Livingston v. Trane Inc., Civil Action No. 17-6480 (ES) (MAH)

LOUISE LIVINGSTON, MELISSA RAINEY, DAVID SMITH,RAYMOND SABBATINE, PETER GOLDIS, and BILL COLBERT,on behalf of themselves and all others similarly situated, Plaintiffs, v. TRANE INC., Defendant.

Civil Action No. 17-6480 (ES) (MAH)

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

January 31, 2019

Not for Publication

OPINION

SALAS, DISTRICT JUDGE

Before the Court is Defendant Trane Inc.'s ("Defendant's" or "Trane's") motion to dismiss the Complaint of Plaintiffs Louise Livingston, Melissa Rainey, David Smith, Raymond Sabbatine, Peter Goldis, and Bill Colbert (collectively, "Plaintiffs") under Federal Rules of Civil Procedure 8(a), 9(b), and 12(b)(6). (D.E. No. 14). The Court has subject-matter jurisdiction under 28 U.S.C. §§ 1331 and 1332(d). After considering the parties' submissions,¹ the Court reaches its decision without oral argument. See D.N.J. Civ. R. 78.1(b). For the following reasons, the Court GRANTS-in-part and DENIES-in-part Defendant's motion to dismiss.

I. Background

Plaintiffs bring this putative class action to recover damages arising from Defendant's allegedly defective HVAC systems, including air conditioners and heat pumps ("systems"). (D.E.No. 1, Complaint ("Compl.") ¶ 1). The Court will "set out facts as they appear in the Complaint . . . ." See Bistrian v. Levi, 696 F.3d 352, 358 n.1 (3d Cir. 2012). According to the Complaint, Defendant's systems contain defective thermal expansion valves ("TXVs"). (Compl. ¶ 1). The defect arises from a chemical rust inhibitor, Ryconox, used in manufacturing by one of Trane's suppliers from mid-2013 through at least late 2014. (Id.). Ryconox "is incompatible with the oil and/or refrigerants used in the . . . systems and creates a sticky substance that collects on the TXV, leading to degraded performance and . . . failure of [the systems]." (Id.).

Plaintiffs assert that Defendant "discovered the defect by the early summer of 2014 (and likely much earlier) and quickly determined that the root cause was the rust inhibitor." (Id. ¶ 2). Nevertheless, Defendant "continued to sell [the] . . . systems containing the rust inhibitor without disclosing it so that Trane could offload its inventory . . . onto unsuspecting consumers." (Id.). "Thousands of . . . systems failed within months or just a few years of purchase due to this undisclosed defect, and tens of thousands of the systems contain the defect, which will impact their performance and value for years to come." (Id. ¶ 3). Furthermore, "[e]ven where the contamination has not yet resulted in a complete TXV or system failure, this known defect is likely to cause a failure to some point in the future." (Id. ¶ 5).

As the basis for their legal claims, Plaintiffs allege that Defendant extended an express "limited warranty against manufacturing defects" with respect to "all parts" in its systems. (Id. ¶¶ 34 & 135). Plaintiffs also allege that Defendant expressly warranted that it would "provide adequate repairs," such as by "replac[ing] . . . parts," required as a result of manufacturing defects. (Id. ¶¶ 4 & 6). Both of these alleged promises are rooted in a written warranty agreement issuedto Plaintiffs (the "Express Warranty").² Defendant, Plaintiffs allege, has not complied with its obligations under the Express Warranty. (See, e.g., id. ¶ 4). Instead, for instance, Defendant "has been instructing service personnel to inject the defective systems" with a harmful chemical called MJ-X. (Id.). MJ-X is "highly acidic," "causes premature wear," and "damages and devalues the . . . systems." (Id.). In contrast, "[a]n adequate repair" of the defective systems would "require[] at least replacing the contaminated oil, TXV, and filters . . . and in some cases may require replacing the entire compressor," all "as required by" the Express Warranty. (Id. ¶¶ 33-35). ("Injecting MJ-X is far simpler and cheaper than performing an adequate warranty repair." (Id.).)

Consequently, Plaintiffs bring this lawsuit on behalf of themselves and all similarly-situated individuals. (Id. ¶ 84). Generally, Plaintiffs bring state statutory and common-law claims for breach of warranty, fraud, and unjust enrichment; and a federal claim based on the state-law claims for breach of warranty. (See generally id. ¶¶ 96-334). Plaintiffs seek to certify a nationwide class for their claims under the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301, et seq. (Id. ¶ 85). Plaintiffs also seek to certify subclasses ("State Sub-Classes") for their common-law and state-statutory claims under North Carolina, Pennsylvania, Wisconsin, Illinois, Massachusetts, and Kentucky law. (Id. ¶ 86). The individual plaintiffs representing those classes are described below in the context of their respective warranty claims. Plaintiffs "seek all remedies as allowed by law." (Id. ¶ 140).

As noted above, Defendant has moved to dismiss the Complaint under Rules 8(a), 9(b), and 12(b)(6) of the Federal Rules of Civil Procedure. (See D.E. No. 14). The Court addresses Defendant's arguments in the analysis of Plaintiffs' claims below.

II. Legal Standards

A. Federal Rule of Civil Procedure 12(b)(6)

Federal Rule of Civil Procedure 8(a)(2) requires that a plaintiff's complaint contain a "short and plain statement of the claim showing that the pleader is entitled to relief." But in order to survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), a plaintiff's 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 (2007). "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 556).

Pursuant to the pleading regime established by Twombly and Iqbal, the Court of Appeals for this Circuit has promulgated a three-pronged test of the sufficiency of a complaint. See Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010). First, the Court considers "the elements a Plaintiff must plead to state a claim." Id. Second, the Court abstracts from mere legal conclusions contained in the complaint, which "are not entitled to an assumption of truth." Id. (quoting Iqbal, 556 U.S. at 664). That is, a complaint's "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements," Iqbal, 556 U.S. at 678, cannot "nudge[] [a plaintiff's] claims across the line from conceivable to plausible," Twombly, 550 U.S. at 570. Finally, the Court considers the complaint's remaining well-pleaded factual allegations and "determines whether they plausibly give rise to an entitlement for relief." Santiago, 629 F.3d at130 (quoting Iqbal, 556 U.S. at 679). Throughout this process, the Court is "required to accept as true all allegations in the complaint and all reasonable inferences that can be drawn from them after construing them in the light most favorable to the nonmovant." See, e.g., McDermott v. Clondalkin Grp., Inc., 649 F. App'x 263, 266 (3d Cir. 2016).

B. Federal Rule of Civil Procedure 9(b)

Federal Rule of Civil Procedure 9(b) ("Rule 9(b)") states that when "alleging fraud . . . a party must state with particularity the circumstances constituting fraud . . . ." "In order to satisfy Rule 9(b), a complaint must provide all of the essential factual background that would accompany the first paragraph of any newspaper story—that is, the who, what, when, where and how of the events at issue." United States v. Eastwick Coll., 657 F. App'x 89, 93 (3d Cir. 2016) (quoting In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 217 (3d Cir. 2002)) (emphasis added) (internal quotation marks omitted). In other words, a complaint "must state the circumstances of . . . alleged fraud with sufficient particularity to place the defendant on notice of the 'precise misconduct with which [it is] charged.'" Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007) (quoting Lum v. Bank of Am., 361 F.3d 217, 223-224 (3d Cir. 2004)) (emphasis added).

To exactly which claims Rule 9(b) applies is not conclusively settled. See, e.g., In re: Elk Cross Timbers Decking Mktg., No. 15-0018, 2015 WL 6467730, at *9 (D.N.J. Oct. 26, 2015). The Court will address this issue in the context of the relevant counts, below.

III. Discussion

A. Count I: Violation of the Magnuson-Moss Warranty Act

Plaintiffs bring a claim under the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301, et seq. ("MMWA"), on behalf of themselves, the nationwide Class, and the State Sub-Classes. (Compl. ¶¶ 96-107). The MMWA "provides a private right of action in federal court forconsumers who are 'damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation . . . under a written . . . [or] implied warranty.'" Argabright v. Rheem Mfg. Co., 201 F. Supp. 3d 578, 600 (D.N.J. 2016) (quoting 15 U.S.C. § 2310(d)(1)). MMWA "claims based on breaches of express and implied warranties under state law depend upon those state law claims." Avram v. Samsung Elecs. Am., Inc., No. 11-6973, 2013 WL 3654090, at *14 (D.N.J. July 11, 2013) (quoting Cooper v. Samsung Elecs. Am., Inc., No. 07-3853, 2008 WL 4513924, at *6 (D.N.J. Sept. 30, 2008)); see also Cooper v. Samsung Elecs. Am., Inc., 374 F. App'x 250, 254 (3d Cir. 2010).

Plaintiffs' MMWA claim is based on Defendant's alleged breaches of express and implied warranties under state law. (See, e.g., Compl. ¶¶ 101-105). Plaintiffs have complied with the notice requirement of the MMWA and have adequately stated claims for many of those alleged breaches of express and implied warranties. (See infra, sections III.M-III.V). Plaintiffs' MMWA claim, therefore, may proceed to that extent. See, e.g., Granillo v. FCA US LLC, No. 16-0153, 2016 WL 9405772, at *16 (D.N.J. Aug. 29, 2016) (permitting state-law breach-of-warranty claims to proceed under the MMWA); Morris v. BMW of Am., LLC, No....