Schiesser v. Ford Motor Co.

DAVID SCHIESSER, on behalf of himselfand all others similarly situated, Plaintiff, v. FORD MOTOR COMPANY, Defendant.

No. 16 C 730

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

April 6, 2017

Judge Sara L. Ellis

OPINION AND ORDER

Plaintiff David Schiesser brings this putative class action against Defendant Ford Motor Company ("Ford"), alleging that certain Ford vehicles have a defect that allows harmful exhaust gases to enter the passenger compartment of the vehicles. The Court previously dismissed Schiesser's first amended complaint. Doc. 44. In his second amended complaint ("SAC"), Schiesser brings claims for breach of express warranty, common law fraud, and violation of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq., the Illinois Uniform Deceptive Trade Practices Act ("UDTPA"), 815 Ill. Comp. Stat. 510/1 et seq., and the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"), 815 Ill. Comp. Stat. 505/1 et seq. Ford moves to dismiss the SAC pursuant to Federal Rule of Civil Procedure 12(b)(6). Because the Court agrees with Ford that Schiesser has failed to correct the deficiencies identified by the Court in dismissing the first amended complaint and that preemption and comity concerns prevent the Court from adjudicating Schiesser's UDTPA claim, the Court dismisses the SAC with prejudice.

BACKGROUND¹

Ford represents that its vehicles are "best-in-class" that "lead in quality, fuel efficiency, safety, smart design and value." Doc. 46 ¶ 56 (quoting Ford's 2011 Annual Report). But despite this general representation, its Ford Explorer vehicles have experienced exhaust odor issues stemming from an alleged design defect that causes carbon monoxide to enter the passenger compartment of the vehicle. In December 2012, Ford began issuing Technical Service Bulletins ("TSBs") acknowledging exhaust odor in the cabins of some Ford Explorer models (the "Defect").² The TSBs describe the issue as merely an "unpleasant odor," when, in reality, the exhaust seeping into the cabin contains carbon monoxide. Id. ¶ 10. The TSBs include instructions on correcting the exhaust odor, although the proposed fixes do not effectively remedy the Defect. Ford provided the TSBs to authorized dealerships, but not to non-Ford automotive repair facilities. Ford also did not disclose these TSBs to its customers.

Ford learned of the Defect before issuing the December 2012 TSB from Ford customers posting about the problem in online discussion forums. In response to customer complaints on such online forums, for example, in July 2011, an "Official Ford Rep" offered to help customers by escalating their problems concerning exhaust odors and arranging for Ford representatives to contact the customers. Id. ¶¶ 24-27. Ford also responded to customer complaints by letter in March 2014, noting that it had "performed several inspections and sealing actions . . . to helpminimize the amount of odor coming into the passenger compartment" but that the customer "may still experience odor under certain driving conditions such as, when performing wide open throttle (WOT) accelerations with the climate control system in recirculation mode." Id. ¶ 32.

Schiesser purchased a model year 2013 Ford Explorer (the "Vehicle") in June 2012 from Joe Rizza Ford in Orland Park, Illinois. He purchased the Vehicle based on Ford's reputation and believing the Vehicle to be safe. The Vehicle came with a warranty, Ford's New Vehicle Limited Warranty (the "Warranty"), limited to three years from the date of purchase or 36,000 miles. The Warranty promises that, while under the applicable coverage period, an authorized Ford dealership would, without charge, repair, replace, or adjust all parts on a vehicle affected by factory defects.

In August or September 2015, Schiesser began noticing exhaust odor accumulating in the passenger cabin of his Vehicle. In October 2015, Schiesser brought his Vehicle to the dealership to service the problem. After being contacted by Schiesser's dealership, Ford allegedly proposed two repairs costing between $800 and $900 but could not guarantee that either repair would fix the problem. Schiesser decided not to incur the cost of repair because neither solution was guaranteed to solve the problem.

The National Highway Transportation Safety Administration ("NHTSA") began investigating the exhaust leak issue in July 2016. Additionally, a federal district court in Florida has preliminarily approved a nationwide settlement addressing the same issues raised in this case, which provides that Ford will issue a new TSB to address the exhaust odor issue. See Sanchez-Knutson v. Ford Motor Co., No. 14-61344-CIV, Doc. 434 (S.D. Fla. Nov. 18, 2016).

LEGAL STANDARD

A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not its merits. Fed. R. Civ. P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis but must also be facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678.

Rule 9(b) requires a party alleging fraud to "state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). This "ordinarily requires describing the 'who, what, when, where, and how' of the fraud, although the exact level of particularity that is required will necessarily differ based on the facts of the case." AnchorBank, 649 F.3d at 615 (citation omitted). Rule 9(b) applies to "all averments of fraud, not claims of fraud." Borsellino v. Goldman Sachs Grp., Inc., 477 F.3d 502, 507 (7th Cir. 2007). "A claim that 'sounds in fraud'—in other words, one that is premised upon a course of fraudulent conduct—can implicate Rule 9(b)'s heightened pleading requirements." Id.

ANALYSIS

I. Breach of Express Warranty Claim (Count I)

To state a claim for breach of express warranty, Schiesser "must allege the terms of the warranty, the failure of some warranted part, a demand upon the defendant to perform under the warranty's terms, a failure by the defendant to do so, compliance with the terms of the warranty by the plaintiff, and damages measured by the terms of the warranty." In re Rust-Oleum Restore Mktg., Sales Practices & Prods. Liab. Litig., 155 F. Supp. 3d 772, 787 (N.D. Ill. 2016) (citations omitted) (internal quotation marks omitted); Darne v. Ford Motor Co., No. 13 C 03594, 2015 WL 9259455, at *4-5 (N.D. Ill. Dec. 18, 2015). Schiesser acknowledges that he brought his Vehicle to the dealership for repairs in October 2015, after the Warranty expired, meaning that he must sufficiently allege that the Warranty's time and mileage limitations are unconscionable for the claim to proceed.

A court can invalidate a contract for either procedural or substantive unconscionability. ChampionsWorld, LLC v. U.S. Soccer Fed'n, Inc., 890 F. Supp. 2d 912, 943 (N.D. Ill. 2012); see Snyder v. Komfort Corp., No. 07 C 1335, 2008 WL 2952300, at *4 (N.D. Ill. July 30, 2008) (a written warranty is a contract, and courts interpret contracts according to their plain meaning under Illinois law). "Procedural unconscionability refers to both a situation where a term is so difficult for a plaintiff to find or understand that he cannot have been aware he was agreeing to it and also to a plaintiff's lack of bargaining power or lack of meaningful choice." Darne, 2015 WL 9259455, at *7. Substantive unconscionability refers to contract terms which are "inordinately one-sided in one party's favor." Id. (quoting Razor v. Hyundai Motor Am, 854 N.E.2d 607, 622, 222 Ill. 2d 75, 305 Ill. Dec. 15 (2006)). Unconscionability may be shown by "acts of bad faith such as concealments, misrepresentations, [or] undue influence." Singer v.Sunbeam Prods., Inc., No. 15 C 1783, 2016 WL 1697777, at *4 (N.D. Ill. Apr. 28, 2016) (alteration in original) (quoting Levey v. CitiMortgage, Inc., No. 07 C 2678, 2009 WL 2475222, at *4 (N.D. Ill. Aug. 10, 2009)); see also Original Great Am. Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd., 970 F.2d 273, 281 (7th Cir. 1992) (describing unconscionability as being "closely allied" to the doctrines of fraud and duress).

Illinois courts enforce durational limitations in express warranties. See, e.g., Evitts v. DaimlerChrysler Motors Corp., 834 N.E.2d 942, 950, 359 Ill. App. 3d 504, 296 Ill. Dec. 137 (2005). But, as he did with respect to his first amended complaint, Schiesser argues that the Court should find the Warranty in this case unconscionable because Ford knew of the Defect at the time of sale, making any limitation on the warranty unconscionable. At most, Schiesser alleges that, before he bought his Vehicle in June 2012, Ford knew of a number of online complaints of an exhaust odor, with further knowledge accumulating after Schiesser purchased the Vehicle. But the SAC contains no allegations that Ford knew that carbon monoxide was entering vehicle compartments at the time Schiesser purchased his Vehicle. As the Court previously found, the SAC does not allow the inference that Ford knew of the Defect at the time of sale so as to make the Warranty's limitations unconscionable. See Doc. 44 at 6-8 (acknowledging Schiesser's argument that the Warranty was unconscionable because Ford knew of the Defect based on consumer complaint as of 2011 but finding these...