Owen v. General Motors Corp.

• Decision Date: 17 July 2008
• Docket Number: No. 07-2621.,07-2621.
• Citation: 533 F.3d 913
• Parties: Timothy C. OWEN; Gloria J. Owen, Appellants, v. GENERAL MOTORS CORPORATION, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

533 F.3d 913

Timothy C. OWEN; Gloria J. Owen, Appellants, v. GENERAL MOTORS CORPORATION, Appellee.

No. 07-2621.

United States Court of Appeals, Eighth Circuit.

Submitted: March 14, 2008.

Filed: July 17, 2008.

Daniel W. Anderson, argued, Tampa, FL, A. Anderson B. Dogali, Tampa, FL, Thomas H. Rost, Jefferson City, MO, on the brief, for appellant.

John K. Sherk III, argued (Laurel J. Harbour and Matthew C. Miller, on the brief), Shook, Hardy & Bacon L.L.P., Kansas City, MO, for appellee.

Before WOLLMAN, HANSEN, and MELLOY, Circuit Judges.

HANSEN, Circuit Judge.

Timothy and Gloria Owen brought this putative class action suit against General Motors Corporation (GM) after their windshield wipers failed, asserting claims of breach of warranty, breach of contract, unjust enrichment, fraudulent concealment, and violation of the Missouri Merchandising Practices Act (MMPA), Mo. Rev.Stat. § 407.025 (2000). See 28 U.S.C. § 1332(d)(2) (prescribing the elements of class action jurisdiction); see also Fed. R.Civ.P. 23. The district court¹ granted in part GM's motions to dismiss on statute of limitations grounds and for failure to state a claim, and the district court granted summary judgment to GM on the remaining claim due to the Owens' failure to establish causation under the MMPA. The Owens appeal, and we affirm.

I.

The Owens purchased a 1999 Chevrolet Tahoe on May 8, 1998, and approximately 6½ years later on October 9, 2004, the windshield wipers on the Owens' Tahoe failed while Mr. Owens was driving through a construction zone in heavy rain, impairing his visibility. The complete vehicle had been covered by an express warranty extending 3 years or 36,000 miles. The Owens paid a GM dealer $91.87 to replace the wipers. The dealer kept their old wiper control module, and GM did not reimburse this out-of-warranty cost. The dealer informed the Owens that the wiper control module had been subject to two prior recalls due to wiper failures but that the recalls applied only to earlier model vehicles, not to the Owens' 1999 Tahoe.

The complaint alleges that at the time of sale to the Owens, GM knew that in earlier models, the same or similar windshield wiper motor assembly was prone to fail after the warranty had expired. The complaint also alleges that GM did not disclose these failures, or this alleged defect, to the Owens when they purchased their 1999 Tahoe. The first recall in 1998, was issued in response to increasing customer complaints of wiper failures and a resulting investigation by the National Highway Traffic Safety Administration's Office of Defects Investigation (NHTSA). GM recalled the wiper control module on certain 1994 through 1996 model trucks and sport utility vehicles (SUVs), including certain Tahoes, because specific engine/model combinations were prone to wiper motor failure. Specifically, the location of the wiper motor on the recalled vehicles subjected the motor to high temperatures within the engine compartment, which caused the single-sided solder joints near the wiring harness connector to crack. GM reported to the NHTSA that the increase in wiper motor failures on recalled models began occurring after August 1994, when GM had implemented a change in its wiper control module supplier and had made changes in the control module design specifications and the manufacturing process. GM was aware of the problem by June 1997. The 1998 recall included over 1.5 million vehicles.

GM issued a second recall of 1.7 million vehicles in April 2003, in response to continued complaints and an expanded investigation by the NHTSA, again citing potential windshield wiper failure "due to cracked solder joints on the controller circuit board." (Appellants' App. at 300-02.)² This expanded recall included 1994 to 1996 model Tahoes. By 2002, GM warranty claims related to wipers on the entire recalled group of vehicles had totaled 225,000, and there were at least 11 reported auto accidents related to windshield wiper problems by December 1999. Although GM initially asserted that the alleged defect was not related to safety due to the low incidents of accidents or injuries, it later admitted that safety consequences can ensue from the failure of a windshield wiper system. The NHTSA's report indicated that "[t]he likelihood of failure increases with the level of heat to which the windshield wiper motor assembly is exposed," which, in turn, is related to its position within the engine compartment. (Id. at 304.) GM reported that it had made several modifications to the wiper module in 1998, and the NHTSA report stated that after the changes, "the incidence of the problem of failing windshield wipers was reduced." (Id. at 286.) GM did not recall 5.8 million vehicles that have the same or similar windshield wiper control module as the vehicles that were included in the recalls.

Also in 2003, GM implemented a Special Policy Adjustment Program ("Special Policy") to cover other 1994 to 1997 vehicles investigated by NHTSA. The Special Policy offered owners of those models a limited-term extended warranty and reimbursement to those who had paid to replace their windshield wiper motors. The Special Policy did not cover any vehicle with a model year after 1997 and neither did the earlier recalls.

The Owens filed this putative class action suit on April 3, 2006, on behalf of themselves and all other United States citizens or residents, excluding commercial entities, who owned or leased a 1998 or 1999 GM vehicle with the same allegedly defective wiper module and who were not compensated for repairs made to correct it. The original complaint alleged six counts: Count I (unjust enrichment), Count II (injunctive relief), Count III (breach of implied warranty), Count IV (breach of express warranty), Count V (violation of the MMPA, Mo.Rev.Stat. § 407.025), and Count VI (breach of implied warranty under the Magnuson-Moss Warranty Act (MMWA), 15 U.S.C. §§ 2301-2312 (2000)).

GM moved to dismiss the complaint, partly relying on the statute of limitations. While the motion to dismiss was pending, the Owens requested permission to file a first amended complaint adding approximately 40 new paragraphs of factual assertions and two new counts-Count VII (breach of contract based on the Special Policy) and Count VIII (fraudulent concealment). The Owens represented to the court that because the proposed amendment would not materially alter the original counts, the amended complaint would not require rebriefing of the issues related to the pending motion to dismiss. The district court then granted the Owens leave to file the First Amended Class Action Complaint and granted in part GM's first motion to dismiss, concluding that the breach of warranty claims were barred by the statute of limitations.³ The Owens thereafter filed a second motion for leave to amend the complaint, which the district court denied, and GM filed a second motion to dismiss, which the district court granted, dismissing the newly added counts of breach of contract and fraudulent concealment for failure to state a claim.⁴

GM then filed a motion for summary judgment on the only remaining claim — that GM violated the MMPA (Count V) by failing to disclose or remedy an alleged defect in the wiper system. The summary judgment record, viewed in the light most favorable to the Owens, includes the report of GM's internal investigatory team, headed by Dr. Michael Pecht, and Dr. Pecht's statement as the Owens' designated expert. GM commissioned its team in March 1998 in an attempt to determine the source of the wiper problems.

Among the malfunctioning wipers that had been replaced while under warranty, the team identified 15 categories of possible reasons for the wiper failure, including solder joint failures, design changes, and manufacturing variables. In wiper modules made after 1994, some circuit boards had come into contact with the aluminum casting of their housing and there was a wide variation in the quality of solder joints among the units that failed. The team determined that single-sided solder joints produced in Juarez, Mexico, were particularly prone to fatigue cracking but no defect at all was identified in 23% of the circuit boards returned due to reported failures. The team recommended replacing the single-sided windshield wiper circuit board with a double-sided circuit board that would be less prone to solder joint failure. GM continued manufacturing and installing the single-sided windshield wiper circuit boards until the double-sided units could be produced. GM also continued installing the single-sided units in new vehicles until it exhausted its supply. GM did not recall 1998 or 1999 vehicles with the same single-sided circuit board, concluding that any malfunction was not likely to occur within the warranty period.

The Owens designated Dr. Pecht as their expert, and his report states the opinion that "the single sided / CEM circuit card assembly, common to the vehicles being manufactured by GM prior to the implementation of the double sided [circuit assembly] . . . was not robust enough and not appropriate for a vehicle which must survive more than a 3 year, 36,000 mile[ ] warranty period." (Appellants' Add. at 53.) Because the failure results from solder fatigue, Dr. Pecht recommended that GM replace the single-sided assembly with a stronger double-sided circuit assembly. He concluded, "otherwise, there is an increasing likelihood that it will fail outside the warranty period." (Id.) They presented no evidence diagnosing the reason that their wiper motor failed.

The district court granted summary judgment to GM on the MMPA claim, concluding that there was no evidence indicating that the Owens' loss resulted from a defect that GM failed to inform them of. The district court also denied as moot the Owens' pending motion for class certification. The Owens appeal.

II.

A. Motions to Dismiss

"This court reviews de novo the grant of a motion to dismiss,...