United States District Court, D. New Jersey
GALO COBA and COBA LANDSCAPING AND CONSTRUCTION, INC., individually, and on behalf of other members of the general public similarly situated, Plaintiffs,
FORD MOTOR COMPANY, Defendant.
Galo Coba and Coba Landscaping and Construction, Inc.
("Coba Landscaping") bring this putative class action
against Defendant Ford Motor Company ("Ford"). The
Third Amended Class Action Complaint (the
"Complaint") (ECF no. 91) contains four counts arising
out of Ford's alleged inability to cure a defective fuel
tank installed in certain Ford F-Series Super Duty trucks and
before the Court is Ford's motion (ECF no. 130-1) for
summary judgment. In a previous Opinion (ECF no. 149), I
granted summary judgment to Ford on Counts 1, 2, and 4, which
allege breach of express warranty, breach of the implied
contractual covenant of good faith and fair dealing, and
common law fraud. At that time, I also administratively
terminated without prejudice the portion of Ford's
summary judgment motion concerning Count 3, which alleges a
violation of the New Jersey Consumer Fraud Act (the
"NJCFA"), N.J. Stat. Ann. § 56:8-2, and I
granted leave to submit supplemental briefing.
parties have submitted supplemental briefing and, for the
reasons stated below, I will grant summary judgment to Ford
on Count 3. This opinion assumes familiarity with my prior
Summary Judgment Opinion, and should be read in conjunction
facts, as set forth in my previous Summary Judgment Opinion,
are incorporated here by reference. (See SJ Op.
2-13, 2016 WL 5746361 *l-*7.)
Summary Judgment Standard
familiar legal standards governing a motion for summary
judgment are likewise incorporated by reference, and will not
be repeated here. (See SJ Op. 13-14, 2016 WL 5746361
Violation of the New Jersey Consumer Fraud Act
Elements of a CFA Claim
third cause of action arises under the New Jersey Consumer
Fraud Act ("CFA"). In a diversity case, this court
must interpret substantive state law in accordance with
rulings of the state's highest court. Lacking such
specific guidance, it must predict how the state court would
resolve the issue. Hunt v. U.S. Tobacco Co., 538
F.3d 217, 220-21 (3d Cir. 2008); Norfolk Southern Ry. Co.
v. Basell USA Inc., 512 F.3d 86, 91-92 (3d Cir. 2008);
see generally Erie R. Co. v. Tompkins, 304 U.S. 64,
Jersey Legislature enacted the NJCFA in 1960 to address
fraudulent practices in the market for consumer goods and to
deter such conduct by merchants. Furst v. Einstein
Moomjy, Inc., 182 N.J. 1, 11 (2004) (citing Cox v.
Sears Roebuck & Co., 138 N.J. 2, 21 (1994)). As
amended in 1971, the statute confers a private right of
action for consumers who have suffered from unconscionable or
fraudulent practices in the marketplace:
Any person who suffers any ascertainable loss of moneys or
property, real or personal, as a result of the use or
employment by another person of any method, act, or practice
declared unlawful under this act of the act hereby amended
and supplement may bring an action or assert a counterclaim
therefor in any court of competent jurisdiction.
N.J. Stat. Ann. § 56:8-19. The NJCFA is to be liberally
construed in favor of the consumer, see Cox, 138
N.J. at 14, and "applied broadly in order to accomplish
its remedial purpose, " Gonzalez v. Wilshire Credit
Corp., 207 N.J. 557, 576 (2011) (quoting Lemelledo
v. Beneficial Mgmt. Corp., 150 N.J. 255, 264 (1997));
see also Gennari v. Weichert Co. Realtors, 148 N.J.
582, 604 (1997).
state a prima facie case under the CFA, a plaintiff
must demonstrate three elements: (1) unlawful conduct by the
defendant; (2) an ascertainable loss by the plaintiff; and
(3) a causal connection between the defendant's unlawful
conduct and the plaintiffs ascertainable loss." Pay
an v. GreenPoint Mortgage Funding, 681
F.Supp.2d 564, 572 (D.N.J. 2010) (citing Bosland v.
Wamock Dodge, Inc., 197 N.J. 543, 557 (2009));
accord Gonzalez, 207 N.J. at 576.
first element of an NJCFA claim-unlawful conduct-is defined
as: "[t]he act, use or employment by any person of any
unconscionable commercial practice, deception, fraud, false
pretense, false promise, misrepresentation, or the knowing,
concealment, suppression, or omission, in connection with the
sale or advertisement of any merchandise . . . ." N.J.
Stat. Ann. § 56:8-2. From this statutory definition,
courts have derived three broad categories of unlawful
conduct: affirmative acts, knowing omissions, and regulatory
violations. Federico v. Home Depot, 507 F.3d 188,
202 (3d Cir. 2007) (citing Cox, 138 N.J. at 17).
allegations fall within the second category: knowing
omissions. "When the alleged consumer fraud consists of
an omission, the plaintiff must show that the defendant acted
with knowledge, and intent is an essential element of the
fraud." Cox, 138 N.J. at 18. An actionable
omission thus occurs where the defendant "(1) knowingly
concealed (2) a material fact (3) with the intention that the
consumer rely upon the concealment." Arcand v.
Brother Intern. Corp., 673 F.Supp.2d 282, 297 (D.N.J.
Coba's New Jersey CFA Claim
alleges that Ford knowingly concealed the material fact that
"the Class Vehicles suffered from a common defect
resulting in fuel tank material clogging portions of the fuel
system, thereby causing sudden loss of power to the engine,
sudden loss of forward propulsion, and stalling while driving
the Class Vehicles" by "purposefully fail[ing] to
disclose this to Plaintiffs and Class Members during the
purchase of the vehicle and, in fact, actively conceal[ing],
suppress[ing] and omitt[ing] any mention of the Fuel Tank
Defect." (3AC ¶ 153) Coba further alleges that
"Ford purposefully and knowingly failed to disclose the
Fuel Tank Defect in the Class Vehicles and replacement tanks
in order to secure the sale of these vehicles or replacement
tanks at a premium price and also to mislead owners during
the express warranty period to avoid having to perform their
contractual duties under the warranty." (3AC ¶ 160)
omissions claim, as noted above, requires a showing that Ford
knowingly concealed a material fact with the intention that
the consumer rely on that omission. See Arcand, 673
F.Supp.2d at 297. Implicit is the requirement that the
defendant be subject to an "underlying duty ... to
disclose what he concealed to induce purchase."
Id. "Obviously, there can be no [unlawful
conduct], or reliance for that matter, if the defendant was
under no obligation to disclose the information in the first
place." Id. Whether a defendant was subject to
a duly to disclose is a question of law that must be
determined in light of the factual circumstances. Judge
v. Blackfin Yacht Corp., 357 N.J.Super. 418, 426-27
(App. Div. 2003) (citing Carter Lincoln-Mercury, Inc.,
Leasing Div. v. EMAR Grp., Inc., 135 N.J. 182 (1994)).
contends that Coba has not raised a material factual dispute
with regard to the unlawful conduct element of its omissions
claim. Ford states that it violated no duty to disclose the
alleged material facts relating to the fuel tank delamination
at the time of Coba's purchases.
is well-developed case law, cited by both sides in the
initial briefing on this motion, as to the nature and scope
of a manufacturer's duty of disclosure with respect to a
warranted defect. See, e.g., Mickens v. Ford
Motor Co., No. 10-CV-5842 KM MAH, 2015 WL 5310755, at *8
(D.N.J. Sept. 10, 2015) (citing Tatum v. Chrysler Grp.,
LLC, 2011 WL 1253847, *5 (D.N.J. March 28, 2011)).
Automobile manufacturers commonly warrant their cars against
failures for a period of time. Thus freedom from,
e.g., fuel tank failure for a fixed period of years
becomes part of the bargained-for exchange; if such a failure
occurs, it will be remedied at the manufacturer's
expense. It is well known that automobiles do not always
function flawlessly; that is the very reason for a warranty.
Where the relevant defect was covered by a warranty, then,
"it is not sufficient to allege that the defendant
manufacturer knew that a part might fail [due to the
defect] before the warranty expired but concealed that
knowledge." Alban v. BMW of N. Am., LLC, 2010
WL 3636253, at *10 (D.N.J. Sept. 8, 2010) (emphasis in
original) (citing Perkins v. DaimlerChrysler Corp.,
383 N.J.Super. 99, 111-12, 890 A.2d 997 (App. Div. 2006)).
Instead, B[t]o support a CFA cause of action for
fraud in the context of a warranted defect, a plaintiff must
show that the manufacturer was not in good faith insuring
against a risk, but that it actually *knew with
certainty that the product at issue or one of its
components was going to fail." Mickens, 2015 WL
5310755, at *8 (citing Tatum, 2011 WL 1253847, *5
(emphasis in original)). "Only then will a concealed,
but warranted-against, defect furnish the basis for a CFA
both sides seemed to have briefed the NJCFA duty to disclose
issue on the assumption that the fuel tank delamination was a
warranted defect. As I noted in my earlier Summary Judgment
Opinion, that was an understandable assumption, given
Ford's "position that it could not reliably identify
the nature of the problem but honored warranty claims in the
interim" and Coba's "position that the defect
was covered by the NVLW." (S.J. Op. at 22, 2016 WL
5746361 at *12). However, because I found that the
allegations and proofs relate solely to an alleged design
defect, not covered by the express warranty (and there is no
implied warranty claim asserted), I granted the parties the
opportunity to address the NJCFA duty-to-disclose issue in
light of my disposition of the express warranty issue.
parties have submitted supplemental briefs on the issue of
the duty to disclose in relation to a non-warranted defect. I
now turn to that question.
parties agree that the NJCFA is applicable whether or not the
allegedly omitted defect was covered by a warranty. Thus, the
disputed question here is not whether the NJCFA protects the
consumer from non-warranted defects, but rather what
standard should govern the duty to disclose. Must
plaintiffs demonstrate that a defendant knew that a product
was certain to fail, as in the Alban line
of cases? Or is the knowledge that a product may
fail sufficient to trigger a duty to disclose a non-warranted
part, Coba argues that in the "absence of warranty
coverage . . . courts do not insist that the defendant know
that a defect would arise in 100% of the cases before finding
an omissions claim actionable, with or without
warranty." (PI. Supp. Br. 2-3) Coba further contends
that if the Alban certainty standard is applied in
the absence of a warranty, "defendants will be in the
perverse position of being able to escape liability entirely
under the NJCFA simply because they did not warrant a known
defect that is prone to failure but does not fail at a 100%
rate." (PI. Supp. Br. 3-4) Coba argues that "[t]he
Court's finding that the fuel tank delamination defect is
not covered by warranty can only aid Plaintiffs-not Ford.
This is because the existence of a warranty is typically
invoked as a defense to a claim that defendant violated the
NJCFA." (PI. Supp. Br. 8)
contrast, Ford asks the Court to apply the certainty standard
here, arguing that "Alban and its progeny are
nearly indistinguishable from this case." (Def. Supp.
Br. 4) This is so, says Ford, because "there is no
conceptual distinction between a defect that is not covered
by warranty because it falls outside the durational
limitation (as in the Alban-line of cases) versus a
defect that falls outside the scope of the warranty (as in
this case)." "[B]oth what [the warranty] covers and
for how long, " says Ford, "are 'part of the
benefit of the bargain between the parties.'”
(Id. at 4-5) (quoting Thiedemann v.
Mercedes-Benz U.S.A., LLC,872 A.2d 783, 794 (N.J.