Short v. Hyundai Motor Co.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS SECOND AMENDED COMPLAINT

Before the court is Defendants Hyundai Motor America, Inc. ("HMA"), Hyundai Motor Company ("HMC"), Kia Motors America, Inc. ("KMA"), and Kia Motor Company's ("KMC") (collectively, "Defendants") motion to dismiss Plaintiffs Linda Short, Olivia Parker, Elizabeth Snider, Jennifer DiPardo, Anthony DiPardo, Seane Ronfeldt, James Twigger, Gabrielle Alexander, Tavish Carduff, Brian Frazier, Chad Perry, William Pressley, Jeanett Smith, and Janell Wight's (collectively, "Plaintiffs")

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second amended consolidated class action complaint. (See Mot. (Dkt. # 78); see also SAC (Dkt. # 71); Reply (Dkt. # 84.)) Plaintiffs oppose the motion. (Resp. (Dkt. # 82).) The court has considered the motion, the parties' submissions in support of and in opposition to the motion, the relevant portions of the record, and the applicable law. Being fully advised,¹ the court GRANTS in part and DENIES in part the motion as set forth below.

This is a putative class action about alleged defects in 2011-2013 Hyundai Tucsons and 2012-2016 Kia Souls (the "Class Vehicles") that cause the Class Vehicles' engines to stall and, in some cases, to catch fire. (See SAC ¶¶ 1, 19.) Plaintiffs allege that Defendants knew about these defects yet failed to disclose them. (See id. ¶ 3.)

A. Procedural Background

On March 16, 2020, the court granted in part and denied in part Defendants' motion to dismiss the first amended complaint. (3/16/2020 Order (Dkt. # 62).) On May 4, 2020, Plaintiffs filed their second amended complaint. (SAC). In it, Plaintiffs included seven new named plaintiffs, five new subclasses, and 10 new claims. (See generally id.) Defendants now move to dismiss the SAC. (Mot.)

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B. The Alleged Defects

1. 2012-2016 Kia Soul

Plaintiffs allege that in February 2019, KMA issued a recall for 378,967 Kia Soul vehicles from the 2012 to 2016 model years. (See SAC ¶ 92.) Kia's recall notice stated this was due to a programming error that made the catalytic converter in those vehicles' 1.6-liter direct injection gasoline engines ("Gamma engines") susceptible to overheating, which can lead to several forms of engine failure and result in engine fires. (See id.) Plaintiffs allege that the overheating is "caused by problems that run deeper," namely, contamination with metal shavings that is similar to issues experienced in vehicles that Defendants have previously recalled. (See id. ¶¶ 93-95.) Plaintiffs allege that Defendants were "aware of the dangerous defects in Gamma engines as early as 2011." (See id. ¶ 97.) Plaintiffs make similar allegations about Kia Souls with 2.0-liter engines ("Nu engines") but allege that KMA has not announced a recall for those vehicles. (See id. ¶ 105.)

2. 2011-2013 Hyundai Tucson

Plaintiffs allege that manufacturing defects "leading to oil pan leaks in 2011-2013 Hyundai Tucson vehicles have caused serious risk of harm in the form of spontaneous engine stalling and engine fire." (See id. ¶ 106.) HMA issued a recall for "at least 120,000 Tucson SUVs from the 2011-2013 model years" due to oil pan leakage. (See id. ¶ 107.) However, Plaintiffs allege that the recall did not identify manufacturing defects in the Tucson's 2.0-liter engine as responsible for the oil pan leaks and fires, and even in April 2019, only referred to the Tucson's defect as "an important safety matter." (See id.

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¶ 109.) In July 2019, HMA announced another recall, but Plaintiffs allege that the recall does not address the root cause of the problem and is "too little too late." (See id. ¶¶ 110-112.)

C. Defendants' Knowledge of Alleged Defects

Plaintiffs allege that Defendants knew about the Class Vehicle defects for several years "but consistently concealed this knowledge." (See id. ¶¶ 9, 121.) Plaintiffs alleged that Hyundai Defendants knew that the engines in the Tucson Class Vehicles were defective by the end of June 2013, and that Kia Defendants knew the engines in the Soul Class Vehicles were defective by the end of May 2012. (See id. ¶ 91.) Defendants knew about the defects, Plaintiffs allege, for three reasons. (See id. ¶ 121.)

First, Plaintiffs allege that Defendants' design and durability testing revealed the defects. (See id.) Plaintiffs allege that Defendants claim the Class Vehicles underwent "rigorous" durability testing designed to reveal "the types of defects at issue." (See id. ¶¶ 122-28.) Based on these tests, Plaintiffs allege, "Defendants knew about the defects in Class Vehicles well before Plaintiffs and Class members started purchasing them." (See id. ¶ 131.)

Second, Plaintiffs allege that customers filed National Highway and Transportation Safety Administration ("NHTSA") complaints and sought warranty repairs for models that had the same engines as the Class Vehicles. (See id. ¶ 121.) According to Plaintiffs these complaints "put Defendants on notice [of the defects] before the Class Vehicles went on sale and, at the very least, before Plaintiffs purchased or leased their Vehicles." (See id. ¶ 132.)

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Third, Plaintiffs allege that customers began experiencing engine failures and fires in the Class Vehicles themselves and filing NHTSA complaints and seeking warranty repairs. (See id. ¶ 121.) Plaintiffs assert that owners and lessees of the 2012-2016 Kia Soul vehicles with both the Gamma and Nu engines filed complaints about catastrophic engine failures and fires going as far back as early 2012, "almost immediately after the very first 2012 Souls hit the market." (See id. ¶ 138.) They bring similar allegations regarding the Hyundai Tucson Class Vehicles. (See id. ¶ 141.)

According to Plaintiffs, Defendants, despite their alleged knowledge of the defects, created a "long term, overarching marketing message for their brand, and specifically the Class Vehicles" that Defendants' "vehicles are safe and dependable and that their engines can be relied on to perform well." (See id. ¶ 148.) Plaintiffs alleged that this marketing message "was so long term, pervasive, and uniform that Plaintiffs and Class members, by Defendants' design, associated safety and dependability with Defendants and Class Vehicles, which is a primary reason they purchased their Class Vehicle." (See id. ¶ 158.)

D. Plaintiffs and Their Claims

Plaintiffs bring claims on behalf of a putative nationwide class and at least nine putative statewide subclasses. (See id. ¶¶ 166-67.) Plaintiffs define the putative nationwide class as "[a]ll persons or entities in the United States (including its territories and the District of Columbia) who purchased or leased a Class Vehicle." (Id. ¶ 166.) The ten statewide putative classes include residents of Arizona, California, Connecticut, Missouri, North Carolina, Ohio, Pennsylvania, Texas, Washington, and West Virginia.

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(Id. ¶ 167.)² Plaintiffs define the statewide putative classes as "[a]ll persons or entities in [name of state] who purchased or leased a Class Vehicle." (Id.) Plaintiffs allege that they purchased the following vehicles at the following times:

(See id. ¶¶ 32-86). Of the fourteen plaintiffs, eight allege experiencing engine-related issues. (See id. ¶¶ 44-52, 55-86.) Six plaintiffs, Ms. Short, Ms. Parker, Ms. Snider, Mr. and Ms. Dipardo, and Ms. Alexander, do not allege any engine issues with the Class Vehicles. (See id. ¶¶ 32-43, 53-54.)

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On behalf of themselves and the putative classes, Plaintiffs bring the following claims: