Gentry v. Hyundai Motor Am., Inc.

JOHN WILLIAM GENTRY, ET AL., Plaintiffs, v. HYUNDAI MOTOR AMERICA, INC., Defendant.

ALIM ABDURAHMAN, ET AL., Plaintiffs, v. HYUNDAI MOTOR AMERICA, INC., ET AL., Defendants.

JIHAD ABDUL-MUMIT, ET AL., Plaintiffs, v. HYUNDAI MOTOR AMERICA, INC., ET AL., Defendants.

CASE NO. 3:13-cv-00030

CASE NO. 3:14-cv-00002

CASE NO. 3:14-cv-00005

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF VIRGINIA CHARLOTTESVILLE DIVISION

January 23, 2017

OPINION

JUDGE NORMAN K. MOON

These three cases are before the Court on motions to dismiss. Each involves allegations that Hyundai Motor America, Inc. ("HMA") misstated or misrepresented the gas mileage obtained by Hyundai Elantras. Gentry is a class action against a single defendant, HMA. Abdurahman is a mass action of over 700 plaintiffs against 29 defendants: HMA and various Virginia dealerships. Abdul-Mumit—also a mass action with substantively identical allegations to Abdurahman—has over 500 named plaintiffs suing 27 defendants. The cases previously were stayed, transferred to MDL 2424, and then partially remanded by the MDL back to this Court in September 2015. Each case contains a claim under the Virginia Motor Vehicle Warranty Enforcement Act ("Lemon Law"), Va. Code §§ 59.1-207.9 et seq.; the Virginia Consumer Protection Act of 1977 ("VCPA"), Va. Code §§ 59.1-196 et seq.; and for false or misleading advertising, Va. Code §§ 18.2-216 & 59.1-68.3.

An important date in these cases is November 2, 2012, when HMA announced its "recalculation" of fuel economy estimates for certain vehicles ("Announcement"). At the MDL, a class settlement was reached for pre-November 2nd purchasers and is now on appeal before the Ninth Circuit. Thus, the MDL remanded these cases for proceedings on two sets of claims: (1) any pre-November 2nd purchasers who opted out of the settlement, and; (2) post-November 2nd purchasers of 2011-13 Hyundai Elantras sold in Virginia. (Gentry, dkt. 91).

The parties have presented numerous jurisdictional and merits arguments. After briefing and oral argument, the Court concludes that aspects of the Lemon Law claim in Gentry based on the on-board mileage calculator may proceed. But the aspect of the Lemon Law claim based on fuel economy, as well as Mr. Gentry's VCPA and false advertising claims, will be dismissed because those counts do not state a claim. As for Abdul-Mumit and Abdurahman, the Court finds that it has jurisdiction based on the Class Action Fairness Act ("CAFA"). In addition to sharing some shortcomings with the Gentry complaint, the complaints in Abdul-Mumit and Abdurahman are devoid of facts pertaining to any of the hundreds of named plaintiffs or to any Defendantother than HMA. Therefore, those complaints will be dismissed.

PROCEDURAL BACKGROUND

I. Gentry Filed and Stayed.

Gentry was filed in this Court in August 2013. The complaint was amended that October, but Defendant HMA moved both to dismiss the complaint and to stay the case. The case was stayed in November 2013 pending a decision from the MDL.

II. Abdurahman Filed and Removed, so Abdul-Mumit Is Filed (and Removed).

After Gentry was stayed, the Plaintiffs' attorney, Mr. Feinman, filed a mass action, Abdurahman, in state court in December 2013. Defendants removed the case to this Court on January 2014, citing the Class Action Fairness Act ("CAFA") as the basis for removal.

The next day, Mr. Feinman filed Abdul-Mumit in the Roanoke Circuit Court, a complaint which was substantively identical to Abdurahman, except that the caption of named plaintiffs and defendants differed somewhat. Predictably, Defendants removed Abdul-Mumit in February 2014, although this time—in addition to CAFA jurisdiction—they also relied on traditional diversity jurisdiction (arguing that that defendant dealerships in Virginia were fraudulently joined or were nominal defendants) and federal question jurisdiction (arguing that the attempt to evade the Court's stay in Gentry implicated the Court's authority to control its own proceedings).

III. MDL Transfers, then Remands, the Cases

With motions to dismiss pending in all three cases, the MDL on June 9, 2014 ordered the transfer of all three cases to the Central District of California.

After extensive proceedings, the MDL returned the cases on September 15, 2015 to this Court, identifying the two classes noted above: pre-November 2nd opt-outs and post-November 2nd purchasers. From late 2015 to mid-2016, the parties—at the Court's repeated urging—attempted with only modest success to resolve various case management issues: e.g., deadlines; identification of proper plaintiffs and possible duplication of cases; and whether discovery, repleading, or both should occur.

In June and July 2016, the Court ordered Plaintiffs to amend their complaints to reflect developments in the case, or else have their prior complaints deemed operative. (See Gentry, dkts. 86, 89). They chose the latter, and Defendants filed renewed motions to dismiss in all three cases.

ALLEGATIONS IN GENTRY

Gentry was filed as a class action with five named plaintiffs. Defendant HMA asserts—and Plaintiff does not contest—that the four other named class representatives were not remanded by the MDL because those plaintiffs fell within the settlement and did not opt out. Thus, Mr. Gentry is the only remaining named plaintiff in Gentry.

The Complaint brings claims for violations of Virginia's "Lemon Law," the VCPA, and deceptive advertising law. (Dkt. 27 [hereinafter "Complaint"] ¶ 4). The case involves allegedly deceptive practices surrounding HMA's 2011-2013 Elantra vehicle.

In November 2010, HMA's CEO introduced the "All New 40 MPG Hyundai Elantra." (Complaint ¶ 5). Ad campaigns represented that the Elantra would obtain 40 miles per gallon ("MPG") on the highway. (Id.). Allegedly, 16,000 Virginians bought the 2011-2013 edition. (Id.). Mr. Gentry was one of them. He commutes several miles to work, and in early 2013 began researching a new vehicle. (Id. ¶ 7). He recalled ads for the 2011-2012 Elantra touting its 40 MPG highway and later saw others about the 2013 Elantra claiming 38 MPG. (Id.). He thus purchased a 2013 Elantra on February 18, 2013 from a dealer in Staunton, Virginia. (Id. ¶ 8). He asserts that his "warranty book" stated his car would receive "up to" 40 MPG. (Id. ¶ 7).

Post-purchase, Mr. Gentry kept track of his car's MPG. Rather than obtaining 38 MPG, his Elantra received only 30 to 33 MPG. (Complaint ¶ 9). Plaintiff returned to the local HMA dealership, where employees relayed that his car should get 38 MPG on the highway. (Id. ¶¶ 9-10). Indeed, the dealership's owner drove the vehicle himself and calculated that Gentry's car was receiving 32 MPG, and that the on-board mileage calculator was overstating the actual gas mileage. (Id. ¶ 10). Further testing by the dealership employees and HMA representatives occurred.

On June 18, 2013, HMA employees performed tests in Staunton, Virginia. (Complaint ¶ 11). Their tests yielded 62 MPG and 42 MPG calculations, while the on-board mileage calculator yielded 37-40 MPG and 38-44 MPG, respectively. (Id.). In subsequent conversations with Mr. Gentry, the dealership's owner expressed doubt about the accuracy of these calculations, which contradicted his experiences, as well as Mr. Gentry's, when driving the car. (Id. ¶ 12). The dealership owner claimed the HMA employees insisted that: the Elantra obtained the proper gas mileage; Mr. Gentry's calculations were caused by his driving style; and the car received the proper gas mileage. (Id.).

Facing a nonresponsive HMA, Gentry sought legal representation. During his search, he discovered "for the first time" details of a separate class action where HMA admitted in November 2012 that it has submitted false and incorrect mileage calculations to the EPA for its 2011-2013 Elantras. (Complaint ¶ 13). Plaintiff alleges additional facts regarding two of his claims.

Lemon Law. Plaintiff alleges that HMA published on its website in April 2012 statements that 39% of Elantras obtain 40 MPG. (Complaint ¶ 21). HMA cannot fix its 2011-2013 Elantras to make them produce 40 MPG. (Id. ¶ 24). Further, HMA represented thatElantra's on-board mileage calculators would give "accurate" MPG assessments but in fact do not. (Id. ¶ 25). Mr. Gentry alleges "on information and belief" that HMA knew its MPG tests for the Elantra model, as well as its on-board mileage calculator, were inaccurate. (Id.).

VCPA. Plaintiff asserts several statements or actions by HMA constituted violations of the VCPA: (A) HMA's statement that Elantras would receive 40 MPG; (B) HMA's refusal to sell an Elantra to Mr. Gentry that conformed to the 40 MPG representation; (C) HMA's representation that the on-board calculator was accurate; (D) statements from a HMA website that 2013 Elantras could obtain 38 MPG had deceptively obscure and difficult-to-read disclaimers; (E) HMA employees' statements about the gas mileage Mr. Gentry's Elantra actually received when they tested it. (See Complaint ¶ 31).

GENTRY—ANALYSIS OF MOTION TO DISMISS

I. Additional Facts Presented by HMA.

HMA submitted several exhibits to its motion to dismiss. HMA uses the first class of exhibits to advance its legal arguments about preemption. The second batch of documents is used in support of HMA's argument that the EPA has primary jurisdiction over this case. Even if the Court were to consider these documents, the arguments they support do not succeed or fail by reference to the exhibits.

For Exhibits A through E, HMA urges judicial notice of statements made by the government on its websites. See Johnson v. Clarke, No. 7:12CV00410, 2012 WL 4503195, at *2 n.1 (W.D. Va. Sept. 28, 2012) (compiling cases). These exhibits contain statements made on the EPA's website about fuel economy, HMA's Elantra, and the relevant regulatory regime. HMA observes that federal law mandates fuel economy labels and authorizes the EPA to issue effecting regulations. See 48 U.S.C. § 32908(b); 40 C.F.R. §§ 600.302-12(a)-(f), (h). One...