United States District Court, D. New Jersey
JOSEPH H. RODRIGUEZ, UNITED STATES DISTRICT JUDGE
matter is before the Court on Defendants' Motion to
Dismiss pursuant to Fed. R. Civ. Pro. 12(b)(6). Having
considered the parties' submissions, the Court decides
this matter without oral argument pursuant to Federal Rule of
Civil Procedure 78(b). For the reasons stated below, the
Court grants in part and denies in part Defendants'
Motion to Dismiss.
case concerns alleged engine defects in Subaru's 2009
through and including 2018 model year Impreza WRX and WRX STi
(“class vehicles” or “class
vehicle”). Four named Plaintiffs, Joseph Amato, James
Moore, Chris Lall, and George Sandoval (collectively
“Plaintiffs”), bring this action against
Defendants Subaru of America, Inc. (“SoA”) and
Subaru Corporation (“SRB”), (collectively
“Subaru” or “Defendants”),
individually and on behalf of all others similarly situated.
a Japanese corporation and manufacturer of Subaru vehicles.
According to Plaintiffs, it manufactured and tested the class
engine and engine management system, and “drafted and
published the Owner's Manual and Warranty &
Maintenance Booklet materials that accompanied class vehicles
and/or were published on the Internet.” Compl. ¶
18. “SoA manufactures, imports, distributes and/or
sells Subaru motor vehicles including all class vehicles and
also acts as the authorized representatives of Subaru in the
United States. SoA operates its national marketing, warranty,
consumer relations and engineering offices from its New
Jersey facility.” Id. at ¶ 19. It also
drafted and published the Owner's Manual and Warranty
& Maintenance Booklet.” Id. at ¶ 21.
Plaintiffs now claim that the engines used in the class
vehicles, including engine codes EJ255, EJ257, and FA20
(“class engines”), are “predisposed to
premature engine failure.” Id. at ¶ 1-3.
to the facts alleged in Plaintiffs' Complaint:
“Class vehicles are defective with respect to
improperly designed and manufactured pistons and an engine
management system and PCV (positive crankcase ventilation)
system that subjects class engines to premature catastrophic
engine piston ringlands failure (the ‘Piston Ringlands
Defect')” Id. at ¶ 4. This alleged
defect “often” causes engine failure “at
less than 50% of [the engines] reasonably expected useful
life.” Id. at ¶ 10. Plaintiffs claim
that the class engine failure causes power loss, stalling,
and “sudden and catastrophic engine self-destruction as
overheated internal parts seize.” Id. at
¶ 8. Therefore, Plaintiffs assert that the Piston
Ringlands Defect causes serious safety issues for drivers of
the class vehicle. Id. at ¶ 9. Plaintiffs
contend that the predecessor engines had similar issues, and
instead of redesigning the engine, Defendants attempted to
make certain modifications to the engine system.
filed a class action Complaint with this Court against
Defendants alleging class wide claims for Breach of Express
Warranty of Merchantability (Count I), Breach of Implied
Warranty of Merchantability (Count II), Violation of
Magnuson-Moss Warranty Act 15 U.S.C. § 2310(D)(1(A)
(Count III), Negligent Misrepresentation (Count VIII), and
Injunctive and Declaratory Relief (Count IX); and state law
claims for certain subclasses under the New Jersey Consumer
Fraud Act N.J. Stat. Ann. §§ 56:8-2 (Count IV), the
Indiana Deceptive Consumer Sales Act, Ind. Code §§
24-5-0.5-1 (Count V), New York General Business Law §
349 Deceptive Acts and Practices (Count VI), and Arizona
Consumer Fraud Act, A.R.S. §§ 44-1521 (Count VII).
claim that Defendants' had actual knowledge of the
alleged defect, which they concealed from consumers.
Specifically, that “defendants fraudulently,
intentionally, negligently and/or recklessly concealed . . .
the Piston Ringland Defect in class engines even though the
defendants knew or should have known of design, materials and
manufacturing defects in class vehicles.” Id.
at ¶ 47. They claim that “prior to manufacturing
and then distributing a new part, defendants perform
substantial field inspections, testing and quality review of
vehicles in service to determine the root cause and diagnosis
of a problem.” Id. at ¶ 38. In addition,
Plaintiffs claim Defendants would have obtained knowledge of
defect through (1) field information and customer feedback on
warranty claims that SoA monitors, (2) inspections of class
engines during replacement pursuant to warranty claims, (3)
sales and distribution of engines to dealerships and repair
facilities, (4) internet communications and other consumer
forums, (5) information concerning revisions made to
subsequent engine specifications and materials, and (6)
communications with class vehicle owners. Id. at
class vehicles were subject to a warranty contained within
the Owner's Manual and Warranty & Maintenance Booklet
materials. According to the Complaint, these materials
“do not contain any maintenance or service information
for class engine pistons or piston ringlands that are
defective.” Id. at ¶¶ 10, 53.
Plaintiffs' claims that they timely notified the
defendants of breach of warranties Id. at ¶ 55.
The putative class contacted SoA directly and/or through an
authorized dealership and were notified that SoA would not
replace engines incorporated in class engines or reimburse
replacement costs “because their vehicles were outside
of the express warranty period.” Id. at
¶¶ 56-57. Now Plaintiffs' plead that Defendants
failed to cure the class vehicle defect, despite alleged
knowledge of the defect, and have breached the terms of its
express warranty. Id. at ¶ 58.
named class representative Plaintiffs' claims arise out
of the following alleged facts:
Amato was a resident of New Jersey at the time he leased his
“new 2016 Impreza WRX STi from an authorized
Pennsylvania Subaru dealer in November 2015.” At 65,
000 miles, Amato's class vehicle required replacement of
the engine due to the Piston Ringland Defect. Amato spent
more than $6, 500 replacing the class engine together with
other incidental expenses. Id. at ¶ 14.
Moore currently resides in Indiana. He “purchased a
certified pre-owned 2013 WRX from an authorized Subaru dealer
in Indiana in November of 2015.” At 66, 000 miles,
Moore's class vehicle required replacement of the engine.
Moore spent more than $7, 500.00 repairing the class engine
together with other incidental expenses. Id. at
Lall currently resides in New York. He “purchased a new
2016 Subaru WRX from Curry Subaru, an authorized Subaru
dealer in New York in or about May of 2016.”
Id. at ¶ 16. At approximately 32, 000 miles,
Bay Ridge Subaru worked on the clutch of his vehicle
“and returned the vehicle to Lall without indicating
any issue with the engine piston ringlands.”
Id. “Upon information and belief, ” Bay
ridge Subaru completed “a tear down and diagnostic of
the vehicle” but did not address or advise about the
Piston Ringland's Defect. At approximately 33, 000 miles,
within 1, 000 miles of receiving the vehicle back from Bay
Ridge Subaru, “the vehicle suffered a catastrophic
engine ringlands failure.” Id. Thereafter,
Lall “demanded” that SoA repair his vehicle's
engine under warranty. According to the Complaint, SoA
refused. Lall was required to pay for his engine repair and
lost use of his vehicle in excess of 2 months. Id.
Sandoval is a resident of Arizona. He “purchased a new
2018 WRX STi from Auto Nation Subaru of Scottsdale, Arizona,
an authorized Subaru dealer in Scottsdale, Arizona in 2018
for approximately $41, 000.” Id. at ¶ 17.
The engine in Sandoval's class vehicle “has not
experienced ringlands failure.” Sandoval claims
“he has suffered diminution of value as a result of
class engine ringlands failure becoming public
knowledge.” Id. He claims that prospective
purchaser(s) have told him “that because Subaru has
publicized the fact that the pistons and piston ringlands
required strengthening, an issue which Subaru revealed was
fixed in the 2019 version of the WRX STi vehicle, that such
purchaser(s) would not want to purchase the earlier class
vehicles which did not incorporate engines with the
strengthened pistons and ringlands.” Id.
Defendants move to dismiss all claims alleged in
Plaintiffs' Complaint. [Dkt. No. 10]. The Motion to
Dismiss has been fully briefed and is ripe for decision.
Standard of Review
Rule of Civil Procedure 12(b)(6) allows a party to move for
dismissal of a claim based on “failure to state a claim
upon which relief can be granted.” Fed.R.Civ.P.
12(b)(6). A complaint should be dismissed pursuant to Rule
12(b)(6) if the alleged facts, taken as true, fail to state a
claim. Fed.R.Civ.P. 12(b)(6). When deciding a motion to
dismiss pursuant to Rule 12(b)(6), ordinarily only the
allegations in the complaint, matters of public record,
orders, and exhibits attached to the complaint, are taken
into consideration. See Chester County Intermediate Unit
v. Pa. Blue Shield, 896 F.2d 808, 812 (3d Cir. 1990). It
is not necessary for the plaintiff to plead evidence.
Bogosian v. Gulf Oil Corp., 561 F.2d 434, 446 (3d
Cir. 1977). The question before the Court is not whether the
plaintiff will ultimately prevail. Watson v. Abington
Twp., 478 F.3d 144, 150 (2007). Instead, the Court
simply asks whether the plaintiff has articulated
“enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007).
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, 556 U.S. 662, 678
(2009) (citing Twombly, 550 U.S. at 556).
“Where there are well-pleaded factual allegations, a
court should assume their veracity and then determine whether
they plausibly give rise to an entitlement to relief.”
Iqbal, 556 U.S. at 679.
Court need not accept “‘unsupported conclusions
and unwarranted inferences, '” Baraka v.
McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (citation
omitted), however, and “[l]egal conclusions made in the
guise of factual allegations . . . are given no presumption
of truthfulness.” Wyeth v. Ranbaxy Labs.,
Ltd., 448 F.Supp.2d 607, 609 (D.N.J. 2006) (citing
Papasan v. Allain, 478 U.S. 265, 286 (1986));
see also Kanter v. Barella, 489 F.3d 170, 177 (3d
Cir. 2007) (quoting Evancho v. Fisher, 423 F.3d 347,
351 (3d Cir. 2005) (“[A] court need not credit either
‘bald assertions' or ‘legal conclusions'
in a complaint when deciding a motion to dismiss.”)).
Accord Iqbal, 556 U.S. at 678-80 (finding that
pleadings that are no more than conclusions are not entitled
to the assumption of truth). Further, although
“detailed factual allegations” are not necessary,
“a plaintiff's obligation to provide the
‘grounds' of his ‘entitlement to relief'
requires more than labels and conclusions, and a formulaic
recitation of a cause of action's elements will not
do.” Twombly, 550 U.S. at 555 (internal
citations omitted). See also Iqbal, 556 U.S. at 678
(“Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
motion to dismiss should be granted unless the
plaintiff's factual allegations are “enough to
raise a right to relief above the speculative level on the
assumption that all of the complaint's allegations are
true (even if doubtful in fact).” Twombly, 550
U.S. at 556. “[W]here the well-pleaded facts do not
permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged-but it has not
‘shown'-‘that the pleader is entitled to
relief.'” Iqbal, 556 U.S. at 679.
outset, Defendants object to the application of New Jersey
law to nonresident Plaintiffs' claims for breach of
warranties and negligent misrepresentation. In response,
Plaintiffs contend that any conflict of laws analysis at the
motion to dismiss stage would be premature. But “courts
in this Circuit have sometimes determined that the choice of
law analysis in a putative class action can be done at the
motion to dismiss stage.” Snyder v. Farnam
Companies, Inc., 792 F.Supp.2d 712, 718 (D.N.J. 2011)
(collecting cases). If the Court were to conduct a choice of
law analysis, it must apply the choice of law rules of the
forum state, here, New Jersey. Barbey v. Unisys
Corp., 256 Fed.Appx. 532, 533 (3rd Cir. 2007). Under New
Jersey rules, the “choice of law analysis must be
undertaken on an issue-by-issue basis.” Harper v.
LG Elecs. USA, Inc., 595 F.Supp.2d 486, 490 (D.N.J.
2009) (citing Rowev . Hoffman-La Roche, Inc., 917
A.2d 767, 771 (N.J.2007)). Therefore, the Court will analyze
each claim separately to determine whether an analysis is
proper, and if so, determine which state's law should be
applied at that time.
Count I: Breach of Express Warranty
claims for breach of express warranty are premised on the
warranties Defendant SoA issued to the class vehicles,
including the basic warranty and Powertrain Limited Warranty
(“the Limited Warranty”). Compl. ¶ 118. The
basic warranty covered class vehicles for “3 years or
36, 000 miles, whichever comes first.” The Limited
Warranty promised “any repairs needed to correct
defects in material or workmanship for 5 years or 60, 000
miles, whichever comes first.” Id. This
Limited Warranty particularly covered the class vehicle's
engine, and “engine block and all internal
parts.” Id.; see [Dkt No. 10-2].
relevant limited warranty materials state:
THESE WARRANTIES ARE LIMTED IN DURATION TO THE TIME PERIOD OF
THE WRITTEN WARANTIES. THESE WARRANTIES ARE IN LIEU OF ALL
OTHER OBLIGATIONS, LIBILITIES, OR WARANTIES, WHETHER EXPRESS
OR IMPLIED. ANY IMPLIED WARRNATIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE END AT THE SAME TIME
COVERAGE ON THE PARTCULAR COMPONENT ENDS.
[Dkt No. 10-2]. As to Plaintiffs' claims under Count I of
the Complaint, the Court need not address or engage in any
choice of law analysis. Defendants allege that a conflict of
law exists because New Jersey does not require privity or
reliance to establish an express warranty claim, while the
requirements under New York, Indiana, and Arizona law,
include privity. Defendants, however, do not argue that
Plaintiffs claim for breach of express warranty fails for
lack of privity or reliance alike. Second, for the reasons
stated below, the Court finds that Plaintiffs' breach of
express warranty claim fails prior to the need for an
analysis under any specific state law. In fact, Defendants do
not argue that a conflict of laws between states exists on
the pertinent issue this Court will dismiss Count I pursuant
to. Therefore, the potential conflict is inapposite to the
Court's analysis of Plaintiffs' claim.
argue that Plaintiffs' breach of express warranty claims
against SoA fail and therefore, Count I should be dismissed
because (1) the Limited Warranty does not cover the alleged
design defect and (2) none of the Plaintiffs have pleaded
“legitimate breach of express warranty claims.”
Def. Brf. at 13-21. Defendants first argument that Count I
should be dismissed against SoA claims that the Limited
Warranty that Plaintiffs rely on does not cover the alleged
defect, because according to Defendants, Plaintiffs are
alleging a design defect. The Limited warranty at issue
covers only defects in “material or workmanship.”
Defendant argues that “material or workmanship”
pertains to manufacturing defects and does not subsume design
defects. The Court agrees that the language of the Limited
Warranty does not cover design defects.
Third Circuit has held that the plain and ordinary meaning of
the term “defect[s] in . . . materials or workmanship,
” unambiguously excludes “design defects.”
Coba v. Ford Motor Co., 932 F.3d 114, 121 (3d Cir.
2019) (citations omitted). Prior to the Third Circuits
ruling, a number of courts within this district, and the
relevant jurisdictions, held the same. See Cali v.
Chrysler Grp. LLC, No. 10 CIV. 7606, 2011 WL 383952, at
*2 (S.D.N.Y. Jan. 18, 2011), aff'd, 426
Fed.Appx. 38 (2d Cir. 2011) (“The terms
‘material,' ‘workmanship,' or
‘factory preparation,' . . . refer to the
mechanical process of implementing [a] design.”);
Nelson v. Nissan N. Am., Inc., No. CIV. 11-5712,
2014 WL 7331922, at *3 (D.N.J. Dec. 19, 2014) (choosing
“to join the vast weight of authority [by] holding that
a workmanship and materials warranty cannot encompass a
design defect claim.”); Pegg v. Nexus RVs LLC,
No. 3:16-CV-783, 2019 WL 2772444, at *8 (N.D. Ind. July 2,
2019) (same); Troup v. Toyota Motor Corp., 545
Fed.Appx. 668, 668-69 (9th Cir. 2013) (same).
Court must then decide if the Piston Ringland Defect, as
pled, is a design defect or one of material and workmanship.
In Coba, the court explained the difference between
those types of defects as follows:
[D]efects in “workmanship” and
“materials” are flaws pertaining to the
construction or manufacture of a product, while defects in
“design” are shortcomings that arise in the plans
for a product's creation. More specifically, a
“materials” defect is a failing in the quality of
the actual substances used to make a product; a
“workmanship” defect is a deficiency in the
execution of a product's assembly or construction; and a
“design” defect is a flaw inherent in the
product's intended operation and construction . . .
Coba, 932 F.3d at 121.
Plaintiffs contend that they have sufficiently pled facts
that the class vehicle defect, is covered under warranty as a
materials and workmanship defect. The Complaint alleges that
“[c]lass vehicles are defective with respect to
improperly designed and manufactured pistons and an engine
management system and PCV (positive crankcase ventilation)
system.” Compl. ¶ 4. Plaintiffs
also argue that their Complaint supports a claim for a
manufacturing defect by claiming “the class engine
pistons should have been manufactured differently by using
forged pistons.” Pl. Opp. at 16; see Compl.
¶ 5. Further allegations contained in the Complaint
claim that class engines were failing due to
“materials, workmanship, manufacture, or design
defect.” Compl. ¶ 44.
argue that, in effect, Plaintiffs are “deliberately
refusing” to identify the type of defect the Piston
Ringland engine defect is, which Defendants insist is one of
design. Def Brf. at 15. Defendants indicate that
Plaintiffs' pleading discusses the modifications to the
ECM programming and PCV system, both of which are issues of
design and would constitute design defects. Additionally,
Defendants stress that Plaintiffs criticize Defendants'
material selections as causes for the engine defect, and such
choices are design decisions. See Compl.
stage, the Court is “required to accept as true all of
the allegations in the complaint and all reasonable
inferences that can be drawn therefrom.” Morse v.
Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.
1997). Prior to discovery, some courts have decided that
“the distinction between defect in design and defect in
materials or workmanship is a matter of semantics, and [when]
sufficient facts are alleged to assert both, the
defendant's characterization of the nature of the claim
pre-discovery should not control whether the complaint
survives.” Alin v. Am. Honda Motor Co., No.
CIV A 08-4825, 2010 WL 1372308, at *6 (D.N.J. Mar. 31, 2010).
In this case, Plaintiffs Complaint concludes that the Piston
Ringland Defect is one of design and manufacture. However,
even taking Plaintiffs' allegations as true, their
Complaint fails to sufficiently plead facts supporting a
manufacturing defect or defect in “materials or
specifically claim that the class engine's internal
defect resulted from performance modifications. According to
the Complaint, previous versions of the engine, “[t]he
2.0 liter and 2.5 liter high output class engine[, ] share
substantially similar piston ringland construction but are
manufactured differently. The earlier 2.0 liter STi engine
had more durable forged pistons while class EJ and
FA engines use more brittle cast pistons.”
Compl. ¶ 5 (emphasis added). Plaintiffs make clear that
what caused the cast engine piston's alleged durability
issue, was the material used in the casting.
Therefore, as pled, the alleged defect in the class vehicles
resulted from the type of material used to case the engine
pistons, which utilized a less expensive manufacturing
process. These issues present problems in design, consistent
with Plaintiffs' allegation that the engines lacked
internal modifications to meet their performance
modifications. Id. at ¶ 6.; see Coba,
932 F.3d at 123 (finding that a fuel tank defect, as alleged
by plaintiff, was a design defect, noting that the problem
was defendant's “plan to use [certain] coatings . .
. in constructing its fuel tanks”). There are no facts
alleged to suggest that the Piston Ringlands were defective
because the engine departed from its intended design.
Instead, as Defendants point out, Plaintiffs criticize the
materials and type of process chosen to manufacture
the alleged defective parts of the class vehicle. Such
criticism fails to allege a problem in the process
of constructing the engine, rather it alleges a flaw in the
overall intended construction (a design
decision). See Id. at 121.
Plaintiffs' opposition does not address its allegations
regarding an inadequate PCV or engine management system. In
fact, Plaintiffs' Complaint does not provide any factual
assertions as to why the engine management system contributed
to the engine failures and alleges only that the defendants
“experimented with different PCV system
configurations.” Therefore, at this time, the Court
finds that Plaintiffs fail to state a claim for breach of
express warranty, thus the Court will dismiss Count
COUNT II: Breach of Implied Warranty ...