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Tameka Nelson, et al v. Nissan North America

September 6, 2012

TAMEKA NELSON, ET AL., PLAINTIFFS,
v.
NISSAN NORTH AMERICA, INC., AND NISSAN MOTOR CO. LTD.,
DEFENDANTS.



The opinion of the court was delivered by: Honorable Joseph E. Irenas

OPINION

IRENAS, Senior District Judge:

Plaintiffs Tameka Nelson, Richard Creel, Karim Abdullah, Ruth Taplet, and Nancy Ebner initiated this action against Defendants Nissan North America, Inc. and Nissan Motor Company Ltd (collectively "Nissan") for the alleged concealment of defectively designed transmissions in certain Maxima, Altima, and Quest vehicles.*fn1 Pending before the Court is Defendant Nissan North America's Motion to Dismiss the First Amended Class Action Complaint ("Class Action Complaint") pursuant to Fed. R. Civ. P. 12(b)(6) and 9(b).*fn2

I.

Certain Nissan vehicles contain a 5-speed automatic transmission known as the RE5F22A ("22A"). (Class Action Compl. ¶ 29.) The 22A transmissions rely on a complex maze of channels and passages that directs hydraulic fluid to numerous valves called the valve body, which, when properly designed, enables a smooth shift to the appropriate gear. (Id. ¶ 30.) The transmission problems underlying this action allegedly result from the improper design and function of the 22A valve body, which caused delayed shift patterns, excessive heat buildup, slippage, harshness, premature internal part wear, metal debris, and catastrophic transmission failure. (Id.) Allegedly, a faulty Transmission Control Module also contributed to the 22A transmission failures. (Id. ¶ 31.) According to the Class Action Complaint, the defective transmissions not only fail well in advance of their expected useful life, but also pose significant safety risks due to an unpredictable acceleration response and sudden total transmission failure. (Id. ¶¶ 5-6.) As detailed below, the five named Plaintiffs in this action all experienced transmission problems in their Nissan vehicles.*fn3

Plaintiff Tameka Nelson purchased a pre-owned 2006 Nissan Maxima in August 2006 from Rancho Valley Chevrolet in Pomona, California. (Id. ¶ 54.) At the time of purchase, her vehicle had approximately 16,000 miles. (Id.) Beginning in 2010, before the vehicle had been in service for five years and before it had been driven 60,000 miles, the transmission began to malfunction. (Id. ¶ 56.) On May 14, 2011, with only 77,551 miles, Nelson experienced catastrophic transmission failure and was informed by Nissan of San Bernardino that a new transmission was required. (Id. ¶ 57.) Nelson ultimately had her transmission problem repaired by a specialty transmission service center and incurred charges of $90.00 for a diagnostic fee and $2,696.46 in repair costs. (Id. ¶ 58.)

Plaintiff Richard Creel purchased a new 2005 Nissan Maxima in August 2005 from Bowser Nissan*fn4 in Pleasant Hills, Pennsylvania. (Id. ¶ 61.) Beginning in 2008, Creel began experiencing transmission problems. (Id. ¶ 63.) On April 10, 2008, before the vehicle had been in service for five years and with only 48,486 miles, Creel brought his vehicle to Bowser Nissan for transmission repairs under the warranty. Creel was told that the shifting problems could not be duplicated and that there was nothing wrong with the vehicle. (Id. ¶ 64.) On January 7, 2009 with only 59,776 miles, Creel brought the vehicle to Bowser Nissan again seeking repairs under the warranty. (Id. ¶ 65.) Creel was again told that the shifting problems could not be duplicated and that there was nothing wrong with the vehicle. (Id.)

After the shifting problems continued to worsen, on March 3, 2011, with 86,943 miles, Creel brought the vehicle to Bowser Nissan seeking repairs. (Id. ¶ 66.) Again, Creel was told that nothing was wrong with the transmission. (Id.) On March 18, 2011, Creel sent a complaint letter to Nissan North America. (Id. ¶ 67.) For a fee of $89.00, Creel took his vehicle to a different Nissan dealership for a diagnostic test. (Id.) Pittsburgh East Nissan informed Creel that the transmission needed to be replaced at a cost of $3,346.57. (Id. ¶ 67.) Creel ultimately had the transmission replaced at an independent transmission center for a cost of $1,457.30. (Id. ¶ 69.)

Plaintiff Karim Abdullah purchased a pre-owned 2004 Nissan Maxima with approximately 37,000 miles from Acura of Turnersville in January 2006.*fn5 (Id. ¶ 73.) During the warranty period, Abdullah experienced transmission problems, and beginning in January 2009, with approximately 95,000 miles, the transmission problem escalated. (Id. ¶¶ 75-76.) In January 2010, at 110,000 miles, Abdullah's vehicle became inoperable because of the transmission failure. (Id. ¶ 77.) Abdullah incurred costs of $1,200 to repair the transmission from an independent service center. (Id. ¶ 79.)

Plaintiff Ruth Taplet purchased a used 2006 Nissan Maxima on August 6, 2007 from Nissan of South Holland in South Holland, Illinois. (Id. ¶ 82.) Taplet also purchased a 60 month/100,000 miles Gold Preferred Plan Service Agreement ("Service Agreement"), which allegedly covered all internal and external components for her transmission until the earlier of February 18, 2011 or 100,000 miles. (Id. ¶ 84.) On November 18, 2010, with 82,983 miles, Taplet noticed transmission problems. (Id. ¶ 85.) Taplet brought the vehicle to Kelly Nissan, and was told that the transmission needed replacement. (Id. ¶ 85.) However, Kelly Nissan refused to do the work under the Service Agreement and allegedly told her that if she wanted the Service Agreement to cover the transmission, she would have to take it to South Holland Nissan. (Id. ¶ 86.) The next week, Taplet brought the vehicle to South Holland Nissan, which found no problem with the transmission and refused to make any repairs. (Id. ¶¶ 88-89.)

In March 2011, after the expiration of the Service Agreement, Taplet brought the vehicle back to South Holland Nissan, and she was informed that she needed a new transmission. (Id. ¶¶ 91-92.) Plaintiff Nancy Ebner purchased a new 2004 Nissan Maxima in October 2003 from Fred Martin Nissan, LLC in Akron, Ohio. (Id. ¶ 95.) Beginning in April 2004, with approximately 11,000 miles, Ebner began experiencing transmission problems; however, Fred Martin Nissan was unable to duplicate the problem. (Id. ¶ 97.) In September 2004, with approximately 22,400 miles, Ebner brought the vehicle to Fred Martin Nissan, which reprogrammed the Transmission Control Module. (Id. ¶ 98.) In March 2005, with approximately 30,600 miles, Ebner brought the vehicle back for transmission problems, but Fred Martin Nissan was again unable to duplicate the problem. (Id. ¶ 99.) On June 5, 2011, Ebner filed a complaint with Nissan North America regarding her transmission problems. (Id. ¶ 100.) Her claim was denied on the basis of the expiration of the 5 year/60,000 mile express warranty. (Id.) In January 2010, with approximately 122,000 miles, Ebner's vehicle became inoperable because of the transmission problems. (Id. ¶ 101.)

The Class Action Complaint alleges that Nissan was well aware of the alarming failure rate of the 22A transmissions based on its own records of customer complaints, dealership repair records, National Highway Traffic Safety Administration records, complaints through consumer affairs websites, and its own durability testing. (Id. ¶ 38.) Plaintiffs assert that "Nissan actively concealed the material defect" and that the existence of the transmission problem was exclusively within Nissan's knowledge and control. (Id. ¶ 41.)

Plaintiffs initiated this action on September 30, 2011. On December 5, 2011, Plaintiffs filed the instant Class Action Complaint asserting claims for breach of express warranty, breach of implied warranty of merchantability, unjust enrichment, and consumer fraud act claims under the state laws of New Jersey, California, Illinois, Ohio and Pennsylvania. Defendant Nissan North America filed a Motion to Dismiss on January 9, 2012.

II.

Federal Rule of Civil Procedure 12(b)(6) provides that a court may dismiss a complaint "for failure to state a claim upon which relief can be granted." In order to survive a motion to dismiss, a complaint must allege facts that raise a right to relief above the speculative level. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007); see also Fed. R. Civ. P. 8(a)(2).

While a court must accept as true all allegations in the plaintiff's complaint, and view them in the light most favorable to the plaintiff, Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008), a court is not required to accept sweeping legal conclusions cast in the form of factual allegations, unwarranted inferences, or unsupported conclusions. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). The complaint must state sufficient facts to show that the legal allegations are not simply possible, but plausible. Phillips, 515 F.3d at 234. "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." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009).

When evaluating a Rule 12(b)(6) motion to dismiss, the Court considers "only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim." Lum v. Bank of America, 361 F.3d 217, 221 n.3 (3d Cir. 2004). A document that forms the basis of a claim is one that is "integral to or explicitly relied upon in the complaint." Id. (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)).

III.

A federal court in a diversity case must apply the forum state's choice of law rules. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941). New Jersey has adopted the "most significant relationship" test. P.V. v. Camp Jaycee, 197 N.J. 132, 142-43 (N.J. 2008). For the purposes of this Motion, the Court will apply the law of the state where each Plaintiff purchased and sought repair for her vehicle.

A. Breach of Express Warranty

Plaintiffs allege that Nissan expressly warranted that its dealerships would repair transmission defects during a 5 year/60,000 mile warranty period. Plaintiffs contend that Nissan breached this express warranty because (1) Nissan was aware of the transmission defect and did not disclose it during the warranty period, and (2) even when the transmission problem manifested during the warranty period, Nissan refused to make any repairs. (Class Action Compl. ¶¶ 42-44.) Plaintiffs further allege that "[s]ince the Transmission Problem typically manifests shortly outside of the warranty period for the Class vehicles--and given Defendants' knowledge of this concealed design defect, failure to disclose it, and superior bargaining power--Nissan's attempt to limit the warranty with respect to the Transmission Problem is unconscionable here." (Id. ¶ 9.)

Nissan moves to dismiss Plaintiffs' claims for breach of express warranty arguing that transmission problems requiring repair did not manifest until after the applicable time or mileage periods in the warranty had elapsed.

A threshold issue concerns the nature of the express warranty that Plaintiffs allege was breached. In the Class Action Complaint, Plaintiffs allege that "Nissan expressly warranted that its dealerships would repair any defects in the powertrain (including the transmission) during the warranty period of 5 years or 60,000 miles, whichever came first." (Class Action Compl. ¶ 42.) Nissan's Warranty Information Booklets for the years 2004-2006 provide that "[t]his warranty covers any repairs needed to correct defects in materials or workmanship of all parts and components of each new Nissan vehicle supplied by Nissan . . . ." (Healy Cert. Exs. A-C at 4.) Thus, the express warranty is a warranty to repair defects in materials or workmanship during a fixed time and mileage period.

With this in mind, a review of the allegations in the Class Action Complaint demonstrates that Plaintiffs have generally alleged that transmission problems such as delayed shift patterns and slippage manifested during the warranty period. (See Class Action Compl. ¶¶ 56, 63-65, 75, 85, 97-99.) However, only Plaintiffs Creel and Ebner make specific allegations that they sought transmission repairs from Nissan within the express warranty period. (Id. ¶¶ 64-65, 97-99.) While Plaintiffs Ebner and Abdullah did not seek repairs during the pendency of the warranty period, the Court does not find this fatal to their express warranty claims. The Class Action Complaint alleges that Nissan knew that the vehicles had defective transmissions and failed to disclose this to Plaintiffs. Further, Plaintiffs allege that they experienced symptoms of the alleged transmission defect prior to the expiration of the warranty. In light of the fact that Plaintiffs allege that ...


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