Johannessohn v. Polaris Indus., Inc.

Decision Date31 March 2020
Docket NumberCase No. 16-CV-3348 (NEB/LIB)
Citation450 F.Supp.3d 931
Parties Riley JOHANNESSOHN, et al., Plaintiffs, v. POLARIS INDUSTRIES, INC., Defendant.
CourtU.S. District Court — District of Minnesota

Andrew N. Friedman, Pro Hac Vice, Douglas J. McNamara, Pro Hac Vice, Cohen Milstein Sellers & Toll PLLC, Washington, DC, Eric A. Kafka, Pro Hac Vice, Cohen Milstein Sellers & Toll PLLC, New York, NY, Karen Hanson Riebel, Kate M. Baxter-Kauf, Lockridge Grindal Nauen PLLP, Minneapolis, MN, Robert E. Gordon, Pro Hac Vice, Steven Calamusa, Pro Hac Vice, Gordon & Doner PA, Theodore J. Leopold, Pro Hac Vice, Cohen Milstein Sellers & Toll PLLC, Palm Beach Gardens, FL, for Plaintiffs.

Andrew Baker Bloomer, Pro Hac Vice, Eric Yeager, Pro Hac Vice, Paul David Collier, Pro Hac Vice, R. Allan Pixton, Pro Hac Vice, Richard C. Godfrey PC, Pro Hac Vice, Wendy L. Bloom, Pro Hac Vice, Kirkland & Ellis LLP, Chicago, IL, Christopher Keegan, Pro Hac Vice, Kirkland & Ellis LLP, San Francisco, CA, Peter Magnuson, Wendy Jo Wildung, Faegre Drinker Biddle & Reath LLP, Minneapolis, MN, for Defendant.

ORDER

Nancy E. Brasel, United States District Judge

Plaintiffs bring this action under the laws of six states on behalf of a putative class of all-terrain vehicle ("ATV") buyers. They claim that Defendant Polaris Industries, Inc. omitted material facts about an alleged defect at the time they purchased their Sportsman ATVs. Fact and expert discovery have now closed. Plaintiffs move for class certification, and Polaris moves to strike certain of Plaintiffs' expert opinions and for summary judgment on the named Plaintiffs' claims.1

BACKGROUND

The Court draws the following background facts from the summary judgment record, viewing the evidence in the light most favorable to the Plaintiffs. Torgerson v. City of Rochester , 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc ).

Polaris, headquartered in Medina, Minnesota, manufactures recreational vehicles, such as ATVs and motorcycles. (ECF No. 340-2 at 23:17–19.) Polaris's ATVs include the Sportsman 450, 570, 850, and 1000. (ECF No. 370 ("Dahl Decl.") ¶¶ 3–4.) The Sportsman 450 and 570 ATVs have smaller single cylinder engines; the Sportsman 850 and 1000 ATVs have larger dual cylinder engines. (Id. ¶ 6.)

As early as 2007, Polaris faced consumer complaints about excessive heat in some of its ATVs. In 2014, the U.S. Consumer Production Safety Commission ("CPSC") opened an investigation in response to reports of several ATV fires. Over the course of that investigation, the CPSC made the preliminary determination that Polaris MY2015-16 Sportsman 850 ATVs present "a substantial product hazard" under 15 U.S.C. § 2064(a), noting that "the right hand side heat shield is in close proximity to, and in some cases makes contact with [the] exhaust manifold, posing a burn and fire hazard." (ECF No. 336-23 at 2.) The CPSC requested that Polaris voluntarily recall or correct the potentially hazardous Sportsman 850 ATVs. (Id. at 3.) In March 2017, Polaris issued a recall for MY2015-16 Sportsman 850s and 1000 ATVs. (ECF No. 336-24.) Polaris informed consumers that it had developed a new exhaust manifold side panel that "significantly increases the air gap between the exhaust manifold and exhaust manifold side panel and utilizes a metal heat shield." (ECF No. 336-25.)

The CPSC's investigation also sought information about Polaris's Sportsman 570s. (ECF No. 336-22.) Following the investigation, Polaris issued a service advisory in July 2017 offering an "optional Right Hand Side Panel Close Off Kit that will redirect a portion of the heat produced by the engine and exhaust away from the right hand foot well area" for MY2016-17 Sportsman 450s and MY2014-17 Sportsman 570s. (ECF No. 336-26.)

Plaintiffs in this case are Sportsman ATV owners Riley Johannessohn, Daniel C. Badilla, James Kelley, Kevin R. Wonders, William Bates, and James Pinion (collectively, "Plaintiffs").2 Their Corrected Second Amended Complaint ("Complaint") pleads that Polaris violated the consumer protection laws of Minnesota, California, Florida, Missouri, New York, and North Carolina by failing to disclose the Sportsman line's exhaust heat problems, causing Plaintiffs to suffer injury. (ECF No. 66 ("SAC") ¶¶ 85–175.) The Complaint alleges that "Polaris'[s] omissions artificially inflated the market price for the ATVs" when Polaris "could have and should have warned customers" about what the Complaint refers to as an "exhaust heat defect." (Id. ¶ 4.) Plaintiffs now seek to certify a nationwide class of consumers who purchased new MY2011-16 Polaris Sportsman 850s, MY2015-16 Sportsman 1000s, MY2014-17 Sportsman 570s, and MY2016-17 Sportsman 450s (the "Class Vehicles") from October 4, 2010 to the present. (ECF No. 335 at 1 n.1.) In the alternative, they seek to certify six statewide classes for Class Vehicle owners in the states of Minnesota, Florida, California, Missouri, New York, and North Carolina. (Id. at 18–19.) Polaris moves for summary judgment on all claims asserted against it in the Complaint. (ECF No. 356.) Polaris also seeks to exclude the expert testimony of Richard Eichmann and Sara Butler. (ECF No. 371.) For the reasons discussed below, all three motions—for summary judgment, for exclusion of expert testimony, and for class certification—are denied.

SUMMARY JUDGMENT
I. Choice of Law

To assess Plaintiffs' claims, the Court must first decide what law applies to them. This task requires a choice-of-law analysis, complex here because Plaintiffs are from six states, each with its own consumer protection statute or statutes. Plaintiffs contend that the Minnesota Consumer Fraud Act should apply to the consumer fraud claims of all plaintiffs, regardless of their state of residence. See Minn. Stat. § 325F.68 et seq. ("MCFA"). A federal court sitting in diversity applies the choice-of-law rules of the forum state where it sits—here, Minnesota's choice-of-law rules. Highwoods Props., Inc. v. Exec. Risk Indem., Inc. , 407 F.3d 917, 920 (8th Cir. 2005). In determining if the MCFA can apply extraterritorially, Minnesota courts apply a multistep analysis. The court first determines whether an outcome-determinative conflict exists. Jepson v. Gen. Cas. Co. of Wisc. , 513 N.W.2d 467, 469–70 (Minn. 1994) ; In re St. Jude Med., Inc. , 425 F.3d 1116, 1120 (8th Cir. 2005) (" St. Jude I "). If a conflict exists, the court determines whether the law of both states can be constitutionally applied. Jepson , 513 N.W.2d at 469. If it is constitutionally permissible for the forum state to apply its laws, the court then considers five factors to determine whether to apply the forum state law. Id. at 470. For the reasons that follow, the Court concludes that each Plaintiff's claims are governed by the state in which he resides.

A. Application of the MCFA: Outcome-Determinative Conflicts

The Complaint alleges that Polaris violated the consumer protection laws of Minnesota, California, Florida, Missouri, New York, and North Carolina, thereby injuring Plaintiffs and other consumers who reside in those states. Plaintiffs maintain that because the consumer protection laws of these states do not conflict with the MCFA, the Court can apply the MCFA to all claims.3

The parties focus their briefs on the requirements of reliance or causation and scienter under each state's consumer protection statute or statutes. In doing so, both Plaintiffs and Polaris refer to tables appended to their briefs.4 Plaintiffs bear the burden of fully analyzing the law of the jurisdictions whose laws may apply to the putative class's claims; it is not Polaris's burden to prove an outcome-determinative conflict exists. See Thompson v. Allianz Life Ins. Co. of N. Am. , 330 F.R.D. 219, 223 (D. Minn. 2019). Below, the Court addresses the six state consumer-protection laws and their requirements as to reliance or causation and scienter. Such an analysis is necessary before the Court can compare each state's laws against the MCFA to reach the conflicts issue.

1. Minnesota

The Complaint alleges that Polaris violated the MCFA by omitting material information regarding the Sportsman ATVs' exhaust heat defect, thereby injuring Plaintiff Riley Johannessohn and other purchasers.5 (SAC Count I.) The MCFA prohibits "[t]he act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise." Minn. Stat. § 325F.69, subd. 1. A private plaintiff suing for an MCFA violation must prove that "the defendant engaged in conduct prohibited by the statutes and that the plaintiff was damaged thereby." Grp. Health Plan, Inc. v. Philip Morris Inc. , 621 N.W.2d 2, 12 (Minn. 2001) ; see also Wexler v. Bros. Entm't Grp., Inc. , 457 N.W.2d 218, 221 (Minn. Ct. App. 1990) (to prevail on an MCFA claim, a plaintiff must prove that the defendant violated Minn. Stat. § 325F.69 and that the plaintiff "was injured in some way by the violation"). For an MCFA claim based on an omission, a plaintiff must prove an omission of material fact, as well as special circumstances that trigger a duty to disclose. Graphic Commc'ns Local 1B Health & Welfare Fund A v. CVS Caremark Corp. , 850 N.W.2d 682, 696 (Minn. 2014).6

a. Causation under the MCFA

Under the MCFA, a plaintiff need not prove traditional common law reliance. Grp. Health , 621 N.W.2d at 13. Rather, he or she must establish a causal nexus between the conduct alleged to violate the MCFA and the damages claimed, which can be proved by circumstantial evidence. Id. at 4, 14. In Group Health , the Minnesota Supreme Court noted that an element of individual reliance is embedded in the causal nexus requirement because a fraudulent or misleading statement cannot by its nature cause harm unless the statement "had some impact on" inducing the individual plaintiff's actions. State v. Minn. Sch. of Bus., Inc. , 935 N.W.2d 124, 141 (Minn. 2019) (quoting Grp....

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