Gen. Motors Anti-Lock Brake Products Liability Lit.

• Decision Date: 11 June 1997
• Docket Number: No. MDL-1129.,MDL-1129.
• Citation: 966 F.Supp. 1525
• Parties: In re GENERAL MOTORS CORPORATION ANTI-LOCK BRAKE PRODUCTS LIABILITY LITIGATION
• Court: U.S. District Court — Eastern District of Missouri

966 F.Supp. 1525

In re GENERAL MOTORS CORPORATION ANTI-LOCK BRAKE PRODUCTS LIABILITY LITIGATION

No. MDL-1129.

United States District Court, E.D. Missouri, Eastern Division.

June 11, 1997.

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John G. Simon, Jeffrey J. Lowe, Gray & Ritter, St. Louis, MO, David O. Danis, Danis, Cooper, Cavanaugh & Hartweger, St. Louis, MO, John J. Carey, Joseph P. Danis, Carey & Danis, St. Louis, MO, Joe C. Holzer, Butler & Binion, Houston, TX, Joseph W. Phebus, Phebus, Winkelman, Wong & Bramfeld, Urbana, IL, Melvyn I. Weiss, Patricia M. Hynes, Robert A. Wallner, Milberg, Weiss, Bershad, Hynes & Lerach, New York City, John M. Deakle, Janet L. Sims, Hattiesburg, MS, John M. Sims, Heidelberg, MS, Anthony Sakalarios, F. Marvin Morris, III, Morris and Sakalarios, Hattiesburg, MS, Stanley M. Grossman, D. Brian Hufford, Peter G.A. Safirstein, Pomerantz, Haudek, Block & Grossman, New York City, D. Michael Campbell, Miami, FL, Keith G. Liberman, Clayton, MO, Arnold Levin, Levin, Fishbein, Sedran & Berman, Philadelphia, PA, Gary E. Mason, Cohen, Milstein, Hausfeld & Toll, Washington, DC, Steve W. Berman, Hagens & Berman, Seattle, WA, Michael F. Ram, Leiff, Cabraser, Heimann & Bernstein, San Francisco, CA, Turner Branch, Branch Law Firm, Albuquerque, NM, Sam Heins, Heins, Mills & Olson, Minneapolis, MN, Marvin Blount, Marvin Blount Law Officies, Greenville, NC, Steven A. Martino, Jackson, Taylor & Martino, Mobile, AL, William M. Audet, Michael McShane, Alexander Law Firm, San Jose, CA, Ronald L. Burdge, Franklin, OH, Keen L. Ellsworth, Thomas A. Ericsson, Robert B. Gerard, Edwards, Olson, Waite & Wintest, Las Vegas, NV, for Plaintiffs.

David M. Harris, John E. Petite, Greensfelder, Hemker & Gall, St. Louis, MO, James H. Schink, Robert B. Ellis, David A. Coulson, J. Andrew Langan, Kirkland and Ellis, Chicago, IL, Terrence J. Galligan, Kirkland and Ellis, New York City, Greg J. Dow, Strasburger & Price, Houston, TX, David C. Thies, Richard L. Thies, Webber & Thies, Urbanan, IL, Lee A. Schutzman, Detroit, MI, J. Henry Ros, Page, Mannino, Peresich, Dickson & McDermott, Gulfport, MS, R. Benjamine Reid, Popham, Haik, Schnobrich & Kaufman, Miami, FL, John M. Kunst, Jr., Jeffrey P. Hinebaugh, Dinsmore & Shohl, Cincinnati, OH, for General Motors Company.

Frank N. Gundlach, Armstrong, Teasdale, Schafly & Davis, St. Louis, MO, Edward M. Kronk, Butzel, Long, Gust, Klein & Vanzile, Detroit, MI, Nancy Archer Yanochik, Joe W. Redden, Jr., Beck, Redden & Secrest, Houston, TX, William J. Brinkmann, Thomas, Mamer & Haughey, Champaign, IL, Robert M. Frey, Butler, Snow, O'Mara, Stevens & Cannada, Jackson, MS, Daniel E. Gonzalez, Lawrence P. Bemis, Steel, Hector & Davis, Miami, FL, for Kelsey-Hayes Company.

ORDER

NANGLE, District Judge.

Before the Court are two motions to dismiss the consolidated amended complaint in the above-captioned multidistrict litigation. The motions were filed by defendants General Motors ("GM") and Kelsey-Hayes ("KH"). For the reasons set forth below, defendants' motions to dismiss are granted in fill.

I. BACKGROUND

On October 8, 1996, the Judicial Panel on Multidistrict Litigation transferred six actions¹ to this Court for coordinated or consolidated pretrial proceedings pursuant to 28 U.S.C. § 1407. Several tag-alongs have followed. Plaintiff's filed a Consolidated and Amended Class Action Complaint ("Plaintiffs' Complaint") on January 13, 1997.² Plaintiffs' Complaint alleges that GM and KH jointly designed a dangerously defective anti-lock brake system ("ABS"), knew the ABS was defective, concealed this information from the public, and promoted the ABS as a highly effective safety device. Specifically, plaintiffs allege two defects: 1) the ABS system performs counter-intuitively because of a pedal-to-the-floor phenomenon³ that causes the driver to think there has been a total brake failure⁴ and 2) the ABS is an inferior anti-lock brake system which extends the distance needed for stopping, increasing the possibility of accidents.

Plaintiffs assert a total of six causes of action, five against both defendants and one solely against GM. The five claims against both defendants are for fraudulent misrepresentation, fraudulent concealment, breach of implied warranty, violation of state consumer protection statutes, and breach of implied warranty on behalf of the subclass.⁵ The claim solely against GM is for breach of express warranty and/or breach of contract. Plaintiffs' Complaint explicitly disclaims "any intent to seek in this suit any recovery for personal injuries or property damage suffered or which may be suffered by any Class member." (Plaintiffs' Complaint at ¶ 21). Plaintiffs seek the following forms of relief: (1) compensatory damages for actual damages sustained; (2) an order directing defendants to recall or repair the ABS systems; (3) an order directing defendants to issue corrective disclosures; (4) punitive damages; and (5) attorneys' fees and costs. (Id. at 39-40). Defendants have moved to dismiss Plaintiffs' Complaint for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). Alternatively, defendants have moved to dismiss the claims for fraudulent misrepresentation, fraudulent concealment and violations of state consumer protection statutes for failure to plead with specificity pursuant to Fed. R.Civ.P. 9(b).

II. ANALYSIS

When ruling on a Rule 12(b)(6) motion to dismiss, a court must examine the complaint in the light most favorable to the non-moving party, accept the well-pleaded factual allegations as true and construe all allegations in favor of the plaintiff. Carney v. Houston, 33 F.3d 893, 894 (8th Cir.1994); Hamm v. Groose, 15 F.3d 110, 112 (8th Cir.1994); Kohl v. Casson, 5 F.3d 1141, 1148 (8th Cir.1993). A complaint should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); See also Rosenberg v. Crandell, 56 F.3d 35, 37 (8th Cir.1995).

A. Failure to Plead Damages

Each defendant has moved to dismiss the complaint for the failure to adequately plead damages, an essential element of every cause of action. Plaintiffs have alleged that their vehicles "suffer from the defects." (Plaintiffs' Complaint at ¶ 10-15). It is undisputed that plaintiffs do not allege personal injury or property damage. (Plaintiffs' Complaint at ¶ 21). Plaintiffs' allegation of damage is for economic loss caused by paying more for the vehicles than they were worth and for economic loss stemming from lost resale value. (Id. at ¶ 99).

Plaintiffs' allegations of damages are conclusory and fall short of the pleading requirements for defective products. See, e.g., Hubbard v. General Motors Corp., 1996 WL 274018, *3 (S.D.N.Y.1996) (holding plaintiff must allege defect manifested itself in his or her product to state claim for relief); Lee v. General Motors Corp., 950 F.Supp. 170, 171-74 (S.D.Miss.1996) (dismissing plaintiffs' claims of inherently defective detachable fiberglass roofs for failure to plead sufficient damages); Barbarin v. General Motors Corp., 1993 WL 765821, *3 (D.D.C.1993) (dismissing claims of plaintiffs whose cars had not manifested defect); Yost v. General Motors Corp., 651 F.Supp. 656, 657 (D.N.J.1986) (holding design defect likely to cause damage did not state claim); Feinstein v. Firestone Tire & Rubber Co., 535 F.Supp. 595, 603 (S.D.N.Y.1982) (holding no cause of action for defect which never manifests itself); Khan v. Shiley Inc., 217 Cal.App.3d 848, 266 Cal. Rptr. 106, 110 (4th Dist.1990) (holding plaintiff with inherently defective heart valve did not state cause of action absent malfunction of valve). Plaintiffs do not allege that the defect manifested itself in their vehicles, i.e. they do not explain when, where or how their vehicles exhibited the defects.

Damages based on lost resale value have been rejected as inappropriate under a breach of implied warranty theory. See Carlson v. General Motors Corp., 883 F.2d 287, 297-98 (4th Cir.1989). In Carlson, the court upheld the dismissal of the claims of plaintiffs who had not had engine difficulties but had sought recovery for "lost resale value" because of the widespread problems with GM diesel products. Id. at 298. The plaintiffs in Carlson had acknowledged that the loss in resale value had resulted from the "poor reputation of the cars" rather than from a manifest defect in any of the cars which had experienced no problems. Id. at 291. The court held that the implied warranty of merchantability does not encompass a claim for loss of resale value. Id. at 297-98. The court specifically stated that it affirmed the district court's dismissal of "those plaintiffs who alleged damages attributable only to `lost resale value.'" Id. at 298. Like the plaintiffs in Carlson, the plaintiffs in this case cannot recover merely for economic loss.

Plaintiffs' statement that their vehicles "suffer from the defects" is not a sufficient allegation of damages. Plaintiffs' definition of the purported class reveals their true allegation of damage in this case. In their class definition, plaintiffs include "All persons ... who own or lease a model-year 1989-1996 GM vehicle equipped with an ABS system fabricated by Kelsey-Hayes," without limitation to persons whose vehicles have manifested the defect. In fact, plaintiffs state that "at the time of the sale of each automobile, the GM owner (and the general public) was exposed to potential of a brake failure." (Plaintiffs' Response Brief at 13)(emphasis added). It is clear from Plaintiffs' Complaint that they believe the vehicles were defective from the moment they came off the assembly line and that this fact, in and of itself, is behind their claims of damage. Manifestation of the defect in the vehicle, however, is a prerequisite to recovery. See, e.g., Hubbard, 1996 WL 274018, *3; Barbarin,...