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McGarvey v. Penske Automotive Group

March 29, 2010

SHARON MCGARVEY, ET AL., PLAINTIFFS,
v.
PENSKE AUTOMOTIVE GROUP, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Jerome B. Simandle United States District Judge

OPINION

SIMANDLE, District Judge

I. INTRODUCTION

This matter is before the Court upon a number of Defendants' motions: (1) a motion filed by Defendant Innovative Aftermarket Systems ("IAS") and joined by Defendants Penske Automotive Group, Inc. ("PAG"), United Autocare Products, Inc. and United Autocare, Inc. ("UAP") for reconsideration or in the alternative appellate certification of the Court's June 29, 2009 Order [Docket Items 52 & 53]; (2) IAS's motion seeking retroactive permission to file a reply brief on the motion for reconsideration [Docket Item 61]; (3) IAS's motion to dismiss the Amended Complaint [Docket Item 64]; (4) PAG and UAP's motion to dismiss the Amended Complaint [Docket Item 63]; (5) IAS's motion to "Confirm Right to Cure Under the MMWA" [Docket Item 82]; and (6) IAS's motion for partial summary judgment regarding the scope of Plaintiffs' claims in the Amended Complaint [Docket Item 95].*fn1

II. BACKGROUND

This putative class action centers around the IBEX Anti-Theft Etch System, a product designed to deter automobile theft, which is manufactured and distributed by IAS and sold by automobile dealerships owned by PAG. The IBEX System is sold with a limited warranty. Under the terms of the warranty, if the IBEX System fails to perform its intended function of deterring vehicle theft and the purchaser's vehicle is stolen and not recovered, then IAS would issue a credit of between $2,500.00 and $7,500.00 at the dealership from which the stolen car had been purchased, to be applied toward the purchase of a replacement vehicle.*fn2

None of the Plaintiffs in this case alleges that his or her automobile was stolen or otherwise declared to be a total loss pursuant to the warranty's terms. Instead, Plaintiffs argue that the terms of the warranty are unlawful and that merely having been a party to such a warranty is sufficient for relief under various consumer protection statutes and the common law. The original complaint alleged six counts: violation of the Magnuson Moss Warranty Act ("MMWA") 15 U.S.C. § 2302 (Count I), violation of the New Jersey Consumer Fraud Act, N.J. Stat. Ann. § 56:8-1 (Count II), violation of other states' consumer protection laws (Count III), unjust enrichment (Count IV), rescission (Count V), and violation of New Jersey's Truth-In-Consumer Contract, Warranty and Notice Act, N.J. Stat. Ann. § 56:12-15 ("NJTCCA") (Count VI). The complaint has since been amended as discussed below.

On June 29, 2009, this Court decided Defendants' first motions to dismiss [Docket Items 21 & 22], as well as Plaintiff's motion for partial summary judgment [Docket Item 19]. The Court made a number of important determinations.

First, the Court ruled that "because Plaintiffs have not alleged that they incurred actual damages as a result of Defendants' alleged MMWA violation, the claim they seek to assert pursuant to the MMWA itself is unsustainable." [Docket Item 47, at 8-9]. This is because the MMWA only provides a private right of action to consumers "damaged by the failure of a . . . warrantor . . . to comply with any obligation under [the MMWA], or under a written warranty." 15 U.S.C. § 2310(d)(1). The Court concluded that "Congress did not intend to afford a right of action to a consumer who merely paid for a warranty that was technically illegal under the statute." [Id. at 12 (citations omitted).] The Court therefore dismissed Count I.

Second, the Court ruled that the NJTCCA, relied upon in Count VI, provides for a state cause of action when the MMWA has been violated, even if the MMWA does not provide a federal cause of action for that violation. The NJTCCA provides in relevant part that no seller shall: offer to any consumer . . . any written consumer warranty, notice or sign after the effective date of this act which includes any provision that violates any clearly established legal right of a consumer or responsibility of a seller, lessor, creditor, lender or bailee as established by State or Federal law at the time the offer is made or the consumer contract is signed or the warranty, notice or sign is given or displayed.

N.J. Stat. Ann. § 56:12-15. The NJTCCA provides for a private right of action. § 56:12-17. The Court concluded that the NJTCCA can be violated if a contract or warranty contains a provision prohibited by state or federal law. Thus, if the warranty in question contains a provision prohibited by the MMWA, Defendants may be held liable under the NJTCCA, even if Plaintiffs have not incurred actual damages. [Docket Item 47 at 15 (citing Barows v. Chase Manhattan Mortg. Corp., 465 F. Supp. 2d 347, 362 (D.N.J. 2006)).]

Third, the Court granted Plaintiff's motion for partial summary judgment and found that Plaintiff had demonstrated that the undisputed facts showed that the IBEX warranty violates the anti-tying provision of the MMWA. Section 2302(c), one of the MMWA's provisions aimed at preventing anti-competitive warranty practices, proscribes warranties on consumer products which "condition [the] written or implied warranty of such product on the consumer's using, in connection with such product, any article or service (other than [an] article or service provided without charge under the terms of the warranty) which is identified by brand, trade, or corporate name." § 2302(c). The IBEX warranty requires that the credit for stolen vehicles be issued toward purchase of a vehicle at the dealership listed in the warranty, which is identified by brand. The Court found that this violated § 2302(c) of the MMWA.

Finally, the Court granted Defendants' motion to dismiss Plaintiffs' claims brought pursuant to the consumer fraud acts of New Jersey and fifteen other states as well as Plaintiff's common law claim of rescission (Counts II, III, & V), but denied the motion to dismiss as to Plaintiff's unjust enrichment claim (Count IV).

As a result of this Court's June 29, 2009 Order, Plaintiffs amended their complaint to reflect the Court's ruling. The First Amended Complaint maintains Plaintiffs' claims on the basis of common law unjust enrichment and the NJTCCA. It also seeks declaratory judgment that the IBEX purchase contracts are void and unenforceable and a refund of money pursuant to that declaratory judgment.

Defendants now move for, among other things, reconsideration of that part of the June 29, 2009 Order granting Plaintiffs partial summary judgment as to the technical violation of the MMWA and denying Defendants' motions to dismiss Counts IV and VI. Both the granting of the partial summary judgment and the denial of the motions to dismiss were based on the determination that the undisputed facts demonstrated that the IBEX warranty violated the anti-tying provision of the MMWA. Because, as explained below, the Court finds that this determination was erroneous, Defendants' motion for reconsideration will be granted.

III. DISCUSSION

A. Standard of Review

Local Civil Rule 7.1(i) governs the Court's review of Defendants' motion for reconsideration. To prevail on a motion for ...


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