MICHAEL M. BAYLSON, District Judge.
This putative class action asserts violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL") (Count I), unjust enrichment (Count II), breach of express warranty and implied warranty of merchantability (Counts III and IV), and negligent misrepresentation and fraud (Counts V and VI) against Volvo Car Corporation ("VCC") and two of its subsidiaries, Volvo Cars of North America, Inc. ("VCNA") and Volvo Car UK Limited ("VCUK," and together with VCC and VCNA, "Volvo").
Presently before the Court is Defendants' Motion to Dismiss Plaintiffs' Second Amended Complaint. For reasons stated below, the Motion to Dismiss is GRANTED with prejudice.
Plaintiff's claims are based on Defendants' alleged failure to install a Side Impact Protection System ("SIPS") equipped with steel "door bars" in the rear passenger-side doors of Volvo 850 vehicles. The named plaintiff, Ana Webb, alleges that, on May 1, 2009, she purchased one of these (used) vehicles based on advertising that touted Volvo as a leader in automobile safety and that claimed Volvo vehicles contained SIPS on all passenger doors.
The case began with the filing of a class action complaint on May 1, 2013. After VCNA filed a Motion for More Definite Statement (ECF 4), Plaintiffs filed an amended complaint on September 16, 2013 (ECF 12). Then, on October 3, 2013, VCUK filed a Motion to Dismiss for Lack of Jurisdiction (ECF 18), and VCC and VCNA filed a joint Motion for More Definite Statement (ECF 20), which the parties fully briefed. On December 6, 2013, the Court held a hearing with all parties, during which the Court granted leave to Plaintiffs to submit a Second Amended Complaint, which they filed on December 19, 2013. (ECF 49) Also during the December 6, 2013 hearing, Plaintiffs' counsel requested limited discovery in the form of a corporate designee deposition of VCUK. (
On December 30, 2013, Defendants filed a Motion to Stay (ECF 56), in light of a very similar case pending between the parties in the Philadelphia Court of Common Pleas. Defendants also moved for an extension of time to respond to Plaintiffs' Second Amended Complaint. (ECF 57) The Court entered a stay in the case on January 31, 2014 (ECF 63). One year later, the stay expired by its own terms. After the parties engaged in additional motion practice, on June 23, 2015, the Court entered another stay, as the parallel case in Philadelphia Court of Common Pleas had gone to trial but was then pending on appeal. (ECF 92) On June 24, 2016, the Pennsylvania Superior Court vacated part of the Court of Common Pleas' judgment, on the grounds that, having dismissed all negligence claims from the case, the Court should not have instructed the jury that federal vehicle safety standards were relevant to the question of strict product liability.
This Court entered an Order on July 19, 2016, maintaining the federal case in "suspense status" pending the outcome of the related state case. Then, on May 4, 2017, the Pennsylvania Supreme Court denied allocatur. Following that decision, Volvo filed in this Court a motion to lift the stay in this federal case (ECF 97), as well as a Motion to Dismiss Plaintiffs' Second Amended Complaint (ECF 98), and a Motion for Partial Summary Judgment on Court I of Plaintiffs' Second Amended Complaint. (ECF 101)
In summary, more than four years since this case was first filed in this Court,
There being no further grounds for delay, it is now an appropriate time to resolve Defendants' Rule 12(b)(6) Motion to Dismiss.
On May 1, 2009, Plaintiff Ana Webb purchased a used 1997 Volvo 850. (SAC ¶ 30) During the period that the Volvo 850 was manufactured, sold, marketed, and advertised by Volvo, steel anti-intrusion door bars were an industry-standard safety feature in passenger vehicles in the U.S. (
Specifically, Plaintiffs allege six causes of action:
In their Motion to Dismiss, Defendants contend that Counts I (UTPCPL), V (Negligent Misrepresentation), and VI (Fraud) should be dismissed because they lack allegations of justifiable reliance on any statement or advertising by Volvo.
Moreover, Defendants contend that Count II (Unjust Enrichment) should be dismissed because Plaintiffs have not adequately alleged a benefit conferred on Defendants by Plaintiffs, knowledge or appreciation of those benefits by Defendants, or inequitable acceptance and retention of such benefits.
Defendants also contend that Count III (Express Warranty) should be dismissed. To the extent that the claim
Additionally, Defendants contend that, to the extent Plaintiffs rely on a breach of express warranty for their UTPCPL claim (Count I), that should also be dismissed for the same reasons that Count III, mentioned immediately above, should be dismissed.
Lastly, Defendants urge the Court to dismiss Plaintiffs' Implied Warranty claim (Count IV) because the Volvo Limited Warranty confined any implied warranties to four years from the time of sale to the original retail purchaser, which expired long before Plaintiff purchased the used vehicle and the four-year statute of limitations expired.
In response to Defendants' Motion to Dismiss, Plaintiffs assert that they adequately pled justifiable reliance and thus provided sufficient notice to Defendants as to Counts I (UTPCPL), V (Negligent Misrepresentation), and VI (Fraud).
Plaintiffs similarly disagree that their Unjust Enrichment (Count II) claim is inadequately pled, because they alleged that Plaintiffs conferred both direct and indirect benefits on Defendants, Defendants knew that they obtained those benefits, and Defendants acted inequitably in accepting and retaining such benefits.
With respect to their Implied Warranty (Count IV) claim, as well as their Express Warranty (Count III) claim—and the derivative UTPCPL claim—Plaintiffs assert that they adequately highlight the specific written warranties in Volvo's advertising and safety materials that Volvo violated. They also assert that any disclaimer by Volvo was ineffective because it did not state that it applied to design defects and was not conspicuously featured in the relevant materials. Plus, they contend, the four year statute of limitations does not apply because the doctrine of equitable estoppel bars Volvo from lulling Plaintiffs into a sense of false security during the limitations period to prevent timely accountability.
Lastly, Plaintiffs move under Fed. R. Civ. P. 15(a)(2) to file a fourth complaint, should the Court find that their third complaint is inadequate.
Defendants' Reply echoes their assertion that the SAC does not allege any specific document or advertisement that Plaintiff Webb saw and relied upon. Thus, they contend, the UTPCPL, Negligent Misrepresentation, and Fraud claims should be dismissed.
Defendants also assert that, with respect to the Unjust Enrichment claim, they do not dispute that an indirect benefit can be sufficient as a matter of law to establish an unjust enrichment claim. However, they reiterate that Plaintiff Webb does not identify any legally cognizable benefit, direct or indirect, from her purchase of the Volvo 850. They also contend that Plaintiffs do not allege any knowledge or appreciation of such a benefit by Volvo. Defendants' final argument regarding Unjust Enrichment is that the claim rests on the same conduct as the underlying tort claims, and the underlying tort claims should be dismissed.
As to the Breach of Express Warranty claim, Defendants characterize Plaintiffs' Response as clarifying that Plaintiffs are "not predicating [their] express warranty claim on the Limited Warranty," but rather "that an express warranty was created by some unidentified advertisement." (ECF 115, at 7) For the same reason, Defendants urge the Court to dismiss the UTPCPL claim that is based on a breach of express warranty claim.
The Breach of Implied Warranty claim, according to Defendants' Reply, should also be dismissed because it was limited to a four year duration. The fact that the Limited (express) Warranty does not mention design defects, they contend, does not affect whether the implied warranty's duration-limiting language is effective. As to Plaintiffs' assertion that the disclaimer is not conspicuous, Defendants disagree because the disclaimer was in italics and in bold font.
Lastly, Defendants assert that the Implied Warranty claim is barred by a four year statute of limitations, which cannot be equitably estopped because, (1) the SAC does not contain any allegations of equitable estoppel and, (2) Volvo could not have prevented Plaintiff Webb's discovery of her claim because she did not allege that she owned a Volvo 850 during the four year limitations period.
Defendants ask the Court to deny Plaintiffs' request to amend the complaint and file a fourth complaint, because Plaintiff Webb has not shown how she would cure any of the defects in the SAC.
A party may move to dismiss a complaint for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). When considering such a motion, the Court must "accept as true all allegations in the complaint and all reasonable inferences that can be drawn therefrom, and view them in the light most favorable to the non-moving party."
Although a plaintiff is entitled to all reasonable inferences from the facts alleged, a plaintiff's legal conclusions are not entitled to deference and the Court is "not bound to accept as true a legal conclusion couched as a factual allegation."
In deciding a Rule 12(b)(6) motion, the Court limits its inquiry to the facts alleged in the complaint and its attachments, matters of public record, and undisputedly authentic documents if the complainant's claims are based upon these documents.
Federal Rule of Civil Procedure 9(b) adds an additional pleading requirement to certain claims: "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). This heightened pleading standard applies to Plaintiff's fraudulent misrepresentation, negligent misrepresentation, and UTPCPL claims.
To satisfy Rule 9(b)'s pleading requirements, a plaintiff must "plead or allege the date, time and place of the alleged fraud or otherwise inject precision or some measure of substantiation into a fraud allegation."
Plaintiffs label Count VI of their SAC as "Fraud," although it is clear from the allegations of that Count that it could more specifically be labeled as "Fraudulent Misrepresentation" and/or "Fraudulent Inducement." (
Under Pennsylvania law, claims for fraudulent misrepresentation or inducement have six elements:
Defendants assert throughout their Motion to Dismiss that the Court should dismiss Plaintiffs' fraud claim because Plaintiff Webb has not adequately alleged justifiable reliance on a specific misleading misrepresentation. In response, Plaintiffs rely on two paragraphs of the SAC, which they contend satisfy "notice pleading" requirements:
(SAC ¶¶ 6, 11)
It is clear that Plaintiffs' allegations fall short of what is legally required. Plaintiff Webb does not at any time allege a single actual representation made by Volvo that she justifiably relied upon.
Notably, Plaintiffs' original complaint also did not identify any specific misleading representation that was seen, heard, and relied upon to purchase the Volvo 850. (ECF 1) Defendants specifically moved for a more definite statement on this ground (ECF 4), and Plaintiffs submitted an amended complaint that identified an allegedly misleading representation, which specified a Volvo brochure which did not, on its face, pertain to the same Volvo model (850) which is the subject matter of this case. (ECF 12) However, the First Amended Complaint's identified representation has been improperly altered by Plaintiffs' prior counsel to make it appear relevant to this case in ways that it was not. (Hearing on 12/17/13, at 56, ECF 49) This Court once again granted Plaintiffs leave to amend, and Plaintiffs removed the misleading exhibit. However, this left them again without any specific misleading representation alleged. (ECF 54) In sum, Plaintiffs have had three opportunities to properly allege fraudulent misrepresentation by Defendants, and have repeatedly failed. Permitting Plaintiffs a fourth opportunity would be futile.
In Pennsylvania, a claim of negligent misrepresentation requires proof of: "(1) a misrepresentation of a material fact; (2) made under circumstances in which the misrepresenter ought to have known its falsity; (3) with an intent to induce another to act on it; and (4) which results in injury to a party acting in justifiable reliance on the misrepresentation."
As with Plaintiffs' fraud claim, and for the same reasons expressed above, their claim for negligent misrepresentation fails under Rule 12(b)(6). Plaintiffs have failed to allege a single specific misrepresentation by Defendants that Plaintiffs justifiably relied upon.
Also for the same reasons, permitting Plaintiffs to file a fourth complaint would be an exercise in futility.
Defendants assert that the Court should dismiss Plaintiffs' breach of express warranty claim because Plaintiff Webb did not allege that she read and relied on a specific advertisement or other representation that created a warranty. In their Response, Plaintiffs make clear that their express warranty claim is "based on Volvo's deceptive advertising." (ECF 111, at 14)
Under Pennsylvania law, "express warranties are bargained, `dickered,' individualized promises that the goods will perform up to the specific standards set forth in that warranty."
Thus, to state a cognizable claim for breach of express warranty, a plaintiff must allege both that the defendant made "an actual affirmation of fact or a promise," and that the affirmation of fact or promise "formed the basis of the bargain" between the defendant and the plaintiff.
There is no allegation whatsoever in Plaintiffs' SAC as to what express warranty was seen, heard, and believed by Plaintiff Webb. Having had three opportunities over the past four years to adequately plead such a warranty, Plaintiffs will not have a fourth. Amendment of this claim would also be futile.
The elements that prove a breach of the implied warranty of merchantability are essentially the same as those to recover on a strict products liability claim.
Defendants contend that the Court should dismiss Plaintiffs' breach of implied warranty claim because the statute of limitations for breach of an implied warranty is four years from the date that the seller tenders the goods to the
It is undisputed that the statute of limitations for breach of implied warranty is four years from the date the seller tenders the goods to the original purchaser. 13 Pa. Cons. Stat. § 2725 (a) & (b). Plaintiff bought the car
Plaintiffs contend that, irrespective of the statute of limitations period, equitable estoppel serves as a bar to dismissal of this claim because Volvo "cause[d] the plaintiff to relax his vigilance or deviate from his right of inquiry into the facts."
However, there is no allegation of unintentional deception, fraud, or concealment that meets the
Plaintiffs also contend that, because the statute of limitations defense is an "affirmative defense," it should not preclude them from filing an amended complaint. (ECF 111, at 20 n.3) Under Fed. R. Civ. P. 8(c), the statute of limitations constitutes an affirmative defense to an action. However, the limitations defense may be raised on a motion under Rule 12(b)(6) when "the time alleged in the statement of a claim shows that the cause of action has not been brought within the statute of limitations."
Moreover, Defendants' other ground for dismissal does not rely upon an affirmative defense. Defendants correctly point out that Volvo's Limited Warranty limited the duration of any implied warranty of merchantability to the period of the express warranty (i.e., four years). Volvo's Limited Warranty is attached to the Motion to Dismiss as Exhibit 2, and it contains an explicit limitation on the Warranty Period of four years or 50,000 miles. (
However, Plaintiffs assert that the "disclaimer" (i.e., duration and mileage limitation) of the implied warranty of merchantability is ineffective because the express warranty and its disclaimer do not apply to design defects (ECF 111, at 16). Specifically, Plaintiffs cite and mentioned at oral argument
Plaintiffs also assert that the disclaimer is not sufficiently conspicuous under 13 Pa. Cons. Stat. § 2316(b) (2016). (ECF 111, at 16.) The Pennsylvania Uniform Commercial Code allows for implied warranties, including the implied warranty of merchantability, to be disclaimed as long as the disclaimer is "conspicuous." 13 Pa. C.S.A. § 2316(b). A clause or term is deemed to be "conspicuous" when it is "so written, displayed or presented that a reasonable person against which it is to operate ought to have noticed it." 13 Pa. C.S.A. § 1201(b)(10). The duration limitation is presented in the booklet in italicized and bolded font:
(ECF 100, at 9.)
Conspicuous terms include those "in contrasting type, font or color to the surrounding text of the same or lesser size." 13 Pa. Cons. Stat. § 1201(b)(10). The above duration limitation clearly qualifies.
Because Plaintiffs cannot overcome the statute of limitations defense, and separately, because the implied warranty of merchantability was no longer in effect at the time that the Webbs took possession of the vehicle, this claim must be dismissed. No additional allegations could possibly demonstrate that amendment would be anything but futile, given that no further detail about the case could change the mileage of the car or the amount of time that had expired at the time that the Webbs took possession of the Volvo in question.
Under Pennsylvania law, the elements of unjust enrichment have been defined as, (1) benefits conferred on defendant by plaintiff; (2) appreciation of such benefits by defendant; (3) acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value.
Plaintiff Webb contends that Volvo benefitted from producing and selling Volvo 850s at a lower cost than it would have been able to had it installed steel bars in its backseat doors. In this way, Plaintiff Webb alleges, Volvo benefitted at her expense. Plaintiff Webb also contends that, by purchasing and driving a used Volvo 850, she benefitted Volvo by (1) promoting Volvo's brand, (2) contributing to the market for Volvo parts and service, and (3) inducing initial purchasers to buy Volvos by bolstering resale value. None of these benefits are legally sufficient.
Plaintiffs cite and mentioned at oral argument
What Plaintiffs fail to address, however, is the fact that Defendants concede this point. Defendants do not dispute that, as a matter of law, indirect purchasers can establish claims for unjust enrichment. (
Moreover, irrespective of Defendants' intent, or lack thereof, in allegedly "accepting" and/or "retaining" such generalized benefits,
The Third Circuit has emphasized that under Fed. R. Civ. P. 15(a), "leave to amend should be `freely given when justice so requires,'" and "`a district court must permit a curative amendment unless such an amendment would be inequitable or futile.'"
An amendment is considered futile if "the complaint, as amended, would fail to state a claim upon which relief could be granted."
At oral argument, Plaintiffs' counsel stated that the precise advertisements alleged in the SAC need not specifically be mentioned because Volvo "knows" which advertisements to which Plaintiffs are referring, and in any event, those advertisements can be specifically added if the Court permits Plaintiffs to submit a fourth complaint. One such advertisement was handed to the Court as an exemplar of the materials that Plaintiffs would submit if provided the opportunity. The Court has seen the same pamphlet several times before, as it was attached to the First Amended Complaint (ECF 12, at 4), handed to the Court during a hearing held on December 6, 2013 (ECF 49, at 20-21), and the subject of extensive proceedings on a Motion for Sanctions filed by Defendants (ECF 32). In fact, it is the exact exhibit that was altered by Plaintiffs' prior counsel. Even if the Court were to consider this brochure, and the other materials which have been submitted or otherwise presented to this Court on prior occasions, Plaintiffs' allegations would not even come close to providing sufficient support for Plaintiffs' claims to overcome another motion to dismiss.
Here, Plaintiffs have had three opportunities to properly allege a case against Defendants, and they have repeatedly failed. For reasons expressed throughout this opinion, permitting Plaintiffs a fourth opportunity would be futile.
For the reasons stated above, Defendants' Motion to Dismiss is GRANTED with prejudice with respect to all counts.
An appropriate Order follows.