Defrank v. Samsung Elecs. Am.

Decision Date26 October 2020
Docket NumberCiv. No. 19-21401 (KM) (JBC)
PartiesLISA DEFRANK, HOLLIS STAVN, CHRIS GARCIA, MARK DITROIA, CARL GERSH, WENDY DOWDS, MARIA KEENE, ASHLEY NUIBE, Plaintiff, v. SAMSUNG ELECTRONICS AMERICA, INC. Defendants.
CourtU.S. District Court — District of New Jersey
OPINION

KEVIN MCNULTY, U.S.D.J.

:

This is a class action complaint brought against defendant Samsung Electronics America, Inc. ("SEA"). Plaintiffs are consumers who purchased SEA dryers, and who now claim that the dryers are defective. Specifically, plaintiffs allege the dryers have a defective drum which develops cracks over the lifetime of the appliance. The cracks in the drum allegedly snag on clothes and also permit lint to fall into the dryers' heating element, thereby creating a risk of fire. Plaintiffs bring claims under various state consumer protection laws and the Magnuson-Moss Warranty Act ("WWMA"), as well as claims of unjust enrichment. They claim the defective drum, which SEA failed to disclose, has rendered each of their dryers inoperable well before the end of its expected useful life.

Now before the Court is SEA's motion to dismiss the complaint for failure to state a claim. (DE 51) For the reasons set forth below, the motion is GRANTED in part and DENIED in part.

TABLE OF RULINGS ON MOTION TO DISMISS

Claim
Motion to Dismiss
Disposition
Opinion Sections
Count I/UCL
Motion Denied
III.A.2.b.iii, III.A.2.c,
III.A.3
Count II/CFAL
Motion Denied
III.A.2.b.iii, III.A.2.c
Count III/CLRA
Motion Denied
III.A.2.b.iii, III.A.2.c,
III.A.4
Count IV/NJCFA
Motion Denied
III.A.2.b.ii, III.A.2.c
Count V/NMUPA
Motion Denied
III.A.2.a, III.A.2.c
Count VI/OCSPA
Motion Granted
III.A.5.a
Count VII/ODTPA
Motion Granted
III.A.5.b
Count VIII/MMWA
Motion Denied
III.B
Count IX/
Unjust Enrichment
Motion Granted against
Florida, Illinois, and
Ohio claims; Otherwise
Denied
III.C
Count X/ICFA
Motion Denied
III.A.2.b, III.A.2.c
Count XI/FDUTPA
Motion Denied
III.A.2.b.i, III.A.2.c

TABLE OF ABBREVIATIONS

Record Citations. Citations to the record are abbreviated as follows:

"DE ___" refers to the docket entry numbers in this case.
"1AC" refers to the First Amended Complaint, located at DE 22.
"Opp." refers to the plaintiff's Brief in Opposition, located at DE 54.
"MTD" refers to SEA's Memorandum in Support of its Motion to Dismiss, located at DE 51-1.
"Reply" refers to SEA's Reply in Support of its Motion to Dismiss, located at DE 59.

State Statutes. Applicable state consumer protection statutes, identified by initial section, are abbreviated as follows:

Ohio
OCSPA - Ohio Consumer Sales Practices Act, Ohio Rev. Code. Ann. § 1345.01
ODTPA - Ohio Deceptive Trade Practices Act, Ohio Rev. Code Ann. § 4565.01
OPLA - Ohio Product Liability Act, Ohio Rev. Code. Ann. § 2307.71
New Mexico
NMUPA - New Mexico Unfair Practices Act, N.M. Stat. Ann. § 57-12-1
New Jersey
NJCFA - New Jersey Consumer Fraud Act, N.J.S.A. § 56:8-1
Florida
FDUTPA - Florida Deceptive and Unfair Trade Practices Act, Fla. Stat. § 501.201
California
CLRA - California Consumer Legal Remedies Act, Cal. Civ. Code § 1750
UCL - California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200
CFAL - California False Advertising Law, Cal. Bus. & Prof. Code § 1700
Illinois
ICFA - Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. 505/1

TABLE OF CONTENTS

I. FACTS
A. Background 1
B. Allegations Regarding the Parties 1
C. Allegations that SEA Concealed a Defect in the Class Dryers 3
D. Allegations that SEA's Warranty is Unconscionable 4
E. Procedural History 5
II. GENERAL LEGAL STANDARDS
A. Standard on Motion to Dismiss 5
B. Ascertainment of State Law in Diversity Case 6
III. DISCUSSION
A. Consumer Fraud Allegations and Rule 9(b) 7
1. Standards under Rule 9(b) 7
2. Claims of fraudulent omissions under state consumer protection statutes 9
a. Omissions Under the NMUPA 10
b. Duties to disclose under state law 10
i. Under FDUTPA, dismissal is denied because Plaintiffs are not required to plead a duty to disclose 11
ii. Under NJCFA, dismissal is denied because the complaint adequately alleges a duty to disclose defects which manifest themselves post-warranty 14
iii. Under California law, dismissal is denied because the complaint adequately alleges a duty to disclose a defect that affects the central function of the dryers and poses an unreasonable safety risk. 16
c. The complaint adequately alleges that SEA knew of the defect at the time of sale 18
3. Other fraudulent omissions issues: California UCL Claim 23
4. Other fraudulent omissions issues: California CLRA Notice Requirements 255. Other fraudulent omissions issues: Ohio OCSPA and ODTPA Claims 26
a. OCSPA claim inadequately pled and subsumed by OPLA 26
b. ODTPA claim dismissed for lack of consumer standing 28
B. Federal Magnuson-Moss Warranty Act/Breach of Warranty 29
1. Substantive and procedural unconscionability under MMWA 30
2. Reasonable opportunity to cure under MMWA 34
C. Unjust Enrichment
1. Pleading unjust enrichment in the alternative 35
2. Unjust enrichment and third-party purchase 36
a. California permits unjust enrichment claims against a manufacturer where the product was purchased from a third party 37
b. Florida unjust enrichment claim dismissed for failure to allege direct benefit 38
c. Illinois unjust enrichment claim dismissed for failure to allege required circumstances 39
d. New Jersey permits unjust enrichment claims against a manufacturer where the product was purchased from a third party 40
e. New Mexico permits unjust enrichment claims against a manufacturer where the product was purchased from a third party 44
f. Ohio unjust enrichment claim dismissed for failure to allege an economic transaction between the manufacturer and the plaintiff 44
IV. Conclusion 46
I. FACTS1
A. Background

SEA is a nationwide company which manufactures, designs, markets, and sells a number of products. Relevant here are certain clothes dryers SEA began selling in 2011 (the "Class Dryers"),2 which all allegedly contain a defect which causes them to develop cracks in the dryer drum. (1AC ¶¶ 1, 115.) The alleged root causes of the defect are a defective flywheel and inappropriately thin-gauge steel in the drums. (Id. at 103-04.) Plaintiffs allege that the cracks can cause the dryers to become inoperable because they snag on consumers' clothing and tear them. (Id. ¶ 3.) Plaintiffs also allege that lint can fall through the cracks and catch fire from the dryer's heating element. (Id. ¶¶ 106, 175.) According to plaintiffs, the only solution is to completely replace the drum. (Id. ¶ 4.) All Class Dryers allegedly contain the same component parts or are a result of the same manufacturing process which causes the defect, and the defect allegedly has resulted in widespread complaints from SEA customers. (Id. ¶¶ 5, 7.)

B. Allegations Regarding the Parties

Plaintiffs are residents of Ohio, New Mexico, New Jersey, Florida, California, and Illinois who purchased Class Dryers.

Plaintiff DeFrank is an Ohio resident who purchased a Class Dryer in November 2013. (Id. ¶¶ 22-23.) She noticed the dryer had a cracked drum in March 2018. (Id. ¶ 27.) She contacted SEA to make a warranty claim, and was informed that the one-year warranty did not cover her claim so SEA would not repair the dryer. (Id. ¶ 30.)

Plaintiff Garcia is a New Mexico resident who purchased a Class Dryer in 2015. (Id. ¶¶ 32-33.) He alleges that a year after he purchased the dryer, he began noticing that his clothes were getting lost or stuck in the dryer, that metal shards were appearing in his laundry, and that the dryer emitted a loud banging noise when in use. (Id. ¶¶ 36, 38.) He claims he contacted SEA for warranty assistance but was informed that his warranty had expired. (Id. ¶ 37.)

Plaintiff Mark DiTroia is a New Jersey resident who purchased a Class Dryer at Lowe's Home Improvement in December 2011. (Id. ¶¶ 40-41.) In September 2017, Mr. DiTroia alleges he began hearing a loud banging when the dryer was in use, and he discovered upon investigation that the drum had cracked and was hitting its roller, causing the banging sound. (Id. ¶¶ 44-45.) Mr. DiTroia initially replaced the drum himself, but once the banging noise returned, contacted SEA to complain. (Id. ¶ 46-47.) SEA representatives told him that there were no reported issues regarding the product and that his dryer was out of warranty. (Id. ¶ 47.)

Plaintiff Carl Gersh is a Florida resident who purchased a Class Dryer from Best Buy on September 10, 2015. (Id. ¶¶ 49-50.) Sometime around April or May of 2018, Mr. Gersh allegedly noticed a loud banging from the dryer and discovered a hole in its drum. (Id. ¶¶ 53-54.) He alleges that he contacted SEA to make a warranty claim and was told that the warranty had expired. (Id. ¶ 55.) He then attempted to repair the dryer through a third-party, but, shocked at the cost, elected instead to contact SEA again via its Internet forum and Twitter account. (Id. ¶¶ 56-57.) After that failed to elicit a favorable response from SEA, he finally replaced the dryer. (Id. ¶¶ 58-59.)

Plaintiff Wendy Dowds is a California resident who purchased a Class Dryer on May 10, 2017 from Lowe's Home Improvement and noticed it had a cracked drum in June of 2018. (Id. ¶¶ 60-61, 64-65.) Ms. Dowds then contacted SEA to make a warranty claim, but was denied. (Id. ¶ 66.)

Plaintiff Maria Keene is a resident of Illinois who purchased a Class Dryer for her son from Home Depot on March 20, 2016. (Id. ¶¶ 68-69.) Ms.Keene noticed a crack in the dryer drum in February of 2018. (Id. ¶¶ 72-73.) Her son then contacted SEA, which told him that the warranty had already expired. (Id. ¶¶ 72-73.)

Plaintiff Ashley Nuibe is a resident of the State of Ohio who purchased a Class Dryer from Best Buy in January 2016. (Id. ¶¶ 76-77.) She noticed a banging noise when the dryer was in use in March of 2018, and, upon complaining to SEA, was informed that her warranty had already expired. (Id. ¶¶ 80-82.)

C. Allegations that SEA Concealed a Defect in the...

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