Cleveland v. Whirlpool Corp.

550 F.Supp.3d 660

Elisabeth CLEVELAND, on behalf of herself and all others similarly situated, Plaintiff,

v.WHIRLPOOL CORPORATION, Defendant.

Case No. 20-cv-1906 (WMW/KMM)

United States District Court, D. Minnesota.

Signed July 27, 2021

Erin Johnson Ruben, Pro Hac Vice, Milberg Coleman Bryson Phillips Grossman, PLLC, Raleigh, NC, Gregory F. Coleman, Pro Hac Vice, Lisa A. White, Pro Hac Vice, Greg Coleman Law PC, Rachel Soffin, Pro Hac Vice, Milberg Coleman Bryson Phillips Grossman, PLLC, Knoxville, TN, Harper Todd Segui, Pro Hac Vice, Milberg Coleman Bryson Phillips Grossman, PLLC, Mount Pleasant, SC, Michelle J. Looby, Gustafson Gluek PLLC, Minneapolis, MN, Raina Borrelli, Turke & Strauss LLP, Madison, WI, for Plaintiff.

Andrew M. Unthank, Pro Hac Vice, Galen D. Bellamy, Pro Hac Vice, Wheeler Trigg O'Donnell LLP, Denver, CO, Kyle R. Kroll, Mary Riverso, Thomas H. Boyd, Winthrop & Weinstine, P.A., Minneapolis, MN, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

Wilhelmina M. Wright, United States District Judge

This matter is before the Court on Defendant's motion to dismiss. (Dkt. 27.) For the reasons addressed below, Defendant's motion is granted in part and denied in part.

BACKGROUND

Plaintiff Elisabeth Cleveland is a resident of Minnesota. Defendant Whirlpool Corporation (Whirlpool), a Delaware corporation with its principal place of business in Michigan, designs, manufactures, and sells numerous household appliances, including dishwashers. This putative class-action lawsuit arises from an allegedly "uniform defect" present in more than 900 dishwasher models manufactured by Whirlpool (Dishwashers).¹ The Dishwashers contain a pump motor diverter shaft seal (Seal) and, according to Cleveland, the Seal is "incorrectly oriented," thereby "expos[ing] a larger portion of the [Seal] to hot, soapy water and debris from dirty dishes." Because of this defect, Cleveland alleges that the Seal's polymer materials degrade more rapidly, debris builds up, the Seal fails to function effectively, and ultimately water flows onto the floor below the Dishwashers. The water leakage begins slowly so consumers are unable to detect the defect "until a complete failure has occurred."

On September 5, 2016, Cleveland purchased a Whirlpool dishwasher. In making her purchase, Cleveland alleges she "relied on Whirlpool's representations that its dishwashers required fewer repairs than other brands of dishwashers, as well as Whirlpool's reputation and ... she believed she was purchasing a high-quality product." Cleveland alleges that, in June 2020, she observed a "small amount of water leaking underneath" her dishwasher, which increased in subsequent months. In August 2020, a repair technician serviced Cleveland's dishwasher. After inspecting the dishwasher, the repair technician allegedly advised Cleveland that the water leak resulted from a defective Seal, which was a defective product that could not be fixed. Cleveland also alleges that the water leak damaged her tile grout.

On September 4, 2020, Cleveland contacted Whirlpool and reported the defective Seal. Whirlpool advised Cleveland that the company would not replace the dishwasher. That same day, Cleveland commenced this putative class-action lawsuit, which Whirlpool moved to dismiss on October 29, 2020. Cleveland subsequently filed an amended complaint (complaint) on November 25, 2020. The complaint includes nine counts. Counts I and II allege breach of express and implied warranty, respectively. Counts III and IV, pled in the alternative, allege breach of contract and unjust enrichment, respectively. Counts V–VII allege violations of the Minnesota Consumer Fraud Act (MCFA), the Minnesota Uniform Deceptive Trade Practices Act (MDTPA), and the Minnesota Unlawful Trade Practices Act (MUTPA). Finally, Counts VIII and IX allege negligence and fraudulent concealment, respectively. Cleveland seeks both injunctive relief and damages. Whirlpool moves to dismiss all counts of the complaint for failure to state a claim on which relief can be granted. See Fed. R. Civ. P. 12(b)(6). Whirlpool also seeks to dismiss Cleveland's fraudulent-concealment claim for failure to meet the heightened pleading standards of Rule 9(b), Fed. R. Civ. P.

ANALYSIS

A complaint must allege sufficient facts such that, when accepted as true, a facially plausible claim to relief is stated. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). If a complaint fails to state a claim on which relief can be granted, dismissal is warranted. See Fed. R. Civ. P. 12(b)(6). When determining whether a complaint states a facially plausible claim, a district court accepts the factual allegations in the complaint as true and draws all reasonable inferences in the plaintiff's favor. Blankenship v. USA Truck, Inc. , 601 F.3d 852, 853 (8th Cir. 2010). Factual allegations must be sufficient to "raise a right to relief above the speculative level" and "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Mere "labels and conclusions" are insufficient, as is a "formulaic recitation of the elements of a cause of action." Id. at 555, 127 S.Ct. 1955. And legal conclusions couched as factual allegations may be disregarded. See Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. Whirlpool argues that Cleveland's claims must be dismissed for failure to state a claim on which relief can be granted.

I. Express Warranty (Count I)

Whirlpool seeks to dismiss Cleveland's breach-of-express-warranty claim, arguing that the warranty was never breached. Because the durational limit on the warranty period is unconscionable, Cleveland argues, the limitation should not be enforced.

Under Minnesota law, to state a claim for breach of express warranty, a plaintiff must allege (1) the existence of a warranty, (2) breach, and (3) a causal link between the breach and the alleged harm.

Sipe v. Workhorse Custom Chassis, LLC , 572 F.3d 525, 530 (8th Cir. 2009). Although the parties dispute the express warranty's applicability, the parties do not dispute its existence.

Whirlpool's express warranty provides that "[f]or one year from the date of purchase, ... Whirlpool ... will pay for Factory Specified Replacement Parts and repair labor to correct defects in materials or workmanship that existed when this major appliance was purchased, or at its sole discretion replace the product."² But Cleveland did not notify Whirlpool that she experienced any issues with her dishwasher until nearly four years after the purchase date. And "case law almost uniformly holds that time-limited warranties do not protect buyers against hidden defects—defects that may exist before, but typically are not discovered until after, the expiration of the warranty period." Canal Elec. Co. v. Westinghouse Elec. Co. , 973 F.2d 988, 993 (1st Cir. 1992) (collecting cases).

Cleveland seeks to avoid the express warranty's one-year limitation by arguing that various terms of the express warranty are unconscionable. Whirlpool disagrees, arguing that the warranty is neither procedurally nor substantively unconscionable.

"Upon finding that a contract was unconscionable at the time it was entered, a court may refuse to enforce the contract, remove the unconscionable clause or limit its application to avoid an unfair result." In re Estate of Hoffbeck , 415 N.W.2d 447, 449 (Minn. Ct. App. 1987) (citing Minn. Stat. § 336.2-302(1) ). Under Minnesota law, when a plaintiff alleges that a contractual clause is unconscionable, the parties must be afforded a reasonable opportunity to present evidence as to the contractual clause's commercial setting, purpose and effect to aid the court in determining whether to enforce the disclaimer. Minn. Stat. § 336.2-302(2). When doing so on a motion to dismiss, courts consider whether the plaintiff has alleged sufficient facts as to unconscionability. See McQueen v. Yamaha Motor Corp., U.S.A. , 488 F. Supp. 3d 848, 865 (D. Minn. 2020) ; Podpeskar v. Makita U.S.A. Inc. , 247 F. Supp. 3d 1001, 1009 (D. Minn. 2017) (denying motion to dismiss plaintiff's express-warranty claim based on finding that plaintiff had sufficiently pleaded unconscionability).

Cleveland's complaint alleges that the Dishwashers contain a defect, that Whirlpool knew about this defect, and that Whirlpool attempted to limit the express warranty in a manner that would exclude coverage of the Seal defect because the purchase transactions were "tainted by Whirlpool's concealment of material facts." Such allegations of unconscionability are sufficient to survive a motion to dismiss. To the extent that any argument for dismissal of Count I depends on a determination of unconscionability, a decision as to this issue is premature until the parties have had an opportunity to submit evidence as to the disclaimer's commercial setting, purpose, and effect. See Johnson v. Bobcat Co. , 175 F. Supp. 3d 1130, 1144 (D. Minn. 2016).

Accordingly, Whirlpool's motion to dismiss Cleveland's breach-of-express-warranty claim, Count I, is denied.

II. Implied Warranty (Count II)

Whirlpool moves to dismiss Cleveland's breach-of-implied-warranty claim, arguing that the implied warranty is time-barred.

Minnesota law recognizes implied warranties of merchantability and fitness for a particular purpose. Minn. Stat. §§ 336.2-314(1), 336.2-315. Any claim challenging an implied warranty of merchantability or fitness fails if the warranty has been disclaimed. See Minn. Stat. § 336.2-316(2). A manufacturer disclaims an implied warranty of merchantability by using express language that is conspicuous. Id. ; accord Knotts v. Nissan North America, Inc. , 346 F. Supp. 3d 1310, 1321–22 (D.Minn. 2018). Similarly, an implied warranty of fitness may be disclaimed when the disclaimer is in "writing and conspicuous." Minn. Stat. § 336.2-316(2) (explaining that "[l]anguage to exclude all implied warranties of...