Sasso v. Tesla, Inc.

• Decision Date: 07 February 2022
• Docket Number: 5:21-CV-24-D
• Parties: Chad SASSO, and the Challenge Printing Co. of the Carolinas, Inc., Plaintiffs, v. TESLA, INC., Defendant.
• Court: U.S. District Court — Eastern District of North Carolina

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Chad SASSO, and the Challenge Printing Co. of the Carolinas, Inc., Plaintiffs,
v.
TESLA, INC., Defendant.

No. 5:21-CV-24-D

United States District Court, E.D. North Carolina, Western Division.

Signed February 7, 2022

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Brycen G. Williams, Williams & Ray, PLLC, Raleigh, NC, for Plaintiffs.

Amir M. Nassihi, Shook, Hardy & Bacon LLP, San Francisco, CA, Caroline Marie Gieser, Shook, Hardy & Bacon LLP, Atlanta, GA, Rachel A. Straus, Shook, Hardy & Bacon LLP, Los Angeles, CA, Mark W. Skanes, Rosewaldorf PLLC, Albany, GA, for Defendant.

ORDER

JAMES C. DEVER III, United States District Judge

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On December 15, 2020, Chad Sasso ("Sasso") and The Challenge Printing Co. of the Carolinas, Inc. ("Challenge Printing") (collectively, "plaintiffs") filed suit in Wake County Superior Court against Tesla, Inc. ("Tesla" or "defendant") arising from problems with a Tesla car plaintiffs purchased [D.E. 1-1]. On January 15, 2021, Tesla removed the case to this court [D.E. 1]. On February 5, 2021, plaintiffs filed an amended complaint with class allegations [D.E. 11]. They allege state and federal law claims: (1) breach of the implied warranty of merchantability; (2) a claim for a declaratory judgment; (3) violation of the North Carolina Unfair Trade Practices Act, N.C. Gen. Stat. §§ 75-1.1, et seq. ; (4) breach of express warranty; (5) violations of the Magnuson-Moss Warranty Act ("MMWA"), 15 U.S.C. §§ 2301, et seq. ; and (6) breach of the covenant of good faith and fair dealing. See id. Plaintiffs seek compensatory damages, punitive damages, declaratory relief, and injunctive relief. See id. On April 12, 2021, Tesla moved to dismiss plaintiffs’ amended complaint under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) [D.E. 16]. On June 7, 2021, plaintiffs’ responded in opposition [D.E. 22]. On July 6, 2021, Tesla replied [D.E. 25]. As explained below, the court grants Tesla's motion to dismiss.

I.

Tesla manufactures electric cars. See Am. Compl. ¶ 12. Tesla does not sell its cars via traditional dealerships but instead sells them directly to consumers either online or at one of its showrooms. See id. ¶ 22. Each of Tesla's models from 2016 to 2020 includes a 17-inch touchscreen made by Innolux Corporation. See id. ¶¶ 15–16. The touchscreen controls many of the cars’ features. See id. ¶ 19. For example, the touchscreen controls the interior lighting, door locks, child-protection locks, opening the trunk, the blind-spot warning system, the audio system, and the cars’ climate control. See id. (listing these and more functions). According to plaintiffs, Tesla manufactured more than 1.2 million cars with the Innolux touchscreen between 2016 and 2020. See id. ¶ 21.

Sasso is a North Carolina citizen who owns and runs Challenge Printing. See id. ¶ 11. In 2016, Sasso placed an online order with Tesla on behalf of Challenge Printing to purchase a new 2016 Model S 60D. See id. ¶ 24. Sasso planned to use the car for company business. See id. The car cost $101,280, and plaintiffs also paid $13,900 for software upgrades, $4,264.68 for accessories, $550 for annual servicing, and paid to upfit Sasso's house with an at-home charging station. See id. ¶¶ 26–27. Apparently, Sasso and Challenge Printing split some of the ancillary costs, but it is unclear whether they split the cost of the car itself. See id. Plaintiffs do not allege whose name (Sasso or Challenge Printing) is on the car's title. Based on what Sasso alleges Tesla employees told him, Sasso believed the car came with a four-year warranty, and the purchase agreement Sasso received confirming the purchase said Sasso would receive the warranty when he received the car, if not before. See id. ¶¶ 28–30; [D.E. 11-6] 4. The purchase agreement also said Sasso could get a copy of the warranty upon request or could download it from the purchaser's online user account. See Am. Compl. ¶ 30; [D.E. 11-6] 4.

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On December 15, 2016, Sasso picked up the car from Tesla. See Am. Compl. ¶ 131. No one gave Sasso a copy of the warranty when he picked up the car. See id. In June 2018, the touchscreen in the car began to malfunction by developing a yellow border around the edge of the screen. See id. ¶ 33. On July 3, 2018, Sasso took the car to a Tesla location, and Tesla replaced the touchscreen for free under the warranty. See id. ¶¶ 34–35. After six months, the problem returned. See id. ¶ 36. Sasso then tried several times to have Tesla fix the touchscreen, but each time, Tesla could not fix the screen because of equipment issues. See id. ¶¶ 37–54. Tesla then told plaintiffs the touchscreen defect can be mitigated but not fully fixed without upgrading the touchscreen for $2,500. See id. ¶¶ 50–51. Plaintiffs allege that the yellow border appears on the touchscreen because the touchscreen is poor quality and does not meet industry standards for the range of temperatures and exposure to sunlight cars endure when they are parked outside. See id. ¶¶ 55–61. Plaintiffs allege many Tesla owners have had similar problems. See id. ¶¶ 62–63.

Additionally, plaintiffs allege their car came with a New Vehicle Limited Warranty (the "warranty"). See id. ¶ 64. Tesla, however, allegedly never gave plaintiffs a copy of the warranty when they received the car (or at any time thereafter). See id. ¶ 65. Plaintiffs allege that when Sasso logged into plaintiffs’ MyTesla online account, the warranty available online changed over time and that Tesla refused Sasso's requests to send a hard copy of the 2016 warranty. See id. ¶¶ 66–72. Sasso eventually found copies of the warranty online, but plaintiffs allege the various copies are all different and indicate a constantly changing document See id. ¶¶ 73–77. According to plaintiffs, the alleged warranty changes diminish customers’ warranty rights to Tesla's benefit. See id. ¶¶ 77–82.

II.

A motion to dismiss under Rule 12(b)(1) tests subject-matter jurisdiction, which is the court's "statutory or constitutional power to adjudicate the case." Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 89, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (emphasis omitted); see Holloway v. Pagan River Dockside Seafood, Inc., 669 F.3d 448, 453 (4th Cir. 2012) ; Constantine v. Rectors & Visitors of George Mason Univ., 411 F.3d 474, 479–80 (4th Cir. 2005). A federal court "must determine that it has subject-matter jurisdiction over the case before it can pass on the merits of that case." Constantine, 411 F.3d at 479-80. In considering a motion to dismiss for lack of subject-matter jurisdiction, the court may consider evidence outside the pleadings without converting the motion into one for summary judgment. See, e.g., White Tail Park, Inc. v. Stroube, 413 F.3d 451, 479 (4th Cir. 2005) ; Richmond, Fredericksburg & Potomac R.R. v. United States, 945 F.2d 765, 768 (4th Cir. 1991). "[T]he party invoking federal jurisdiction bears the burden of establishing its existence." Steel Co., 523 U.S. at 104, 118 S.Ct. 1003 ; see Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999). However, "when a defendant asserts that the complaint fails to allege sufficient facts to support subject matter jurisdiction, the trial court must apply a standard patterned on Rule 12(b)(6) and assume the truthfulness of the facts alleged [in the complaint and any additional materials]." Kerns v. United States, 585 F.3d 187, 193 (4th Cir. 2009). Tesla argues that Sasso lacks standing concerning all his claims and that both plaintiffs lack standing to assert their declaratory judgment claim.

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A.

Tesla contends that Sasso lacks standing. See [D.E. 17] 27–28. A plaintiff establishes standing by showing: (1) that the plaintiff has "suffered an injury in fact—an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical"; (2) "a causal connection between the injury and the conduct complained of—the injury has to be fairly traceable to the challenged action of the defendant, and not ... the result of the independent action of some third party not before the court"; and (3) that it is "likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision" from the court. Chambers Med. Techs. of S.C., Inc. v. Bryant, 52 F.3d 1252, 1265 (4th Cir. 1995) (alterations omitted) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ); see Spokeo, Inc. v. Robins, 578 U.S. 330, 338, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016). These requirements are "the irreducible constitutional minimum of standing." Lujan, 504 U.S. at 560, 112 S.Ct. 2130 ; see Spokeo, 578 U.S. at 338, 136 S.Ct. 1540. If a plaintiff does not have standing, the court does not have subject-matter jurisdiction to hear the plaintiff's claim. See, e.g., Lujan, 504 U.S. at 560–61, 112 S.Ct. 2130 ; White Tail Park, 413 F.3d at 459.

Tesla argues Sasso does not have standing because Sasso has not suffered an injury in fact. See [D.E. 17] 27–28. The injury in fact requirement is the "first and foremost" of the standing requirements. Spokeo, 578 U.S. at 338, 136 S.Ct. 1540 (cleaned up); see Steel Co., 523 U.S. at 103, 118 S.Ct. 1003. To show injury in fact, "a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’ " Spokeo, 578 U.S. at 339, 136 S.Ct. 1540 (quoting Lujan, 504 U.S. at 560, 112 S.Ct. 2130 ). An injury is particularized when it affects the plaintiff in a "personal and individual way." Spokeo, 578 U.S. at 339, 136 S.Ct. 1540 (quotation omitted). A concrete injury is one that actually exists, even if it is intangible. See id. at 340, 136 S.Ct. 1540. It must be real and not abstract. See id.

Sasso lacks standing because he suffers no injuries from the car's alleged defects or from Tesla's alleged warranty scheme. Plaintiffs allege...