Opinion
No. C21-1015-LTS
2022-04-04
RJ'S LEASING, INC. and Simon's Trucking, Inc., Plaintiffs, v. NAVISTAR, INC., Defendant.
Clayton J. Callen, Jeffrey S. Patterson, Brian J. Sawyer, Hartline Barger LLP, Dallas, TX, Stephanie L. Hinz, Pickens Barnes & Abernathy, Cedar Rapids, IA, for Defendant. Joshua Lloyd Christensen, John L. Riccolo, Tim Semelroth, RSH Legal PC, Cedar Rapids, IA, Lawrence Ray Lassiter, Miller Weisbrod, LLP, Dallas, TX, for Plaintiffs.
Clayton J. Callen, Jeffrey S. Patterson, Brian J. Sawyer, Hartline Barger LLP, Dallas, TX, Stephanie L. Hinz, Pickens Barnes & Abernathy, Cedar Rapids, IA, for Defendant.
Joshua Lloyd Christensen, John L. Riccolo, Tim Semelroth, RSH Legal PC, Cedar Rapids, IA, Lawrence Ray Lassiter, Miller Weisbrod, LLP, Dallas, TX, for Plaintiffs.
ORDER ON DEFENDANT'S MOTION TO DISMISS
Leonard T. Strand, Chief Judge I. INTRODUCTION
This case is before me on a motion (Doc. 22) to dismiss by defendant Navistar, Inc. (Navistar). Plaintiffs Simon's Trucking, Inc., and RJ's Leasing, Inc. have filed a resistance (Doc. 25) and Navistar has filed a reply (Doc. 26). Oral argument is not necessary. See Local Rule 7(c).
II. BACKGROUND
This dispute concerns the purchase and performance of sixteen Navistar International ProStar trucks purchased by RJ's Leasing between December 2011 and December 2012 and subsequently leased to Simon's Trucking. Doc. 1 at ¶ 12. RJ's Leasing alleges that each of the trucks experienced at least one breakdown of the exhaust gas recirculation (EGR) system within the warranty period. Id. at ¶ 17. The trucks were in the shop for warrantied repairs on more than 100 separate occasions. Id. at ¶ 30. Plaintiffs allege that despite Navistar's warranties, Navistar was never able to effectively repair the EGR systems and denied or otherwise refused to perform repairs or replace parts under the express warranty. Id. at ¶ 19. RJ's Leasing eventually sold the trucks, stating it received sale prices significantly below the industry average for comparable trucks. Plaintiffs allege the following claims:
Plaintiffs allege that the EGR system recirculates the exhaust gas produced by the engine back into the engine to be re-combusted. Navistar was the only manufacturer of heavy-duty commercial trucks to rely exclusively on the EGR system to meet the new emissions standards implemented by the United States Environmental Protection Agency in 2010. Doc. 1 at ¶¶ 10-11. Other manufacturers used a combination of EGR and selective catalytic reduction (SCR) technologies. Id.
• Count I – Breach of Express Warranty
• Count II – Breach of Contract
• Count III – Breach of Implied Warranty
• Count IV – Fraud
• Count V – Fraudulent Concealment
• Count VI – Unconscionability of All Warranty Disclaimers and Limitations on Remedies/Damages
Doc. 1.
The parties agree on the following timeline of events concerning plaintiffs’ lawsuits against Navistar.
• December 17, 2015 – plaintiffs filed suit in Iowa District Court for Linn County naming Navistar and another defendant. Plaintiffs voluntarily dismissed this complaint.
• November 23, 2016 – plaintiffs filed suit in United States District Court for the Northern District of Texas naming Navistar as the only defendant. This case was conditionally transferred to a multidistrict litigation pending in the United States District Court for the Northern District of Illinois and then remanded
back to the Northern District of Texas.
• January 26, 2021 – the Northern District of Texas dismissed the complaint for lack of personal jurisdiction
• July 26, 2021 – plaintiffs filed their complaint in this court against Navistar
The parties agree that plaintiffs’ claims against Navistar accrued no later than 2013.
III. APPLICABLE STANDARDS
Plaintiffs assert diversity of citizenship subject matter jurisdiction pursuant to 28 U.S.C. § 1332. It is "well-settled that in a suit based on diversity of citizenship jurisdiction the federal courts apply federal law as to matters of procedure but the substantive law of the relevant state." Hiatt v. Mazda Motor Corp. , 75 F.3d 1252, 1255 (8th Cir. 1996) (citing Erie R.R. Co. v. Tompkins , 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) ). Here, the parties agree that Iowa law applies.
Navistar seeks dismissal based on statute of limitations arguments under Iowa's savings statute and borrowing statute, as well as under the Federal Rules of Civil Procedure for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). The Supreme Court has provided the following guidance in considering whether a pleading properly states a claim:
See Iowa Code § 614.10 ("If, after the commencement of an action, the plaintiff, for any cause except negligence in its prosecution, fails therein, and a new one is brought within six months thereafter, the second shall be held a continuation of the first.").
See Iowa Code § 614.7 ("When a cause of action has been fully barred by the laws of any country where the defendant has previously resided, such bar shall be the same defense here as though it had arisen under the provisions of this chapter; but this section shall not apply to causes of action arising in this state.").
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." As the Court held in [ Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 127 S. Ct. 1955, 167 L.Ed.2d 929 (2007) ], the pleading standard Rule 8 announces does not require "detailed factual allegations," but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation. Id. , at 555, 127 S. Ct. 1955 (citing Papasan v. Allain , 478 U.S. 265, 286, 106 S. Ct. 2932, 92 L.Ed.2d 209 (1986) ). A pleading that offers "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." 550 U.S. at 555, 127 S. Ct. 1955. Nor does a complaint suffice if it tenders "naked assertion[s]" devoid of "further factual enhancement." Id. , at 557, 127 S. Ct. 1955.
To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Id. , at 570, 127 S. Ct. 1955. 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. Id. , at 556, 127 S. Ct. 1955. The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Ibid. Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility
of ‘entitlement to relief.’ " Id. at 557, 127 S. Ct. 1955 (brackets omitted).
Ashcroft v. Iqbal , 556 U.S. 662, 677-78, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
Courts assess "plausibility" by " ‘draw[ing] on [their own] judicial experience and common sense.’ " Whitney v. Guys, Inc. , 700 F.3d 1118, 1128 (8th Cir. 2012) (quoting Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ). Also, courts " ‘review the plausibility of the plaintiff's claim as a whole, not the plausibility of each individual allegation.’ " Id. (quoting Zoltek Corp. v. Structural Polymer Grp. , 592 F.3d 893, 896 n.4 (8th Cir. 2010) ). While factual "plausibility" is typically the focus of a Rule 12(b)(6) motion to dismiss, federal courts may dismiss a claim that lacks a cognizable legal theory. See, e.g., Somers v. Apple, Inc. , 729 F.3d 953, 959 (9th Cir. 2013) ; Ball v. Famiglio , 726 F.3d 448, 469 (3d Cir. 2013) ; Commonwealth Prop. Advocates, L.L.C. v. Mortg. Elec. Registration Sys., Inc. , 680 F.3d 1194, 1202 (10th Cir. 2011) ; accord Target Training Intern., Ltd. v. Lee , 1 F. Supp. 3d 927 (N.D. Iowa 2014).
In considering a Rule 12(b)(6) motion to dismiss, ordinarily the court "cannot consider matters outside the pleadings without converting the motion into a motion for summary judgment." McMahon v. Transamerica Life Ins. , No. C17-149-LTS, 2018 WL 3381406, at *2 n.2 (N.D. Iowa July 11, 2018) ; see Fed. R. Civ. P. 12(b)(6). On the other hand, when a copy of a "written instrument" is attached to a pleading, it is considered "a part of the pleading for all purposes," pursuant to Federal Rule of Civil Procedure 10(c). Thus, when the pleadings necessarily embrace certain documents, I may consider those documents without turning a motion to dismiss into a motion for summary judgment. Id.
When a complaint does not state a claim for relief that is plausible on its face, the court must consider whether it is appropriate to grant the pleader an opportunity to replead. The rules of procedure permit a party to respond to a motion to dismiss by amending the challenged pleading "as a matter of course" within 21 days. See Fed. R. Civ. P. 15(a)(1)(B). Thus, when a motion to dismiss highlights deficiencies in a pleading that can be cured by amendment, the pleader has an automatic opportunity to do so. When the pleader fails to take advantage of this opportunity, the question of whether to permit an amendment depends on considerations that include:
whether the pleader chose to stand on its original pleadings in the face of a motion to dismiss that identified the very deficiency upon which the court dismissed the complaint; reluctance to allow a pleader to change legal theories after a prior dismissal; whether the post-dismissal amendment suffers from the same legal or other deficiencies as the dismissed pleading; and whether the post-dismissal amendment is otherwise futile.
Meighan v. TransGuard Ins. Co. of Am. , 978 F. Supp. 2d 974, 982 (N.D. Iowa 2013).
IV. ANALYSIS
A. Are Plaintiffs’ Fraud and Implied Warranty Claims Barred by Iowa's Five-Year Statute of Limitations?
Iowa provides a five-year statute of limitations for actions founded on unwritten contracts and fraud. See Iowa Code § 614.1(4). The parties agree that plaintiffs’ claims accrued no later than 2013. Plaintiffs argue their fraud and implied warranty claims (Counts III, IV and V) remain timely under Iowa's savings statute, which provides: "If, after the commencement of an action, the plaintiff, for any cause except negligence in its prosecution, fails therein, and a new one is brought within six months thereafter, the second shall be held a continuation of the first." Iowa Code § 614.10. "There are four prerequisites for claiming relief under this section: (1) failure of a former action not caused by the plaintiff's negligence; (2) the commencement of a new action brought within six months thereafter; (3) the parties must be the same; and (4) the cause of action must be the same." Wetter v. Dubuque Aerie No. 568 of the Fraternal Ord. of Eagles , 588 N.W.2d 130, 132 (Iowa Ct. App. 1998). "[S]avings statutes are generally regarded as remedial and are liberally construed to provide for trials on the merits, but a proper balance must always be struck between the competing policies of the statute of limitations and the savings statute." Rivera v. Woodward Resource Ctr. , 830 N.W.2d 724, 730 (Iowa 2013). Plaintiffs argue they meet these criteria because their case was refiled within six months of dismissal by the Northern District of Texas for lack of personal jurisdiction and the parties and causes of action are the same.
Navistar argues the savings statute is inapplicable because this is plaintiffs’ third lawsuit, rather than second. See Veatch v. Bartels Lutheran Home , 804 N.W.2d 530, 537 (Iowa Ct. App. 2011) ("The language of section 614.10 does not save multiple or successive refilings – it saves only the first refiling. [A third] suit is therefore untimely and barred by the statute of limitations."). Plaintiffs argue that because their claims were timely when filed in the Northern District of Texas, Veatch is inapplicable. In Veatch , the first lawsuit was filed in federal court. The court granted defendants’ motion for summary judgment and declined to exercise jurisdiction over the remaining state-law claims, dismissing them without prejudice. Id. at 532. Plaintiffs filed another lawsuit in an Iowa district court asserting their state tort claims. This lawsuit was filed outside the statute of limitations but within the six-month period of the savings statute. Id. Plaintiffs voluntarily dismissed their claims against one set of defendants but maintained the action against another set of defendants. Plaintiffs then filed a separate (third) lawsuit against the previously-dismissed defendants in state court and within the savings statute. Id. The district court dismissed this lawsuit, finding that Iowa's savings statute allowed only one refiling within the six-month period. The Iowa Court of Appeals affirmed. Id. at 537.
Plaintiffs distinguish Veatch on grounds that when they filed their complaint in the Northern District of Texas, their claims were still within the statute of limitations and did not rely on the savings statute. Navistar relies on the statutory language of "second" lawsuit and notes that courts have dismissed third lawsuits under similar circumstances where the first two were timely, but the third relied on the savings statute. See Mitchell v. Joyner , No. 14-cv-997, 2015 WL 12806578, at *3-4 (W.D. Mo. July 28, 2015) ; Evans ex rel. Evans v. Lederle Labs. , 167 F.3d 1106, 1110 (7th Cir. 1999). In Mitchell , the court applied Iowa's savings statute. Plaintiff's first lawsuit was dismissed for lack of subject matter jurisdiction. While she appealed the dismissal, she filed a second lawsuit, which was dismissed as frivolous under 28 U.S.C. § 1915. She filed a third lawsuit, approximately 16 months after the United States Supreme Court denied her writ of certiorari from the appeal of her first lawsuit. The court dismissed this action as being outside the six-month savings period. Citing Veatch , the court stated "the plain language of the statutory provision only contemplates a second action" and determined the Iowa savings statute was not applicable to her claims. Mitchell , 2015 WL 12806578, at *3-4.
It is not clear whether her second lawsuit was filed within the statute of limitations or whether it was filed within six months after the Supreme Court denied her writ of certiorari. See Mitchell , 2015 WL 12806578, at *3-4. It is also not clear when the second lawsuit was dismissed. Without these facts, Mitchell is not necessarily supportive of Navistar's argument.
Evans was cited by the Veatch court and based on an Illinois savings statute, which provides for "one and only one refiling" and has been interpreted to mean "one, and only one, refiling of a claim even if the statute of limitations has not expired." Flesner v. Youngs Dev. Co. , 145 Ill.2d 252, 164 Ill.Dec. 157, 582 N.E.2d 720, 721 (1991). Ohio's savings statute similarly provides that a plaintiff "may commence a new action within one year ... or within the period of the original applicable statute of limitations, whichever occurs later." Ohio Rev. Code § 2305.19 ; see also Rector v. Dorsey , No. 109835, 2021 WL 3422857, at *2-3 (Ohio Ct. App. Aug. 5, 2021) (noting that even if the plaintiff refiles an action before the expiration of the statute of limitations, the refiled complaint is considered to be filed under the savings statute such that a third filing would be barred). By contrast, when a savings statute is not as specific, courts have made a distinction for subsequent lawsuits that are filed within the statute of limitations. See Balsinger v. Gass , 214 Tenn. 343, 379 S.W.2d 800, 805 (1964) (concluding that second action did not utilize the savings statute because it was brought within the statute of limitations and that third action was allowed under savings statute because it was the only action that relied on the savings statute and was brought within one year after the dismissal of the second action); Heintz v. Swimmer , 922 S.W.2d 772, 775 (Mo. Ct. App. 1996) ("The action giving rise to the benefit of the savings statute may be the first action or a subsequent one, so long as it was filed within the original period of limitations.").
Navistar argues this is plaintiffs’ second refiling under the savings statute and third lawsuit. Plaintiffs argue this is their first use of the savings statute. Veatch is easily distinguished because plaintiffs’ second lawsuit in that case was filed outside the statute of limitations but within the six-month period of the savings statute. Veatch , 804 N.W.2d at 532. Their third lawsuit was a second refiling under the savings statute. Here, plaintiffs’ second lawsuit was filed within the statute of limitations and did not rely on the savings statute. Many courts acknowledge that a savings statute is "only used when the original statute of limitations period expires in the interim between the filing of the complaint and the time at which either a nonsuit is entered or the judgment is reversed or arrested." Elzea v. Perry , 340 Ark. 588, 12 S.W.3d 213, 216 (2000) ("the original statute of limitations had not yet expired, and thus, the savings statute is simply irrelevant."); Ewing v. State, Dept. of Transp. , 235 P.3d 776, 782 (Utah Ct. App. 2010) ("Where the Ewings’ action was dismissed prior to the expiration of the statute of limitations, the trial court properly concluded that the savings statute was not invoked."). Under this interpretation, plaintiffs did not avail themselves of the savings statute when filing their second lawsuit in the Northern District of Texas because the statute of limitations period had not yet expired at that time. Thus, I agree with plaintiffs that the lawsuit in this court constitutes the first use of the savings statute. There is an additional reason why the second lawsuit cannot be considered the first use of the savings statute. Under Iowa's statute, voluntary dismissals are not considered to have "failed" absent some compulsion to dismiss. See Furnald v. Hughes , 804 N.W.2d 273, 282 (Iowa 2011) ("for a voluntary dismissal to be within the scope of the term ‘fails’ under the savings statute, there must be a compulsion to the extent that a plaintiff's entire underlying claim has been, for all practical purposes, defeated."). While the parties do not describe the details of the voluntary dismissal of the first lawsuit, its description as a voluntary dismissal suggests that the second lawsuit in the Northern District of Texas would not have met the requirements of Iowa's savings statute, even if the statute of limitations had run in the interim. As such, the lawsuit in the Northern District of Texas cannot be viewed as the first use of Iowa's savings statute.
Because the filing of this lawsuit constitutes plaintiffs’ first filing under Iowa's savings statute, and meets the statute's requirements, Navistar's motion to dismiss on this basis is denied.
This conclusion applies not only to plaintiffs’ fraud and implied warranty claims (Counts III, IV and V) under Iowa's five-year statute of limitations, but also to plaintiffs’ contract-based claims (Counts I, II and VI) under Illinois’ four-year statute of limitations and Washington's six-year statute of limitations. See Doc. 22-1 at 6-9 (seeking dismissal of contract-based claims for the same reasons as the fraud and implied warranty claims). Navistar is not entitled to the dismissal of any claims under Rule 12(b)(6) on a statute of limitations theory.
B. Do Plaintiffs Fail to State a Claim of Unconscionability?
Navistar also seeks dismissal of Count VI based on Rule 12(b)(6). It argues that plaintiffs must allege facts that amount to more than an imprudent bargain. It contends the limitations of remedies and damages conspicuously set out in the warranties at issue do not amount to unconscionability. With regard to procedural unconscionability, Navistar notes the contractual limitations are set out in bold and capitalized and that plaintiffs are sophisticated business entities in the trucking industry.
Plaintiffs argue they have pleaded unconscionability to preserve their arguments with respect to anticipated contentions by Navistar that the disclaimer language in its warranty, among other things, (1) precludes plaintiffs from demonstrating justifiable reliance on Navistar's pre-sale misrepresentations and (2) precludes a court from awarding consequential damages. Plaintiffs characterize Navistar's warranty as a classic adhesion contract and contend that the court cannot determine whether any part of the agreement was unconscionable without considering evidence of the parties’ dealings. Alternatively, plaintiffs seek leave to amend their complaint.
Iowa Code § 554.2302 provides:
If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
"A contract is unconscionable where no person in his or her right senses would make it on the one hand, and no honest and fair person would accept it on the other hand." Homeland Energy Solutions, LLC v. Retterath , 938 N.W.2d 664, 704 (Iowa 2020) (quoting Albaugh v. Reserve , 930 N.W.2d 676, 687 (Iowa 2019) ). The court should consider factors such as "assent, unfair surprise, notice, disparity of bargaining power, and substantive unfairness." Id. (quoting C&J Vantage Leasing Co. v. Wolfe , 795 N.W.2d 65, 80 (Iowa 2011) ). "[T]he doctrine of unconscionability does not exist to rescue parties from bad bargains." Bartlett Grain Co., LP v. Sheeder , 829 N.W.2d 18, 27 (Iowa 2013). "Procedural unconscionability involves an advantaged party's exploitation of a disadvantaged party's lack of understanding, unequal bargaining power between the parties, as well as the use of fine print and convoluted language." Id. at 705. "A substantive unconscionability analysis focuses on the ‘harsh, oppressive, and one-sided terms’ of a contract.’ " Id. at 707 (quoting In re Marriage of Shanks , 758 N.W.2d 506, 515 (Iowa 2008) ). "Iowa law does not require both procedural and substantive unconscionability to find a contract or provision unconscionable; instead either type of unconscionability may render the contract provision unconscionable." Brown v. Louisiana-Pacific Corp. , 820 F.3d 339, 353 (8th Cir. 2016) (citing In re Marriage of Shanks , 758 N.W.2d at 516-19 ).
Plaintiffs allege the following in support of their unconscionability claim:
101. This is an action by Plaintiffs seeking a determination that any and all disclaimers or limitations of damages contained in Navistar warranty documentation, including but not limited to the boilerplate express warranty and extended warranty are unenforceable.
102. Plaintiff realleges and readopt paragraphs 1 - 99 as if set forth herein.
103. Navistar's acts have rendered all exclusive or limited express warranties or limited remedies inapplicable because they have failed their essential purpose in that no amount of repair has been able to effectively remedy the defects in materials and/or workmanship in the 16 Trucks purchased by Plaintiff RJ, as even if Navistar exercised good faith, Navistar did not (and could not) fulfill within a reasonable time its obligation to replace or completely repair the equipment.
104. Additionally, or in the alternative, any and all attempts to limit the damages and remedies available to Plaintiffs in any agreement, Navistar's actions as expressed herein make all such attempted limitations unconscionable.
105. Specifically, Navistar's fraud and fraudulent concealment involving the withholding of critical information as described in this Complaint shows the unfairness that tainted the negotiation process between these parties, as Navistar specifically misled Plaintiff RJ as to the basis of the bargain between the parties and no voluntary meeting of the minds was possible with respect to the inconspicuous attempts at limiting remedies/damages. Navistar acted with deception both substantively and procedurally and as such the attempted limitation of damages and remedies by Navistar is outrageous.
106. Additionally, Navistar acted in an unfair and grossly unfair manner as described herein, by failing to act with good faith as Navistar did not proceed with honesty in fact and the observance of reasonable commercial standards of fair dealing. The inequality between Navistar and Plaintiff RJ was so gross as to shock the conscience. The purchase of the Trucks based on the fraud of Navistar created a transaction that Plaintiff RJ, had it not been under the delusion created by Navistar, would not have entered into.
107. Plaintiffs asks the Court to declare that they are entitled to recover all damages available to them under the law from Navistar because all exclusive or limited express warranties have failed in
their essential purpose, and all attempted limitations of remedies/damages are unconscionable.
108. Further, any limitations or remedies or disclaimers are void as being unconscionable because they were not presented to nor agreed to by Plaintiffs prior to entering into the transactions for the purchase of the Trucks.
Doc. 1 at 22-23. Plaintiffs have attached the warranties at issue to their complaint. See Docs. 1-1 and 1-2.
The limited warranty for the base vehicle provides that Navistar will "repair or replace any part of this vehicle which proves defective in material and/or workmanship in normal use and service, with new or ReNEWed parts, for the first 12 months from new vehicle delivery date, or for 100,000 Miles (160,000 Km) plus the miles/kilometers at the time the vehicle had the DTU (delivered to user) performed, whichever expiration occurs first. Doc. 1-1. It also provides additional warranty coverage for MaxxForce® components. The extended warranty purchased by RJ Leasing was for 60 months, or 500,000 miles or 800,000 Km from vehicle delivery date, whichever came first. See Doc. 1-2.
Navistar relies on arguments that the limitations are expressly permitted under Iowa law, conspicuous and agreed upon by two sophisticated parties. While that may be true, plaintiffs allege that Navistar withheld information that tainted the negotiation process such that plaintiff RJ Leasing was misled as to the basis of the bargain. They allege Navistar knew about the issues with the EGR technology and knew it could not fulfill its warranties. Plaintiffs’ allegations go beyond merely stating there was unequal bargaining power or lack of meaningful choice related to the limitations on the warranties. Those allegations, if true, are sufficient to support a claim of unconscionability. See Carlson v. Gen. Motors Corp. , 883 F.2d 287, 295-96 (4th Cir. 1989) (plaintiffs sufficiently alleged unconscionability based on allegations that defendant knew of inherent defects in its diesel engines and that bargaining between the parties was tainted by concealment of relevant facts such that plaintiffs had no meaningful choice when they accepted the warranty limitations); Skeen v. BMW of North America, LLC , Civ. No. 2:13-cv-1531-WHW-CLW, 2014 WL 283628, at *14 (D.N.J. Jan. 24, 2014) (finding plaintiffs had sufficiently pled unconscionability where defendants knew about a defect before plaintiffs purchased their vehicles and manipulated the warranty terms to avoid paying for it); In re Porsche Cars North America, Inc. , 880 F. Supp.2d 801, 822 (S.D. Ohio 2012) ("although a manufacturer's knowledge of a defect will not invalidate a durational limitation, the relevant question in the unconscionability context is whether one party abused its superior knowledge and the opposing party's relative ignorance so as to create an exchange of obligations that is substantively unconscionable."). See also Restatement (Second) of Contracts § 208 ("knowledge of stronger party that the weaker party will be unable to receive substantial benefits from the contract" or that "the transaction involved elements of deception or compulsion" or that "the weaker party had no meaningful choice, no real alternative, or did not in fact assent or appear to assent to the unfair terms" may contribute to a finding of unconscionability).
Because plaintiffs have alleged a plausible claim of unconscionability, Navistar's motion to dismiss Count VI is denied.
V. CONCLUSION
For the reasons set forth herein, Navistar's motion (Doc. 22) to dismiss is denied in its entirety.