LUPPINO et al v. MERCEDES-BENZ USA, LLC, No. 2:2009cv05582 - Document 295 (D.N.J. 2013)

Court Description: OPINION. Signed by Judge Dennis M. Cavanaugh on 11/8/13. (gmd, )

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NOT FOR PUBLICATION UNITED STATES I)ISTRICT COURT DISTRICT OF NEW JERSEY VINCENT LUPPINO, CLIFF STERN, JOFTN CASIERO. and NOEL J. SPIEGEL, individually and on behalf of all others similarly situated, : Hon. Dennis M. Cavanaugh : OPINION Civil Action No. 09-C V-5582 (DMC) (JI3C) Plaintiffs, V. Ml RCI DbS-Bl NZ LS DAIMLER AG, LI C and Defendants. DENNIS M. CAVANAUGH, U.S.DJ. This matter comes before the Court upon Omnibus Rule 12 Motion by Defendant Daimler AG ( Dairnler ) and Defendant Mercedes-Benz USA, LLC ( MBUSA ) (collectively. Defendants ) to dismiss the Third Amended Complaint (the TAC ) flied by Plaintiffs Vincent Luppino. Cliff Stern. John Casiero and Noel 3. Spiegel (collectively. Plaintiffs ). pursuant to FED, R. Civ. P. 12(b)(6), and motion by Defendants to strike the class allegations pursuant to FED. R. Civ. P. 23, (Feb. 22, 2013. ECF No. 223), and cross-motion by [)efendants to strike the declarations of Shelly L. Friedland and Kelly A. Noto submitted in opposition to Defendants Omnibus Rule 12 Motion to Dismiss (Mar. 25, 2013, ECF No, 240). Pursuant to FED. R. Civ. P 78. no oral argument was heard. After decision considering the submissions of all parties, of this Court, for the reasons herein expressed. that 1)efendants Motion Plaintiffs Third Amended Complaint is denied in part and granted 1 in it is to the 1)ismiss part; Defendants Motion to Strike the Class Allegations is denied; and Defendants Motion to Strike the Declarations of Shelly L. Friedland and Kelly A. Noto is granted. 1. BACKGROUND On November 2, 2009, Plaintiffs filed a class action suit against MBUSA in this Court pursuant to 28 U.S.C. § 1332 on the basis of diversity. (Compi. ECF No. 1). On March 14, 2012. Plaintiffs tiled the Third Amended Complaint adding Daimler as a Defendant. (ECF No. 118), Plaintiffs filed the class action on behalf of all consumers who purchased or leased a Mercedez-Benz vehicle with 17-inch, 18-inch or 19-inch AMG or non-AMG wheels (the Rims ) from 2006 to the present. (TAC ¶ 1). Plaintiffs allege that Defendants designed, manufactured. distributed, advertised, marketed, promoted, warranted and sold the Rims without disclosing that they were defective and would fail (that is, bend, deform, dent, warp, or fracture) under normal driving conditions. (TAC ¶ 2). Plaintiffs also allege that Defendants have, as a matter of practice and policy, failed to honor the terms of the Warranty as it applies to the Rims, thereby forcing consumers to pay out-of-pocket to repair or replace defective Rims. (TAC 9). Specifically, the TAC asserts the following three causes of action against Defendants: (I) Breach of Express Warranty; (2) Breach of Written Warranty Pursuant to the Magnuson-Moss Warranty Act: and (3) Violation of the New Jersey Consumer Fraud Act (the NJCFA ). This Court has already responded to two motions to dismiss filed by MBUSA. In an Opinion dated August 13. 2010, this Court dismissed Plaintiffs warranty claims without prejudice tindrng that they were not pled with the requisite specificity ippyMcrced Benz USA, LLC, Civ. No. 09-5582, 2010 U.S. Dist. LEXIS 83584 (D.N..l. Aug. 13. 2010). The Court also dismissed without prejudice Plaintiffs NJCFA claim based on affirmative miILpILcntaton loi lack ol specilicit and upheld thc NJCI A claim bascd on omissions In an Opinion dated June 20, 2011, this Court dismissed the warranty claims as to Stern and Casiero thr failure to provide notice to MBUSA. Luppino v. Mercedes-Benz USA. LLC. Civ. No, 09-5582, 2011 U.S. i)ist. LEXIS 65495 (D.N.J. Jun. 20, 2011). The Court upheld Plaintitis NJCFA claim based on affirmative misrepresentations and denied MBUSA s motion to dismiss Count III. Id. After MI3USA s two motions to dismiss, the only claims ultimately dismissed were the warranty claims of Stern and Casiero. Defendants now move to dismiss Plaintiffs claims for lack of standing. Specifically. Defendants assert that Plaintiffs do not have the evidence to prove a causal connection between their alleged injuries and the purported defects at issue, Defendants also move to dismiss all claims brought against Daimler. According to Defendants, the claims against Daimler warrant dismissal because the TAC lacks any factual allegations that Daimler warranted the vehicles and fails to identify any representations, omissions or unlawful acts by Daimler. In addition. Defendants assert that Plaintiffs class allegations should he stricken because the putative class cannot meet the ascertainability or commonality requirements of Rule 23. Finally, Defendants cross-move to dismiss certifications submitted by Plaintiffs in response to Defendants motion to dismiss. (ECF No. 240). II. LEGAL STANDARD a. Motion to Dismiss In deciding a motion under Rule I 2(b)(6). a district court is required In accept as true all factual allegations in the complaint and draw all inferences in the facts alleged in the light most favorable to the [Plaintiffi. Phillips v. Cnty. of Allegheny. 515 F.3d 224. 228 (3d Cir. 2008). [Aj complaint attacked by a. . . motion to dismiss does not need detailed factual allegations. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, the Plaintiffs obligation to provide the. grounds of his entitle[ment] to relier requires more than labels and conclusions, and a i ormulaic recitation of the elements ol a cause of action xviii not do. Id. (internal citations omitted). [A court is] not bound to accept as true a legal conclusion couched as a factual allegation. Papasan v. Allain, 478 U.S. 265, 286 (1986). Instead, assuming that the factual allegations in the complaint are true, those [f]actual allegations must be enough to raise a right to relief above a speculative level. Twombly, 550 U.S. at 555. A complaint will survive a motion to dismiss if it contains sufficient factual matter to state a claim to relic! that is plausible on its face. Ashcroft v. lqbah 556 U.S. 662. 678 (2009) (citing Tcibl , 550 U.S. at 570). A claim has facial plausibility when the pleaded f actuai content allows the court to draw the reasonable inference that the defendant is liable for misconduct alleged. Id. Determining whether the allegations in a complaint are plausible is a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. Young v. Speziale, Civ. No. 07-03129. 2009 WL 3806296. at *3 (D.N.J. Nov. 10 2009) (quoting court to infer more 556 U S at 679) [ v\ ]hec ihc. wLli plcaded I ivts do not pLlmrt thL than the mere possibility of misconduct, the complaint has ailegedhut it has not shoxvn that the pleader is entitled to relief. lqbal. 556 U.S. at 679. To decide a motion to dismiss, courts generally consider only the allegations contained in the complaint, exhibits attached to the complaint and matters of public record. Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192. 1196 (3d Cir. 1993). The complaint must show an entitlement to relief with its facts. Steedley v. McBride, 446 F. App x 425 (3d Cir. 2011) citing 1 owler v. UPMC Shadvside, 578 F.3d 203. 2011 (3d Cir. 2009>. Factual allegations contained in a certification ollered in defense of a motion to dismiss will not be considered in determining the sufficiency of Plaintifrs complaint. See S1oirs,c. 4 Thomas, No. 09-cv-4778, 2010 WL 2036139, at *2, n. 3 (D.N.J. May 21, 2010). b. Motion to Strike Class Allegations When evaluating a motion to strike allegations of a complaint, the court must accept as true all factual allegations in the complaint and view all reasonable inferences in the light most favorable to Plaintiffs, just as on a motion to dismiss pursuant to FED.R.CIv.P. I 2(b)(6). Smikle v. Coca-Cola Enterprises. Inc.. Civ. 03-143l(RBK). Slip op. 7. (D.N.J. Ma 17. 2004). Generally courts do not consider whether a proposed class meets the FED.R.CIv.P. 23 class requirements until after plaintiffs move for class certification. 6803 Blvd. F., LLC v. DIRFCIV Inc No 12-CV-2657 WHW 2012 WL 3133680 (D NJ Jul31 2012) Hox\Lvcl a defendant may move to strike class action allenations prior to discovery in rare cases where the complaint itself demonstrates that the requirements for maintaining a class action cannot he met. Landsrnan & Funk PC v. Skinder Strauss Associates, 640 F.3d 72, 93 n. 30 (3d Cir. 201 1). In Korman v. The Walking Co., 503 F.Supp.2d 755. 762 63 (E.D.Pa.2007). the court held that a motion to strike class allegations is premature when a plaintiff has failed to tile a motion for class certification. The court reasoned that a motion to strike class allegations under F1D.R.C1v.P. 23 is. for all practical purposes, identical to an opposition to a motion for class certification, and that it would be improper to allow Deftndants to slip through the backdoor what is essentially an opposition to a motion for class certification before Plaintiffs have made such a motion and when discovery on the issue is still ongoing. Id. at 762. See also Bell v. Money Resource Corp., No. 08 639, 2009 WL 382478, at *3 (E.D.Pa. Feb. 13. 2009) (denying a motion to dismiss class allegations because it found that defendant was using the motion to attack the merits of the class itself, which is improper before a motion for class certification has been tiled): Rosenberg v. Avis Rent A Car Svs.. Inc.. No. 07 1110. 2007 WL 2213642. at *4 (ED.Pa. July 31, 2007) (same); Brothers v. Portage NatI Bank, No, 06 94, 2007 WL 965835, at *7 (W.D.Pa. Mar. 29. 2007) (same); Padilla v. GMAC Mortg. Corp.. 389 B.R. 409, 447 48 (Bankr.E.D.Pa.2008) (same). HI. DISCUSSION a. Standing As dictated by Article III of the United States Constitution, a plaintiff must have standing to bring a suit in federal court. To establish standing. a plaintiff must show (1 ) injury in fact. (2) causation, and (3) redressabilitv. Horvath v. Keystone Health Plan E.. Inc.. 333 F.3d 450. 455 (3d. Cir, 2003); Luian v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). Injury in fact is an invasion of a legally protected interest which is (a) concrete and particularized, and (h) actual or imminent, not conjectural or hypothetical. Lan, 504 U.S. at 560. As the United States Supreme Court explained further, a particularized injury is one that affect[s] the plaintiff in a personal and individual way. Id. at 561 n. I . As to the causation requirement. a plaintiff must demonstrate a causal connection between the injury and the conduct complained of, JL at 560. This injury must be fairly.. .trace[ablei to the challenged action of the defendant. Id. (quoting Simon v. Eastern Ky. Welfare Rights Org.. 426 U.S. 26, 41-42 (1976). Defendants argue that Plaintiffs lack standing because they cannot prove their alleged injuries were caused by the alleged defects at issue. Specifically. I)efendants assert thai Plainti Ifs have no evidence showing their wheels were damaged as a result of the alleged defect and not by some other cause. Defendants point out that in reviewing a factual attack of a plaintiffs standing pursuant to a challenge to a court s subject matter jurisdiction under Rule I 2(b)(1), no presumptive truthfulness attaches to plaintiffs allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of 6 urisdictiona1 claims. Mortensen v. First Fed. Say. & Loan Ass n, 549 F.2d 884, 891 (3d Cir. 1 977). Moreover, in a factual attack under Rule 1 2(b)(1), the plainti ii will have the burden of proof that jurisdiction does in fact exist. jj Plaintiffs assert that the real argument Defendants are making is that Plaintiffs have not yet established proximate cause. As the Third Circuit has explained, the fairly traceable causation requii ement br standing pirposes is not equivalent to a requirement of tort causation. Pub. Interest Research Grp. of N.J.. Inc. v. Powell Duffrvn Terminals Inc.. () 13 F.2c1 64, 72 (3d Cir. 1990). Moreover, where a motion to dismiss for lack of jurisdiction concerns the merits of the claim, the motion should be decided under Rule 12(b)(6) or Rule 56, applying the appropriate presumptions under those Rules, and not under Rule 12(b)(l ). See Nesbit v. Gears Unlimited, Inc., 347 F.3d 72, 76-77, 83-84 (3d Cir. 2003). The Court finds that Defendants motion to dismiss for lack of jurisdiction based on standing is more appropriately construed as an attack on Plaintiffs ability to prove certain necessary elements ot their claims. The Court will therelore decide the issue as a merits question under Rule 12(b)(6). Accepting as true all factual allegations in the complaint and drawing all inferences in the facts alleged in the light most favorable to Plaintiffs, the Court finds the TAC suflicienti pleads causation for both the warranty and NJCFA claims. As the Court has previously upheld Plaintiffs warranty and NJCFA claims on the merits in response to MBUSA s prior motions to dismiss, the Court will not go into detail in this Opinion on the merits of those claims. (See ECF Nos. 30. 66). Defendants also make the argument that Plaintiffs lack standing to assert economic loss claims because they are unable to prove their vehicles did, in fact, diminish in value as a result of the alleged defective [vehicle parts] Chan v. Daimler AG, et al.. 2012 U.S. Dist. TIXIS 7 161716 *23 (D.N.J. Nov. 9.2012). The Court finds that Defendants standing challenge as to economic loss is really a challenge to the merits of Plaintiffs NJCFA claim, specifically as to whether or not Plaintiffs can show they suffered an ascertainable loss. Under the [NJCFAJ. a plaintitI must demonstrate an ascertainable loss. which is defined as a cognizable and calculable loss due to the alleged [NJCFAj violation. Solo v. Bed Bath & l3evond, Inc.. 2007 U.S. Dist. LEXIS 31088, *78 (D.N.J. April 26, 2007) (quoting Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234, 249 (2005)). Either out of pocket loss or a demonstration of loss in value will suffice to meet the ascertainable loss hurdle. Thiedernann, 183 N.J. at 248. Here, the Court finds that the allecations in the TAC that Plaintiffs had to pay for replacement wheels is sufficient to demonstrate out of-pocket loss and consequently ascertainable loss for purposes of this motion to dismiss. (TAC ¶J 68, 99, 126, 146, 147, 166). Defendants assert that Plaintiffs attempt to represent a class comprised of all owners and lessees of model year 2006 and later Mercedez-Benz vehicles equipped with any type of 17- 10 19 inch AMG or non AMG wheel, coupled with any type of tire is improper for standing purposes. I)efendants argue that since each Plaintiff only claims to have owned or leased a vehicle with one type of wheel/tire pairing, Plaintiffs therefore lack standing to pursue claims as to the innumerable other types of vehicle/wheel/tire pairings that they did not purchase themselves. Plaintiffs respond that it would be premature for the Court to address this standing issue at the motion to dismiss stage and that instead it should be addressed subsequent to the determination of class certification. The Court agrees with Plaintiffs that it would be premature to determine the standing issue at this time as to product combinations Plaintiffs did not purchase or lease themselves. As the United States Supreme Court has recognized, there is clearly an inherent tension between the 8 issues of standing and adequate representation for class certification, $cg Gratz v. Boll inger, 539 U.S. 244, 263 n. 1 5 (2003) ( Although we do not resolve here whether such an inquiry in this case is appropriately addressed under the rubric of standing or adequacy, we note that there is a tension in our prior cases in this regard. ). In Stewart v. Smart Balance, Inc., 2012 U.S. Dist. LEXIS 138454 (D.N.J. June 26, 2012), the court addressed this tension, This Court finds ihe analysis and conclusion reached in Stewart to be persuasive. The plaintiffs in Stewart filed a putative class action against Smart Balance on consumer at *2. Smart Balance moved to dismiss those claims fraud and breach of warranty grounds. related to Smart Balance products not actually purchased by the plaintiffs for lack of standing. içi. at *5, As noted by the court in Stewart, courts in this District have held that standing cannot be predicated on an injury which the plaintiff has not suffered, nor can it be acquired through the back door of a class action, 1d (citing In re Franklin Mut. Funds Litig., 338 F. Supp. 2d 451, 461 (D.N.J. 2005); See also Koronthaly v. L Oreal USA, Inc., 2008 U.S. Dist. LEXIS 59024, at *4 (D.N.J. July 29, 2008), affd, 374 F.App x 257 (3d. Cir. 2010); Lieberson v. Johnson & Johnson Consumer Litig., 865 F. Supp 2d 529 (D.N.J. 2011). However, the Stewart court also noted that In the class action context. .traditional notions of standing are not completely . informative of what claims may be asserted. In re Franklin Mut., 388 F. Supp at 46U62. The defendants in Stewart, as Defendants here, pointed to a number of recent decisions in this District dismissing claims in putative class actions where plaintiffs only alleged injury as to one product in a series of products by the same defendant. $gg, 865 F.Supp 529; Green v. Green Mountain Coffee Roasters, Inc., 279 F.R.D. 275, 280 (D.N.J. 2011), Hemy v. Perdue Farms, inc., 2011 U.S. Dist. LEXIS 125301, *fl (D.N.J. Oct. 31, 2011). After recognizing these decisions, the Stewart court then went on to highlight decisions of the Third Circuit Court of 9 Appeals in which plaintiffs were allowed to represent a class suffering injuries distinct from their own as long as they resulted from the same policy or practice of the defendant. ge Baby Neal for and by Kanter v. Casey, 43 F.3d 48, 58 (3d. Cir. 1994) ( where an action challenges a polic or practice, the named plaintiffs suffering one specific injury from the practice can represent a class suffering other injuries, so long as all the injuries are shown to result from the practice. ) Haas v. Pittsburgh Nat l Bank. 526 F.2d 1 083. 1088-89 (3d. Cir. 1975) (notwithstanding the fact that plaintiff lacked standing to pursue a particular claim, she could assert that claim in a putative class action where she did have standing to pursue two closely related claims against the same defendant.). Ultimately, the court in Stewart determined that although the plaintiffs did not have standing to bring claims related to products they did not purchase themselves, dismissal was inappropriate at such an early stage in the litigation because whether or not those plaintiffs may represent a class of plaintiffs who do have standing was not yet before the court. See also Ameheni Prods. v. Windsor, 521 U.S. 591. 612-13 (1997) (Since class certification issues are logically antecedent to the existence of Article III issues. it is appropriate to reach the class action issues first. ). This Court agrees and finds that dismissal of Plaintiffs claims related to vehicle/wheel/tire combinations Plaintiffs did not purchase would be premature at this time, For the foregoing reasons, Defendant s motion to dismiss Plaintiffs claims for lack of standing is denied. b. Motion to Dismiss Claims against Daimler Plaintiffs originally commenced this putative class action lawsuit against MBLSA. as the sole defendant, in November 2009. Then, in 2012. Plaintiffs added Daimler as a defendant to the TAC, incorporating the same allegations previously asserted against MBUSA. Defendants 10 argue that the TAC provides no allegations specific to Daimler and that therefore all claims against Daimler should be dismissed, Specifically, Defendants argue that Plaintiffs have not alleged valid warranty claims against Daimler because the warranty was issued by MBUSA. not Daimler. l)efendants also assert that dismissal of the NJCFA claim against Daimler is warranted because the TAC does not provide any facts identifying misrepresentations, omissions or unlawful acts by Daimler. The Court agrees with Defendants and finds that the warranty claims made against Daimler are based on conclusory and speculative allegations. Beyond the conclusory claim that Daimler sets the warranty terms, Plaintiffs have failed to provide facts to support the allegation that Daimier warrants the vehicles. The language of the TAC itself even describes the warrant as obligating MBUSA, as opposed to Daimler or Defendants collectivel, (See lAC 7. 59, 6 1 ). As the TAC lacks facts sufficient to support the warranty claims against Daimler, those claims must be dismissed without prejudice. Plaintiffs primary argument in response to Defendants motion to dismiss the claims against Daimler is that Daimler is liable for both the breach of warranty and violation of the NJCFA as the alter ego of MBUSA. (Pls. Opp n Br. 19-20. 22-23). To prove that a parent company is the alter ego of a subsidiary. Plaintiffs must show (I) the parent so dominated the subsidiary that it had no separate existence but was merely a conduit for the parent and (2) the parent has abused the privilege of incorporation by using the subsidiary to perpetrate a fraud or injustice, or otherwise to circumvent the law. State Dept. of Environmental Protection v. Ventron Corp., 94 N.J. 473 (1983). Plaintiffs only support for their alter ego argument is the General Distributor Agreement (the GDA ) between Daimler and MI3USA which allegedly demonstrates that Daimler sets the warranty terms. approves marketing plans and has general 11 control of other business aspects of MBTiSA. (Pis. Opp n Br. 19-20). The Court agrees with Defendants that although the GDA may show that Daimler has the right to control MBUSA, it does not does not show that Daimler dominates MBUSA into non-existence. The Court also does not lind it plausible. based on the facts alleged in the TAC, that Daimler is using Ml3U;\ to perpetrate a fraud or injustice, or otherwise circumvent the law. As such, the Court finds that the TAC is factually insufficient to demonstrate that Daimler is the alter ego of MBUSA. Since Plaintiffs claims against Daimler depend on Daimler s alter ego status, all claims against Daimler are dismissed without prejudice. c, Motion to Strike Class Allegations Defendants argue that Plainti 11s class allegations should be stricken because Plai nti ft s cannot satisfy the requirements of ascertainability and predominance. Because Defendants motion to strike is premature. the merits of this argument will not he addressed at this stage of the litigation. Dismissal of class claims prior to discovery and a motion to certify the class by plaintiff is the exception rather than the rule. See Ehrhart v. Svnthes (USA). No. 07-01237. 2007 U.S. Dist. LEXIS 94760, *79 (D.N.J. Dec. 21. 2007) (motion to strike highly disfavored and dismissal of class allegations should be done rarely); Gutierrez v. Johnson & Johnson, lqc, No. 01-5302. 2002 U.S. Dist. LEXIS 15418. *16 (D.N.J. 2002) (citing Ahdallah v. Coco-Cola Co.. 1999 U.S. Dist LEX1S 23211 (D.Ga. July 16, 1999) (dismissal of class allegations at this stage should be done rarely: the better course is to deny the motion because the shape and form of a class action evolves only through the process of discovery. ). In Andrews v. Home Depot U.S.A. Inc.. this Court found the dismissal of class action allegations to be premature at the motion to dismiss stage. Civ. A. 03CV5200, 2005 WL 1490474, at *3 (D.N.J. June, 23, 2005). As in Andrews. the Court finds that dismissal of Plaintiffs class action allegations at this stage 12 of the litigation would he premature and is not appropriate. The Court will not consider whether a proposed class meets the class requirements until after Plaintiffs move for class certification. Defendants Motion to Strike Plaintiffs class allegations is therefore denied. d. Cross-Motion to Strike Certifications Defendants filed a cross-motion to strike (ECF No. 240) the Declaration of Shellv F. Friediand (the Friedland Declaration ) (ECF No. 232-i) and Exhibits to the Declaration of Kelly A. Noto (the Noto Declaration ) (ECF No. 232-2). As expressed above. to decide a motion to dismiss, courts generally consider only the allegations contained in the complaint. exhibits attached to the complaint and matters of public record. Pension Benefit (3uar. Corp.. 998 F.2d at 1196. As such, the Court did not consider either the Friedland Declaration or the Noto 1)eclaration in the present Opinion with respect to Defendants I 2(b)(6) motion. As the Declarations at issue are immaterial to the present motion to dismiss. the Court grants Defendants cross-motion to strike the Friedland Declaration and the Nob Declaration. IV. CONCLUSION For the foregoing reasons, Defendants Motion to Dismiss is denied in part and granted in part. With respect to Daimler, all claims are dismissed without prejudice. Defendants Motion to Strike Plaintiffs Class Allegations is denied. Defendants cross-motion to strike certifications is granted. Plaintiffs are granted leave to amend their complaint. An appropriate Order accompanies this Opinion. Date: Original: cc: November 2013 Clerks Office Hon. James B. Clark, U.S.M.J. All Counsel of Record File 13

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