Hammerschmidt v. Gen. Motors LLC

583 F.Supp.3d 1215

Joseph HAMMERSCHMIDT and Edward Jackson, individually and on the behalf of all others similarly situated, Plaintiffs,

v.GENERAL MOTORS LLC, Defendant.

Civil No. 20-1773 (DWF/BRT)

United States District Court, D. Minnesota.

Signed February 3, 2022

Brant D. Penney, Esq., and Garrett D. Blanchfield, Jr., Esq., Reinhardt Wendorf & Blanchfield; Charles Williams, Esq., Williams & Skilling, P.C.; and Danielle L. Manning, Esq., and Marc L. Godino, Esq., Glancy Prongay & Murray LLP; and Mark Greenstone, Esq., counsel for Plaintiff.

Archis A. Parasharami, Esq., Daniel Jones, Esq., John Nadolenco, Esq., and Marjan A. Batchelor, Esq., Mayer Brown LLP, counsel for Defendant.

MEMORANDUM OPINION AND ORDER

DONOVAN W. FRANK, United States District Judge

INTRODUCTION

This matter is before the Court on Defendant General Motors, LLC's ("GM" or "Defendant") Motion to Dismiss Consolidated Class Action Complaint for Failure to State a Claim (Doc. No. 90) and Motion to Strike Nationwide Class Allegations in Consolidated Class Action Complaint (Doc. No. 96). For the reasons below, the Court grants the motion to dismiss and denies the motion to strike as moot.

BACKGROUND

This lawsuit relates to an alleged defect in the "right front passenger airbag on-off indicator light"¹ in Plaintiffs’ respective vehicles.² (Compl. ¶¶ 20, 24.) According to the allegations in the Complaint³ , both Plaintiff Joseph Hammerschmidt ("Hammerschmidt") and Plaintiff Edward Jackson ("Jackson") purchased Chevrolet Camaros designed and manufactured by GM. (Id. ¶¶ 16, 22, 28.) Hammerschmidt purchased a 2010 Chevrolet Camaro from a third party, Summit Auto & Cycle, in Zumbrota, Minnesota on September 20, 2016, and Jackson purchased a 2011 Chevrolet Camaro from Dudley Martin Chevrolet in Manassas, Virginia in January 2012. (Id. ¶¶ 16, 22.) GM provided a warranty on both Vehicles.⁴

Hammersmith alleges that around March 2019, the airbag indicator light in his Vehicle "began to malfunction—reading ‘OFF’ even when an adult passenger was seated." (Id. ¶ 20.) Jackson alleges the same occurred in his Vehicle around May 2019. (Id. ¶ 24.) Hammerschmidt alleges that he took his car to a third-party repair shop, where they ran a diagnostic and found "error codes" that were the subject of a Technical Service Bulletin ("TSB")⁵ that was issued by GM in September 2010. (Id. ¶¶ 20, 24 & Ex. 1 ("September 2010 TSB").) Jackson alleges that he took his Vehicle to a Chevrolet dealer in November 2020, where they ran a diagnostic and found a "Diagnostic Trouble Code" that was the subject of the September 2010 TSB. (Id. ¶ 24 & September 2010 TSB.)

The September 2010 TSB states, in relevant part:

Condition/Concern

Some customers may comment on the SIR/Airbag indicator/light on in the instrument panel cluster (IPC). Upon further investigation, the technician may find DTCs B0074 and B0081 set.

Recommendation/Instructions

Important: DO NOT replace the passenger presence system (PPS) module or sensing diagnostic module (SDM) or attempt to reprogram the SDM for this concern.

[image omitted]

The PPS pad may have a tear (1) in the sensor circuit where the plastic push pins/retainers are pressed into the seat frame as shown above. If this condition is discovered, replace the PPS sensor....

(September 2010 TSB.)⁶

Although no tear in the sensor circuit was discovered, Hammerschmidt alleges that the third-party repair shop recommended replacement of the PPS sensor pad for an estimated $959.82, but that he declined because of the cost. (Id. ¶ 20.) Jackson alleges that a tear was discovered in the sensor in his Vehicle, and that he replaced it at the cost of $967.55. (Id. ¶ 24.) Both Vehicles were "out of warranty" when the airbag indicator light issues arose. (Id. ¶¶ 20, 25.)

In September 2010, GM introduced a redesigned PPS pad intended to prevent push-pin interference with the sensors. (Id. ¶ 38.) Because Plaintiffs’ Vehicles were manufactured before the redesign, they were not upgraded. (Id. )

In the Complaint, Plaintiffs cite to numerous consumer complaints filed with the National Highway Traffic Safety Administration ("NHTSA") regarding issues with the airbag indicator light, but Plaintiffs do not allege that the NHTSA has issued a recall or otherwise acted on the complaints. (Id. ¶¶ 5, 46-48.)

Plaintiffs bring the following causes of action: Violation of the Minnesota Consumer Fraud Act, Minn. Stat. §§ 325.68 et seq. ("MCFA") (Count One); Violation of the Minnesota False Statement in Advertising Act, Minn. Stat. §§ 325 F.67 et seq. ("MFSAA") (Count Two); Violation of the Minnesota Unfair and Deceptive Trade Practices Act, Minn. Stat. §§ 325D.44 et seq. ("MUDTPA") (Count Three); Breach of Implied Warranty of Merchantability, Minn. Stat. §§ 336.314 et seq. (Count Four); Violation of Virginia's Consumer Protection Act, Va. Code Add. §§ 59.1-196, et seq. (Count Five); Breach of Implied Warranty of Merchantability, Va. Code Ann. § 8.2-314 (Count Six); Breach of Implied Warranty of Merchantability Under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq. (Count Seven); and Fraudulent Omission (Count Eight). Plaintiffs also propose the creation of a nationwide class (excluding California), and Minnesota and Virginia subclasses, of individuals who purchased or leased 2010 or 2011 Camaros.

GM now brings two separate motions. First, GM moves to dismiss the Complaint for failure to state a claim. In short, GM argues that in each count, Plaintiffs allege that GM knew but failed to disclose an "Airbag Defect" in their Vehicles, namely a defect in its airbag systems that causes the airbag indicator light to be off when an adult is seated, "such that the passenger airbag will not deploy in the event of an accident. " (Compl. ¶ 2 (emphasis added).) GM asserts that Plaintiffs’ lawsuit is based on speculation about risks that have never materialized and underscores that Plaintiffs do not allege an instance in which the airbag in either Vehicle or any other 2010 or 2011 Camaro failed to deploy. Second, GM moves to strike the nationwide class allegations in the Complaint.

DISCUSSION

I. Motion to Dismiss

In deciding a motion to dismiss under Rule 12(b)(6), a court assumes all facts in the complaint to be true and construes all reasonable inferences from those facts in the light most favorable to the complainant. Morton v. Becker , 793 F.2d 185, 187 (8th Cir. 1986). In doing so, however, a court need not accept as true wholly conclusory allegations, Hanten v. Sch. Dist. of Riverview Gardens , 183 F.3d 799, 805 (8th Cir. 1999), or legal conclusions drawn by the pleader from the facts alleged, Westcott v. City of Omaha , 901 F.2d 1486, 1488 (8th Cir. 1990). A court deciding a motion to dismiss may consider the complaint, matters of public record, orders, materials embraced by the complaint, and exhibits attached to the complaint. See Porous Media Corp. v. Pall Corp. , 186 F.3d 1077, 1079 (8th Cir. 1999).

To survive a motion to dismiss, a complaint must contain "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Although a complaint need not contain "detailed factual allegations," it must contain facts with enough specificity "to raise a right to relief above the speculative level." Id. at 555, 127 S.Ct. 1955. As the Supreme Court reiterated, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements," will not pass muster under Twombly . Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). In sum, this standard "calls for enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of [the claim]." Twombly , 550 U.S. at 556, 127 S.Ct. 1955.

In addition to the pleading standard explained by the Supreme Court in Twombly and Iqbal , Federal Rule of Civil Procedure 9(b) requires "particularity" when pleading "fraud or mistake." Fed. R. Civ. P. 9(b). Rule 9(b) serves to deter suits filed for purpose of discovering unknown wrongs and to enable a defendant to understand a plaintiff's claim and effectively prepare a defense. See Parnes v. Gateway 2000, Inc. , 122 F.3d 539, 549 (8th Cir. 1997). To satisfy Rule 9(b), "the complaint must plead the ‘who, what, where, when, and how’ of the alleged fraud.’ " Drobnak v. Andersen Corp. , 561 F.3d 778, 783 (8th Cir. 2009) (citation omitted). "Conclusory allegations that a defendant's conduct was fraudulent and deceptive are not sufficient to satisfy the rule." Schaller Tel. Co. v. Golden Sky Sys., Inc. , 298 F.3d 736, 746 (8th Cir. 2002) (citation omitted).

A. Fraud-Based Claims

Plaintiffs have alleged several claims based on a theory of fraud-by-omission. At the heart of these claims is the allegation that GM failed to disclose the potential for an issue with their Vehicle's airbag indicator light, of which GM had exclusive or superior knowledge, prior to selling the Vehicles, and further that the issue with the airbag indicator light is "necessarily a safety defect." Specifically, Plaintiffs allege that when the airbag indicator light is off, "the passenger airbag will not deploy in the event of an accident" (Compl. ¶ 2), and that the airbag indicator defect "can cause the front passenger frontal airbag to fail to deploy when it otherwise should" (id. ¶ 34).

Plaintiffs assert claims for common law fraud under both Minnesota and Virginia law.⁷ Plaintiffs allege that: (1) GM knew or should have known that the Vehicles and their airbag systems were defective, would fail, and were not suitable for their intended use; (2) GM had a duty, but failed, to disclose the defect; and (3) as a result, Plaintiffs suffered actual damages. GM argues that Plaintiffs’ fraud-by-omission claims should be dismissed, primarily because there was no duty to disclose.

Under the common law, a party to a transaction generally "has no duty to disclose...