Iannacchino v. Ford Motor Co., SJC-10059

• Decision Date: 13 June 2008
• Docket Number: SJC-10059
• Parties: Joseph IANNACCHINO & others<SMALL><SUP>1</SUP></SMALL> v. FORD MOTOR COMPANY & another.<SMALL><SUP>2</SUP></SMALL>
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

888 N.E.2d 879

451 Mass. 623

Joseph IANNACCHINO & others¹ v. FORD MOTOR COMPANY & another.²

SJC-10059

Supreme Judicial Court of Massachusetts, Middlesex.

Argued February 4, 2008.

Decided June 13, 2008.

William H. Narwold, Hartford, CT (Kristen Marquis Fritz, Boston, with him) for the plaintiffs.

Brian D. Boyle, District of Columbia (Mel Andrew Schwing, District of Columbia, & Thomas M. Elcock, Boston, with him) for the defendants.

The following submitted briefs for amici curiae:

Hugh F. Young, Jr., of Virginia, David R. Geiger & Rachel M. Brown, Boston, for The Product Liability Advisory Council, Inc.

John Roddy, Elizabeth Ryan, & Paul R. Collier, III, for AARP & others.

Deborah J. La Fetra, Sacramento, CA, for Pacific Legal Foundation.

Robin S. Conrad & Amar D. Sarwal, District of Columbia, & Peter W. Herzog for The Chamber of Commerce of the United States of America.

Ben Robbins, Martin J. Newhouse, & Jo Ann Shotwell Kaplan for New England Legal Foundation & another.

Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, COWIN, CORDY, & BOTSFORD, JJ.

BOTSFORD, J.

The question before us in this case concerns the viability of the plaintiffs' complaint. They bring the action as representatives of a proposed class of Massachusetts residents owning certain models of Ford vehicles, and they claim that the outside door handle systems in their vehicles are noncompliant with applicable Federal safety standards, defective, and unsafe. At issue in this appeal are the plaintiffs' claims for violation of G.L. c. 93A and breach of implied warranty.³ The plaintiffs do not allege that their door handles have ever malfunctioned or that they have sustained any personal injury or property damage. Rather, they claim that Ford's alleged practice of knowingly manufacturing, offering for sale, and refusing to recall vehicles that do not comply with Federal safety regulations and are defective is unfair or deceptive and has injured the plaintiffs economically. We do not consider the lack of accident-related injury or manifested defect a bar to recovery under G.L. c. 93A, § 9, in this case. Nevertheless, we conclude that the plaintiffs' complaint does not contain sufficient factual allegations to make out either a § 9 claim or a claim for breach of implied warranty based on economic injury. For reasons we explain, we conclude that these claims in the plaintiffs' complaint should be dismissed without prejudice. We also take the opportunity to refine the standard governing motions to dismiss under Mass. R. Civ. P. 12(b)(6), 365 Mass. 754 (1974).⁴

1. Prior proceedings and the plaintiffs' complaint. The three named plaintiffs filed their complaint⁵ in the Superior Court against Ford Motor Company; Ford Motor Company of Canada, Ltd. (collectively, Ford); and three component part manufacturers (makers of the door handles that were installed in Ford's vehicles)⁶ asserting claims for violation of G.L. c. 93A, §§ 2 and 9, conspiracy to violate c. 93A, breach of express and implied warranties, and unjust enrichment. After filing its answer, Ford moved for judgment on the pleadings pursuant to Mass. R. Civ. P. 12(c), 376 Mass. 754 (1974).⁷ A judge in the Superior Court granted Ford's motion and ordered dismissal of all counts except the count alleging breach of implied warranty. The judge then reported his decision to the Appeals Court pursuant to Mass R. Civ. P. 64, as amended, 423 Mass. 1410 (1996). We transferred the case here on our own motion.

The plaintiffs seek to represent a class consisting of all Massachusetts residents who own model year 1997 to 2000 Ford F-150, F-250 (light duty), and Expedition vehicles or model year 2000 Ford F-150 Super Crew vehicles, which the plaintiffs claim contain defective outside door handle systems; they state that "[e]xcluded from the class are all claims for personal injury by Plaintiffs or class members." The plaintiffs' complaint alleges that the door handles on these vehicles are defective and fail to comply with Federal Motor Vehicle Safety Standard No. 206 (FMVSS 206), a standard promulgated by the National Highway Traffic Safety Administration (NHTSA) pursuant to the National Traffic and Motor Vehicle Safety Act (Safety Act), 49 U.S.C. §§ 30111(a) et seq. (2000), 49 C.F.R. § 501.2(a)(1) (2006),⁸ as well as with Ford's internal guidelines.⁹ Because of this alleged defect and alleged regulatory noncompliance, the plaintiffs claim, the doors on the plaintiffs' vehicles might open accidentally in certain types of collisions, putting vehicle occupants at risk of significant personal injury or death.

With regard to Ford's knowledge and conduct, the complaint alleges as follows. By October, 1995, Ford knew or should have known that the door latch mechanisms on the vehicles at issue did not comply with FMVSS 206 and were improperly designed and manufactured. Nevertheless, for the next five years Ford continued to manufacture and market these vehicles and to issue statutorily required certifications of safety regulation compliance. In March of 2000, as a result of its own testing and investigation, Ford prepared an internal memorandum acknowledging the safety-related defect and noncompliance with FMVSS 206, and proposed a safety-related recall of the Ford vehicles to replace the door handle systems with FMVSS 206-compliant systems. However, on evaluating the cost of a recall, Ford changed its mind. Instead, even though Ford had always tested compliance with the strength requirements of FMVSS 206 by using a particular, preferred NHTSA-approved test called SAE J839, Ford at this time used an "antiquated and nonstandard" methodology referred to by the parties as the GM test, which it had never used before, to establish a feigned compliance with FMVSS 206. Resort to this alternate test was necessary because Ford and its component part manufacturers knew that the door handle systems did not and could not meet SAE J839, and "thus did not comply with FMVSS 206." Ford has never notified NHTSA of its noncompliance with FMVSS 206, as Ford was allegedly obligated to do; has never notified consumers; and has never ordered a recall. As a result of Ford's conduct, the plaintiffs and proposed class members have been injured because "they (1) own vehicles that are unsafe, (2) own vehicles that are worth less than their value were they to comply with all safety standards and (3) will incur the cost of repairing the vehicles to make them safe."

The complaint focuses in large part on the plaintiffs' claim that the outside door latches fail to comply with FMVSS 206. This NHTSA standard contains a number of subsidiary requirements, two of which are relevant here. See 49 C.F.R. § 571.206 (2006). First, the door latches must remain connected when specified amounts of force are applied in longitudinal and transverse directions; this is sometimes called the "strength" standard. 49 C.F.R. § 571.206, S4.1.1.1, S4.1.1.2. Second, the latches must remain connected when the vehicle to which the door is attached sustains an impact at a specified acceleration (in either the longitudinal or the transverse direction); this is sometimes called the "inertia load" standard. 49 C.F.R. § 571.206, S4.1.1.3. Automobile manufacturers in the United States are required by the Safety Act and NHTSA regulations to measure compliance with the NHTSA strength standard using a testing method described in "paragraph 5 of Society of Automotive Engineers Recommended Practice J839, Passenger Car Side Door Latch Systems, June 1991" (SAE J839). 49 C.F.R. § 571.206, S5.1.1.1. In demonstrating compliance with the inertia load standard, however, manufacturers may rely either on a calculation described in paragraph 6 of SAE J839 or on other "approved tests." 49 C.F.R. § 571.206, S5.1.12. NHTSA has approved one alternate test in response to an inquiry from General Motors in the 1960's (GM test). 72 Fed. Reg. 5385-01, 5390 n. 9 (2007). Thus, compliance with the inertia load requirement may be demonstrated using either SAE J839 or the GM test.¹⁰

The judge granted Ford's motion for judgment on the pleadings as to four of the complaint's five counts. With regard to the plaintiffs' claim under G.L. c. 93A, § 9, the judge concluded that the plaintiffs had alleged sufficient deceptive conduct on Ford's part to constitute a violation of G.L c. 93A, § 2, but had failed to allege that the violation had caused them any cognizable injury. Citing this court's decision in Hershenow v. Enterprise Rent-A-Car Co. of Boston, 445 Mass. 790, 840 N.E.2d 526 (2006) (Hershenow), the judge concluded that the plaintiffs' claimed damages were "speculative and premature" because "no plaintiff alleges that he has been in an accident where the door latches failed or has otherwise suffered any actual damage." The judge consequently dismissed the plaintiffs' c. 93A claim, as well as their claim for conspiracy to violate c. 93A, because the latter was dependent on the underlying claim of a c. 93A violation. He also dismissed the plaintiffs' breach of express warranty claim, finding that they had not alleged that they had seen or relied on the labels certifying compliance with Federal safety regulations, as well as their unjust enrichment claim, concluding that "[t]he alleged facts in this case do not lend themselves to such a cause of action."¹¹ However, the judge denied Ford's motion as to the implied warranty claim on the basis that the plaintiffs had alleged a safety defect that would render the vehicles unfit for their ordinary purposes, resulting in a breach of the implied warranty of merchantability that had caused injury to the plaintiffs at the time of purchase. The judge noted further that his dismissal of the c. 93A claim might be inconsistent with his ruling on the implied warranty claim, because "a breach of warranty can itself constitute a c. 93A violation" (citing Slaney v. Westwood Auto, Inc., 366 Mass. 688, 702, 322 N.E.2d 768 [1975]). He also commented that "[t...