Knotts v. Nissan N. Am., Inc., File No. 17-cv05049 (SRN/SER)

346 F.Supp.3d 1310

Michael KNOTTS, on Behalf of Himself and All Others Similarly Situated, Plaintiff,

v.NISSAN NORTH AMERICA, INC., Defendant.

File No. 17-cv05049 (SRN/SER)

United States District Court, D. Minnesota.

Signed October 10, 2018

Melissa S. Weiner, Pearson Simon & Warshal, LLP, 800 LaSalle Ave., Ste. 2150, Minneapolis, MN 55402; James C. Shah and Natalie Finkelman Bennett, Shepherd Finkelman Miller & Shah, LLP, 35 East State Street, Media, PA 19063, for Plaintiff.

Mark A. Solheim, Larson King, LLP, 30 E. 7th Street Suite 2800, St. Paul, MN 55101; Edwin Paul Cauley, Jr. and Sherman Vance Wittie, Drinker Biddle & Reath LLP, 1717 Main Street Suite 5400, Dallas, TX 75201, for Defendant.

MEMORANDUM OPINION AND ORDER

SUSAN RICHARD NELSON, United States District JudgeThis matter is before the Court on two motions filed by Defendant Nissan North America ("NNA"): (1) a Motion to Dismiss [Doc. No. 15] pursuant to Federal Rule of Civil Procedure 12(b)(6) ; and (2) a Motion to Strike or Dismiss Plaintiff's Class Allegations [Doc. No. 21] based on the U.S. Supreme Court's decision in Bristol-Myers Squibb Co. v. Superior Court of California , ––– U.S. ––––, 137 S.Ct. 1773, 198 L.Ed.2d 395 (2017). For the reasons set forth below, Defendant's Motion to Dismiss under Rule 12(b)(6) is granted in part and denied in part and Defendant's Motion to Strike is denied.

I. BACKGROUND

A. Factual Background

Plaintiff Michael Knotts, a citizen of Minnesota, alleges that in approximately October 2012, he purchased a new Nissan Versa from Morrie's Nissan, an authorized Nissan dealership located in Brooklyn Park, Minnesota. (Compl. ¶ 13 [Doc. No. 1].) Defendant NNA is a California corporation with its principal business office in Sacramento, California, and its North American headquarters in Franklin, Tennessee. (Id. ¶ 14.) It markets, sells, and warrants vehicles, including 2012 Nissan Versas, through an established network of licensed dealers and distributors. (Id. ¶ 18).

The subject vehicle that Plaintiff purchased was built with a continuously variable automatic transmission ("CVT"). (Id. ) A CVT is a "modified automatic transmission that employs a single, adaptable belt and a dual-pulley mechanism." (Id. ¶ 2.) It is designed such that the " ‘drive pulley’ and ‘driven pulley’ work opposite one another, constantly creating different gear ratios, allowing for smooth acceleration and deceleration." (Id. ) Knotts alleges that NNA advertised and continues to advertise the CVT as a "next-generation" transmission, designed to "provide smoother performance, quicker acceleration, and better fuel economy than ever before." (Id. ¶ 3.)

NNA provides its customers with a three-year, 36,000-mile limited vehicle warranty and a five-year, 60,000-mile powertrain¹ warranty on all of its vehicles (the "Warranty"). (Id. ¶ 5.) The Warranty " ‘covers any repairs needed to correct defects in materials or workmanship of all parts and components of each new Nissan vehicle supplied by Nissan,’ " including the engine, transmission, drivetrain, and restraint system. (Id. ¶ 6.)

Knotts alleges that unbeknownst to him and the putative class members, the subject vehicles' CVTs were "defective," and routinely failed during and shortly after the expiration of the Warranty. (Id. ¶ 7.) The alleged defect causes the vehicle to lose most, if not all, of its ability to accelerate, putting the vehicle's occupants at serious risk of harm. (Id. ) As a result of this defect, Plaintiff alleges that NNA's CVTs fail after "an unreasonably low number of miles have been driven"—frequently just after the expiration of the Warranty. (Id. ¶ 19.)

Knotts contends that on one occasion, he was stopped at a red light, and when he attempted to accelerate across the intersection after the light turned green, his vehicle "would not accelerate beyond a crawl, causing him to block and delay traffic behind him and rendering him barely able to move the car into the shoulder of the road so that he could avoid the danger of moving so slowly at a traffic-heavy intersection." (Id. ¶ 38.)

After this incident, Plaintiff alleges that his "acceleration problems were pervasive," and in or about March 2017—approximately four and a half years after he purchased his Versa—he took his vehicle to Victory Auto Service & Glass in Brooklyn Park, Minnesota. (Id. ¶ 39.) At that time, the mechanic diagnosed a "fuel injection issue" as the cause of the Versa's problems. (Id. ) The following month, when Knotts' vehicle again failed to accelerate, it was again towed to Victory Auto Service & Glass. (Id. ¶ 40.) This time, the shop identified a transmission problem, and replaced the transmission and the transmission fluid. (Id. ) Plaintiff paid more than $3,300 for this work. (Id. ¶ 42.)

At the end of April 2017, Plaintiff contacted NNA about his allegedly defective CVT, describing the acceleration problems. (Id. ¶ 41.) He alleges that NNA refused to cover the cost of the repairs because the issue arose outside of the Warranty period and the repairs had been performed by non-Nissan service providers. (Id. ¶ 42.)

Knotts alleges that he and other putative class members relied on NNA's representations. (Id. ¶ 9.) He states that had they known about the alleged defect when they leased or purchased the vehicles, they would have not purchased or leased them, or they would have paid less. (Id. ) He also contends that he, along with the putative class members, "reasonably expected that the CVTs in the Subject Vehicles would not be defective," and that "if they were defective, Nissan would repair the defect pursuant to the terms of the Warranty." (Id. ¶ 20.) Plaintiff maintains that the CVT defect, related safety concerns, and the lack of a pre-failure fix are "material facts to a reasonable consumer" in deciding whether to purchase or lease a Nissan and how much to pay for it. (Id. ¶ 26.) He asserts that "Nissan should have disclosed these material facts to the public, but failed to do so." (Id. )

Knotts imputes knowledge of the CVTs' alleged defects to NNA, including the knowledge that the CVTs were "not fit for their intended purpose, and unsafe when used as intended." (Id. ¶ 8.) According to Plaintiff, "any type of meaningful pre-production testing conducted by Nissan would have provided Nissan with knowledge of the defect." (Id. ¶ 22.) In addition, Knotts alleges that NNA's knowledge of the alleged defect further increased once the subject vehicles were on the market:

Nissan was further put on notice regarding the existence of the defect shortly after the Vehicles were brought to market (and prior to many Subject Vehicles being sold) as a result of receiving customer complaints (1) directly, (2) through its authorized dealers, (3) through complaints made to the National Highway Traffic Safety Administration ("NHTSA"), and (4) through the public dissemination of complaints publicly posted on online forums.

(Id. )

In the Complaint, Knotts quotes 18 complaints filed with the NHTSA involving acceleration failures in 2012 Nissan Versas. (Id. ¶ 22 (a)–(r).) For example, in one such complaint, the driver reported that on two occasions, his 2012 Nissan Versa stalled when he was driving at approximately 55 miles per hour. (Id. ¶ 22(a).) The driver further stated that this required two repairs, including transmission replacement, but the failure recurred after each repair. (Id. ) In addition to the NHTSA complaints, Plaintiff also alleges that the Internet is rife with similar complaints, and provides six examples in his pleading. (Id. ¶ 24(a)–(f).)

Knotts asserts that despite these consumer complaints, NNA "failed to disclose the defective CVT to Plaintiff and the Class members, both before and after purchase." (Id. ¶ 8.) Plaintiff asserts that "[a]t all relevant times, Nissan had exclusive possession of the information regarding the defective CVT and its propensity to fail and malfunction based upon, inter alia, Nissan's own testing, industry testing, and the numerous consumer complaints it received." (Id. ¶ 28.) Moreover, Plaintiff further alleges that NNA has "no viable fix for the CVT defect," other than transmission replacement, after the failure manifests. (Id. ¶ 25.) The cost of the defect, Knotts asserts, "has been borne by Plaintiff and Class members." (Id. )

B. Procedural Posture

Plaintiff initiated this putative class action on November 7, 2017, "on behalf of all current and former owners and lessees of model year[ ] 2012 ... Nissan Versas that are equipped with a continuously variable automatic transmission."² (Id. ¶ 1.) Plaintiff proposes the following classes:

National Class : All current and former owners and lessees of the Subject Vehicles purchased or leased in the United States.

Minnesota Class : All current and former owners and lessees of the Subject Vehicles purchased or leased in the State of Minnesota.

(Id. ¶ 44.)

Knotts asserts three Minnesota statutory claims on behalf of a putative Minnesota Class. In Counts I and II, Knotts asserts deceptive trade practices claims under the Minnesota Deceptive Trade Practices Act ("MDTPA"), Minn. Stat. § 325D.44, et seq. (Id. ¶¶ 55–63), and § 325F.68. (Id. ¶¶ 64–74.) In Count III, he asserts violations of the Minnesota False Statement in Advertising Act ("MFSAA"), Minn. Stat. § 325F.67. (Id. ¶¶ 75–83.)

In Counts IV through VII, Knotts asserts common law claims on behalf of the both the putative national and Minnesota classes. In Count IV, he asserts a claim for breach of express warranty, (id. ¶¶ 84–92), in Count V, he asserts a claim for breach of the implied warranty of merchantability and fitness, (id. ¶¶ 93–101), in Count VI, he asserts a claim of fraudulent misrepresentation, concealment, and failure to disclose, (id. ¶¶ 102–09), and in Count VII, Knotts pleads an alternative claim of unjust enrichment. (Id. ¶¶ 110–14.)

In its Motion to Dismiss, NNA argues that Plaintiff's claims fail to state a claim upon which relief can be granted for several reasons, including the following: (1)...