation of New York General Business Law ("NYGBL"); 11) violation of Tennessee Consumer Protection Act ("TCPA"); 12) violation of Vermont Consumer Protection Act ("VCPA"); 13) violation of Wisconsin Deceptive Trade Practices Act ("WDPTA"); and 14) punitive damages. Defendant DeLaval Inc. moves for dismissal of "all Counts, excluding Count 13 with respect to Plaintiffs Rodney, Janeen, Chad, and Aaron Naedler, and Naedler Farms II, and Counts 7 and 9 with respect to Bernard and Denise Robillard and Robillard Flat Farms, Inc." (Doc. #35, p. 1).
II. LEGAL STANDARD
Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a claim for "failure to state a claim upon which relief can be granted." "To survive a motion to dismiss [for failure to state a claim], 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quotation marks omitted) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ); Zink v. Lombardi , 783 F.3d 1089, 1098 (8th Cir. 2015). "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." Ash v. Anderson Merchs., LLC , 799 F.3d 957, 960 (8th Cir. 2015) (internal citation quotation marks omitted) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ). The Court must accept all facts alleged in the complaint as true when deciding a motion to dismiss. See Data Mfg., Inc. v. United Parcel Serv., Inc. , 557 F.3d 849, 851 (8th Cir. 2009) (noting "[t]he factual allegations of a complaint are assumed true and construed in favor of the plaintiff, even if it strikes a savvy judge that actual proof of those facts is improbable").
III. DISCUSSION
A. Breach of Contract and Implied and Express Warranty Claims (Counts 1–4)
1. Timeliness
Defendant DeLaval Inc. argues Plaintiff Terry Bishop, DVM's ("Bishop") claim and the claim of Plaintiffs Bernard and Denise Robillard and Robillard Flat Farms, Inc. (the "Robillards") for breach of contract and breach of warranty should be dismissed as untimely because the claims were not brought within the timeframe allowed by the statute of limitations and tolling does not apply. Plaintiffs argue the statute of limitations was tolled because Defendants fraudulently concealed relevant facts from them. Bishop purchased VMS robots for use at his dairy farm in Tennessee. The Robillards purchased VMS robots for use at their dairy farm in Vermont. Both Defendant DeLaval Inc. and Plaintiffs analyze the statute of limitations and tolling issues under Tennessee and Vermont law.
A court may consider a statute of limitations argument at the motion to dismiss stage only if it appears from the face of the complaint that the limitations period has run and the complaint contains no facts to toll that running." JJ Holand Ltd. v. Fredrikson & Byron, P.A. , No. CIV. 12-3064 ADM/TNL, 2013 WL 3716948, at *5 (D. Minn. July 12, 2013) (citing Varner v. Peterson Farms , 371 F.3d 1011, 1016 (8th Cir. 2004) ). Both Tennessee and Vermont impose a four-year statute of limitations on breach of contract and breach of warranty claims. Tenn. Code Ann. § 47-2-725(1), (2) ; Vt. Stat. Ann. Tit. 9A, § 2-725(1), (2). Both Tennessee and Vermont permit tolling of the statute of limitations for breach of contract and breach of warranty claims, Tenn. Code Ann. § 47-2-725(4) ; Vt. Stat. Ann. Tit. 9A, § 2-725(4), "under the fraudulent concealment doctrine ... when the defendant has taken steps to prevent the plaintiff from discovering he [or she] was injured" or that the defendant is the cause of the injury. Redwing v. Catholic Bishop for Diocese of Memphis , 363 S.W.3d 436, 462 (Tenn. 2012) (alteration in original) (internal citation and quotation marks omitted); accord Aube v. O'Brien , 140 Vt. 1, 433 A.2d 298, 300 (1981) ("When a person entitled to bring a personal action is prevented from so doing by the fraudulent concealment of the cause of such action by the person against whom it lies, the period prior to the discovery of such cause of action shall be excluded in determining the time limited for the commencement thereof.") (quoting Vt. Stat. Ann. Tit. 12, § 555 ). "The statute of limitations is tolled until the plaintiff discovers or, in the exercise of reasonable diligence, should have discovered the defendant's fraudulent concealment or sufficient facts to put the plaintiff on actual or inquiry notice of his or her claim." Redwing , 363 S.W.3d at 463 (Tenn. 2012) ; accord Clarke v. Abate , 194 Vt. 294, 80 A.3d 578, 589–90 (2013).
Plaintiffs here allege facts supporting fraudulent concealment. For example, Plaintiffs allege Defendants "concealed [various defects] from the dairy farmers to whom the classic model VMS was sold[.]" (Doc. #26, ¶ 15). Plaintiffs allege Defendants, through an aggressive marketing campaign, misled them into believing "that other dairy farmers were not having problems with the classic model VMS, and that any problems were of their own making, all the while Defendants had exclusive possession and superior, unique and particular knowledge of material facts to the contrary to which Plaintiffs and the Class did not have access." (Doc. #26, ¶ 397). Plaintiffs alleged they were ignorant to the information Defendants fraudulently concealed from them and that despite Plaintiffs' efforts to resolve the VMS robots' performance issues, Defendants fraudulently and continuously reassured Plaintiffs that software updates would fix the issues and that the issues were normal and would improve over time. Plaintiffs allege the Robillards did not learn of the concealed information until October 2015 at the earliest, when they visited another farm and learned that the promised software update did not resolve the performance issues. Plaintiffs allege Bishop did not learn of the concealed information until the spring of 2019, when he consulted with an expert. Accepting Plaintiffs' allegations as true, which the Court must at this early stage, Plaintiffs have sufficiently pled tolling of the statute of limitations that would render their breach of contract and breach of warranty claims timely. Accordingly, Defendant DeLaval Inc.'s motion to dismiss Plaintiffs' claims of breach of contract and breach of warranty as untimely is denied.
Defendant DeLaval Inc. argues briefly and partially in a footnote in its reply that this allegation contradicts Plaintiffs' first complaint, which alleged the Robillards had so many problems with Defendants and the VMS robots that they "stopped using the robots in or around September 2015." (Doc. #1-2, ¶ 175) (emphasis added). Defendant DeLaval Inc. argues "[a] complaint can be amended to cure deficiencies in the complaint but it must be consistent with the challenged pleading and must not contradict the allegations in the original complaint." (Doc. #57, p. 12) (citing Wahoo Int'l, Inc. v. Phix Doctor, Inc. , No. 13CV1395-GPC BLM, 2015 WL 3872343, at *6 (S.D. Cal. June 23, 2015) ). Nothwithstanding the nonprecedential value of the case cited by Defendant DeLaval Inc., the Court finds neither the substance of the allegation nor the reference to the timeframe "contradict" the allegation in the original complaint.
2. Limited Warranty
a. Void or Voidability
Defendant DeLaval Inc. argues Plaintiffs' breach of contract and breach of warranty claims should be dismissed because the Plaintiffs' purchase agreements contain a valid limited warranty that bars such claims. (Doc. #36, p. 17). Plaintiffs argue the limited warranty is void or voidable and therefore does not bar their claims. Plaintiffs argue the limited warranty is void or voidable because: 1) Plaintiffs were fraudulently induced into entering into their respective purchase agreements; 2) it failed of its essential purpose since Defendants never performed an adequate repair, provided an adequate replacement, or refunded Plaintiffs; and 3) it is unconscionable.
i. Fraudulent Inducement
Plaintiffs argue that the limited warranty is voidable because they were fraudulently induced to enter into their respective purchase agreements. Defendant DeLaval Inc. does not dispute that fraudulent inducement renders a limited warranty voidable under the relevant states' laws. Instead, Defendant DeLaval Inc. argues Plaintiffs have not stated a claim for fraudulent inducement because such a claim is barred by the relevant statutes of limitations or economic loss doctrine. As set forth infra , Section III.C, Plaintiffs have pled sufficient facts to support a plausible claim for fraudulent inducement. In turn, Plaintiffs have pled sufficient facts to support their claim that the limited warranty is voidable, and the Court need not address Plaintiffs' arguments that the limited warranty is also void or voidable because it failed of its essential purpose and is unconscionable. Accordingly, Defendant DeLaval Inc.'s motion to dismiss Plaintiffs' breach of contract and breach of warranty claims on the basis that the limited warranty bars such claims is denied.
b. Lack of Privity
Defendant DeLaval Inc. argues the breach of implied warranty claims brought by Bishop; Rodney, Janeen, Chad, and Aaron Naedler, and Naedler Farms II (the "Naedlers"), and the Robillards should be dismissed for lack of privity because these Plaintiffs purchased their VMS robots from authorized dealers and not directly from Defendant DeLaval Inc. Plaintiffs argue privity exists because Defendants made binding express warranties, forming a unilateral contract. Defendant DeLaval Inc. does not deny that the purchase agreements contain a limited warranty from Defendant DeLaval Inc. Defendant DeLaval Inc. cites no binding precedent under the relevant states' laws that would mandate a finding under these facts that Plaintiffs have not sufficiently alleged Defendants are in privity with Bishop, the Naedlers, and the Robillards. Defendant DeLaval Inc.'s motion to dismiss Bishop's, the Naedlers', and the Robillards' breach of implied warranty claims for lack of privity is denied.
B. Tort Claims (Counts 5, 6, 8)
1. Economic Loss Doctrine
Defendant DeLaval Inc. argues the economic loss doctrine bars Plaintiffs' claims for strict products liability, negligence, and negligent misrepresentation. Plaintiffs argue "the economic loss doctrine does not bar claims for economic losses in combination with non-economic losses, such as the damage to ‘other property’ claimed by Plaintiffs." (Doc. #47, p. 23). The parties agree Wisconsin, New York, Vermont, and Tennessee law govern the analysis of the economic loss doctrine. The economic loss doctrine is a judicially created doctrine providing that a commercial purchaser of a product cannot recover from a manufacturer, under the tort theories of negligence or strict products liability, damages that are solely "economic" in nature. Daanen & Janssen, Inc. v. Cedarapids, Inc. , 216 Wis.2d 395, 573 N.W.2d 842, 844–45 (1998) ; accord Praxair, Inc. v. Gen. Insulation Co. , 611 F. Supp. 2d 318, 326 (W.D. N.Y. 2009) (applying New York state law) ; Moffitt v. Icynene, Inc. , 407 F. Supp. 2d 591, 601 (D. Vt. 2005) (applying Vermont state law) ; Lincoln Gen. Ins. Co. v. Detroit Diesel Corp. , 293 S.W.3d 487, 489 (Tenn. 2009). Personal injury and damage to property other than the product in question are not considered economic damages and thus do not implicate the economic loss doctrine. Daanen , 573 N.W.2d at 845 ; Praxair, Inc. , 611 F. Supp. 2d at 326 ; Moffitt , 407 F. Supp. 2d at 601 ; Lincoln , 293 S.W.3d at 489.
The economic loss doctrine does not bar Plaintiffs from bringing claims of negligence and products liability because Plaintiffs allege damage to their barns and cows. Defendant DeLaval Inc. argues that any damage to the barns or cows is consequential damages to property flowing from the VMS robots' allegedly defective performance. It is true that consequential damages attributable to the allegedly defective product are considered economic damages that implicate the economic loss doctrine. Daanen , 573 N.W.2d at 845 ; Praxair, Inc. , 611 F. Supp. 2d at 326 ; Moffitt , 407 F. Supp. 2d at 601 ; Lincoln , 293 S.W.3d at 489. Consequential damages generally include damages such as loss of profits resulting from an inability to use the defective product. Daanen , 573 N.W.2d at 845 ; Praxair, Inc. , 611 F. Supp. 2d at 326 ; Moffitt , 407 F. Supp. 2d at 601 ; Lincoln , 293 S.W.3d at 489. However, while consequential damages sometimes include damage to property related to "disappointed performance expectations" that speak to the "heart of the bargain," Grams v. Milk Prod., Inc. , 283 Wis.2d 511, 699 N.W.2d 167, 178, 180 (2005), Defendant DeLaval Inc. cites no binding precedent under any of the relevant states' laws that holds damage to cows and barns resulting from a defective voluntary milking system may not be properly considered damage to other property. Contra Schullo v. DeLaval, Inc. , 342 Wis.2d 251, 816 N.W.2d 352, at ¶ 86 (Wis. Ct. App. 2012) (reversing district court's finding on summary judgment that "other property" exclusion to the economic loss doctrine applied where, on facts similar to this case, defendant "point[ed] to no evidence in th[e] record that link[ed] what [defendant] describe[d] as the ‘heart of the bargain’—milk production—with the result of sick, injured, or dead cows."). Accordingly, Defendant DeLaval Inc.'s motion to dismiss Plaintiffs' negligence and products liability claims on the grounds that they are barred by the economic loss doctrine is improper.
2. Limited Warranty
Defendant DeLaval Inc. argues Plaintiffs' tort claims are precluded by the limited warranty contained in the purchase agreements. Plaintiffs argue their tort claims are not precluded by the limited warranty because the limited warranty is void or voidable. Plaintiffs argue, among other reasons, the limited warranty is voidable because Plaintiffs were fraudulently induced into entering into their respective purchase agreements. Defendant DeLaval Inc. does not dispute that fraudulent inducement renders a limited warranty voidable. Rather, Defendant DeLaval Inc. argues Plaintiffs have not stated a claim for fraudulent inducement. As set forth infra , Section III.C, Plaintiffs have pled sufficient facts to support a plausible claim for fraudulent inducement. In turn, Plaintiffs have pled sufficient facts to support their claim that the limited warranty is voidable, and Defendant DeLaval Inc.'s motion to dismiss Plaintiffs' tort claims on the basis that they are precluded by the limited warranty is denied.
3. Timeliness
Defendant DeLaval Inc. argues Bishop's tort claims should be dismissed as time-barred because the three-year statutes of limitations governing Bishop's tort claims have run. Plaintiffs argue the statutes of limitations governing Bishop's tort claim were tolled until spring of 2019. The parties agree Tennessee law applies to the analysis. "Under the ‘discovery rule’ applicable in tort actions, including but not restricted to products liability actions predicated on negligence, strict liability or misrepresentation, the cause of action accrues and the statute of limitations begins to run when the injury occurs or is discovered, or when in the exercise of reasonable care and diligence, it should have been discovered." Potts v. Celotex Corp. , 796 S.W.2d 678, 680 (Tenn. 1990). "The cause of action accrues when the plaintiff knows or should know that it sustained an injury as a result of wrongful ... conduct by the defendant." Redwing , 363 S.W.3d at 458 (internal citation and quotation marks omitted). Plaintiffs allege Bishop did not learn that Defendants' wrongful conduct was the source of the issues with the VMS robots until the spring of 2019, when he consulted with an expert. Accepting Plaintiffs' allegations as true, which the Court must at this early stage, Plaintiffs have sufficiently pled tolling of the statutes of limitations that would render Bishop's torts claims timely. Accordingly, Defendant DeLaval Inc.'s motion to dismiss Bishop's torts claims as untimely is denied.
C. Fraudulent Inducement and Fraudulent Concealment Claims (Counts 7, 9)
1. Robillards and Richards
Defendant DeLaval Inc. argues Daniel and Erin Richards' (the "Richards") and the Robillards' fraud claims should be dismissed because any alleged fraud is not extraneous to the contract. Plaintiffs argue the Richards and Robillards have sufficiently alleged fraud claims distinct from contract claims. The parties agree New York and Vermont law govern the analysis.
"[U]nder New York law, parallel fraud and contract claims may be brought if the plaintiff (1) demonstrates a legal duty separate from the duty to perform under the contract; (2) points to a fraudulent misrepresentation that is collateral or extraneous to the contract; or (3) seeks special damages that are unrecoverable as contract damages." Merrill Lynch & Co. Inc. v. Allegheny Energy, Inc. , 500 F.3d 171, 183 (2d Cir. 2007). "New York distinguishes between a promissory statement of what will be done in the future that gives rise only to a breach of contract cause of action and a misrepresentation of a present fact that gives rise to a separate cause of action for fraudulent inducement." Id. at 184. "[A] misrepresentation of present facts is collateral to the contract (though it may have induced the plaintiff to sign the contract) and therefore involves a separate breach of duty." First Bank of the Americas v. Motor Car Funding, Inc. , 257 A.D.2d 287, 292, 690 N.Y.S.2d 17 (N.Y. App. Div. 1999). In Vermont, "a single transaction may give rise to multiple causes of action," including contractual and fraud claims. Bevins v. King , 147 Vt. 203, 514 A.2d 1044, 1045 (1986) (internal citation omitted). "In order to create an independent cause of action in fraud ... the claim must be based on tortious conduct of the seller." Id. "In other words, the fraud must be extraneous to the contract, rather than a fraudulent nonperformance of the contract itself." Id.
Plaintiffs allege fraudulent conduct extraneous to the contract. Defendant DeLaval Inc. characterizes Plaintiffs' allegations as allegations of failure to deliver goods in the promised condition. However, Plaintiffs allege, for example, Defendants fraudulently induced Plaintiffs to enter into purchase agreements by making false representations and concealing "presently existing data collected and maintained by, and accessibly only to [Defendants], detailing the defects and problems with, the performance and failures of, and the profits yielded by similar dairy farmers using classic model VMS robots ...." (Doc. #26, ¶ 463) (emphasis added). Such allegations of fraudulent representations and concealment plausibly involve present facts extraneous to any alleged failure to deliver goods in the promised condition and are enough to support fraud claims separate from their claims for breach of contract or breach of warranty. The Court expects that the discovery process will allow the parties to more fully and accurately determine the relationship between any misrepresentation of present facts and the relevant contractual promises.
Defendant DeLaval Inc. also argues the Richards' fraud claims fail because the purchase agreement "contained a disclaimer that any representations or descriptions regarding the VMS Classics were approximate only and did not create any warranty or other obligation upon [Defendant DeLaval Inc.]." (Doc. #36, p. 28). Plaintiffs argue the disclaimer in the purchase agreement was not sufficiently specific to foreclose the Richards' fraud claims. Under New York law, a contract "must contain explicit disclaimers of the particular representations that form the basis of the [fraud] claims" in order to bar the fraud claims. Manufacturers Hanover Tr. Co. v. Yanakas , 7 F.3d 310, 316 (2d Cir. 1993) (internal citations and quotation marks omitted). "The substance of the disclaimer provisions [must] track[ ] the substance of the alleged misrepresentations." Id. ; see, e.g., Danann Realty Corp. v. Harris , 5 N.Y.2d 317, 184 N.Y.S.2d 599, 157 N.E.2d 597, 598–99 (1959) (finding purchaser of a lease barred from bringing a fraud claim resulting from the selling defendants' false representations "as to the operating expenses of the building and as to the profits to be derived from the investment" when the contract stated that "[t]he Seller has not made ... any representations as to the ... expenses [or] operation ... [of] the aforesaid premises ... and the Purchaser hereby expressly acknowledges that no such representations have been made ....").
Here, the purchase agreements do not specifically disclaim the fraudulent representations alleged by Plaintiffs. Further, "even where the parties have executed a specific disclaimer of reliance on a seller's representations, a purchaser may not be precluded from claiming reliance on any ... misrepresentations if the facts allegedly misrepresented are peculiarly within the seller's knowledge ...." DIMON Inc. v. Folium, Inc. , 48 F. Supp. 2d 359, 368 (S.D.N.Y. 1999) (applying New York state law) (internal citation omitted). Plaintiffs allege Defendants had "peculiar, unique and superior knowledge" from various specified sources of the facts supporting the allegations of fraud. (Doc. #26, ¶¶ 463, 476). Defendant DeLaval Inc.'s motion to dismiss the Richards' and Robillards' claims of fraudulent inducement and fraudulent concealment are denied.
Because the Court finds Plaintiffs' allegations of fraudulent misrepresentation extraneous to the contract are sufficient to survive dismissal, the Court will not address Plaintiffs' additional arguments in support of their entitlement to pursue fraud claims.
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2. Bishop and Naedlers
Defendant DeLaval Inc. argues the economic loss doctrine prohibits the Bishops and the Naedlers from bringing claims of fraud. Plaintiffs argue the economic loss doctrine is not a bar to their claims of fraud. Both parties agree that Tennessee and Wisconsin law applies here.
Under Wisconsin law, "a fraud in the inducement claim is not barred by the economic loss doctrine ‘where the fraud is extraneous to, rather than interwoven with, the contract.’ " Kaloti Enterprises, Inc. v. Kellogg Sales Co. , 283 Wis.2d 555, 699 N.W.2d 205, 219 (2005) (internal citation omitted). While Tennessee has not explicitly adopted a fraud exception to the economic loss doctrine, see Milan Supply Chain Sols. Inc. v. Navistar Inc. , No. W201800084COAR3CV, 2019 WL 3812483, at *6 (Tenn. Ct. App. Aug. 14, 2019), appeal granted (Jan. 16, 2020), case law indicates the economic loss doctrine does not bar claims of fraud under Tennessee law. See, e.g., Messer Griesheim Indus., Inc. v. Cryotech of Kingsport, Inc. , 131 S.W.3d 457, 460 (Tenn. Ct. App. 2003) (upholding the dismissal of a negligence claim based on the economic loss doctrine but addressing the merits of a fraud claim based on the same set of facts); Gibson v. Total Car Franchising Corp. , 223 F.R.D. 265, 272 (M.D. N.C. 2004) ("There are no reported cases in which Tennessee courts have applied the economic loss doctrine to dismiss a fraud claim where the plaintiff was able to prove actual fraud, and there is no reason to believe the Supreme Court of Tennessee would do so. In fact, in Messer Griesheim , the Tennessee Court of Appeals upheld dismissal of the negligence claim based on the economic loss rule, but addressed the actual fraud claim separately and upheld dismissal on a different basis ...."); Exprezit Convenience Stores, LLC v. Transaction Tracking Techs., Inc. , No. 305-CV-0945, 2007 WL 307237, at *10 (M.D. Tenn. Jan. 29, 2007) ("Given that a fraud in the inducement claim presents a special situation where parties to a contract appear to negotiate freely—which normally would constitute grounds for invoking the economic loss doctrine—but where in fact the ability of one party to negotiate fair terms and make an informed decision is undermined by the other party's fraudulent behavior, the Court concludes that the economic loss doctrine would not bar [plaintiff's] misrepresentation claim [under Tennessee law].").
The Court has already found that Plaintiffs have sufficiently alleged conduct extraneous to the contact to support claims of fraud. Accordingly, Defendant DeLaval Inc.'s motion to dismiss Bishop's and the Naedlers' claims of fraud as barred by the economic loss doctrine is denied.
D. Violation of NYGBL (Count 10)
Defendant DeLaval Inc. argues the Richards' claims under NYGBL §§ 349 and 350 should be dismissed because their alleged dissatisfaction with the performance of the VMS robots does not constitute consumer-oriented conduct and injury. Plaintiffs argue "[t]he purported ‘commercial nature’ of the family-run dairy farm owned by the Richards is irrelevant to the issues of whether the deceptive acts and practices in which [Defendants] engaged are ‘consumer-oriented.’ " (Doc. #47, p. 39). "To establish prima facie violation of [NYGBL]§ 349, a plaintiff must demonstrate that the defendant is engaging in consumer-oriented conduct which is deceptive or misleading in a material way, and that the plaintiff has been injured because of it." St. Patrick's Home for Aged & Infirm v. Laticrete Int'l, Inc. , 264 A.D.2d 652, 655, 696 N.Y.S.2d 117 (N.Y. App. Div. 1999). "A similar showing is required under [NYGBL] § 350, which prohibits false advertising." Id. "The ‘consumer oriented’ requirement does not preclude businesses from acting as plaintiffs." Statler v. Dell, Inc. , 775 F. Supp. 2d 474, 484 (E.D.N.Y. 2011) (applying New York state law) (internal citations omitted). "The consumer oriented prong ... requires a plaintiff to show that the practices complained of have a broad impact on consumers at large; private contract disputes unique to the parties ... would not fall within the ambit of the statute." Id. at 483–84 (E.D.N.Y. 2011) (internal citations and quotation marks omitted). "The meaning of this proposition is twofold." Exxonmobil Inter-Am., Inc. v. Advanced Info. Eng'g Servs., Inc. , 328 F. Supp. 2d 443, 449 (S.D.N.Y. 2004) (applying New York state law). "First, [ ] liability attaches primarily where a party's misrepresentations are boilerplate and have the potential to be repeated in order to deceive numerous similarly situated buyers." Id. (internal citations omitted). "Second, allegedly deceptive acts that occur between relatively sophisticated entities with equal bargaining power do not give rise to [ ] liability. Id. "[A] disparity in bargaining power favors a finding of consumer-oriented practice[.]" M & T Mortg. Corp. v. White , 736 F. Supp. 2d 538, 572 (E.D.N.Y. 2010) (applying New York state law).
The Richards allege that Defendants engaged in a fraudulent, standard, and uniform marketing scheme to induce dairy farmers nationwide to purchase the VMS robots. The Richards highlight that Defendants are the self-proclaimed "worldwide leader in milking equipment and solutions for dairy farmers" and allege Defendants knew the Richards and other dairy farmers "were not technologically sophisticated and, in light of the peculiar, unique and specialized knowledge about the [VMS robot] that [Defendants have and held themselves out as having], would reasonably rely thereon to their detriment by purchasing one or more [VMS robots]." (Doc. #26, ¶¶ 81, 180). Plaintiffs allege the VMS robots were sold to Plaintiffs "pursuant to standard form purchase agreements drafted by [Defendants], which were not subject to negotiation and were offered on a take-it-or-leave-it-basis." (Doc. #26, ¶ 356). The Court finds the foregoing allegations, accepted as true, support a plausible claim for relief under NYGBL §§ 349 and 350. Further, the Court rejects Defendant DeLaval Inc.'s unsupported contention that the choice of law provision in the Richards' purchase agreement precludes the Richards from brining a claim under NYGBL. See Meachum v. Outdoor World Corp. , 235 A.D.2d 462, 464, 652 N.Y.S.2d 749 (N.Y. App. Div. 1997) ("[T]he fact that the contract between the [ ] plaintiffs and [defendant] provides that it is to be governed by and interpreted under Pennsylvania law does not preclude assertion of the [ NYGBL § 349 ] claim, inasmuch as the claim does not involve any issue relating to the terms of the contract or its interpretation."). Defendant DeLaval Inc.'s motion to dismiss the Richards' claims under NYGBL §§ 349 and 350 is denied.
E. Violation of TCPA (Count 11)
Defendant DeLaval Inc. argues Bishop's claim under the TCPA should be dismissed because the VMS robots do not constitute goods as defined in the TCPA. Bishop argues the VMS robots are properly considered goods under the TCPA. The TCPA prohibits "unfair or deceptive acts or practices affecting the conduct of any trade or commerce." Tenn. Code Ann. § 47-18-104. " ‘Trade,’ ‘commerce,’ or ‘consumer transaction’ means the advertising, offering for sale, lease or rental, or distribution of any goods, services, or property, tangible or intangible, real, personal, or mixed, and other articles, commodities, or things of value wherever situated." Tenn. Code Ann. § 47-18-103(20). " ‘Goods’ means any tangible chattels leased, bought, or otherwise obtained for use by an individual primarily for personal, family, or household purposes or a franchise, distributorship agreement, or similar business opportunity[.]" Tenn. Code Ann. § 47-18-103(8).
Bishop argues in its briefing on this motion, but does not allege in the Amended Class Action Complaint, that the VMS robots he purchased were for use on his family farm. Bishop also alleges that one of the reasons he became interested in the VMS robots is because Defendants represented that "[t]housands of families have already handed over the heavy chore of milking to a [VMS robot] and they now enjoy a more flexible lifestyle" with "time away from a stringent milking schedule and the freedom to choose how [they] spend [their] time." (Doc. #26, ¶¶ 93, 268). This latter allegation alone raises a question of fact as to whether Bishop purchased the VMS robots primarily for personal or family purposes. Further, trade and commerce are defined by the act as encompassing more than just goods. Defendant DeLaval Inc. does not argue that the VMS robot "does not fit within this broad definition of trade or commerce." Hanson v. J.C. Hobbs Co. , No. W2011-02523-COA-R3CV, 2012 WL 5873582, at *11 (Tenn. Ct. App. Nov. 21, 2012). The court in Hanson also rejected the argument that the purchase of a tractor was "not covered by the TCPA because [the plaintiff] purchased it to use in his farming business." Id. For these reasons, Defendant DeLaval Inc.'s motion to dismiss Bishop's claim for violation of the TCPA is denied.
F. Violation of VCPA (Count 12)
Defendant DeLaval Inc. argues the Robillards' VCPA claims must be dismissed because the claim is an impermissible attempt to reframe their warranty claims as violations of the VCPA in order to circumvent the statute of limitations. The Robillards argue "[a] plaintiff may pursue and even prevail on parallel VCPA and breach of warranty claims." (Doc. #57, p. 43). The authority cited by Defendant DeLaval Inc. does not address VCPA claims. Regardless, because the Court has already found the Robillards have sufficiently pled tolling of the statute of limitations that would render their breach of warranty claims timely, supra Section III.A.1, Defendant DeLaval Inc.'s argument fails. Defendant DeLaval Inc.'s motion to dismiss the Robillards' VCPA claim is denied.
G. Punitive Damages (Count 14)
Defendant DeLaval Inc. argues Plaintiffs' claim for punitive damages must be dismissed because no such cause of action exists. Plaintiffs essentially concede this point, but request the Court not strike the request for punitive damages in their request for relief section of the Amended Class Action Complaint because they "have sufficiently pled claims pursuant to which punitive damages are available." (Doc. #47, p. 44). Defendant DeLaval Inc. does not dispute that Plaintiffs have sufficiently pled such claims. "Punitive damages is not a cause of action but rather is a remedy." Hobbs v. Kroger Ltd. P'ship I , No. 3:18-CV-01026, 2019 WL 1861330, at *1 (M.D. Tenn. Apr. 24, 2019) (applying Tennessee law) ; accord Kubert v. Specht , 971 N.Y.S.2d 71, at *6 (N.Y. Sup. Ct. 2013) ; Wussow v. Commercial Mechanisms, Inc. , 90 Wis.2d 136, 279 N.W.2d 503, 505 (Wis. Ct. App. 1979), rev'd on other grounds , 97 Wis.2d 136, 293 N.W.2d 897 (1980) ; Klein v. Gen. Elec. Co. , 728 S.W.2d 670, 671 (Mo. Ct. App. 1987) ; Davis v. The American Legion, Dep't of Vermont , No. 729-11-13 WNCV, 2014 WL 2134413, at *6 (Vt. Super. Feb. 06, 2014). Accordingly, Defendant DeLaval Inc.'s motion to dismiss Plaintiffs' claim for punitive damages is granted. Plaintiffs' request for punitive damages in their request for relief remains.
IV. CONCLUSION
Accordingly, Defendant DeLaval Inc.'s Partial Motion to Dismiss Amended Class Action Complaint (Doc. #35) is GRANTED in part and DENIED in part. Plaintiffs' claim for punitive (Count 14) damages is dismissed. All other claims remain. Plaintiffs' request for punitive damages in their request for relief remains.