Gregorio v. Ford Motor Co.

• Decision Date: 01 March 2021
• Docket Number: Case No. 20-11310
• Parties: Eric GREGORIO, et al., Plaintiffs, v. FORD MOTOR COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Michigan

522 F.Supp.3d 264

Eric GREGORIO, et al., Plaintiffs,

v.FORD MOTOR COMPANY, Defendant.

Case No. 20-11310

United States District Court, E.D. Michigan, Southern Division.

Signed March 1, 2021

Dennis A. Lienhardt, E. Powell Miller, Emily E. Hughes, Sharon S. Almonrode, William Kalas, The Miller Law Firm, Rochester, MI, Jason Henry Alperstein, Kopelowitz Ostrow, Ferguson Weiselberg Gilbert, Fort Lauderdale, FL, Cody R. Padgett, Tarek H. Zohdy, Trisha K. Monesi, Steven R. Weinmann, Capstone Law, APC, Los Angeles, CA, for Plaintiffs.

Derek J. Linkous, Grant A. Newman, Stephanie A. Douglas, Bush Seyferth PLLC, Troy, MI, for Defendant.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS [12]

LAURIE J. MICHELSON, United States District Judge

The 12 plaintiffs in this case are owners of Ford Mustangs who allege that Ford Motor Company sold them vehicles with inherent defects in the manual transmissions. Plaintiffs seek to represent a nationwide class and nine statewide classes of owners and lessors of 2011-to-2019-model-year Ford Mustangs equipped with a MT82 manual transmission. Plaintiffs’ 183-page, 667-paragraph Third Amended Complaint includes claims for fraudulent omission and breach of express and implied warranty under the laws of nine states, plus class-wide claims under the Magnuson-Moss Warranty Act and for unjust enrichment. Ford moves to dismiss the complaint for failure to state a claim. The Court grants in part and denies in part Ford's motion to dismiss as set out in the Table of Claims appended at the conclusion of this opinion.

I. Background

The 12 named plaintiffs are owners of Ford Mustangs from model years 2014 through 2019. (See ECF No. 12-3.) Plaintiffs purchased their vehicles from authorized Ford dealers in nine different states: Arkansas, California, Colorado, Delaware, Florida, Michigan, New York, North Carolina, and Pennsylvania. (Id. )

Plaintiffs allege that the MT82 manual transmissions (which includes the MT82 and MT82-D4) in their Ford Mustangs have a common defect which existed at the time the vehicles left Ford's possession and control. Plaintiffs allege that the defect causes the transmission to slip, jerk, clash gears, and harshly engage while driving the vehicles. (ECF No. 10, PageID.22.)¹ Plaintiffs also allege that the defect causes "premature internal wear, increased shift efforts, inability to drive, and eventually ... a catastrophic failure" of the transmission. (PageID.22.)

To understand the alleged transmission defect, it is necessary to explain a bit how manual transmissions function. The gear shifter that the driver operates controls gear-selector forks. These forks are connected to collars that move along a shaft to engage different gears. In order to engage a gear, the teeth on the collar must mesh with the teeth on the gear. Synchronizers enable the teeth to engage by first synchronizing the speed of the collar and the relevant gear. (PageID.24.)

Plaintiffs allege "on information and belief" that the MT82 transmission was adapted from an application in smaller vehicles with much lower horsepower than the Mustang and is not sufficiently robust for the Mustang's horsepower. (PageID.24.) Plaintiffs believe that, among other problems, the insufficient robustness of the transmission causes the synchronizer to fail to move along the shaft quickly enough for the gears to mesh smoothly. (PageID.24.) Plaintiffs allege that this defect not only affects their day-to-day driving experience, but also leads to premature wear, and eventually failure, of a number of the Mustangs’ transmission parts. (PageID.25.) Moreover, allege Plaintiffs, the defect poses an unreasonable safety hazard because it affects "the driver's ability to control the vehicle's speed, acceleration, and deceleration." (PageID.59.)

Plaintiffs allege that they have experienced symptoms of this defect to varying degrees. For example, Tyrone Morrow began experiencing shifting issues, including the vehicle popping out of gear and scratching gears when shifting, within the first few days of purchasing his 2019 Mustang. (PageID.31.) One week after purchasing the vehicle, and with less than 6,000 miles on the odometer, Morrow brought his vehicle to an authorized Ford dealer for repair. (PageID.31.) The car was in the shop for 27 days, and the technician found that a shift fork was broken and the teeth on two gears and a synchronizer were damaged. (PageID.33.) After picking up the vehicle, within 10 miles of driving, Morrow again observed the defect and brought his car back to the dealer for further repairs. (PageID.33.)

Another plaintiff, Dylon Zimmerli, reports that he began to experience problems with his transmission about 10 months after purchasing his vehicle. (PageID.38.) Yet he continued to drive his vehicle for about a year after noticing issues without seeking repair—even though he stated at the time of the filing of the complaint that he was planning to schedule an appointment to have his Mustang repaired. (PageID.38–39.)

A third plaintiff, Brendon Shunk, experienced a catastrophic failure of his transmission with under 7,000 miles on his Mustang. (PageID.48.) His car was towed to the dealer, where a technician documented that the car "has no 3rd or 4th gear." (PageID.48.) Shunk's car was kept at the dealer for 54 days and the transmission had to be replaced. (PageID.49.) Yet, a few months later, Shunk again noticed problems with his transmission. (PageID.49.) He brought his car back to the dealer where the transmission was again repaired and a shift fork was replaced. (Id. )

A fourth plaintiff, Evan Dickson, began experiencing problems with shifting in his Mustang about a month after purchasing it. (PageID.54.) Yet, at the time of the operative complaint 11 months later, Dickson had not brought the vehicle to a dealer for repair. (PageID.54.) He believed Ford representatives would tell him nothing was wrong. (PageID.54.)

Plaintiffs allege that Ford has been aware of the transmission defect since the introduction of the MT82 transmission and has failed to disclose and in fact actively concealed the defect. (PageID.26.) Plaintiffs point to numerous customer complaints reported to the National Highway Traffic Safety Administration (NHTSA) and in online forums and to the seven "technical service bulletins" (TSBs) and "special service messages" (SSMs) that Ford has issued since 2011 relating to shifting issues and other transmission defects in Mustangs. (PageID.26, 61–84, 84–87.) Plaintiffs also allege that Ford had exclusive knowledge of the defect through pre-release testing data, early consumer complaints, warranty claim data, aggregate data from Ford dealers, and communications with NHTSA. (PageID.59–60.)

In their Third Amended Complaint, Plaintiffs bring 29 counts against Ford under federal law and the laws of the nine states where Plaintiffs bought their Mustangs. (ECF No. 10, PageID.21.) Ford filed a motion to dismiss all of Plaintiffs’ claims. (ECF No. 12.)

II. Legal Standard

Ford seeks dismissal under Federal Rule of Civil Procedure 12(b)(6). In deciding a motion to dismiss under Rule 12(b)(6), the Court "construes the complaint in the light most favorable to the plaintiff, accepts the plaintiff's factual allegations as true, and determines whether the complaint ‘contain[s] sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.’ " Heinrich v. Waiting Angels Adoption Servs., Inc. , 668 F.3d 393, 403 (6th Cir. 2012) (alteration in original) (quoting Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). Under the plausibility framework of Iqbal and Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Court asks whether the factual allegations of Plaintiffs’ Third Amended Complaint permit "the reasonable inference that [Ford] is liable[.]" Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. Whether Plaintiffs have presented enough factual matter to "nudg[e]" their claims "across the line from conceivable to plausible" is "a context-specific task" requiring this Court to "draw on its judicial experience and common sense." Id. (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ).

III. Discussion

Although Plaintiffs bring claims under the laws of nine different states as well as federal law, for ease of discussion the claims can be broadly categorized as warranty, fraud, or consumer-protection claims. Ford argues there is a threshold pleading issue that warrants dismissal of the entire case, so the Court will address that argument before diving into the individual claims.

A. Adequacy of the Defect Allegations

Ford first argues that Plaintiffs’ entire complaint fails because it does not adequately allege a defect as required by the Federal Rules. Ford says that Plaintiffs must specifically allege what is defective about their vehicle transmissions rather than relying on conclusory allegations. Further, argues Ford, it is not sufficient to allege only the symptoms of a defect, i.e., that the transmission "slips, jerks, clashes gears, and harshly engages; has premature internal wear, increased shift efforts, inability to drive, and eventually suffers a catastrophic failure." (ECF No. 12, PageID.228.)

First, it is not clear that Ford's position on what is required to plead a defect is correct. For the proposition that a defect cannot be defined predominantly by symptoms, Ford principally relies on a case from the Eastern District of California, DeCoteau v. FCA US LLC , No. 215CV00020MCEEFB, 2015 WL 6951296 (E.D. Cal. Nov. 10, 2015). The DeCoteau court dismissed the plaintiffs’ complaint because they "allege[d] generally that there must be one or more defects" in their cars’ transmissions without providing "more detailed factual allegations" required to identify a plausible defect. Id. at *3. But, in contrast, another California district court held that "Plaintiffs’ allegation that ‘the Manual...