Daigle v. Ford Motor Co.

Decision Date10 May 2010
Docket NumberCivil No. 09-3214 (MJD/RLE).
Citation713 F.Supp.2d 822
PartiesEdward DAIGLE et al., Plaintiffs,v.FORD MOTOR COMPANY, Defendant.
CourtU.S. District Court — District of Minnesota

COPYRIGHT MATERIAL OMITTED

Robert K. Shelquist, Craig S. Davis and Matthew B. Johnson, Lockridge Grindal Nauen P.L.L.P and Jay P. Saltzman, Law Offices of Jay Saltzman P.C., for Plaintiffs.

Jennifer K. Huelskoetter, David R. Kelly, Michael R. Carey, Bowman and Brooke LLP and John M. Thomas and Thomas J. Palazzolo, Bryan Cave LLP.

MEMORANDUM OPINION AND ORDER

MICHAEL J. DAVIS, Chief Judge.

This matter is before the Court upon Defendant Ford Motor Company's (Ford) motion to strike class allegations and to dismiss the claims of the individually named Plaintiffs pursuant to Federal Rule of Civil Procedure 12(b)(6).

BACKGROUND

Plaintiffs Rex Lindsay, James Genovese, Henri Caron, Sylvester Hobbs, and Edward Daigle are owners of Ford Freestar minivans that have experienced a transmission failure. (Compl. ¶¶ 14, 18, 29, 34, 38.) Plaintiffs allege that the failures are caused by a design defect in the vehicles' torque converter, a component that acts as a bridge between the engine and the transmission. ( Id. ¶ 58.) The torque converter connects to the transmission through a shaft with grooved ends, called “splines.” ( Id. ¶ 59.) If the torque converter fails the splines may strip and the connection between the engine and the transmission is lost. ( Id. ¶ 63.) When this connection is lost, the vehicle loses propulsion. ( Id. ¶ 2.) Each Plaintiff alleges that the splines on their vehicles stripped, causing their transmissions to fail. ( Id. ¶ 2.)

Plaintiffs bring this action on behalf of all who own or lease Ford Freestar or Mercury Monterey minivans from the 2004, 2005, and 2006 model years. ( Id. ¶ 2.) Both the Freestar and Monterey are built in the same factory and use the same design platform. ( Id. ¶ 54.)

Plaintiffs commenced this putative class action suit on November 17, 2009. Their Complaint alleges six claims against Ford: breach of an express warranty, breach of an implied warranty, unjust enrichment, breach of a duty of good faith and fair dealing, strict liability for a product defect, and negligence. Ford has moved to dismiss all claims of the named Plaintiffs pursuant to Fed.R.Civ.P. 12(b)(6). All parties agree that Minnesota law is applicable to this motion.

MOTION TO DISMISS

Fed.R.Civ.P. 8(a)(2) requires a complaint to contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” This requirement has been interpreted to require enough information to give the defendant fair notice of what the claim is and the grounds upon which it rests. Bell Atlantic v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Although detailed factual allegations are not needed, Rule 8(a)(2) requires more than a formulaic recitation of the elements of a cause of action. Id. Moreover, a claim must contain enough factual content to allow the court to “draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).

A court proceeds through its analysis of a Rule 12(b)(6) motion by accepting “as true all of the factual allegations contained in the complaint, and review[ing] the complaint to determine whether its allegations show that the pleader is entitled to relief.” Schaaf v. Residential Funding Corp., 517 F.3d 544, 549 (8th Cir.2008) (citing Twombly, 550 U.S. at 572, 127 S.Ct. 1955).

ANALYSISI. UCC-Based Contract Claims
A. Express Warranty Claim

Under Minnesota law, an express warranty arises when a seller makes an affirmation about a product that becomes part of the basis of the bargain between the parties. Minn.Stat. Ann. § 336.2-313 (West 2010). “To establish a warranty claim the plaintiff must basically prove: the existence of a warranty, a breach, and a causal link between the breach and the alleged harm.” Peterson v. Bendix Home Sys., Inc., 318 N.W.2d 50, 52-3 (Minn.1982). Ford argues that the express warranty claim should be dismissed because Plaintiffs have failed to allege that any of the buyers saw or were aware of a representation about the product that became a basis of the bargain. Plaintiffs respond that when enacting the Uniform Commercial Code (“UCC”), Minnesota abandoned a reliance requirement for an express warranty claim. Moreover, even if a reliance requirement still exists, Plaintiffs contend their express warranty claim passes muster because they have alleged that each plaintiff relied on representations contained within Ford's advertising when purchasing their vehicles.

Both parties conflate the basis-of-the-bargain concept with the reliance concept. Ford argues that Plaintiffs fail to allege any representation that became part of the basis of the bargain or made any claim upon which the Plaintiffs relied. Plaintiffs argue that a showing of reliance is not required in Minnesota, but fail to address whether basis-of-the-bargain must be alleged.

Some courts in this district have held that an allegation of fact that is part of the basis of the bargain is essential to a claim brought under Minn.Stat. § 336.2-313(1)(a). See, e.g., Riley v. Cordis Corp., 625 F.Supp.2d 769, 788 (D.Minn.2009). The Eighth Circuit has held, with regard to a common law warranty claim, that reliance and basis-of-the-bargain allegations are almost indistinguishable and one or the other is required. Hendricks v. Callahan, 972 F.2d 190, 193-94 (8th Cir.1992). The court noted, however, that it was not convinced Minnesota has completely abandoned the requirement of reliance with respect to a breach of warranty claim under the Uniform Commercial Code. Id. at 193. And other courts have held that a reliance requirement has been abandoned in Minnesota and needs not be pled. See, e.g., Drobnak v. Andersen Corp., Civ. No. 07-2249, 2008 WL 80632, at *7 (D.Minn. Jan. 8, 2008) aff'd 561 F.3d 778 (8th Cir.2009). Whatever the distinction between “reliance” and “basis of the bargain,” a plain reading of the statute requires that the bargain be based on a representation made by the seller. Therefore, this Court's inquiry should consider whether Plaintiff has alleged that Ford made representations that caused an express warranty to form.

Plaintiffs allege that Ford, “through its authorized dealers, agents and marketing materials” warranted that the vehicles were merchantable and fit for ordinary purposes of use. (Compl. ¶ 75.) This allegation rises beyond a mere recitation of the elements of the claim and describes with specificity possible sources of representation upon which the vehicle buyers may rely. Accordingly, Ford's motion to dismiss the express warranty claims on the basis that Plaintiffs failed to allege they were aware of a representation that became a basis for the bargain will be denied.

B. Implied Warranty Claim

Under Minnesota law, an implied warranty of merchantability requires that goods be “fit for the ordinary purposes for which such goods are used.” Minn.Stat. § 336.2-314(2)(c) (West 2010). “This warranty is breached when the product is defective to a normal buyer making ordinary use of the product.” Carey v. Chaparral Boats, Inc., 514 F.Supp.2d 1152, 1156 (D.Minn.2007) (citing Peterson, 318 N.W.2d at 52-3).

Ford argues that the claim should be dismissed because all cars are built with components that break down over time. According to Ford, the fact that Plaintiffs allege with technical specificity which part of the car is malfunctioning does not mean that the part becomes exempt from the normal degradation that comes with age and use. Plaintiffs assert that a merchantable minivan is one that is fit for the usual purpose of transportation, for which Plaintiffs and class members paid a considerable sum of money.

“The question when the warranty is imposed turns basically on the meaning of the terms of the agreement as recognized in the trade.” Minn.Stat. Ann. § 336.2-314 at UCC cmt. 2 (2002). Plaintiffs do not allege whether the vehicles were under a manufacturer's warranty or how many miles were on the vehicles. However, they do allege the age of the vehicles. (Compl. ¶¶ 14, 19, 29, 34, 38.) All of the vehicles are model year 2004 or 2005, and each of the vehicles is alleged to have had its transmission fail by the end of 2009. Arguably, a vehicle that suffers a major, systemic malfunction within five years of purchase-even with rigorous driving-may not be “fit” within the meaning of the implied warranty statute. The Court thus finds that Plaintiffs' have stated a claim for breach of implied warranty.

C. Warranty Claims of Plaintiffs Hobbs and Lindsay

Ford argues that the express and implied warranty claims of Plaintiffs Sylvester Hobbs and Rex Lindsay should be dismissed because the complaint fails to allege that either of these plaintiffs notified Ford or an authorized dealer of the transmission failures. Under Minnesota law, “the buyer must within a reasonable time after the buyer discovers or should have discovered any breach notify the seller of breach or be barred from any remedy.” Minn. Stat § 336.2-607 (West 2010).

Plaintiffs contend that, for two reasons, Ford waived the notice requirement of Section 336.2-607. First, the purposes of the notice requirement have been met and, as a consequence, specific notice was not required. Second, because Ford chose to deny that there was anything defective about its vehicles after James Genovese complained about his transmission problems, Ford indicated through its actions that it would be futile for other plaintiffs to complain about their transmissions.

[A] plaintiff in a breach of warranty case is precluded from recovery if he does not plead and prove the giving of notice within a reasonable time under Minn. St. 512.49.” Truesdale v. Friedman, 270 Minn. 109, 132 N.W.2d 854, 865 (1965) (citing the statutory language of the Uniform Sales Act, which was...

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