Hagenbaugh v. Nissan N. Am.

• Decision Date: 23 January 2023
• Docket Number: Civil Action 3:20-1838
• Parties: DAVID HAGENBAUGH, et al., individually and on behalf of all others similarly situated, Plaintiffs v. NISSAN NORTH AMERICA d/b/a NISSAN USA, et al., Defendants
• Court: U.S. District Court — Middle District of Pennsylvania

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DAVID HAGENBAUGH, et al., individually and on behalf of all others similarly situated, Plaintiffs v. NISSAN NORTH AMERICA d/b/a NISSAN USA, et al., Defendants

Civil Action No. 3:20-1838

United States District Court, M.D. Pennsylvania

January 23, 2023

MEMORANDUM

MALACHY E. MANNION, United States District Judge.

I. Factual Background

On November 20, 2020, Plaintiffs filed an amended complaint with attached Exhibits. (Doc. 19). Plaintiffs are three pairs of individuals (two married couples and one father and daughter) residing in Luzerne County, Pennsylvania. (Doc. 19 ¶¶ 1-3). Defendants are three auto manufacturers incorporated and headquartered in other states, three limited liability company auto dealerships incorporated in Pennsylvania, and two remaining individual dealership owners residing in other states.^[1](Id., ¶¶ 4-12).

Defendant manufacturers are Hyundai Motor America, (“HYUNDAI”), Kia Motors America, (“KIA”), and Nissan North America, Inc., (“NISSAN”).

According to the amended complaint, Defendant dealerships, with approval of Defendant manufacturers and owners, advertised a “Set for Life Program” which represented that vehicle purchasers would receive certain benefits, including engine warranties, oil and filter changes, car washes, loaner vehicles, and state inspections, free for the duration of their ownership of the vehicle. (Id., ¶ 20). Amid financial difficulties, Defendant dealerships sold numerous vehicles without repaying the financing for those vehicles to certain manufacturer-affiliated financing entities, while still advertising the Set for Life Program benefits to purchasers. (Id., ¶¶ 16, 24). The Defendant dealerships went out of business in November of 2018, about two years after opening. (Id., ¶ 25). Since the dealership closures, Defendant manufacturers have refused customers' demands to provide them with the Set for Life Program benefits. (Id., ¶¶ 25-27).

Each pair of Plaintiffs purchased a vehicle from one of the Defendant dealerships and each either signed an agreement with the dealership upon purchase specifying the benefits of the Set for Life Program or was provided a brochure upon purchase specifying the benefits. (Id., ¶¶ 28, 32, 37). After the dealerships closed, Plaintiffs demanded that Defendant manufacturers continue to provide the Set for Life Program benefits on behalf of the closed dealerships they had authorized, and Defendant manufacturers refused. (Id., ¶¶ 31, 36, 40).

II. Procedural Background

Plaintiffs, on behalf of those similarly situated, brought this putative class action against Defendants in the Luzerne County Court. (Doc. 1-2). Included among Plaintiffs' putative class are “[a]ll individuals located within and/or residents of the Commonwealth of Pennsylvania, who purchased or leased automobiles” at the Defendant dealerships between November 1, 2016, and November 30, 2018. (Id., ¶ 42a.) In their complaint, Plaintiffs raise four causes of action and allege violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) (73 P.S. §201-1, et seq.), (Count I), breach of contract, (Count II), unjust enrichment, (Count III), and fraud, (Count IV). (Doc. 1-2, ¶¶ 54, 64, 69, 74-80). With respect to Defendant manufacturers, Plaintiffs allege that they are liable under agency theories, contract, and fraud for misrepresenting that they would guarantee the benefits in the Set for Life Program if Defendant dealerships failed to honor them.

Defendants removed this case on October 7, 2020, averring that this court has diversity jurisdiction pursuant to 28 U.S.C. §1332(a) or, alternatively, jurisdiction under §1332(d), i.e., the Class Action Fairness Act of 2005 (“CAFA”). (Doc. 1-2, ¶¶1-2, 32-34). On November 3, 2020, Plaintiffs filed a motion to remand this case back to state court, (Doc. 6), which Plaintiffs ultimately withdrew on June 2, 2022, (Doc. 87), after the court had ordered the parties to conduct additional discovery regarding the citizenship of the Defendant Dealership for jurisdictional purposes, (Doc. 86).^[2]

On January 4, 2021, two Defendants who manufactured some of the vehicles at issue, HYUNDAI and KIA, filed a motion to dismiss plaintiffs' amended complaint pursuant to Rule 12(b)(6), (Doc. 43). Also, on January 4, 2021, NISSAN and HYUNDAI filed a motion to compel arbitration and stay litigation, (Doc. 44), pursuant to Plaintiffs' written arbitration agreements and the Federal Arbitration Act (the “FAA”), 9 U.S.C. §1, et seq.^[3] NISSAN and HYUNDAI attached Exhibits to their motion to compel. Defendant manufacturers filed their briefs in support of both motions on January 15, 2021. (Docs. 52 & 53). Plaintiffs filed their briefs in opposition to Defendant manufacturers' motions on February 8, 2021, with Exhibits attached. (Docs. 61 & 62). On March 4, 2021, Defendant manufacturers filed their reply briefs in support of their motions. (Docs. 69 & 70).

For the reasons that follow, NISSAN and HYUNDAI's motion to compel arbitration and stay litigation will be GRANTED. The court will SEVER the proceedings in this case as to all claims against NISSAN and HYUNDAI pending arbitration pursuant to §3 of the Federal Arbitration Act (“FAA”), 9 U.S.C. §3. This case is not stayed and will PROCEED with respect to the claims of the Plaintiffs who bought Kia vehicles asserted against Defendant manufacturer KIA. In light of the severance, KIA and HYUNDAI's joint motion to dismiss Plaintiffs' amended complaint (Doc. 45) will be DISMISSED without prejudice to filing separate motions and briefs in the appropriate forum.^[4]

III. Standard

“When addressing a motion to compel arbitration, a court must first determine which standard of review to apply; to wit: either the motion to dismiss standard under Federal Rule of Civil Procedure 12, or the motion for summary judgment standard under Rule 56.” Stephenson v. AT&T Services, Inc., 2021 WL 3603322, *2 (E.D. Pa. Aug. 12, 2021) (citing Guidotti v. Legal Helpers Debt Resol., LLC., 716 F.3d 764, 771-72 (3d Cir. 2013)). “Where the affirmative defense of arbitrability of claims is apparent on the face of a complaint (or documents relied upon in the complaint), the FAA would favor resolving a motion to compel arbitration under a motion to dismiss standard without the inherent delay of discovery.” Id. (quoting Guidotti, 716 F.3d at 773-74) (internal citations omitted). “Where arbitrability is not apparent on the face of the complaint, the issue should be judged under the Rule 56 standard.” Id. (citing Guidotti, 716 F.3d at 773-74; Griffin v. Credit One Fin., 2015 WL 6550618, at *2 (E.D. Pa. Oct. 29, 2015)).

In the instant case, the amended complaint and its attachments, (Docs. 19-1 & 19-2), show, on their face, that there is the existence of arbitration agreements with respect to some of the Plaintiffs. Thus, the Rule 12(b)(6) motion to dismiss standard will be applied in reviewing NISSAN and HYUNDAI's motion to compel arbitration and in determining the validity and enforceability of the agreements “without discovery's delay.”^[5] Guidotti, 716 F.3d at 776; see also Sanford v. Bracewell & Guiliani, LLP, 618 Fed.Appx. 114, 117-18 (3d Cir. 2015) (“Because the affirmative defense of arbitrability was therefore apparent from the face of the complaint and the documents relied upon therein, the motion should have been reviewed under Rule 12(b)(6)[.]”) (internal quotations and citation omitted).

Thus, the standard under Rule 12(b)(6) will be applied in this case to the motion to compel arbitration which provides that dismissal is warranted if, “accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court concludes that the plaintiff failed to set forth fair notice of what the claim is and the grounds upon which it rests.” Hite v. Lush Internet, Inc., 244 F.Supp.3d 444, 449 (D. N.J. 2017) (citation omitted). “A complaint will survive a motion to dismiss if it contains sufficient factual matter to ‘state a claim to relief that is plausible on its face.'” Id. (citing Ashcroft v. Iqbal, 556 U.S. 662, 663, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). “Although a court must accept as true all factual allegations in a complaint, that tenet is inapplicable to legal conclusions, and [a] pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do.” Id. (internal quotations and citation omitted).

IV. Discussion

Stated simply, and in viewing the factual allegations of the amended complaint in the light most favorable to the Plaintiffs, as the court must, see Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764, 772-74 (3d Cir. 2013) Plaintiffs allege they are owed lifetime warranties and services regarding the vehicles they purchased from the three Defendant dealerships that comprised the Hazleton Auto Mall. The Defendant dealerships are now closed, and the “Set for Life Agreements” cannot be enforced against them. As such, Plaintiffs have also sued the dealerships' owners and the three Defendant manufacturers. Hagenbaugh Plaintiffs purchased a Nissan vehicle and Lubrecht Plaintiffs purchased a Hyundai vehicle. There is no genuine dispute that the sales contracts of the stated Plaintiffs who bought Nissan and Hyundai vehicles contained arbitration agreements that require disputes to be resolved in an arbitration or small claims court. Nor is there any dispute that the stated Plaintiffs signed the sales contracts. In fact, Plaintiffs attached the contracts to their amended complaint, (Docs. 19-1 & 19-2), and referenced them in their pleading to support their breach of contract claim. (See also Decl. of Bianca Roberts, Doc. 44-1 (Hagenbaugh contract); Doc. 19-2, (Lubrecht...