Opinion
Case No. 4:20-CV-00615-BCW
2021-09-30
Emily DACK, et al., individually and on behalf of others similarly situated, Plaintiffs, v. VOLKSWAGEN GROUP OF AMERICA, et al., Defendants.
Adam R. Gonnelli, Pro Hac Vice, Law Office of Adam R. Gonnelli, L.L.C., Princeton, NJ, Bonner Charles Walsh, Pro Hac Vice, Walsh PLLC, Grangeville, ID, Matthew D. Schelkopf, Pro Hac Vice, Sauder Schelkopf, Berwyn, PA, Tim Eugene Dollar, Dollar, Burns, Becker, & Hershewe LLC, Kansas City, MO, for Plaintiffs. Amir Nassihi, Pro Hac Vice, Shook, Hardy & Bacon L. L. P., San Francisco, CA, Homer B. Ramsey, Pro Hac Vice, Mark A. Weissman, Pro Hac Vice, Michael B. Gallub, Pro Hac Vice, Herzfeld & Rubin, P.C., New York, NY, Robert T. Adams, Shook, Hardy & Bacon, LLP, Kansas City, MO, for Defendant Volkswagen Group of America, Inc. Robert T. Adams, Shook, Hardy & Bacon, LLP, Kansas City, MO, for Defendant AG Volkswagen.
Adam R. Gonnelli, Pro Hac Vice, Law Office of Adam R. Gonnelli, L.L.C., Princeton, NJ, Bonner Charles Walsh, Pro Hac Vice, Walsh PLLC, Grangeville, ID, Matthew D. Schelkopf, Pro Hac Vice, Sauder Schelkopf, Berwyn, PA, Tim Eugene Dollar, Dollar, Burns, Becker, & Hershewe LLC, Kansas City, MO, for Plaintiffs.
Amir Nassihi, Pro Hac Vice, Shook, Hardy & Bacon L. L. P., San Francisco, CA, Homer B. Ramsey, Pro Hac Vice, Mark A. Weissman, Pro Hac Vice, Michael B. Gallub, Pro Hac Vice, Herzfeld & Rubin, P.C., New York, NY, Robert T. Adams, Shook, Hardy & Bacon, LLP, Kansas City, MO, for Defendant Volkswagen Group of America, Inc.
Robert T. Adams, Shook, Hardy & Bacon, LLP, Kansas City, MO, for Defendant AG Volkswagen.
ORDER
BRIAN C. WIMES, UNITED STATES DISTRICT JUDGE
Before the Court is Defendants’ Motion to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(6). (Doc. #17). The Court, being duly advised of the premises, grants in part and denies in part said motion.
BACKGROUND
Plaintiffs are current and former owners or lessees of model year 2015-2019 Volkswagen vehicles equipped with the "Front Assist" feature ("Class Vehicles"). According to the Complaint, Volkswagen describes Front Assist as follows:
Forward Collision Warning and Autonomous Emergency Braking (included in Front Assist) has a sensor in the front to help monitor traffic and can alert you to a potential collision. If the driver brakes too lightly in response to an audible and visual warning, Autonomous Emergency Braking (included in Front Assist) can increase braking pressure to help avoid or mitigate the impact of an impending collision. If the driver does not brake at all, the car can apply the brakes automatically.
(Complaint, Doc. #1, ¶ 126).
Plaintiffs brought this action against Defendants Volkswagen Group of America, Inc. and Volkswagen, AG (collectively, "Volkswagen") alleging a manufacturing defect, including defective software coding, that causes Front Assist to unexpectedly apply the brakes without reason at inappropriate times. Plaintiffs allege Volkswagen knew of the defect in October 2017 but failed to disclose it to consumers. Plaintiffs also allege they sought repairs from Volkswagen, but were told Front Assist was working as it was designed and thus no repair was available.
The fourteen Named Plaintiffs assert claims on behalf of themselves and similarly situated individuals under the applicable state laws of Missouri, California, Florida, Illinois, Massachusetts, New York, North Carolina, Pennsylvania, Utah, and Kansas for violation of consumer protection laws, breach of warranty, breach of implied warranty, and unjust enrichment, and under federal law for violation of the Magnuson-Moss Warranty Act (MMWA). Plaintiffs seek damages and injunctive relief requiring Volkswagen to repair, recall, or replace the Class Vehicles and to correct their advertisement of Front Assist.
In the instant motion, Volkswagen argues it is entitled to dismissal of Plaintiffs’ claims pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(1), and 12(b)(6). First, Volkswagen argues the Court lacks personal jurisdiction over Volkswagen in relation to the claims alleged by the twelve Named Plaintiffs who are not Missouri residents and dismissal is proper pursuant to Rule 12(b)(2). Second, Volkswagen argues the Court dismissal of the MMWA claim is proper pursuant to Rule 12(b)(1) because Plaintiffs do not satisfy the jurisdictional requirements of the MMWA such that the Court lacks subject matter jurisdiction. Third, Volkswagen argues all claims should be dismissed pursuant to Rule 12(b)(6) because Plaintiffs have not identified a defect to the Class Vehicles or otherwise sufficiently plead the elements of their claims.
LEGAL STANDARD
A. Motion to Dismiss for Lack of Personal Jurisdiction Pursuant to Rule 12(b)(2)
To survive a motion to dismiss for lack of personal jurisdiction, "a plaintiff need make only a prima facie case that personal jurisdiction exists." Downing v. Goldman Phipps, PLLC, 764 F.3d 906, 911 (8th Cir. 2014) (internal citation omitted). "When assessing whether personal jurisdiction exists over a nonresident defendant, jurisdiction must be authorized by Missouri's long arm statute and the defendant must have sufficient minimum contacts with the forum state to satisfy due process." Id. "[I]f a defendant transacts business within the state the statute provides for jurisdiction to ‘the full extent permitted by the due process clause.’ " Id. (citing State ex rel. Metal Serv. Ctr. of Ga., Inc., v. Gaertner, 677 S.W.2d 325, 327 (Mo. 1984) ). To comport with due process, "[t]he exercise of specific jurisdiction is permissible if a defendant purposefully directs its activities at residents of the forum state, and the litigation results from alleged injuries that ‘arise out of or relate to’ those activities[.]" Krumm v. Kittrich Corp., No. 19-00182, 2019 WL 6876059, at *4 (E.D. Mo. Dec. 17, 2019) (quoting Myers v. Casino Queen, Inc., 689 F.3d 904, 912 (8th Cir. 2012) ).
B. Motion to Dismiss for Lack of Subject Matter Jurisdiction Pursuant to Rule 12(b)(1)
To survive a motion to dismiss for lack of subject matter jurisdiction, the party asserting jurisdiction has the burden of proving jurisdiction. Guggenberger v. Minnesota, 198 F. Supp. 3d 973, 990 (D. Minn. 2016). Subject matter jurisdiction is a threshold requirement which must be assured in every federal case. Id. (citations and quotations omitted).
C. Motion to Dismiss for Failure to State a Claim Pursuant to Rule 12(b)(6)
To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Factual allegations in the complaint must be sufficiently alleged to raise a right to relief above the speculative level. Twombly, 550 U.S. at 554-55, 127 S.Ct. 1955. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements" do not show that a pleader is entitled to relief. Iqbal, 556 U.S. at 663, 129 S.Ct. 1937. Additionally, Federal Rule of Civil Procedure 9(b) requires that "a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). When ruling on a motion to dismiss, the Court "must accept as true all of the complaint's factual allegations and view them in the light most favorable to the [nonmoving party]" and must draw all reasonable inferences in favor of the nonmoving party. Stodghill v. Wellston Sch. Dist., 512 F.3d 472, 476 (8th Cir. 2008) (citations omitted). However, the Court need not accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.
ANALYSIS
I. Volkswagen's motion to dismiss all non-Missouri Named Plaintiffs for lack of personal jurisdiction is granted.
The Court begins by addressing the issue of personal jurisdiction. The Named Plaintiffs in this action are two individuals who reside in Missouri and twelve individuals who do not reside in Missouri. The twelve non-Missouri Named Plaintiffs ("nonresident Plaintiffs") do not allege they suffered injuries in Missouri related to their claims. Volkswagen argues the Court should dismiss all claims asserted by the nonresident Plaintiffs pursuant to Bristol-Myers Squibb Co. v. Superior Court of California, ––– U.S. ––––, 137 S. Ct. 1773, 198 L.Ed.2d 395 (2017), because the Court does not have personal jurisdiction over Volkswagen relative to the nonresident Plaintiffs’ claims. Volkswagen does not dispute that the Court has personal jurisdiction over them as to the Missouri residents’ claims.
The Missouri resident Named Plaintiffs are Kimberly Henley-Hauser and Emily Dack.
In opposition, Plaintiffs argue Bristol-Myers involved mass tort claims and therefore does not apply to class actions. Plaintiffs also argue that even if the Court lacks personal jurisdiction, it can exercise pendant jurisdiction over the nonresident Plaintiffs’ claims because it has personal jurisdiction as to the Missouri Named Plaintiffs’ claims.
In reply, Volkswagen argues Bristol-Myers requires personal jurisdiction as to all named plaintiffs in class actions, even if it does not require personal jurisdiction over the claims of unnamed, putative class members. Volkswagen further argues pendant jurisdiction is inapplicable.
In Bristol-Myers, the Supreme Court reiterated the "settled principles" of specific jurisdiction that the suit must "aris[e] out of or relat[e] to the defendant's contacts with the forum," Daimler AG v. Bauman, 571 U.S. 117, 127, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014), and "[a] corporation's ‘continuous activity of some sorts within a state ... is not enough to support the demand that the corporation be amenable to suits unrelated to that activity.’ " Bristol-Myers, 137 S. Ct. at 1781 (citing Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 927, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011), quoting Int'l Shoe Co. v. Washington, Off. of Unemployment Comp. and Placement, 326 U.S. 310, 318, 66 S.Ct. 154, 90 L.Ed. 95 (1945) ). In Bristol-Myers, more than 600 plaintiffs filed a mass tort action in California state court against an out-of-state defendant. Id. Finding that many of the plaintiffs lacked connection to the forum state because they did not reside in California or sustain injuries in connection with their claims in California, the Court held that "[t]he mere fact that other plaintiffs were harmed [by the defendant] in California does not allow the State to assert specific jurisdiction over the nonresidents’ claims." Id. at 1776. Thus, the Bristol-Myers court found while the state court had specific personal jurisdiction over the defendant as to the resident plaintiffs, the court lacked specific personal jurisdiction over the defendant as to the non-resident plaintiffs. Id.
The facts here are similar to those in Bristol-Myers. Volkswagen is an out-of-state defendant incorporated in New Jersey with its principal place of business in Virginia, and twelve of the fourteen Named Plaintiffs do not reside in Missouri and were not injured by Volkswagen in Missouri such that their claims are unrelated to Volkswagen's activities Missouri. Accordingly, the Court finds the principles in Bristol-Myers apply here: the Court cannot exercise personal jurisdiction over Volkswagen as to the claims of the nonresident Plaintiffs because the nonresident Plaintiffs’ claims lack connection to the forum and doing so would subject Volkswagen to a suit unrelated to its activities in this forum.
This conclusion is consistent with the application of Bristol-Myers in another recent case in this district, Hartley v. Sig Sauer, Inc., No. 18-00267, 2019 WL 11639618, at *2 (W.D. Mo. Nov. 6, 2019) (finding Bristol-Myers applies to class actions and dismissing the claims of nonresident plaintiffs against an out-of-state defendant because their claims lacked connection to the forum). Plaintiffs’ citations to Huskey v. Colgate-Palmolive Co., 486 F.Supp.3d 1339, 1352-53 (E.D. Mo. 2020), Harrison v. Gen. Motors Co., No. 17-03128, 2017 WL 11341317 (W.D. Mo. Sept. 25, 2017), and Krumm, 2019 WL 6876059, are inapposite to our facts because Volkswagen does not challenge personal jurisdiction as to the unnamed, putative class members, but rather as to the twelve nonresident Named Plaintiffs. Accordingly, the Court lacks personal jurisdiction over Volkswagen as to the nonresident Plaintiffs’ claims, and Volkswagen's motion to dismiss is granted on this point.
Further, pendant jurisdiction does not apply here, as the Court lacks personal jurisdiction over any single claim brought by the nonresident Plaintiffs against Volkswagen. See Greene v. Mizuho Bank, Ltd., 289 F. Supp. 3d 870 (N.D. Ill. 2017) ("once a court has personal jurisdiction over a defendant as to one claim brought by the plaintiff, the court may assert jurisdiction over additional claims brought by that plaintiff.") (emphasis added). Accordingly, Volkswagen's motion to dismiss for lack of personal jurisdiction is granted and all claims asserted by the nonresident Plaintiffs are dismissed. The Court considers the remainder of Volkswagen's motion only as directed to the claims alleged by the Missouri Plaintiffs.
II. Volkswagen's motion to dismiss Plaintiffs’ MMWA claim for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) is denied.
Volkswagen argues the MMWA contains a jurisdictional requirement of 100 or more named plaintiffs in a class action. In this case, there are only two named plaintiffs, and thus, Volkswagen argues, the MMWA claim should be dismissed for lack of subject matter jurisdiction pursuant to Rule 12(b)(1).
In response, Plaintiffs argue the Class Action Fairness Act ("CAFA") confers jurisdiction over the MMWA claim and supersedes the jurisdictional requirements set forth in the MMWA. The parties do not dispute that Plaintiffs have satisfied CAFA's jurisdictional requirements; rather, the issue is whether satisfaction of CAFA is adequate to confer jurisdiction under the MMWA.
The MMWA provides that "[n]o claim shall be cognizable in a suit brought [in district court] – (C) if the action is brought as a class action, and the number of named plaintiffs is less than one hundred." 15 U.S.C. § 2310(d)(3). The later-enacted CAFA provides for federal jurisdiction over diversity class actions when the amount in controversy exceeds $5 million and there are at least 100 named and putative plaintiffs. 28 U.S.C. § 1332(d).
Volkswagen argues the Court should follow Floyd v. Am. Honda Motor Co., 966 F.3d 1027 (9th Cir. 2020). In Floyd, the Ninth Circuit reasoned that the jurisdictional requirements in the MMWA and CAFA do not present an irreconcilable difference and therefore must be read in a manner that gives effect to both statutes. Floyd, 966 F.3d at 1035. "It is a basic principle of statutory construction that a statute dealing with a narrow, precise, and specific subject is not submerged by a later enacted statute covering a more generalized spectrum." Id. (quoting Radzanower v. Touche Ross & Co., 426 U.S. 148, 153, 96 S.Ct. 1989, 48 L.Ed.2d 540 (1976) ). The court also noted the Supreme Court's presumption against implied repeals, and thus concluded CAFA should not override or repeal the MMWA in the absence of clear legislative intent to do so. Id. Accordingly, the Floyd court found CAFA did not supplant the jurisdictional requirements of the MMWA and affirmed dismissal of the plaintiffs MMWA claim for failure to satisfy its 100 named plaintiff jurisdictional requirement.
In contrast, Plaintiffs argue the Court should follow Barclay v. ICON Health & Fitness, Inc., No. 19-2970, 2020 WL 6083704, at *7 (D. Minn. Oct. 15, 2020) (finding "once plaintiffs have satisfied CAFA, the MMWA's additional requirements do not apply."). In Barclay, the court explained that the MMWA authorizes jurisdiction in two venues: (1) "any court of competent jurisdiction in any State or the District of Columbia," and (2) "an appropriate district court of the United States," and that the MMWA's jurisdictional requirement applies only to the second venue (an appropriate district court). Barclay at *7. The Barclay court found that because it had jurisdiction under CAFA, and thus was a "court of competent jurisdiction in any State," the MMWA's jurisdictional requirement did not apply. Id. Also in support of the position that CAFA supplants the requirements of the MMWA, the Sixth Circuit in Kuns v. Ford Motor Co., 543 Fed.App'x 572, 574 (6th Cir. 2013) found the district court could exercise jurisdiction under CAFA even if it did not have jurisdiction under the MMWA on the basis that "CAFA was passed with the clear intention of expanding federal court jurisdiction over class actions" (internal citations and quotations omitted).
In the absence of authority from the Eighth Circuit, this Court finds Barclay to be the better reasoned approach, and accordingly finds Plaintiffs are not required satisfy the MMWA's requirements in light of this Court's jurisdiction under CAFA. Volkswagen's motion to dismiss is thus denied on this point.
III. Volkswagen's motion to dismiss Plaintiffs’ claims for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6) is granted in part and denied in part.
Based on the above conclusions, the Court considers Volkswagen's motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) only with respect to the following claims: Counts 1 (violation of the MMWA), Counts 2 and 39 (violation of Kansas and Missouri consumer protection statutes), Counts 3 and 39 (breach of express warranty under Missouri and Kansas law), Counts 4 and 40 (breach of implied warranty of merchantability under Missouri and Kansas law), and Counts 5 and 41 (unjust enrichment under Missouri and Kansas law).
A. Volkswagen's motion to dismiss Plaintiffs’ claims for violation of consumer protection laws (Counts 2 and 39) is denied.
Volkswagen argues Plaintiffs’ claims for violations of state consumer protection laws should be dismissed pursuant to Rule 12(b)(6) for three reasons: (1) Plaintiffs have not sufficiently alleged Volkswagen made a false statement, affirmative misrepresentation, or omission regarding Front Assist; (2) Plaintiffs have not established Volkswagen had pre-sale knowledge of the alleged defect; and (3) Plaintiffs have not established reliance or causation. In opposition, Plaintiffs argue their consumer protection claims are based on omission only and that they have sufficiently alleged all elements of these claims.
The elements of a claim under the Missouri Merchandising Practices Act (MMPA) are: "(1) the purchase of goods or services, (2) primarily for personal or household purposes, and (3) an ascertainable loss of money or property, (4) as a result of, or caused by, the use or employment by another person of a method, act, or practice declared unlawful under the MMPA." Hawkins v. Nestle U.S.A. Inc., 309 F. Supp. 3d 696, 701 (E.D. Mo. 2018) ; Mo. Rev. Stat. § 407.025. The MMPA declares as unlawful "[t]he act, use or employment by any person of any deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce." Mo. Rev. Stat. § 407.020.
Similarly, the Kansas Consumer Protection Act (KCPA) "prohibits both deceptive and unconscionable acts and practices by a supplier in connection with a consumer transaction." Via Christi Reg'l Med. Ctr., Inc., v. Reed, 298 Kan. 503, 519, 314 P.3d 852 (Kan. 2013). The KCPA defines deceptive acts and practices to include "the willful failure to state a material fact, or the willful concealment, suppression, or omission of a material fact." Kan. Stat. Ann. § 50-626(b)(3). To state a claim under the KCPA, "a party must establish that he or she was ‘aggrieved’ by the violation of the Act." Via Christi Reg'l Med. Ctr, Inc., 298 Kan. at 519, 314 P.3d 852.
Because the required elements for claims under the MMPA and KCPA are essentially the same, the Court analyzes the claims together.
1. Plaintiffs have sufficiently pled Volkswagen concealed or omitted information regarding the alleged Front Assist defect.
Both the MMPA and KCPA authorize a cause of action where a seller omits or conceals a material fact in connection with a sale. See supra Mo. Rev. Stat. § 407.020 ; Kan. Stat. Ann. § 50-626(b)(3). Plaintiffs allege that information about the Front Assist defect was omitted from any of the materials they reviewed and was not disclosed by representatives at their respective dealerships. Volkswagen argues Plaintiffs fail to plead an omission because the braking system's limitations or "unwanted reactions" were disclosed in the Class Vehicle manuals. Plaintiffs, in opposition, argue they were not advised they had access to the manuals prior to purchase, and regardless, that the information in the manuals conceals the extent of the issue with Front Assist.
Plaintiffs do not allege they received Class Vehicle manuals prior to their purchase, nor does Volkswagen assert that they provided those manuals to Plaintiffs prior to purchase. In Asghari v. Volkswagen Group of America, Inc., 42 F. Supp. 3d 1306, 1328 n.74 (C.D. Cal. 2013), the court found where the complaint did not allege plaintiffs had ever received an owner's manual prior to their vehicle purchase, the owner's manual did not disprove the allegations that defendants concealed information about a defect prior to purchase. Accordingly, this Court finds the manuals immaterial to the issue of whether Volkswagen concealed a material fact, and further finds Plaintiffs have sufficiently alleged Volkswagen concealed information about the defect prior to their purchases. Volkswagen's motion to dismiss is denied on this point.
2. Plaintiffs have sufficiently pled that Volkswagen had pre-sale knowledge of the alleged Front Assist defect.
Next, under the MMPA, "[a] plaintiff must show the defendant failed to disclose material facts that were ‘known to him/her, or upon reasonable inquiry would [have been] known to him/her." Elfaridi v. Mercedes-Benz USA, LLC, No. 16-01896, 2018 WL 4071155, at *5 (E.D. Mo. Aug. 27, 2018) (internal quotations and citations omitted). Likewise, the KCPA prohibits "willful" concealment of a material fact. Kan. Stat. Ann. § 50-626(b)(3). Plaintiffs allege Volkswagen had knowledge of the alleged defect prior to selling Class Vehicles to Plaintiffs based on complaints made by Class Vehicle owners on the website of the National Highway Traffic Safety Association ("NHTSA") about the alleged defect, complaints on third-party websites regarding the same, "pre-sale durability testing," "its own internal records," and "information received from Volkswagen dealerships."
Volkswagen argues Plaintiffs have not established it had pre-sale knowledge of the alleged defect because (1) the spontaneous braking Plaintiffs allege is in fact not a defect, but rather how the Front Assist feature was designed, (2) the small number of complaints posted on the NHTSA website are insufficient as a matter of law to establish pre-sale knowledge, and (3) Volkswagen never reviewed or saw complaints posted to third-party websites.
First, regarding the alleged defect, Plaintiffs allege the Front Assist sensor does not work as intended and applies the brakes without reason in situations where there is no impending collision. Plaintiffs allege specific examples of the defect; for example, Dack alleges her brakes engaged while driving on the highway even though no objects or cars were near her at the time. (Doc. #1, ¶ 22). Accepting Plaintiffs’ allegations as true under the applicable standard, the Court finds Plaintiffs have sufficiently pled a defect.
Next, regarding the NHTSA complaints, the record reflects three NHTSA complaints were made prior to Hensley-Hauser's purchase in February 2019 and eleven NHTSA complaints were made prior to Dack's purchase in December 2019. Volkswagen argues three and eleven complaints are too few to establish pre-sale knowledge. See Cadena v. Am. Honda Motor Co., No. 18-04007, 2019 WL 3059931, at *12 (C.D. Cal. May 29, 2019) ([f]orty-five, or even fifty-six, complaints out of hundreds of thousands of vehicles does not on its face indicate an unusually high number of complaints ... [t]hese complaints therefore do not show [defendant's] knowledge of the alleged defect"); Elfaridi, 2018 WL 4071155 at *5 (finding "[t]welve monitored complaints of glass breakage are insufficient to infer defendants’ knowledge of a defect affecting thousands of vehicles).
On the other hand, Plaintiffs argue the NHTSA complaints are sufficient to establish pre-sale knowledge. See Myers v. BMW of N. Am., LLC, No. 16-00412, at *4, 2016 WL 5897740 (N.D. Cal. Oct. 11, 2016) (finding two consumer complaints dated before the plaintiffs’ purchase were sufficient to establish the defendant's pre-sale knowledge when read in conjunction with the plaintiff's allegations that the defendant knew of the alleged defect through "dealerships, pre-release data, and training manuals ...."). Plaintiffs also argue their allegations are sufficient at this stage of the litigation, as they cannot be expected to have personal knowledge of Volkswagen's internal communications. See Abels v. Farmers Commodities Corp., 259 F.3d 910, 921 (8th Cir. 2001) (where the plaintiff alleged a scheme to defraud involving mail and wire communications, the court found it may be "impracticable" to plead with particularity the dates and times of communications to which the plaintiff was not a party).
Accepting all Plaintiffs allegations as true, the Court finds Plaintiffs have sufficiently alleged pre-sale knowledge. As in Myers, Plaintiffs do not rely solely on the NHTSA complaints, and like Myers, this Court finds that the NHTSA complaints, when read with Plaintiffs’ allegations that Volkswagen knew of the defect through other internal records, adequately establishes pre-sale knowledge at this stage of the litigation. Volkswagen's motion to dismiss is denied on this point.
3. Plaintiffs have sufficiently pled the element of causation.
Volkswagen argues Plaintiffs have not alleged they relied upon any representations or omissions in deciding to purchase their Class Vehicles in satisfaction of the causation element of the consumer protection claims. Volkswagen further argues Plaintiffs cannot rely upon the Monroney window stickers, a federally mandated label that must include certain vehicle information, to establish causation because those stickers are not required to include all information about the functions and limitations of the vehicle.
Plaintiffs allege they reviewed Class Vehicles advertising and the Monroney window stickers, discussed the features of the Class Vehicles with Volkswagen sales representatives, and test drove the Vehicles; that all of the above omitted or concealed information about the Front Assist defect; and that Plaintiffs would have paid less for, or would not have purchased, the Class Vehicles if they had known about the alleged defect. Volkswagen cites no caselaw in support of their argument that Plaintiffs cannot rely on the window stickers to establish causation. More importantly, the window stickers are not the only materials Plaintiffs allege they relied upon. Accordingly, the Court finds Plaintiffs have sufficiently alleged they relied upon Volkswagen's representations/omissions in deciding to purchase their Class Vehicles.
In conclusion, Plaintiffs have sufficiently alleged omissions, pre-sale knowledge, and causation such that Volkswagen's motion to dismiss the MMPA and KCPA claims is denied.
B. Volkswagen's motion to dismiss Plaintiffs’ breach of express warranty claims (Counts 3 and 39) is granted.
Plaintiffs allege Volkswagen's New Vehicle Limited Warranty (NVLW) provides for repair or replacement of defects in material and/or workmanship for a period of 6 years or 72,000 miles. Volkswagen argues Plaintiffs’ claims for breach of express warranty under Missouri and Kansas law should be dismissed pursuant to Rule 12(b)(6) because Plaintiffs allege a design defect not covered by the warranty.
In opposition, Plaintiffs argue the alleged defect to Front Assist, including software coding, is a manufacturing defect such that it is covered under the warranty. Plaintiffs further argue that the parties should engage in discovery prior to determining whether the alleged defect is a design or manufacturing defect, citing Haag v. Hyundai Motor Am, 969 F. Supp. 2d 313 (W.D.N.Y. 2013).
Plaintiffs allege "Volkswagen failed to adequately research, design, test and/or manufacture the Front Assist feature" and "Volkswagen is experienced in the design and manufacture of consumer vehicles." (Doc. #1, ¶ 137, 138). They describe the alleged defect as "a manufacturing defect (including software coding issues) in the Front Assist feature that causes the braking system to suddenly and unexpectedly engage without reason or driver input." (Doc. #1, ¶ 2). Plaintiffs allege the defect is present in all Class Vehicles.
"[D]efects in material and workmanship refer to departures from a product's intended design while design defects refer to the inadequacy of the design itself." Bruce Martin Const., Inc. v. CTB, Inc., 735 F.3d 750, 753 (8th Cir. 2013). "[A] design defect cannot also be a defect in material and workmanship." Id. at 754 (internal citations omitted). Although Plaintiffs cite to cases in which discovery was permitted before determining the nature of the defects alleged, the Court finds the facts in this case more akin to those in Freeman v. Toyota Motor Sales, USA, Inc., No. 19-02550, 2020 WL 7041810, at *3 (E.D. Mo. Nov. 30, 2020). In Freeman, the court declined to follow cases which permitted discovery before dismissing an express warranty claim for alleging a design defect, finding that the plaintiffs failed to allege sufficient facts "to support a reasonable inference that the alleged defect is one of materials rather than overall design." Id. at *3. The court specified that plaintiffs only made allegations pertaining to the overall system operation, and "not any particular flaws related to the materials or the assembly process." Id. In contrast, the court in Flynn v. CTB, Inc., No. 12-0068, 2013 WL 28244, at *4 (E.D. Mo. Jan. 2, 2013) found "the complaint does not foreclose an express warranty claim because it does not appear to rely solely on a design defect ... the allegation that the defendants have sold retrofit kits to correct the defects suggests that the defect could be one of material and/or workmanship."
This case is similar to Freeman in that Plaintiffs allege no facts from which the Court could draw a reasonable inference that the defect may involve materials or workmanship. Plaintiffs only state there is a software coding defect which causes the brakes to engage unexpectedly. Accordingly, the Court finds that "[i]nsertion of the word ‘manufacturing’ at various places in the complaint is insufficient to survive a motion to dismiss," Freeman, 2020 WL 7041810 at *3, absent additional factual allegations from Plaintiffs. Volkswagen's motion to dismiss is thus granted as to the breach of express warranty claims.
C. Volkswagen's motion to dismiss Plaintiffs’ breach of implied warranty claims (Counts 4 and 40) is granted in part and denied in part.
Volkswagen argues Plaintiffs’ claims for breach of the implied warranty of merchantability under Kansas and Missouri law should be dismissed pursuant to Rule 12(b)(6) because Plaintiffs have not plausibly alleged the Class Vehicles are unfit for their ordinary purpose. Volkswagen further argues the alleged defect does not present a safety risk or render the Class Vehicles inoperable, as Plaintiffs have not alleged they had to stop driving their Class Vehicles, nor have they alleged they had to disengage the Front Assist feature to avoid unwanted spontaneous braking. In opposition, Plaintiffs argue the defect creates a safety issue that establishes a claim for breach of the implied warranty of merchantability. Under Missouri law, the implied warranty of merchantability warrants that the product is "fit for the ordinary purposes for which such goods are used." Elfaridi, at *10 (citing Mo. Rev. Stat. 400.2-314(2)(c) ; Williams v. United Techs. Corp., No.15-04144, 2015 WL 7738370, at *6 (W.D. Mo. Nov. 30, 2015) ). A product does not fall short of this standard simply because it experiences periodic problems. Id. (citing Williams, 2015 WL 7738370, at *6 ). With regard to automobiles, the implied warranty of merchantability can only be breached when the "vehicle manifests a defect that is so basic it renders the vehicle unfit for its ordinary purpose of providing transportation." Id. (citing In re Gen. Motors Corp. Anti-Lock Brake Prod. Liab. Litig., 966 F. Supp. 1525, 1533 (E.D. Mo. 1997), aff'd sub nom. , Briehl v. Gen. Motors Corp., 172 F.3d 623 (8th Cir. 1999) ) (dismissing the implied breach of warranty claim in part because "[p]laintiffs have not alleged brake failure or that they have stopped driving their vehicles because of the defects.").
Under the allegations of the complaint, the Court finds Plaintiffs have not alleged they have stopped driving their vehicles or that they are unfit for their purpose of providing transportation. Although Plaintiffs allege the defect presents a safety issue, they present no facts to support that allegation; to the contrary, that Plaintiffs have chosen not to deactivate the Front Assist feature to avoid the unwanted braking suggests it is not a significant safety issue. Consequently, to the extent Plaintiffs allege breach of implied warranty of merchantability under Missouri law, Plaintiff has not plausibly alleged a breach and the motion to dismiss is granted on this point.
In contrast, Kansas law does not require a plaintiff to show that vehicles are unfit for the purpose of driving. "An implied warranty of merchantability essentially requires that goods sold by a merchant satisfy basic standards of quality or acceptability." Marksberry v. FCA US LLC, 481 F. Supp. 3d 1229, 1237 (D. Kan. 2020) (internal citations omitted). "Pursuant to K.S.A. § 84-2-314(2)(c), a good is merchantable if it is "fit for the ordinary purposes for which such goods are used." Id. "The Kansas Supreme Court has held that a car's ordinary purpose is not limited to its ‘major components affecting transportation.’ " Id. "To demonstrate a breach of the implied warranty of merchantability, a plaintiff must show that the purchased goods were defective, that the defect was present when the goods left the seller's control, and that the defect caused the injury sustained by the plaintiff." Hodges v. Johnson, 288 Kan. 56, 68, 199 P.3d 1251 (Kan. 2009). In Hodges, the court affirmed judgment for the plaintiffs on their claim for breach of warranty of merchantability where plaintiffs alleged a defective air conditioner but did not allege his car was unfit for transportation. Id. Here, Plaintiffs have pled the Front Assist feature was defective at the time of purchase, and therefore the Court finds Plaintiffs have stated a claim for breach of implied warranty of merchantability under Kansas law.
Accordingly, Volkswagen's motion to dismiss on this point is granted as to Plaintiffs’ claim under Missouri law, and denied as to Plaintiffs’ claim under Kansas law.
D. Volkswagen's motion to dismiss Plaintiffs’ claim for violation of the MMWA (Count 1) is denied.
"The MMWA grants the holder of a limited warranty a federal cause of action for a breach of warranty under the applicable state law." Sipe v. Workhorse Custom Chassis, LLC, 572 F.3d 525, 530 (8th Cir. 2009) (citing 15 U.S.C. § 2310(d) ). Accordingly, because Plaintiffs have sufficiently plead an implied warranty claim under Kansas law, the Court finds Plaintiffs have stated a claim under the MMWA and Volkswagen's motion to dismiss is denied on this point.
E. Volkswagen's motion to dismiss Plaintiffs’ equitable claims for unjust enrichment (Counts 5 and 41) is denied.
Finally, Volkswagen argues Plaintiffs’ equitable claims for unjust enrichment should be dismissed because Plaintiffs have not alleged or established that there is no adequate remedy at law. Volkswagen further argues, to the extent the unjust enrichment claims are predicated on the fraud-based claims, Plaintiffs have not established the essential elements of the claims.
In response, Plaintiffs argue they are permitted to plead equitable claims in the alternative and they have pled the essential elements of unjust enrichment.
"To establish the elements of an unjust enrichment claim, the plaintiff[s] must prove that (1) [they] conferred a benefit on the defendant; (2) the defendant appreciated the benefit; and (3) the defendant accepted and retained the benefit under inequitable and/or unjust circumstances." Howard v. Turnbull, 316 S.W.3d 431, 436 (Mo. Ct. App. 2010) (internal citations omitted). A plaintiff is "certainly entitled to bring an unjust enrichment claim as an alternative ground for relief." Id.; Fed.R.Civ.P. 8(e)(2). "The fact that a plaintiff cannot simultaneously recover damages for both breach of an express contract and unjust enrichment does not preclude that plaintiff from pleading both theories in her complaint." Owen v. General Motors Corp., No. 06-4067, 2006 WL 2808632 (W.D. Mo. Sept. 28, 2006). The Court therefore denies Volkswagen's motion to dismiss Plaintiffs’ unjust enrichment claims. Accordingly, it is hereby
ORDERED Defendants’ Motion to Dismiss for Lack of Personal Jurisdiction is GRANTED. All claims alleged by the nonresident Plaintiffs are DISMISSED (Counts 6-37). It is further
ORDERED Defendants’ Motion to Dismiss for Lack of Subject Matter Jurisdiction as to Plaintiffs’ MMWA claim is DENIED. It is further
ORDERED Defendants’ Motion to Dismiss for Failure to State a Claim is GRANTED IN PART AND DENIED IN PART. The Motion is DENIED as to the MMWA (Count 2) and KCPA (Count 38) claims, the breach of implied warranty claim under Kansas law (Count 40), and the unjust enrichment claims (Counts 5 and 41). The Motion is GRANTED as to the breach of implied warranty claim under Missouri law (Count 4) and the breach of express warranty claims (Counts 3 and 39).
IT IS SO ORDERED.