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Kuzian v. Electrolux Home Prods., Inc.

United States District Court, D. New Jersey

March 27, 2013

MARIUSZ KUZIAN, JAMES G. BROWN, DEBRA A. THOMAS-BROWN, and IRMA LEDERER, Plaintiffs,
v.
ELECTROLUX HOME PRODUCTS, INC., Defendant

Filed March 28, 2013

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BRUCE HELLER NAGEL, DIANE E. SAMMONS, NAGEL RICE, LLP, ROSELAND, NJ; JOHN N. POULOS, JOSEPH LOPICCOLO, POULOS LOPICCOLO PC, OCEAN, NJ, On behalf of plaintiffs.

JEFFREY M. GARROD, ORLOFF, LOWENBACH, STIFELMAN & SIEGEL, P.A., ROSELAND, NJ; C. BRANDON WISOFF, THOMAS B. MAYHEW, FARELLA BRAUN MARTEL LLP, SAN FRANCISCO, CA, On behalf of defendant.

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OPINION

NOEL L. HILLMAN, United States District Judge.

I. BACKGROUND

In this consolidated putative class action, currently pending before the Court are the motions of defendant Electrolux Home Products, Inc. (" Electrolux" ) to dismiss the

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four plaintiffs' complaints,[1] as well as plaintiffs' motion to appoint interim class counsel. Plaintiffs, three from New Jersey and one from New York,[2] claim that the ice makers in their refrigerators, manufactured by Electrolux, are defective. Plaintiffs contend that even though Electrolux knew of this defect since at least February 2008, Electrolux continued to manufacture and sell refrigerators with this defect.[3] Plaintiffs claim that Electrolux provided repairs to the ice makers as part of the one-year express warranty, but that Electrolux knew that the repairs would be temporary and only last long enough to get past the one-year mark. Plaintiffs claim that Electrolux's marketing and sale of its " top of the line" refrigerators that provided " ice at your fingertips" and " nine pounds of ice in 24 hours" constitutes consumer fraud and violates the express and implied warranties because Electrolux knew that the ice makers were defective when they advertised and sold them and would not perform as advertised. Plaintiffs are seeking the certification of a class comprising of all parties who have purchased Electrolux refrigerator models that contain the defective ice makers.

Electrolux has moved to dismiss most of plaintiffs' claims on various bases. Electrolux's main argument is that the New Jersey plaintiffs' fraud and implied warranty claims are subsumed by the New Jersey Products Liability Act, N.J.S.A. 2A:58C-1, et seq., because those claims allege a defective product that has caused damage to other property. Electrolux also argues that the plaintiffs do not have standing to pursue claims for refrigerators that they did not purchase. Plaintiffs have opposed Electrolux's motion. As to Electrolux's main arguments, plaintiffs contend that their claims may proceed because they are not product defect claims, and because the same defective ice maker is in numerous Electrolux refrigerator models.

For the reasons expressed below, Electrolux's motions will be denied in part and granted in part, and plaintiffs' motion to appoint interim class counsel will be denied without prejudice.

II. JURISDICTION

Plaintiffs assert that this Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(d)(2), the Class Action Fairness Act (CAFA), which provides, in relevant part, that " district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in

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which . . . (A) any member of a class of plaintiffs is a citizen of a State different from any defendant." [4]

III. ELECTROLUX'S MOTIONS TO DISMISS

A. STANDARD FOR MOTION TO DISMISS

When considering a motion to dismiss a complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6), a court must accept all well-pleaded allegations in the complaint as true and view them in the light most favorable to the plaintiff. Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005). It is well settled that a pleading is sufficient if it contains " a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Under the liberal federal pleading rules, it is not necessary to plead evidence, and it is not necessary to plead all the facts that serve as a basis for the claim. Bogosian v. Gulf Oil Corp., 561 F.2d 434, 446 (3d Cir. 1977). However, " [a]lthough the Federal Rules of Civil Procedure do not require a claimant to set forth an intricately detailed description of the asserted basis for relief, they do require that the pleadings give defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Baldwin Cnty. Welcome Ctr. v. Brown, 466 U.S. 147, 149-50 n.3, 104 S.Ct. 1723, 80 L.Ed.2d 196 (1984) (quotation and citation omitted).

A district court, in weighing a motion to dismiss, asks " 'not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claim.'" Bell Atlantic v. Twombly, 550 U.S. 544, 563 n.8, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)); see also Ashcroft v. Iqbal, 556 U.S. 662, 684, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (" Our decision in Twombly expounded the pleading standard for 'all civil actions' . . . ." ); Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (" Iqbal . . . provides the final nail-in-the-coffin for the 'no set of facts' standard that applied to federal complaints before Twombly." ).

Following the Twombly /Iqbal standard, the Third Circuit has instructed a two-part analysis in reviewing a complaint under Rule 12(b)(6). First, the factual and legal elements of a claim should be separated; a district court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions. Fowler, 578 F.3d at 210 (citing Iqbal, 129 S.Ct. at 1950). Second, a district court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a " 'plausible claim for relief.'" Id. (quoting Iqbal, 129 S.Ct. at 1950). A complaint must do more than allege the plaintiff's entitlement to relief. Id.; see also Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (stating that the " Supreme Court's Twombly formulation of the pleading standard can be summed up thus: 'stating . . . a claim requires a complaint with enough factual matter (taken as true) to suggest' the required element. This 'does not impose a probability requirement at the pleading stage,' but instead 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary element" ).

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A court need not credit either " bald assertions" or " legal conclusions" in a complaint when deciding a motion to dismiss. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1429-30 (3d Cir. 1997). The defendant bears the burden of showing that no claim has been presented. Hedges v. U.S., 404 F.3d 744, 750 (3d Cir. 2005) (citing Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)).

Finally, a court in reviewing a Rule 12(b)(6) motion must only consider the facts alleged in the pleadings, the documents attached thereto as exhibits, and matters of judicial notice. S. Cross Overseas Agencies, Inc. v. Kwong Shipping Grp. Ltd., 181 F.3d 410, 426 (3d Cir. 1999). A court may consider, however, " an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document." Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). If any other matters outside the pleadings are presented to the court, and the court does not exclude those matters, a Rule 12(b)(6) motion will be treated as a summary judgment motion pursuant to Rule 56. Fed.R.Civ.P. 12(b).

B. ANALYSIS OF THE NEW JERSEY PLAINTIFFS' COMPLAINT

1. Whether plaintiffs' claims are subsumed under the NJPLA

Electrolux argues that all of the New Jersey plaintiffs' claims - except for breach of express warranty - are subsumed under the NJPLA because the Act constitutes the exclusive remedy for claims arising out of a defective product under New Jersey law. Plaintiffs argue that their claims are not subsumed by the NJPLA because their claims are not product liability claims.

The NJPLA was enacted by the New Jersey Legislature in 1987 " based on an 'urgent need for remedial legislation to establish clear rules with respect to certain matters relating to actions for damages for harm caused by products.'" Sinclair v. Merck & Co., Inc., 195 N.J. 51, 948 A.2d 587, 593 (N.J. 2008) (citing N.J.S.A. 2A:58C-1(a)). In 2007, the New Jersey Supreme Court set forth substantive guidance regarding the scope of the NJPLA and explicitly recognized that " '[w]ith the passage of the Product Liability Act, . . . there came to be one unified, statutorily defined theory of recovery for harm caused by a product.'" In Re Lead Paint Litigation, 191 N.J. 405, 924 A.2d 484, 503 (N.J. 2007) (citation omitted). The New Jersey Supreme Court also observed that " [t]he language chosen by the Legislature in enacting the PLA [was] both expansive and inclusive, encompassing virtually all possible causes of action relating to harms caused by consumer and other products." Id. (citing N.J.S.A. 2A:58C-1(b)(3)).

A product liability action is statutorily defined as " any claim or action brought by a claimant for harm caused by a product, irrespective of the theory underlying the claim, except actions for harm caused by breach of an express warranty." N.J.S.A. 2A:58C-1(b)(3). The NJPLA further defines the type of " harm" caused by a product to include the following: " (a) physical damage to property, other than to the product itself ; (b) personal physical illness, injury or death; (c) pain and suffering, mental anguish or emotional harm; and (d) any loss of consortium or services or other loss deriving from any type of harm described in subparagraphs (a) through (c) of this paragraph." N.J.S.A. 2A:58C-1(b)(2) (emphasis added). Thus, what kind of " harm" a defective product causes is dispositive of whether the

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NJPLA governs claims brought for that harm.

In this case, plaintiffs allege that the defective ice makers failed to produce ice. They also allege that the ice makers leaked water into the refrigerators causing the electrical components to short out and malfunction, which caused the refrigerators to warm to unsafe temperatures. This alleged harm is physical damage to the product itself, and it is explicitly excluded from the NJPLA. Thus, these claims are not subsumed by the NJPLA and cannot be dismissed on that basis.

Plaintiffs also allege, however, that the defective ice makers and resulting leaks caused food to spoil and caused damage to flooring, walls and other personal property beyond the refrigerator itself. Electrolux argues that these damages show " physical damage to property, other than to the product itself," which makes plaintiffs' claims be explicitly subsumed by the NJPLA.

Electrolux's attempt to transform plaintiffs' claims into product defect tort claims is unavailing. Even though spoiled food and damage to floors, walls, and other property do not strictly constitute harm to the refrigerator itself, they are consequential, anticipated economic losses resulting from the defect in the refrigerator. As such, they are not subsumed by the NJPLA.

The New Jersey courts have explained, " The Product Liability Act and common law tort actions do not apply to damage caused to the product itself, or to consequential but purely economic losses caused to the consumer because of a defective product." Ford Motor Credit Company, LLC v. Mendola, 427 N.J. Super. 226, 48 A.3d 366, 374 (N.J. S.Ct. App.Div. 2012). Moreover,

As comprehensive as the Products Liability Act is and appears to be, its essential focus is creating a cause of action for harm caused by defective products. The Act's definition of harm so as to exclude damage a defective product does to itself is not merely the Legislature's embrace of the economic loss rule, but a recognition that the Act's goal is to serve as a vehicle for tort recoveries. Simply put, the Act is not concerned with providing a consumer with a remedy for a defective product per se; it is concerned with providing a remedy for the harm or the damage that a defective product causes to people or to property.

Dean v. Barrett Homes, Inc., 204 N.J. 286, 8 A.3d 766, 777 (N.J. 2010) (explaining the history and purpose of the economic loss rule, and also explaining that the NJPLA was not " designed to transform a contract-like claim, that is a claim that the product itself in some ...


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