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In re Takata Airbag Products Liability Litigation

United States District Court, S.D. Florida, Miami Division

May 31, 2017

IN RE TAKATA AIRBAG PRODUCTS LIABILITY LITIGATION THIS DOCUMENT RELATES TO ECONOMIC LOSS TRACK CASES Nos. 15-2599-MD-MORENO, 14-24009-CV-MORENO Count Claim Class Plaintiff Vehicle Manufacturer Transferor Court Choice of Law Resident Purchase Location Law Applied

          ORDER GRANTING IN PART AND DENYING IN PART TAKATA CORPORATION AND TK HOLDINGS INC.'S MOTION TO DISMISS

          FEDERICO A. MORENO UNITED STATES DISTRICT JUDGE

         This multidistrict litigation consolidates allegations of economic loss and personal injury related to airbags manufactured by defendants Takata Corporation and TK Holdings, Inc. and equipped in vehicles manufactured by defendants Honda, BMW, Ford, Mazda, Mitsubishi, Nissan, Subaru, Toyota, and Volkswagen[1] (collectively, the "Automotive Defendants"). Takata asks the Court to dismiss Counts 1-8 and 47-106-the counts alleged against it in the Second Amended Economic Loss Complaint.

         I. BACKGROUND

         Plaintiffs are consumers of vehicles equipped with Takata airbags containing ammonium nitrate as a propellant. The Court has divided the multidistrict litigation's component cases into two tracks: (1) economic loss for plaintiffs alleging purely economic damages, and (2) personal injury for plaintiffs alleging damages to a person. This order pertains only to the economic loss track.

         Plaintiffs bring 68 counts against Takata for allegedly violating the Racketeer Influenced and Corrupt Organizations Act (two counts), the Magnuson-Moss Warranty Act (one count), and various state laws regarding negligence (two counts), fraudulent concealment (two counts), unjust enrichment (one count), implied warranties (20 counts), and consumer protection (40 counts).

         The Court already has: (1) found that Plaintiffs establish prima facie claims for violations of the Racketeer Influenced and Corrupt Organizations Act and the Magnuson-Moss Warranty Act; (2) denied Takata's motion to dismiss Counts 1, 2 and 3; and (3) denied Takata's motion to strike the allegations of a national class action. Additionally, the Court granted the Automotive Defendants' motion to dismiss Counts 104, 105 and 106. But, the Court denied Takata's request to join that motion because "Takata stands in an entirely different position than the Automotive Defendants." Excluding Counts 1, 2 and 3, which the Court already has addressed, the 65 remaining counts against Takata that are addressed in this order are listed in Table 1, along with the putative class or subclass bringing each count.

         TABLE 1

Count
Claim
Class
4
Fraudulent Concealment
Nationwide
5
Breach of Implied Warranty - Michigan Law
Nationwide
6
Unjust Enrichment
Nationwide
7
Violation of the Michigan Consumer Protection Act
Nationwide
8
Negligence - Michigan Law
Nationwide
47
Violation of the Florida Deceptive and Unfair Trade Practices Act
Fla.
48
Breach of Implied Warranty of Merchantability
Fla.
49
Violation of the Alabama Deceptive Trade Practices Act
Ala.
50
Violation of the Consumer Fraud Act
Ariz.
51
Violation of the California Unfair Competition Law
Cal.
52
Violation of the California Consumer Legal Remedies Act
Cal.
53
Violation of the California False Advertising Law
Cal.
93
Violation of the South Carolina Unfair Trade Practices Act
S.C.
94
Violation of the South Carolina Regulation of Manufacturers, Distributors, and Dealers Act
S.C.
95
Breach of the Implied Warranty of Merchantability
S.C.
96
Violation of the Tennessee Consumer Protection Act
Tenn.
97
Violation of the Deceptive Trade Practices Act
Tex.
98
Breach of the Implied Warranty of Merchantability
Tex.
99
Violation of the Virginia Consumer Protection Act
Va.
100
Breach of the Implied Warranty of Merchantability
Va.
101
Violation of the Consumer Protection Act
Wash.
102
Violation of the Consumer Credit and Protection Act
W.Va.
103
Breach of the Implied Warranty of Merchantability
W.Va.
104
Fraudulent Misrepresentation & Fraudulent Concealment
Nat'l Auto.[2]
105
Violations of State Deceptive Trade Practices Statutes
State Auto.[3]
106
Violation of Florida Deceptive and Unfair Trade Practices Act
Fla. Auto.[4]

         These 65 counts arise out of 114 vehicle purchases by 112 named plaintiffs. For each named plaintiff, Table 2 lists the: (1) manufacturer of the vehicle purchased; (2) transferor court; (3) applicable choice-of-law rule; (4) state of residence; (5) location of the vehicle's purchase; and (6) substantive law that applies after analyzing the applicable choice-of-law rule.

         TABLE 2

Plaintiff
Vehicle Manufacturer
Transferor Court
Choice of Law
Resident
Purchase Location
Law Applied
Aliscio
Ford
S.D. Fla.
Fla.
Fla.
Fla.
Fla.
Allen
Honda
S.D. Fla.
Fla.
Fla.
Fla.
Fla.
Archer
Honda
CD. Cal.
Cal.
Haw.
Haw.
Haw.
Arnold
Honda
N.D.Ga.
Ga.
Ga.
Ga.
Ga.
Avery
Honda
W.D. N.C.
N.C.
N.C.
N.C.
N.C.
Bae
Honda
CD. Cal.
Cal.
Cal.
Cal.
Cal.
Barnett
Ford
Direct
Fla.
Tex.
Tex.
Tex.
Barto
Nissan
Direct
Fla.
Pa.
Pa.
Pa.
Benton
Ford
Direct
Fla.
S.C.
S.C.
S.C.
Silva
Honda
Direct
Fla.
Tex.
Tex.
Tex.
Sinclair
Ford
Direct
Fla.
Fla.
Fla.
Fla.
Spiess
Honda
Direct
Fla.
Minn.
Minn.
Minn.
Takeda
Honda
CD. Cal.
Cal.
Cal.
Cal.
Cal.
Talamantes
Toyota
Direct
Fla.
Nev.
Nev.
Nev.
Tanner
Honda
N.D. Ala.
Ala.
Ala.
Ala.
Ala.
Taylor
Honda
CD. Cal.
Cal.
Fla.
Fla.
Fla.
Tessier
Honda
S.D.N.Y.
N.Y.
Fla.
Fla.
Fla.
Thompson
BMW
Direct
Fla.
Ga.
Ga.
Ga.
Tillisch
Honda
CD. Cal.
Cal.
Va.
Va.
Va.
Veser
BMW
E.D. Mich.
Mich.
Fla.
Fla.
Fla.
Vukadinovic
Mazda
E.D. Pa.
Pa.
Fla.
Fla.
Fla.
Walker
Subaru
E.D. Pa.
Pa.
Fla.
Fla.
Fla.
Watley
Honda
N.D.Ga.
Ga.
Ga.
Ga.
Ga.
Weisberg
Honda
S.D. Fla.
Fla.
Fla.
Fla.
Fla.
Weisblat
Ford
S.D. Fla.
Fla.
Fla.
Fla.
Fla.
Whitehead
Honda
CD. Cal.
Cal.
Ala.
Ala.
Ala.
Wilkinson
Honda
S.D. Fla.
Fla.
Or.
Or.
Or.
Wilsey
Honda
Direct
Fla.
R.I.
R.I.
R.l.
Wishkovsky
Toyota
E.D. Mich.
Mich.
Pa.
Pa.
Pa.
Woodard
Ford
Direct
Fla.
S.C
S.C.
S.C
Young
Honda
E.D.N.C
N.C.
N.C.
Ga.
Ga.
Zamora
Honda
S.D. Cal.
Cal.
Cal.
Cal.
Cal.
Zielinski
BMW
N.D. 111.
111.
111.
111.
111.

         II. LEGAL STANDARD

         "A pleading that states a claim for relief must contain.. .a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). To survive a motion to dismiss, a "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)). Detailed factual allegations are not required, but a pleading must offer more than "labels and conclusions" or "a formulaic recitation of the elements of the cause of action." Twombly, 550 U.S. at 555.

         Where a cause of action sounds in fraud, however, Federal Rule of Civil Procedure 9(b) must be satisfied in addition to the more relaxed standard of Rule 8. Under Rule 9(b), "a party must state with particularity the circumstances constituting fraud or mistake, " although "conditions of a person's mind, " such as malice, intent, and knowledge may be alleged generally. Fed.R.Civ.P. 9(b). "The 'particularity' requirement serves an important purpose in fraud actions by alerting defendants to the precise misconduct with which they are charged and protecting defendants against spurious charges of immoral and fraudulent behavior." W. Coast Roofing & Waterproofing, Inc. v. Johns Manville, Inc., 287 F.App'x 81, 86 (11th Cir. 2008) (internal quotations and citations omitted).

         III. ANALYSIS

         A. Choice-of-Law Analysis

         Plaintiffs argue that a choice-of-law inquiry is premature, but the issue has been briefed and can be decided without further factual development. In the Mazda Order, the Court concluded that it should apply the transferor court's choice-of-law rules for each case transferred into the multidistrict litigation. In applying the various choice-of-law rules in previous orders, the Court has completed a choice-of-law analysis for all but five of the 112 named plaintiffs- Bonet, Herron, McLaughlin, Petersen, and Huebner, as to his Pontiac only. Bonet, Herron, McLaughlin and Petersen all purchased Chrysler vehicles with Takata airbags. Although there are no claims asserted against Chrysler because of Chrysler's bankruptcy, the Chrysler plaintiffs still maintain claims against Takata. Huebner purchased two vehicles involved in this multidistrict litigation. The first vehicle-a Ford-was addressed in the Ford Order. The second vehicle-a Pontiac-has yet to be addressed because Huebner's claims against Toyota were dismissed. But, Huebner still maintains claims against Takata related to his Pontiac.

         Applying the Mazda Order's choice-of-law analysis, Florida's choice-of-law rules apply to Bonet's, Herron's, and Petersen's claims because their cases were either directly filed into this multidistrict litigation or transferred from the Southern District of Florida; Pennsylvania's choice-of-law rules apply to Huebner's Pontiac claims because his case was transferred from the Western District of Pennsylvania; and South Carolina's choice-of-law rules apply to McLaughlin's claims because his case was transferred from the District of South Carolina.

         Applying Florida's choice-of-law rules to Bonet, Herron and Petersen, Florida substantive law applies to Bonet and Herron because they purchased their vehicles in Florida and reside in Florida, and Iowa substantive law applies to Petersen because he purchased his vehicle in Iowa and resides in Iowa.[5] Applying Pennsylvania's choice-of-law rules to Huebner's Pontiac claims, Ohio substantive law applies. Although Huebner resides in California, he purchased his Pontiac in Ohio, and thus, Ohio has more interest in his claims than California.[6] Applying South Carolina's choice-of-law rules to McLaughlin, South Carolina substantive law applies because he purchased his vehicle in South Carolina and resides in South Carolina.[7] The Court has now analyzed the applicable substantive law for all 112 named plaintiffs, as summarized in Table 2.

         B. Negligence & Negligent Failure to Recall (Counts 8 & 55)

         Plaintiffs bring two negligence claims: (1) negligence on behalf of the nationwide class (Count 8), and (2) negligent failure to recall on behalf of the California subclass (Count 55). As explained in the Nissan and BMW Orders, California's economic loss rule bars Count 55. Therefore, Takata's motion to dismiss Count 55 is GRANTED. Takata moves to dismiss Plaintiffs' negligence claims on grounds that the economic loss doctrine precludes economic damages on negligence theories of liability. As explained in the Ford Order, the Court treats Count 8 as arising under only Michigan law because even though Plaintiffs allege Count 8 under alternative laws, the Response states that Plaintiffs are "asserting these claims for negligence under Michigan law." As Table 2 indicates, Michigan law applies only to two named plaintiffs-Boone and Morris. Therefore, Takata's motion to dismiss Count 8 is GRANTED as to all named plaintiffs except Boone and Morris.

         As to Boone and Morris, Takata argues that Michigan's economic loss rule bars their negligence claims. The Court agrees. In Michigan, the economic loss doctrine "bars tort (product liability) recovery and limits remedies to those available under the Uniform Commercial Code where a claim for damages arises out of the commercial sale of goods and losses incurred are purely economic." Neibarger v. Universal Coops., Inc., 486 N.W.2d 612, 613 (Mich. 1992). The doctrine was later expanded to apply to consumer transactions. See Sherman v. Sea Ray Boats, 649 N.W.2d 783 (Mich. Ct. App. 2002).

         Plaintiffs argue that Neibarger prohibits application of the economic loss doctrine outside of commercial transactions, and therefore, does not prevent tort claims by consumers who have neither the skill nor the bargaining power to negotiate warranties or other remedies. See, e.g., Republic Ins. Co. v. Broan Mfg. Co., Inc., 960 F.Supp. 1247, 1249 (E.D. Mich. 1997) ("The [economic loss] doctrine has no application outside the commercial realm"); Frankenmuth Mut. Ins. Co. v. Ace Hardware Corp., 899 F.Supp. 348, 351 (W.D. Mich. 1995) (economic loss doctrine does not appear to apply to a consumer who purchases for personal use); Chiasson v. Winnebago, No. 01-74809, 2002 U.S. Dist. LEXIS 27462, at *29 (E.D. Mich. May 16, 2002) (recognizing distinction between commercial and consumer plaintiffs in applying economic loss doctrine-consumer's remedies should not be barred by economic loss doctrine when not in privity with manufacturer). But, the cases supporting Plaintiffs' position were decided by federal courts applying Michigan law either before or just days after Sherman expanded the economic loss doctrine to consumer transactions. Although the Supreme Court of Michigan has not definitively settled the issue-to the extent Neibarger was unclear-Michigan courts now routinely follow Sherman and extend the economic loss doctrine to consumer transactions. See, e.g., Phillips v. State Farm Ins. Co., No. 328309, 329740, 2016 Mich.App. LEXIS 2126, at *5 (Mich. Ct. App. Nov. 17, 2016); Fremont Ins. Co. v. Gro-Green Farms, No. 324075, 2016 Mich.App. LEXIS 553, at *5 (Mich. Ct. App. Mar. 17, 2016). This Court follows suit.[8]

         Here, Plaintiffs' economic loss track damages do not arise from physical harm, but are based on mere disappointed economic expectations in the vehicles. Analysis under the personal injury track may differ, but the overriding concern of the economic loss doctrine provides that where a plaintiff seeks damages solely for economic losses, tort concerns with product safety no longer apply and economic expectation issues prevail. See Sherman, 649 N.W.2d at 790. Therefore, Takata's motion to dismiss Count 8 as to Boone and Morris is GRANTED.[9]

         C. Fraudulent Concealment (Counts 4 & 104)

         Plaintiffs bring two fraudulent concealment claims: (1) Count 4 on behalf of the nationwide class under the common law of fraudulent concealment, or alternatively, under Michigan law, or alternatively, under the laws of the states where Plaintiffs reside or purchased their vehicles; and (2) Count 104 on behalf of the nationwide Automotive Recycler Class. Takata moves to dismiss Plaintiffs' claims for fraudulent concealment on grounds that: (1) there is no federal common law of fraudulent concealment; (2) Takata had no duty to communicate with Plaintiffs; (3) Plaintiffs do not allege injury caused by reliance on any concealment or misrepresentation; and (4) the economic loss doctrine bars any tort recovery under the laws of Florida, Indiana, Michigan, Missouri, North Carolina, Pennsylvania, or West Virginia. As explained below, Plaintiffs sufficiently allege Count 4 under the laws of all states except Florida and Pennsylvania. Therefore, Takata's motion to dismiss Count 4 is GRANTED as to Plaintiffs governed by Florida or Pennsylvania law, and is DENIED as to all other Plaintiffs. And Takata's motion to dismiss Count 104 is GRANTED.

         1. Count 4 is Alleged Under Alternative Laws

         Takata argues that there is no federal common law of fraudulent concealment because the law materially varies by state. Indeed, Takata attaches a lengthy exhibit that charts the elements of fraudulent concealment in 20 states. But, Takata's chart suggests that the elements in each state are similar and that most of the 20 states require duty, reliance, and causation.[10] Thus, Takata's own summary of fraudulent concealment law seems to contradict its argument that the law is not common across the states.

         Nevertheless, the Court need not determine whether or not there is a federal common law of fraudulent concealment at this time because Count 4 is alleged under the federal common law, but alternatively under Michigan law or the laws of the states where Plaintiffs reside or purchased their vehicles. Thus, even if the Court were to determine that there is no federal common law of fraudulent concealment, Plaintiffs would still have viable claims based on the laws of the states where Plaintiffs reside or purchased their vehicles. Indeed, as explained in other orders, the Court has permitted Plaintiffs' fraudulent concealment claims to proceed against the Automotive Defendants under the laws of Alabama, California, Florida, [11]Massachusetts, Nevada, South Carolina, and Texas. Therefore, even if the Court were to conclude that there is no federal common law of fraudulent concealment, Count 4 could not be dismissed. The issue may be readdressed at class certification or at summary judgment.

         2. Florida Law Applies to Count 104

         Plaintiffs do not specify what law applies to Count 104. Takata argues that Count 104 fails to give notice of the state law or laws under which the claim is asserted, which "alone is reason to dismiss the[] claim." See Travelers Indent. Co. v. Cephalon, Inc., 32 F.Supp.3d 538, 550 n.15 (E.D. Pa. 2014) (failure to identify under which state's laws plaintiffs assert their claims is grounds for dismissal). Although Plaintiffs do not dispute Takata's argument in their Response, the Court already has explained in a previous order that the Automotive Recycler Class does not have standing to assert claims under laws of states other than Florida. Further, as explained in the Mazda Order, Florida's economic loss rule bars claims for fraudulent concealment seeking economic loss. Therefore, Takata's motion to dismiss Count 104 is GRANTED.

         3. Plaintiffs Sufficiently Allege Takata's Duty to Disclose

         In many states, a fraudulent concealment claim requires that the defendant have a duty to disclose facts. Takata argues that it had no duty to disclose information to Plaintiffs because Takata did not enter into any direct transaction with Plaintiffs and thus, had no "direct relationship." Takata's arguments are substantially similar to the arguments asserted by Mazda, Subaru, and Ford.[12] As explained in those orders, a direct relationship is not required to create a duty to disclose-other special circumstances can suffice. Although Takata is one step further removed from Plaintiffs' consumer transactions than the Automotive Defendants, the same reasoning applies. Plaintiffs allege that Takata owed a duty to disclose the true safety and reliability of the defective airbags because Takata possessed exclusive knowledge of the dangers and risks posed by the airbags, intentionally concealed those dangers and risks, and "[m]ade incomplete representations about the safety and reliability of the [airbags] generally, while purposefully withholding material facts from Plaintiffs that contradicted these representations." Consistent with the reasoning in the Mazda, Subaru and Ford Orders, because Plaintiffs allege that Takata made these incomplete representations, the Court finds that Plaintiffs sufficiently allege that Takata had a duty to disclose additional facts about the safety of its airbags. Therefore, Takata's motion to dismiss Count 4 for lack of duty to disclose is DENIED.

         Further, at the motion to dismiss stage, the Court does not consider facts outside of the Complaint, like Takata's guilty plea in the United States District for the Eastern District of Michigan, Case No. 16-20810. But, Takata's admissions in that guilty plea may be highly influential at summary judgment.

         4. Plaintiffs Sufficiently Allege ...


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