# OPHEIM v. VOLKSWAGEN AKTIENGESELLSCHAFT

> District Court, D. New Jersey · June 25, 2021

URL: https://www.frixlaw.com/law-library/cases/10270908

## Case

- **Court:** District Court, D. New Jersey
- **Decided:** June 25, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10270908

## Opinion text

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

MATTHEW OPHEIM, et al.,
Plaintiffs,
v.
Civ. No. 20-02483 (KM) (ESK)
VOLKSWAGEN
AKTIENGESELLSCHAFT; OPINION
VOLKSWAGEN GROUP OF AMERICA,
INC.; AUDI AKTIENGESELLSCHAFT;
and AUDI OF AMERICA, INC.,
Defendants.

KEVIN MCNULTY, U.S.D.J.:
Plaintiffs in this putative class action purchased Volkswagen or Audi
vehicles with an allegedly defective yet concealed engine part, i.e., a timing
chain. Plaintiffs sued Volkswagen Aktiengesellschaft (“VW AG”), Volkswagen
Group of America, Inc. (“VW America”), Audi Aktiengesellschaft (“Audi AG”),
and Audi of America, Inc. (“Audi America”). Plaintiffs, who hail from fourteen
states, assert contract, tort, and statutory claims under their respective states’
laws, as well as federal claims under the Magnuson-Moss Warranty Act
(“MMWA”), 15 U.S.C. § 2301 et seq. Audi AG moves to dismiss the complaint
for lack of personal jurisdiction, see Fed. R. Civ. P. 12(b)(2). (DE 48.)1 VM

1 Certain citations to the record are abbreviated as follows:
DE = docket entry
Am. Compl. = Amended Complaint (DE 29)
VW Mot. = VW America’s Brief in Support of its Motion to Dismiss (DE 45-1)
Opp. to VW Mot. = Plaintiffs’ Opposition to VW America’s Motion to Dismiss (DE
54)
Opp. to Audi Mot. = Plaintiffs’ Opposition to Audi AG’s Motion to Dismiss (DE
53)
America moves to dismiss for failure to state a claim, see Fed. R. Civ. P.
12(b)(6), and, as to the MMWA claims, for lack of subject-matter jurisdiction,
see Fed. R. Civ. P. 12(b)(1). (DE 45.) Audi AG joins in VM America’s motion to
dismiss.
For the following reasons, Audi AG’s motion (DE 48) is DENIED without
prejudice to renewal following jurisdictional discovery. VW America’s motion,
joined by Audi AG, is GRANTED IN PART and DENIED IN PART. In sum, the
MMWA claims, fraud claims based on affirmative misrepresentations, implied
warranty claims under Illinois and Oregon law, and negligent
misrepresentation claims under Georgia and Oregon law are dismissed. VW
America’s motion to dismiss is otherwise denied.
I. BACKGROUND
This case is about an allegedly defective engine part in certain Audi and
Volkswagen models.2 (Am. Compl. ¶¶ 1–2.) Specifically, this case concerns a
timing chain system, which contains multiple components. (Id. ¶ 62.) To
simplify, a typical car engine requires that fuel and air mix and combust, while
releasing waste products from combustion. (Id. ¶ 54.) To that end, a timing
chain system controls the opening and closing of an engine’s intake valves (for
introducing fuel and air) and exhaust valves (for releasing byproducts). (Id.
¶ 55.) Plaintiffs allege that the timing chain system at issue malfunctions and
can cause the engine to lose power. (Id. ¶ 6.)
Despite knowledge of the defect, Defendants never disclosed it. (Id. ¶ 7.)
Further, a timing chain system should usually last for 120,000 miles, and the
maintenance schedules that came with the cars did not state that the timing
chain system would need replacing early. (Id. ¶¶ 7, 10.) The New Vehicle
Limited Warranty (“NVLW”) provided with the vehicles promised repairs or

Palmer Decl. = Declaration of Neal Palmer (DE 49)
Importer Agmt. = Sample Importer Agreement (DE 53-2)
2 The Amended Complaint approaches 2,000 paragraphs, so I offer only a
summary of allegations pertinent to the current motions.
replacement only for four/five years or 50,000/60,000 miles (depending on the
exact model). (Id. ¶ 11.) Although the timing chain system was of course
present in the vehicles when Plaintiffs purchased them and the warranty
began, its defects often did not manifest themselves until later. (Id. ¶ 12.)
Defendants knew that the defect would emerge later, but concealed the defect
so that they would not have to repair it under the NVLWs. (Id.) This had the
effect of shifting the repair costs to consumers. (Id.)
Plaintiffs purchased these vehicles from dealerships, some of them new
and some used. (See id. ¶ 1.) They sued Defendants for fraud, negligent
misrepresentation, breach of express and implied warranties, violation of the
MMWA, unjust enrichment, and violations of consumer fraud and unfair and
deceptive trade practices statutes. (Id. ¶ 16.) Because Plaintiffs live in different
states, they allege their claims under their respective states’ laws (except for
the federal MMWA claim). They seek to represent a nationwide class of
purchasers, as well as sub-classes of purchasers in each state. They invoke
jurisdiction for their state-law claims under the Class Action Fairness Act of
2005 (“CAFA”), Pub. L. No. 109-2, 119 Stat. 4 (codified in pertinent part at 28
U.S.C. §§ 1332(d), 1441, 1446). (Am. Compl. ¶¶ 19, 189.)
For defendants, Plaintiffs named (1) VW AG, the manufacturer of
Volkswagen vehicles, which is based in Germany; (2) VW America, VW AG’s
American subsidiary; (3) Audi AG, the manufacturer of Audi vehicles, which is
based in Germany; and (4) Audi America, Audi AG’s American counterpart. (Id.
¶¶ 43–48.) These entities are all within the same corporate family. (Id.)
Although the cars are manufactured in Germany, VW America, which is
incorporated in New Jersey and based in Virginia, acts as VW AG and Audi
AG’s distributor in the United States. (Id.)
For example, Audi AG has importer agreements with VW America,
pursuant to which Audi AG manufactures cars to serve the American market,
and VW America serves as Audi AG’s “importer, distributor, and marketer” in
the United States by creating and contracting with a network of dealerships to
sell Audi cars to consumers. (Importer Agmt. at 4.) Audi AG and VW America’s
relationship is expressly “based upon mutual understanding, cooperation,
trust, and confidence.” To that end, the Agreement obligates Audi AG to, e.g.,
(1) consult with VW America to develop a “sales network” in the U.S. (id.
§ 10(a)); (2) consult with VW America about agreements with dealerships (id.
§ 10(b)); (3) work with VW America “to plan and effectively utilize [Audi AG’s]
production capacity,” (id. § 11(a)); (4) deliver products to VW America based on
specific purchase orders (id. § 11(e)); (5) establish guidelines for VW America’s
marketing and public relations efforts (id. § 15(a)); and (6) receive reports from
VW America regarding business in the American region (id. § 21(b)). Audi
America is an operating unit of VW America; it is not a subsidiary of Audi AG
and has no independent existence. (Palmer Decl. 10–11.)
Audi AG moves to dismiss for lack of personal jurisdiction, and VW
America moves to dismiss for failure to state a claim, in which Audi AG joins in
the alternative. Given that Audi America has no independent existence, VW
America moves on its behalf. VW AG had not been served when the motions
were filed. (VW Mot. at 1 n.1)
II. STANDARDS OF REVIEW
A. Personal Jurisdiction
On a Rule 12(b)(2) motion, the plaintiff bears the burden of establishing
sufficient facts to show that jurisdiction exists. Marten v. Godwin, 499 F.3d
290, 295–96 (3d Cir. 2007). Initially, a court must accept the plaintiff’s
allegations as true and construe disputed facts in favor of the plaintiff. Pinker
v. Roche Holdings, Ltd., 292 F.3d 361, 368 (3d Cir. 2002). Where factual
allegations are disputed, however, “the plaintiff must sustain its burden of
proof in establishing jurisdictional facts through sworn affidavits or other
competent evidence.” Patterson v. FBI, 893 F.2d 595, 603–04 (3d Cir. 1990)
(citation omitted). If the district court does not hold an evidentiary hearing, “the
plaintiff need only establish a prima facie case of personal jurisdiction.”
O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 316 (3d Cir. 2007).
B. Failure to State a Claim
Federal Rule of Civil Procedure 8(a) does not require that a pleading
contain detailed factual allegations but “more than labels and conclusions.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The allegations must raise
a claimant’s right to relief above a speculative level, so that a claim is “plausible
on its face.” Id. at 570. That standard is met when “factual content [] 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). Rule 12(b)(6)
provides for the dismissal of a complaint if it fails to state a claim. The
defendant bears the burden to show that no claim has been stated. Davis v.
Wells Fargo, 824 F.3d 333, 349 (3d Cir. 2016). I accept facts in the complaint
as true and draw reasonable inferences in the plaintiff’s favor. Morrow v.
Balaski, 719 F.3d 160, 165 (3d Cir. 2013) (en banc).
III. DISCUSSION
I take up Audi AG’s personal jurisdiction motion first. See Lightfoot v.
Cendant Mortg. Corp., 137 S. Ct. 553, 562 (2017) (“A court must
have . . . power over the parties before it (personal jurisdiction) before [the
court] can resolve a case.”). Concluding that I cannot dismiss Audi AG, I turn
to the Rule 12(b)(6) motion.
A. Personal Jurisdiction over Audi AG
Audi AG moves to dismiss all claims against it for lack of personal
jurisdiction. A federal court may exercise personal jurisdiction over a defendant
to the extent authorized by state law. Fed. R. Civ. P. 4(k)(1)(A). New Jersey
provides for jurisdiction coextensive with constitutional due process. Miller
Yacht Sales, Inc. v. Smith, 384 F.3d 93, 96 (3d Cir. 2004) (citing N.J. Ct. R. 4:4-
4). Due process allows for general or specific jurisdiction. Danziger & De Llano,
LLP v. Morgan Verkamp LLC, 948 F.3d 124, 129 (3d Cir. 2020). Plaintiffs do not
argue that the Court has general jurisdiction (see Opp. to Audi Mot. at 5–7), so
I focus on specific jurisdiction.3
A court has specific jurisdiction when the defendant has contacts with
the forum, and a plaintiff’s claims “arise out of or relate to” those contacts.
Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1025 (2021)
(citation omitted). To apply that principle, the Third Circuit uses a three-part
test, requiring the plaintiff to show that (1) the defendant purposefully availed
itself of the forum, (2) the claims arise out of or relate to at least one of the
defendant’s activities, and (3) exercising personal jurisdiction comports with
fair play and substantial justice. O’Connor, 496 F.3d at 317. I discuss each
prong in turn.
Purposeful Availment
To start, the plaintiff must show that the defendant took “some act by
which [it] purposefully avails itself of the privilege of conducting activities
within the forum State.” Ford, 141 S. Ct. at 1024 (citation omitted). “[W]hat is
necessary is a deliberate targeting of the forum.” O’Connor, 496 F.3d at 317.
“[R]andom, isolated, or fortuitous” contacts with the forum will not do. Ford,
141 S. Ct. at 1024 (citation omitted).
To show purposeful availment, Plaintiffs point to, among other things,
the sample Importer Agreement between Audi AG and VW America. (Opp. to
Audi Mot. at 7–12.) The obligations in that Agreement make it plausible that
discovery will reveal facts showing that Audi AG deliberately targets New Jersey
consumers. When allegations and evidence “suggest with reasonable
particularity the possible existence of the requisite contacts between [Audi AG]
and the forum state, [Plaintiffs’] right to conduct jurisdictional discovery should

3 In any event, the Court lacks general jurisdiction over Audi AG. A court may
exercise general jurisdiction over a corporation when the corporation has “continuous
and systematic contacts with the forum state” such that it is “essentially at home”
there. Chavez v. Dole Food Co., 836 F.3d 205, 223 (3d Cir. 2016) (en banc) (quotation
marks and citation omitted). A corporation is “at home” at least where it is
incorporated or has its principal place of business. Id. (citation omitted). Audi AG is
organized under German law and headquartered in Germany. (Am. Compl. ¶ 45.)
be sustained.” Toys “R” Us, Inc. v. Step Two, S.A., 318 F.3d 446, 456 (3d Cir.
2003) (cleaned up). The Importer Agreement reveals that Audi AG does not
simply ship a lump number of cars to VW America to then distribute in the
United States independently. Rather, the Agreement evinces a collaborative
relationship in which Audi AG is attuned to the needs and realties of the
American market.
Moreover, some of the obligations suggest that Audi AG works with
specific sub-markets in mind. For example, Audi AG must consult with VW
America about developing a sales network and dealership agreements. It is
plausible, then, that Audi AG at least knows which states it is serving. Indeed,
VW America and “Audi” maintain a “regional” office in New Jersey. (Am. Compl.
¶ 20 (citing Volkswagen Group of America Locations, Volkswagen Group of
America, https://www.volkswagengroupofamerica.com/locations).)
Further, Audi AG delivers products to VW America based on specific
orders, and one can infer that those orders may specify dealerships or sub-
markets. This means that, although VW America serves as a middleman, Audi
AG effectively ships its products to specific markets within the US. Accordingly,
Audi AG is not some arms-length supplier.
Given the Importer Agreement, I cannot say that Audi AG’s contacts with
the New Jersey market are “random, isolated, or fortuitous.” Ford, 141 S. Ct. at
1024 (citation omitted). Instead, it is plausible that Audi AG worked with VW
America to supply the American market, and that work could at times be
forum-specific, such as by sending cars earmarked for certain regions. True,
the Third Circuit has held that efforts to reach the American market writ large
do not show purposeful availment as to the specific forum. Shuker v. Smith &
Nephew, PLC, 885 F.3d 760, 779 (3d Cir. 2018); D’Jamoos ex rel. Estate of
Weingeroff v. Pilatus Aircraft Ltd., 566 F.3d 94, 104 (3d Cir. 2009). But, while
the Importer Agreement may not be enough on its own to establish jurisdiction,
it still indicates that forum-specific facts could exist. That is sufficient to deny
the motion to dismiss in favor of discovery. Toys “R” Us, 318 F.3d at 456.
Regardless, Plaintiffs have another theory of purposeful availment
available to them: VW America is incorporated in New Jersey, so by doing
business with a New Jersey-incorporated company, Audi AG purposefully
directed its activities at New Jersey. This argument resembles one I recently
addressed in Rickman v. BMW of North America LLC, Civ. No. 18-4363, 2021
WL 1904740 (D.N.J. May 11, 2021). The defendants there were a German car
manufacturer (BMW AG) and its American distributor (BMW NA),
headquartered in New Jersey. Id. at *1–2. The plaintiffs sued both, alleging that
they falsely marketed vehicles as ones producing “low emissions.” Id. I held
that jurisdictional discovery was warranted, reasoning that because “BMW AG
serves the American market through BMW NA,” then “significant coordination
between the two is plausible.” Id. at *5.
The Audi AG-VW America relationship is similar to the BMW AG-BMW
NA relationship—with one key difference: The New Jersey connection in
Rickman was that BMW NA was headquartered there, while the New Jersey
connection here is that VW America is incorporated in New Jersey. VW
America’s headquarters, however, are in Virginia.
Is this a distinction with a difference? On one hand, it is easier to see
deliberate targeting of the forum when the theory of personal jurisdiction is
that a foreign defendant worked closely with a defendant headquartered in the
forum. One can readily infer that communications were sent into the forum
and that the foreign defendant knew it was doing business with a forum-based
entity. The physical presence of the co-defendant in the forum means that
efforts to contact or work with that defendant are more tied to the forum. The
same is not necessarily true when a defendant is merely incorporated in the
state. Can a foreign defendant then be said to have targeted a forum by
transacting with a co-defendant incorporated in that forum?
Principles of corporate law and personal jurisdiction suggest yes. The
Supreme Court’s go-to commentary on general jurisdiction explains:
The law treats corporations like legal persons, and the place of
incorporation and the principal place of business are both
analogous to domicile . . . . [T]he corporation . . . cannot ever be
absent from the state of incorporation . . . [E]ven if a corporation
neither does business nor maintains an office in the incorporating
state, the incorporation process itself provides notice of the
potential for judicial jurisdiction.
Brilmayer, et al., A General Look at General Jurisdiction, 66 Tex. L. Rev. 721,
733–34 (1988) (cited favorably by, e.g., Goodyear Dunlop Tires Operations, S.A.
v. Brown, 564 U.S. 915, 924 (2011)). Accordingly, the theory of personal
jurisdiction here becomes straightforward and plausible. The minimal facts
provided thus far suggest that Audi AG has an ongoing, substantial
relationship with VW America as its gateway into the American market. The
law views VW America as a New Jersey “person,” so by regularly transacting
with VW America, Audi AG deliberately targeted New Jersey. Cf. Meridian
Consulting I Corp. v. Eurotec Canada Ltd., Civ. No. 19-22197, 2021 WL 689132,
at *4–7 (D.N.J. Feb. 22, 2021) (Canadian company’s substantial business with
New Jersey company could subject it to personal jurisdiction in New Jersey).
Plaintiffs have at least made out a prima facie showing for purposeful
availment on this theory as well.
“Arise out of or relate to”
Even if the defendant has sufficient contacts with a forum, the plaintiffs’
claims must “arise out of or relate to” those contacts. Ford, 141 S. Ct. at 1025
(citation omitted). This used to mean, in the Third Circuit’s view, that a causal
connection existed between the contacts and the claims. I have concluded that
that causation requirement does not survive the Supreme Court’s holding in
Ford. Rickman, 2021 WL 1904740, at *8. (I do not repeat that discussion here.)
Freed from a strict causation requirement, Plaintiffs lean heavily on Ford
as factually analogous. There, Ford did not prevail on its argument that
plaintiffs had to show that “the company had designed, manufactured,
or . . . sold in the State the particular vehicle involved in the accident.” 141 S.
Ct. at 1023. The Court, however, looked not to the particular vehicle, but to
facts showing that Ford extensively served the market in Minnesota and
Montana. Id. at 1028. Accordingly, the Supreme Court held that Ford’s
contacts in the forums (promoting and selling cars there) were sufficiently
related to the claims (arising from an accident involving a Ford car in the
forum). Id.
This case is sufficiently analogous. The Importer Agreement at least
shows how Audi AG, in conjunction with VW America, serves the American
market, and it is plausible that those efforts entail forum-specific contacts,
including those directed at New Jersey. Next, the New Jersey plaintiffs
purchased their cars here and experience the “injury” here, i.e., owning/using
a defective car. The “relate to” prong is thus satisfied because Audi AG “serves
a market for a product in the forum State and the product malfunctions there.”
Ford, 141 S. Ct. at 1027. “Or said another way, if [Audi AG’s] business
deliberately extended into [New Jersey] (among other States), then [New
Jersey’s] courts could hold [it] accountable for a car’s [malfunctioning] there—
even though the vehicle had been designed and made overseas . . . .” Id.
There is a harder question as to whether I have jurisdiction over the
claims asserted by non-New Jersey residents. They did not purchase their cars
in New Jersey, and they have not experienced any injury in New Jersey.
Nonetheless, Plaintiffs’ alternative theory of jurisdiction suffices for the non-
New Jersey plaintiffs. Pursuant to the Importer Agreement, Audi AG retained
some control over what vehicles were shipped to the United States and how
they were marketed and distributed. There is, then, plausibly some
coordination between Audi AG and VW America. The claims here are that
defects were not disclosed by the written materials accompanying the cars or
defendants’ advertisements. (E.g., Am. Compl. ¶¶ 81–83.) It is plausible, given
the obligations in the Importer Agreement, that Audi AG directed or
collaborated with VW America regarding how the models would be sold and
promoted. The non-New Jersey plaintiffs’ claims would have stemmed from
decisions made within that relationship, which necessarily touched New Jersey
because VW America is a New Jersey corporation. Thus, there is a plausible
connection between the non-New Jersey plaintiffs’ claims and New Jersey. See
Rickman, 2021 WL 1904740, at *9–10 (discovery was warranted to develop how
German manufacturer interacted with American distributor to promote vehicles
in the US when plaintiffs claimed those promotions were misleading); Ponzio v.
Mercedes-Benz USA, LLC, 447 F. Supp. 3d 194, 217 (D.N.J. 2020) (when
marketing decisions were made in New Jersey, the court could exercise
jurisdiction over non-New Jersey plaintiffs’ claims).
Fair Play and Substantial Justice
I conclude that jurisdictional discovery is warranted to develop facts
regarding minimum contacts. There are uncommon cases, however, in which
“other considerations would render jurisdiction unreasonable.” Carteret Sav.
Bank, FA v. Shushan, 954 F.2d 141, 150 (3d Cir. 1992) (citation omitted). So I
briefly address whether considerations of fair play and substantial justice
would defeat jurisdiction and thus obviate the need for jurisdictional discovery.
They do not.
In this connection I consider (1) Audi AG’s burden, (2) New Jersey’s
interest, (3) Plaintiffs’ interest, (4) efficiency, and (5) other forums’ interests. Id.
Although Audi AG is a foreign company, it extensively targets the American
market and has a substantial relationship to a New Jersey company. So it
cannot complain of a severe burden. See Rickman, 2021 WL 1904740, at *7; In
re Platinum & Palladium Antitrust Litig., 449 F. Supp. 3d 290, 327 (S.D.N.Y.
2020). New Jersey has an interest in giving its residents a forum to vindicate
their legal interests for injuries occurring here. Plaintiffs have an interest in
litigating here because some of them are New Jersey residents. As to the fourth
and fifth factors, the alternative to litigating here would seem to be a separate
suit against Audi AG in Germany, and that is plainly inefficient for the
remaining parties. Audi AG has made no argument that Germany has a
stronger interest.
Thus, there is no “compelling case” for dismissal that would moot the
need for jurisdictional discovery. See Carteret, 954 F.2d at 150.
* * *
All said, this is not a case in which the Court can resolve its jurisdiction
over a key defendant based on allegations and preliminary facts. Better, I
think, to understand the relationship more fully between Audi AG and VW
America before proposing to dismiss Audi AG from this case. Audi AG’s motion
to dismiss for lack of personal jurisdiction will be denied without prejudice to
renewal following jurisdictional discovery, under the supervision of the
Magistrate Judge assigned to the case.
B. Rule 12(b)(6)
I address VW America’s arguments for dismissal as to each type of claim
(e.g., implied warranty, fraud, etc.). Before I do so, I deal with three clean-up
matters.
First, VW America mostly relies on general principles that cut across
different states’ laws. Unless otherwise noted, VW America does not argue that
any particular point of law differs state-to-state. As a result, I discuss VW
America’s arguments for dismissal mostly in terms of New Jersey law or
general principles.
Second, Plaintiffs, in their Opposition brief, state that they withdraw
three of their state-law claims.4 (Opp. at 2 n.5.) Having heard no opposition, I
treat the statement in the brief as a voluntary dismissal and grant leave to
dismiss those claims. See Fed. R. Civ. P. 41(a).
Third, VW America asks that all claims be dismissed on “group pleading”
grounds, because the factual allegations of the Amended Complaint do not
adequately distinguish among defendants. (VW Mot. at 6–7.) But, as the
discussion on personal jurisdiction indicates, the entities here are intertwined,
and more discovery is needed to determine the precise role of each. In such
circumstances, there is no need to dismiss the complaint. In re Volkswagen

4 These claims are for negligent misrepresentation under Georgia law (Count 27),
negligent misrepresentation under Oregon law (Count 80), and implied warranty under
Oregon law (Count 81).
Timing Chain Prod. Liab. Litig., Civ. No. 16-2765, 2017 WL 1902160, at *9
(D.N.J. May 8, 2017).
I turn to the main arguments.
Implied Warranty
VW America offers four reasons to dismiss the implied warranty claims:
(a) they are barred by the statute of limitations, (b) they are barred by the
NVLWs, (c) they do not allege that the cars fell below merchantability
standards, and (d) Plaintiffs fail to satisfy some states’ privity requirements.
(VW Mot. at 7–18.) With one minor exception, these reasons do not justify
dismissal.
a. Statute of Limitations
VW America moves to dismiss the implied warranty claims as untimely.
(VW Mot. at 7–11.) A court may dismiss a claim as untimely “only when the
statute of limitations defense is apparent on the face of the complaint.”
Wisniewski v. Fisher, 857 F.3d 152, 158 (3d Cir. 2017). Plaintiffs do not contest
that their claims fall outside of the applicable limitation periods. Instead, they
argue that the statute of limitations be tolled based on fraudulent concealment
of the defect. (Opp. to VW at 10–11.) That doctrine tolls a claim when the
defendant concealed facts necessary for a plaintiff to discover he had a claim.
Timing Chain, 2017 WL 1902160, at *14; see O’Keeffe v. Snyder, 416 A.2d 862,
872 (N.J. 1980); Lopez v. Swyer, 300 A.2d 563, 567 n.2 (N.J. 1973). VW
America offers two reasons why the doctrine does not apply here, but neither is
persuasive.
First, VW America argues that two plaintiffs, who purchased used
vehicles, did not purchase their vehicles within the limitations period, which
began when the original owner purchased the vehicle. (VW Mot. at 9–11.) For
this argument, they rely on an affidavit from a VW America employee attesting
to VW America’s “vehicle records” and state department of motor vehicle forms.
(Id.) Neither is appropriate to consider now, on a Rule 12(b)(6) motion. The
affidavit is plainly improper. Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir.
2014). As for the DMV forms, while a court may take judicial notice of some
public records, id., the forms are bare, and Plaintiffs may be able to argue for
different inferences to be taken therefrom, so to draw conclusive facts from
them is premature, see S. Cross Overseas Agencies, Inc. v. Wah Kwong
Shipping Grp., Ltd., 181 F.3d 410, 427 n.7 (3d Cir. 1999) (distinguishing
between taking notice of existence of documents versus the facts or arguments
asserted therein).
Next, VW America argues that the Amended Complaint fails to allege that
VW America took affirmative steps to conceal the defect, as required for the
doctrine to apply. (VW Mot. at 10–11.) But “a plaintiff is not required to plead,
in a complaint, facts sufficient to overcome an affirmative defense” like the
statute of limitations. Stephens v. Clash, 796 F.3d 281, 288 (3d Cir. 2015)
(citation omitted). Here, “the allegations [do] not rule out the possibility that the
statute of limitations should have been tolled.” Wiesniewski, 857 F.3d at 158.
The facts regarding VW America’s affirmative actions will need to be developed
in discovery.
b. NVLW
VW America next argues that Plaintiffs did not experience any problems
with the timing chain system during the implied warranty period, as limited by
the NVLW. (VW Mot. at 12–14.) Plaintiffs respond that the Court should not
enforce that limitation at this time because the Amended Complaint alleges
that the NVLW is unconscionable. (Opp. to VW Mot. at 12–14.)
A plaintiff may avoid the durational limits of a warranty if allegations
indicate that the warranty is unconscionable. Timing Chain, 2017 WL 1902160,
at *11; see also DeFrank v. Samsung Elecs. Am., Inc., Civ. No. 19-21401, 2020
WL 6269277, at *17 (D.N.J. Oct. 26, 2020). Plaintiffs must plead
(1) substantive unconscionability, i.e., the contract “involving an exchange of
obligations so one-sided as to shock the court’s conscience,” and (2) procedural
unconscionability, i.e., “an inequality of bargaining power.” DeFrank, 2020 WL
6269277, at *18 (citations omitted). Plaintiffs adequately allege both here.
Courts have held that a warranty is substantively unconscionable when a car
manufacturer knew “that class engines would fail after the end of the warranty
period but before the vehicle’s expected useful life.” Gelis v. Bayerische Motoren
Werke Aktiengesellschaft, Civ. No. 17-7386, 2018 WL 6804506, at *18 (D.N.J.
Oct. 30, 2018). Plaintiffs allege just that. (Am. Compl. ¶¶ 123, 132–33, 136.)
Courts have held that a warranty is procedurally unconscionable when the
manufacturer knew of the defect and concealed it while the consumer had no
means to negotiate the warranty. DeFrank, 2020 WL 6269277, at *18
(collecting cases).5 The same is alleged here. Because Plaintiffs plausibly allege
that the NVLW is unconscionable, its durational limit cannot be invoked to bar
their implied warranty claims at the motion to dismiss stage. Whether the
NVLWs are truly unconscionable, as claimed, must await development in
discovery.
c. Merchantability
VW America argues that the implied warranty claims fail because the
implied warranty of merchantability provides only for a minimum level of
quality, and the fact that Plaintiffs drove their cars for years problem-free show
that the cars met the requisite level of quality. (VW Mot. at 14–16.) “In order for
the implied warranty of merchantability to be breached, the product at issue
must have been defective or not fit for the general purpose for which it was
manufactured and sold.” Argabright v. Rheem Mfg. Co., 258 F. Supp. 3d 470,
484 (D.N.J. 2017) (citations omitted). As applied to cars, this means that the
car must “provide safe, reliable transportation.” Nelson v. Nissan N. Am., Inc.,
894 F. Supp. 2d 558, 567 (D.N.J. 2012) (citations omitted); see also In re FCA
US LLC Monostable Elec. Gearshift Litig., 334 F.R.D. 96, 112 (E.D. Mich. 2019)
(collecting cases across jurisdictions). Plaintiffs allege that the defect presents a

5 The only binding case VW America relies on is Werwinski v. Ford Motor Co., 286
F.3d 661, 673 (3d Cir. 2002), where the Third Circuit noted that car purchasers do not
necessarily lack bargaining power, because they have freedom to purchase other cars
with different warranties or purchase an extended warranty. But Werwinski does not
require rejection of Plaintiffs’ unconscionability theory at this early stage because its
discussion did not arise in the context of unconscionability. See id. (discussing
whether the economic loss doctrine should apply when a plaintiff sues a car
manufacturer in tort).
safety risk because it can cause the engine to lose power and thus the ability to
accelerate, maintain speed, or brake. (Am. Compl. ¶ 6.) Plaintiffs have thus
satisfied the Rule 12(b)(6) standard because they provide factual allegations
sketching out how the defect renders the vehicle unsafe. See Nelson, 894 F.
Supp. 2d at 567 (allegations of transmission failure are sufficient to state a
claim).
d. Privity
VW America argues that claims under California, Florida, Georgia,
Illinois, New York, North Carolina, Ohio, and Washington law must be
dismissed because those states require vertical privity. (VW Mot. at 16–18.)
Vertical privity means that Plaintiffs must have purchased the product directly
from the manufacturer, not a dealership. Clemens v. DaimlerChrysler Corp.,
534 F.3d 1017, 1023 (9th Cir. 2008) (California law). Plaintiffs acknowledge the
privity requirement but argue that most states recognize that a third-party
beneficiary of the contract between the manufacturer and dealership, i.e., the
consumer, can still bring a claim. (Opp. to VW Mot. at 17.) Along the same
lines, some states recognize that a dealership may act as an agent of the
manufacturer such that the plaintiff’s purchase from the dealership creates a
“direct nexus” to the manufacturer. Wilson v. Volkswagen Grp. of Am., Inc., Civ.
17-23033, 2018 WL 9850223, at *4 (S.D. Fla. Nov. 30, 2018) (citations
omitted). While not all these states have precedent clearly endorsing such
exceptions to the privity requirement, a persuasive consensus of courts has
emerged to recognize the exceptions.6 Moreover, it is basic contract law that
third parties may, in certain circumstances, enforce a contract. See
Restatement (Second) of Contracts § 302 (Am. Law Inst. 1979). Accordingly,

6 Wilson, 2018 WL 9850223, at *4 (Florida); Amin v. Mercedes-Benz USA, LLC,
349 F. Supp. 3d 1338, 1356 (N.D. Ga. 2018) (Georgia); In re MyFord Touch Consumer
Litig., 46 F. Supp. 3d 936, 983–85 (N.D. Cal. 2014) (California and North Carolina);
Hodgson, Russ, Andrews, Woods & Goodyear, LLP v. Isolatek Int'l Corp., 300 A.D.2d
1051, 1052 (N.Y. App. Div. 2002) (New York); Bobb Forest Prods., Inc. v. Morbark Indus.
Inc., 783 N.E.2d 560, 576 (Ohio Ct. App. 2002) (Ohio); Touchet Valley Grain Growers,
Inc. v. Opp & Seibold Gen. Constr., Inc., 831 P.2d 724, 730 (Wash. 1992) (Washington).
Plaintiffs plausibly are in privity with the manufacturers here because either
they, as end-users, are the beneficiaries of the manufacturers’ contracts with
dealerships, or the dealerships can be said to act as agents for the
manufacturer.7 Again, this defense, whatever its merits, is unsuitable for
adjudication on a Rule 12(b)(6) motion.
The exception, however, is Illinois. The Illinois Supreme Court has
strictly enforced the privity requirement and refused to create exceptions.
Manley v. Hain Celestial Grp., Inc., 417 F. Supp. 3d 1114, 1124 (N.D. Ill. 2019)
(collecting cases). In other words, the Illinois privity requirement, being
categorical as a matter of law, may furnish a basis for a Rule 12(b)(6)
dismissal.8 See Quitno v. Gen. Motors, LLC, No. 18-cv-7598, 2020 WL 777273,
at *5 (N.D. Ill. Feb. 18, 2020). Accordingly, Count 36 will be dismissed.
* * *
For the reasons above, the motion to dismiss the implied warranty claims
will be denied except as to Count 36, which will be dismissed.
Express Warranty
VW America makes four arguments why the express warranty claims
should be dismissed: (1) they are time-barred as to some Plaintiffs, (2) defects
did not manifest during the warranty period, (3) the NVLWs do not cover the
defects alleged, and (4) some Plaintiffs have not alleged that the NVLW was the
basis for their bargain.

7 VW America argues that certain Plaintiffs did not purchase their cars from
authorized dealerships, so they are too far removed to be third party beneficiaries. (VW
Mot. at 18.) But those are facts outside the Amended Complaint. VW America also
argues that Plaintiffs must allege more facts to show a third-party beneficiary or
agency relationship. But one can infer the manufacturers must have agreements with
dealerships, and no additional details are needed at this time. See Martinez v. UPMC
Susquehanna, 986 F.3d 261, 266 (3d Cir. 2021) (a plaintiff need not plead a prima
facie case, i.e., every element of a claim, but only “enough facts to raise a reasonable
expectation that discovery will reveal evidence of each necessary element”).
8 The cases Plaintiffs point to (Opp. to VW Mot. at 18 n.25) arose under the
MMWA and reached a different result under Illinois law. Rothe v. Maloney Cadillac,
Inc., 518 N.E.2d 1028, 1029–30 (Ill. 1988).
a. Statute of Limitations
VW America argues that claims under California, Colorado,
Massachusetts, New York, North Carolina, and Ohio law are time-barred
because, under those states’ law, the limitations period for claims arising from
NVLW-type warranties runs from the date of delivery—regardless of when the
defect is discovered. (VW Mot. at 19–20.) See, e.g., Trans-Spec Truck Serv. v.
Caterpillar Inc., 524 F.3d 315, 323–24 (1st Cir. 2008). But VW America
overlooks that, despite this strict accrual rule, tolling may still be available
under the separate fraudulent concealment doctrine. E.g., New Eng. Power Co.
v. Riley Stoker Corp., 477 N.E.2d 1054, 1059 (Mass. Ct. App. 1985); Allen v.
Andersen Windows, Inc., 913 F. Supp. 2d 490, 509–10 (S.D. Ohio 2012).
Indeed, VW America cites no authority for the proposition that tolling is
unavailable for the express warranty claims, so any such argument is forfeited.
Because Plaintiffs have a viable fraudulent concealment theory, I cannot
dismiss the express warranty claims on the pleadings. (See Section III.B.1.a,
supra.)
b. Warranty Period
VW America argues that an express warranty claim must fail if, as here,
the defect did not become apparent during the warranty period. (VW Mot. at
20–25.) But, as I explained, Plaintiffs put forward enough allegations to raise
an inference that the NVLW is unconscionable, so the fact that the engines did
not fail during the warranty period is not fatal at this stage. (See Section
III.B.1.b, supra.) See also Timing Chain, 2017 WL 1902160, at *11.
c. NVLW Coverage
VW America argues that the express warranty claims fail because the
NVLWs do not cover the design defects which form the basis of Plaintiffs’
claims. (VW Mot. at 25–27.) Rather, the NVLWs “cover[] any repair or
replacement to correct a defect in manufacturer’s material and workmanship.”
(NVLW at 7; see also Am. Compl. ¶ 11.)
The Third Circuit interpreted near-identical warranty language in Coba v.
Ford Motor Co., 932 F.3d 114 (3d Cir. 2019), as amended (July 26, 2019). The
Court held that the terms “material and workmanship” do not encompass
design defects. Id. at 121. Based on the ordinary meaning of the terms, “defects
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.” Id. In other words, “a ‘design’ defect is a
flaw inherent in the product’s intended operation and construction.” Id.
Applying that understanding, the Court held that claims arising from a car
manufacturer’s use of certain fuel-tank coatings were not covered by the
warranty because “[t]he fundamental nature of the defect relates to the overall
plan of construction and operation of the fuel tanks” and all fuel-tanks suffered
from the problem. Id. at 123 (quotation marks and citation omitted).
Whether Coba requires dismissal of the claims here is a close call. On
one hand, the thrust of Plaintiffs’ claims is aimed at the design of the timing
chain system. The Amended Complaint goes into detail about how the timing
chain system fails and which components may be the culprit. (Am. Compl.
¶¶ 61–78.) Further, problems with the timing chain affect a large swath of cars.
(Id. ¶ 111.) These allegations suggest a design defect claim because Plaintiffs
take issue with how the timing chain operates and do not strongly suggest that
anything in the manufacturing process is to blame. See Coba, 932 F.3d at 123.
Coba affirmed my own decision rejecting a design defect claim on just
these grounds, but that decision was in the context of a motion for summary
judgment. Coba v. Ford Motor Co., Civ. No. 12-1622, 2016 WL 5746361, at *8
(D.N.J. Sept. 30, 2016). At the motion to dismiss stage, the preference in this
District has been to let Plaintiffs develop facts in discovery to flesh out the
precise source of the problem and their theory of the case. In re Subaru Battery
Drain Prods. Liab. Litig., Civ. No. 20-3095, 2021 WL 1207791, at *12 (D.N.J.
Mar. 31, 2021); Timing Chain, 2017 WL 1902160, at *12; Alin v. Am. Honda
Motor Co., Civ. No. 08-4825, 2010 WL 1372308, at *6 (D.N.J. Mar. 21, 2010).
That is, the Amended Complaint identifies ways in which the timing chain
system does not work. But the Amended Complaint does not pinpoint whether
that malfunction is only a consequence of design choices or, as perhaps
discovery would reveal, a consequence of some problem in the manufacturing
process. For example, the Amended Complaint alleges that one part, the
ratchet pawl, fails. (Am. Compl. ¶ 67.) But the Amended Complaint does not
say whether the ratchet pawl fails because of how it is designed or how it is
manufactured. Because it may be the latter, more facts are necessary, and
dismissal is inappropriate. Timing Chain, 2017 WL 1902160, at *12.
VW America responds that the Amended Complaint does not adequately
allege that the timing chain system’s flaw stems from the manufacturing
process. (VW Mot. at 27.) True, some courts have required “more specific
allegations to the effect that . . . failures could have been caused by a flaw
in . . . [the] manufacturing process.” Garcia v. Chrysler Grp., LLC, 127 F. Supp.
3d 212, 227 (S.D.N.Y. 2015). But principles of Rule 12(b)(6) counsel that the
better course is to deny the motion to dismiss. On a Rule 12(b)(6) motion, a
court must keep in mind the nature of the plaintiff’s claim and asymmetries in
access to relevant information. See Garrett v. Wexford Health, 938 F.3d 69, 92–
93 (3d Cir. 2019). We cannot expect car owners to know the precise source of
problems with their cars, i.e., whether a manufacturer purposefully designed a
car to function in a certain way or whether something in the manufacturing
process affected functionality. Those facts are in the hands of Defendants, so
the lack of specific allegations along those lines should not be fatal.
Moreover, whether the timing chain system’s defect is one of design or
manufacturing is not just a factual, but a legal conclusion. A plaintiff is not
bound by the legal theories in a complaint, and they can change with
discovery. See Johnson v. City of Shelby, 574 U.S. 10, 11 (2014) (per curiam)
(“Federal pleading rules . . . do not countenance dismissal of a complaint for
imperfect statement of the legal theory supporting the claim asserted.”); Alin,
2010 WL 1372308, at *4–5 (complaint did not require dismissal because the
court need not adopt, at the pleading stage, any particular characterization of
the claim). Accordingly, it is plausible (though by no means certain) that
discovery will reveal the manufacturing process to be the source of the timing
chain system, Plaintiffs do not exclusively press a design defect theory which
would not be covered by the NVLW. Timing Chain, 2017 WL 1902160, at *12.
d. Basis of the Bargain
VW America argues that a plaintiff must allege that an express warranty
was “part of the basis of the bargain” of his/her purchase, yet Plaintiffs who
purchased used cars fail to allege that they purchased their cars while the
NVLW was in effect. (VW Mot. at 27.) Under New York and Illinois law, which
apply to the relevant claims, an express warranty requires “an affirmation of
fact or promise” that “becomes part of the basis of the bargain between the
parties.” Reid v. Unilever U.S., Inc., 964 F. Supp. 2d 893, 905 (N.D. Ill. 2013);
accord Kraft v. Staten Island Boat Sales, Inc., 715 F. Supp. 2d 464, 473
(S.D.N.Y. 2010). Plaintiffs expected that if, pursuant to the NVLW, VW America
discovered a defect during the warranty period—and VW America allegedly
did—then VW America would repair the defect. VW America, however, did not
perform such repairs, and now Plaintiffs have defective vehicles. Under this
theory, Plaintiffs thus relied on the NVLW having been complied with, even if it
expired prior to their purchase. VW America points to no New York or Illinois
case foreclosing that theory.
* * *
For the reasons above, the motion to dismiss the express warranty
claims will be denied.
MMWA
VW America moves to dismiss the MMWA claim on the ground that the
statute does not allow claims by fewer than 100 named plaintiffs. (VW Mot. at
28–29.) The MMWA is a federal statute that provides a federal cause of action
for consumers to assert breach of warranty claims, by incorporation of state
law. DeFrank, 2020 WL 6269277, at *17 (citing 15 U.S.C. § 2310(d)(1)). The
statute allows a consumer to bring a claim “(A) in any court of competent
jurisdiction in any State or the District of Columbia; or (B) in an appropriate
district court of the United States, subject to paragraph (3).” § 2310(d)(1).
Paragraph 3, in turn, provides that “[n]o claim shall be cognizable” if, among
other things, “the action is brought as a class action, and the number of named
plaintiffs is less than one hundred.” § 2310(d)(3)(C).
VW America contends that Plaintiffs’ claim flunks the paragraph 3
requirement because there are fewer than 100 named plaintiffs here. Plaintiffs
respond that CAFA provides a basis for jurisdiction that is an “alternative” to
the MMWA and does not require 100 named plaintiffs. (Opp. to VW Mot. at 25.)
CAFA grants federal courts jurisdiction over class actions when (1) the parties
are minimally diverse, (2) the class consists of at least 100 members, and
(3) the amount in controversy exceeds $5 million. Judon v. Travelers Prop. Cas.
Co. of Am., 773 F.3d 495, 500 (3d Cir. 2014) (citing 28 U.S.C. § 1332(d)(2),
(5)(B), (6)). The issue presented, then, is whether this Court has jurisdiction
over Plaintiffs’ MMWA claim in light of the 100-named-plaintiffs requirement,
considering its interplay with CAFA. See Samuel-Bassett v. KIA Motors Am.,
Inc., 357 F.3d 392, 402 (3d Cir. 2004) (characterizing the MMWA’s 100-named-
plaintiffs requirement as jurisdictional).
The Third Circuit has not addressed this issue. Until recently, no other
Court of Appeals had either, at least precedentially. In that silence, a
consensus emerged in this District that CAFA provided a way around the
MMWA’s 100-named-plaintiff requirement. E.g., McCalley v. Samsung Elecs.
Am., Inc., Civ. No. 07-2141, 2008 WL 878402, at *4–5 (D.N.J. Mar. 31, 2008)
(Greenaway, J.); McGee v. Cont’l Tire N. Am., Inc., Civ. No. 06-6234, 2007 WL
2462624, at *4 (D.N.J. Aug. 27, 2007). Things changed last year when the
Ninth Circuit became the first Court of Appeals to precedentially hold that
CAFA does not provide an alternative basis for jurisdiction in MMWA class
actions with fewer than 100 named plaintiffs. Floyd v. Am. Honda Motor Co.,
966 F.3d 1027, 1035 (9th Cir. 2020). Following Floyd, the consensus in this
District eroded. Every court to address Floyd has followed it. Subaru Battery,
2021 WL 1207791, at *20; Powell v. Subaru of Am., Inc., 502 F. Supp. 3d 856,
885 (D.N.J. 2020). Faced with no binding authority and a shifting landscape of
non-binding authority, I analyze the statute myself, guided by the courts that
have done so before me.
I begin with the plain language of the MMWA. BP P.L.C. v. Mayor & City
Council of Baltimore, 141 S. Ct. 1532, 1537 (2021). Plaintiffs do not dispute
that, because this is an MMWA action brought in a “district court of the United
States,” it is “subject to paragraph (3),” which requires that this action, “as a
class action,” have more than 100 “named plaintiffs.” § 2310(d)(1)(B), (3)(C).
Although Plaintiffs do not raise the argument, plaintiffs in other cases have
tried to skirt paragraph 3’s requirements by arguing that their case is one
brought “in any court of competent jurisdiction in any State” under subsection
(A), such that paragraph 3 does not apply. E.g., Chapman v. Gen. Motors, LLC, -
-- F. Supp. 3d ----, ----, No. 19-CV-12333, 2021 WL 1286612, at *24–25 (E.D.
Mich. Mar. 31, 2021) (“‘[A]ny court of competent jurisdiction,’ is broad—there is
no indication that it is restricted to only state courts, or conversely that federal
courts are excluded.” (quoting § 2310(d)(1)(A))). That argument is unpersuasive
because it renders the subsection referring to federal courts superfluous.
Courts avoid interpreting statutes in ways that render language or parts of the
statutory scheme superfluous. Aristy-Rosa v. Att’y Gen. U.S., 994 F.3d 112,
166 n.4 (3d Cir. 2021); City of Chicago v. Fulton, 141 S. Ct. 585, 591 (2021).
Interpreting “court of competent jurisdiction” to include federal courts would do
just that; if “any” court is covered, then subsection (B), referring to “district
court[s] of the United States” is unnecessary. Moreover, pulling federal courts
into subsection (A) would nullify the limits on federal jurisdiction which
Congress sought to impose via paragraph 3. I hold that this is not a case under
subsection (A), so the 100-named-plaintiffs requirement is in play. E.g., Powell,
502 F. Supp. 3d at 885.
The question becomes whether CAFA provides an escape hatch from that
requirement. In other words, did CAFA, the later-enacted statute, impliedly
repeal or modify the MMWA’s requirements? Implied repeals are generally
disfavored. Me. Cmty. Health Options v. United States, 140 S. Ct. 1308, 1323
(2020). Rather, “[w]hen confronted with two Acts of Congress allegedly touching
on the same topic, this Court . . . strive[s] ‘to give effect to both.’” Epic Sys.
Corp. v. Lewis, 138 S. Ct. 1612, 1624 (2018) (quoting Morton v. Mancari, 417
U.S. 535, 551 (1974)).
There is a way to harmonize the two statutes: CAFA does not modify the
MMWA’s requirements because CAFA applies to suits brought under diversity
jurisdiction, which MMWA suits are not. The MMWA creates a federal cause of
action, so federal courts hearing MMWA claims are exercising their federal-
question jurisdiction. See Mims v. Arrow Fin. Servs., LLC, 565 U.S. 368, 377,
380 (2012) (when a statute creates a federal cause of action, the statute
furnishes federal-question jurisdiction, even if it also provides that claims can
be brought in state court). In contrast, CAFA modifies jurisdictional
requirements in diversity-jurisdiction cases so that more class actions based
only on state law can be brought in federal court. Miss. ex rel. Hood v. AU
Optronics Corp., 571 U.S. 161, 165 (2014); see also S. Rep. No. 109-14, at 10
(2005). Because an MMWA claim creates a federal-question case, CAFA does
not apply to that claim. Indeed, there is nothing in CAFA’s legislative history
indicating that Congress sought to modify class-action requirements for class
actions pressing federal claims. Floyd, 966 F.3d at 1066. In short, CAFA and
MMWA cases have distinct requirements. Plaintiffs do not satisfy the MMWA
requirements, so their MMWA claims must be dismissed.
The motion to dismiss the MMWA claims (Counts 8, 15, 22, 30, 37, 43,
49, 56, 62, 69, 76, 83, 89, and 96) will be granted.
Fraud
Plaintiffs bring fraud claims, under either common law or a state statute,
depending on how the particular state recognizes fraud claims. VW America
identifies flaws underlying all or most fraud claims as well as flaws specific
under individual states’ laws.
a. Cross-Cutting Arguments
VW America identifies grounds for dismissal applicable to all fraud
claims, arguing that Plaintiffs’ allegations of (i) affirmative representations,
(ii) omissions, (iii) pre-sale knowledge, and (iv) grounds for equitable relief are
insufficient.
i. Affirmative Misrepresentations
VW America argues that Plaintiffs’ fraud claims based on affirmative
representations fail because the statements are not actionable, and Plaintiffs
do not plead causation or reliance. (VW Mot. at 30–35.) Fraud-based claims are
subject to a heightened pleading standard. Fed. R. Civ. P. 9(b); In re Suprema
Specialties, Inc. Secs. Litig., 438 F.3d 256, 272 (3d Cir. 2006). Plaintiffs must
plead “the who, what, when, where, and how of the events at issue.” U.S. ex rel.
Bookwalter v. UPMC, 946 F.3d 162, 176 (3d Cir. 2019) (citation omitted). Many
of Plaintiffs’ allegations do not meet this standard because they simply allege
that “Defendants” made “misrepresentations.” (E.g., Am. Compl. ¶¶ 129–30.)
See Frederico v. Home Depot, 507 F.3d 188, 201 (3d Cir. 2007) (Rule 9(b)
“requires, at a minimum, that the plaintiff identify the speaker of allegedly
fraudulent statements” (citation omitted)). Plaintiffs’ more particular allegations
that “Defendants” promoted the “high quality,” “reliability,” “superior
performance,” and “safety” of their vehicles (e.g., Am. Compl. ¶¶ 142, 457) fare
no better because they “constitute merely vague and ill-defined opinions or
puffery” and “are not assurances of fact and thus do not constitute
misrepresentations” for purposes of a fraud claim. Argabright, 201 F. Supp. 3d
at 608 (quotation marks and citation omitted); see also, e.g., Tatum v. Chrysler
Grp. LLC, Civ. No. 10-4269, 2011 WL 1253847, at *4 (D.N.J. Mar. 28, 2011)
(car manufacturer’s advertising claims that vehicles were “reliable” and
“durable” were not affirmative misrepresentations).
That leaves Plaintiffs with only a few particularized allegations of
affirmative misrepresentations. These remaining allegations stem from alleged
misrepresentations in the maintenance schedules and warranty booklets that
came with the cars. For example, the maintenance schedules and warranty
booklets allegedly stated that the timing chain needed replacing every 120,000–
130,000 miles. (Am. Compl. ¶ 10, Ex. C at 4.) The maintenance schedules and
warranty booklets thus did not accurately represent that, as Defendants knew,
the timing chain would fail far earlier in a vehicle’s lifetime. (Id. ¶ 15.) Similarly,
some maintenance schedules listed parts that would need to be replaced but
never listed the timing chain. (Id., Ex. C.)
Assuming that these qualify as affirmative misrepresentations, under
New Jersey law Plaintiffs must plead that they suffered a loss “as a result of”
the misrepresentations in the materials. Dugan v. TGI Fridays, Inc., 171 A.3d
620, 637 (N.J. 2017). Other states require more: Plaintiffs must have justifiably
relied on the misrepresentations to make the purchase. E.g., Yocca v.
Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 438–49 (Pa. 2004). Still further,
Plaintiffs’ allegations of causation and reliance must satisfy Rule 9(b).
They do not. Plaintiffs merely plead in fact-free fashion that they “relied”
on “misrepresentations” “at the time of purchase.” (Am. Compl. ¶ 129.) Those
are legal conclusions not entitled to credit. Dewey v. Volkswagen AG, 558 F.
Supp. 2d 505, 526–27 (D.N.J. 2008). There are no factual allegations, then,
sketching out the relationship between the misrepresentations and Plaintiffs’
losses. For example, Plaintiffs do not allege “at what point—if ever—each
Plaintiff was exposed to one or more of the statements.” Id. Plaintiffs must
“inject precision or some measure of substantiation into” their fraud claims,
Frederico, 507 F.3d at 200, and that requires facts to show how individual
plaintiffs considered the maintenance schedules and warranty booklets. E.g.,
Dewey, 558 F. Supp. 2d at 527; Luppino v. Mercedes-Benz USA, LLC, Civ. No.
09-5582, 2010 WL 3258259, at *6 (D.N.J. Aug. 16, 2010). Because they do not,
fraud claims relying on affirmative misrepresentations will be dismissed.
ii. Omissions
VW America moves to dismiss claims based on a failure to disclose the
timing chain defect because Plaintiffs do not allege that, prior to their
purchase, they were exposed to “any advertisements, statements or literature
from Defendants that should have contained the allegedly omitted disclosure.”
(VW Mot. at 36.) As a result, Plaintiffs cannot show causation or reliance.
VW America misapprehends the standard:
[P]laintiffs need not identify specific samples of representations on
which they relied which did not contain the allegedly omitted
information, a standard which technically might encompass every
statement of the defendants. Rather, a plaintiff typically need only
allege that the defendant failed to disclose material information,
and that omission induced the plaintiff to enter into a transaction.
DeFrank, 2020 WL 6269277, at *7 (cleaned up). Plaintiffs have done just that.
(E.g., Am. Compl. ¶ 39.) As a result, their fraud-by-omission claims are
adequately alleged. See Dewey, 558 F. Supp. 2d at 527–28 (omissions claims
survived while affirmative misrepresentation claims did not because the
standards differed).
iii. Pre-Sale Knowledge
VW America asserts that all Plaintiffs’ fraud claims require allegations
that Defendants had knowledge of the alleged defect at the time of sale. (VW
Mot. at 40–41.) VW America acknowledges that Plaintiffs have included
allegations attempting to speak to pre-sale knowledge, but VW America says
that they are inadequate. (Id. at 41–49.)
VW America is correct that fraud claims usually require knowledge, but
allegations of knowledge are only subject to a plausibility—not particularity—
standard. DeFrank, 2020 WL 6269277, at *12; see also Fed. R. Civ. P. 9(b)
(“[K]nowledge[] and other conditions of a person’s mind may be alleged
generally.”). VW America also overlooks that, in assessing pre-sale knowledge
under this standard, courts consider “the totality of allegations . . . collectively”
and do not, as VW America’s brief does, attack each allegation one-by-one.
Ponzio, 447 F. Supp. 3d at 227.
Under the correct standard, Plaintiffs’ allegations suffice. The Amended
Complaint marshals multiple sources to permit an inference of knowledge:
(1) service bulletins over the past decade describing timing chain issues,
(2) consumer complaints made to regulators and dealerships, and (3) a
redesign of the chain. (Am. Compl. ¶¶ 68, 89–119.) VW America quibbles with
details about these sources, going through each individually in an attempt to
show it does not speak directly to every plaintiff’s model or purchase. (VW Mot.
at 41–49.) But courts assess such allegations at a higher level, asking whether,
together, they can establish a general knowledge. Ponzio, 447 F. Supp. 3d at
228. Plaintiffs’ allegations allow an inference that Defendants knew the timing
chain, at least generally, was a problem. That is all they need for now.
iv. Equitable Relief
VW America argues that Plaintiffs cannot seek equitable relief for their
fraud or consumer-protection claims without pleading that there is no
adequate remedy at law. (VW Mot. at 38–40.) But, as a general matter, courts
only dismiss claims not remedies at this early stage. Wright-Phillips v. United
Airlines, Inc., Civ. No. 20-14609, 2021 WL 1221111, at *20 (D.N.J. Apr. 1,
2021); In re Riddell Concussion Reduction Litig., 121 F. Supp. 3d 402, 424–25
(D.N.J. 2015). We still need to decide, e.g., liability before the viability of
injunctive relief comes into play. Riddell, 121 F. Supp. 3d at 424–25. I will not
dismiss Plaintiffs’ prayers for relief at this time.
b. State-Specific Arguments
VW America next makes arguments specific to individual states’
requirements for a fraud claim.
i. Fraudulent Concealment under Florida, Georgia, Illinois,
Massachusetts, New Jersey, New York, and Ohio Law
For fraudulent concealment claims under Florida, Georgia, Illinois,
Massachusetts, New Jersey, New York, and Ohio law, VW America argues that
those states either do not impose a duty to disclose on remote manufacturers
or distributors, or Plaintiffs do not allege facts establishing a duty to disclose.
(VW Mot. at 50–52.) Under all those states’ laws, however, a plaintiff pleads a
fraudulent concealment claim when (1) the defendant allegedly knew of a safety
defect and failed to disclose it, or (2) the defendant made a partial, misleading
disclosure. Timing Chain, 2017 WL 1902160, at *19–20 (collecting cases).
Plaintiffs have alleged as much, so their allegations suffice for these states’
duty-to-disclose elements. (See Sections III.B.1.c, III.B.4.a.i, supra.) See
Majdipour v. Jaguar Land Rover N. Am., LLC, Civ. No. 12-07849, 2013 WL
5574626, at *17–18 (D.N.J. Oct. 9, 2013).
ii. Missing Necessary Elements under Massachusetts,
Michigan, New Jersey, North Carolina, and Ohio Law
For certain states, VW America argues that Plaintiffs fail to plead
additional, necessary elements specific to those states.
Under Massachusetts law, VW America argues that there must be a
closer relationship between the parties than that here, where the dealerships
intervene between manufacturer and purchaser. (VW Mot. at 55.) The
Massachusetts courts have not defined how closely involved the plaintiff and
defendant must have been. They have said that “[p]rivity is not required,” but
the relationship must be more than “minor,” “insignificant,” or “trivial.”
Reisman v. KPMG Peat Marwick LLP, 787 N.E.2d 1060, 1078 (Mass. Ct. App.
2003) (citation omitted). As explained, the precise relationship between the
manufacturing Defendants here and the dealerships is not yet clear. Plaintiffs
do not and cannot know what materials or direction Defendants provided to the
dealerships. So dismissal in advance of discovery is premature. See In re Gen.
Motors LLC Ignition Switch Litig., 257 F. Supp. 3d 372, 417–18 (S.D.N.Y. 2017)
(allowing Massachusetts claim to proceed even when plaintiffs purchased cars
from dealerships).
Under Michigan law, VW America argues that “conduct specifically
authorized under laws administered by a regulatory board or officer” is exempt
from liability. (VW Mot. at 53–54 (quoting Mich. Comp. Laws § 445.904(1)).) But
VW America has not pointed to any laws that “specifically” “authorized” its
conduct, i.e., using a specific timing chain system and failing to disclose its
known flaws. Yet VW America bears the burden of showing this exemption’s
applicability, and Michigan courts scrutinize the relied-upon statute vis-à-vis
the conduct to ensure that defendants cannot escape liability simply by
claiming that they are subject to a regulatory agency. See In re Gen. Motors Air
Conditioning Mktg. & Sales Pracs. Litig., 406 F. Supp. 3d 618, 642 (E.D. Mich.
2019); Liss v. Lewiston-Richards, Inc., 732 N.W.2d 514, 520–21 (Mich. 2007).
Absent a more specific argument, VW America’s invocation of the exemption
fails.
Under New Jersey law, VW America argues that Plaintiffs have not
pleaded an “ascertainable loss” because the allegedly defective component
outperformed its warranty period. (VW Mot. at 55–56.) True, “[t]here are federal
cases in New Jersey which have limited [New Jersey Consumer Fraud Act or
“NJCFA”] claims to defects which occur within the warranty period.” DeFrank,
2020 WL 6269277, at *10. But courts have still agreed that safety hazards, like
those alleged here, can give rise to a NJCFA claim “regardless of the duration of
the warranty.” Id. at *11. In addition, in cases where, as here, plaintiffs allege
that defendants concealed a defect and limited the warranty accordingly, the
plaintiffs have adequately pleaded a NJCFA claim. Maniscalco v. Bro. Int’l Corp.
(USA), 627 F. Supp. 2d 494, 501–02 (D.N.J. 2009). Also significant is that those
cases dismissing NJCFA claims have done so by concluding that plaintiffs
suffered no damages. Id. at *10. Here, Plaintiffs allege a diminution in value
and costs of replacements, damages sufficient to satisfy the requirement of an
ascertainable loss. Mickens v. Ford Motor Co., 900 F. Supp. 2d 427, 446 (D.N.J.
2012). I reject VW America’s argument.
Under North Carolina law, VW America argues that Plaintiffs must plead
“egregious or aggravating circumstances.” (VW Mot. at 52–53 (quoting Ellis v.
La.-Pac. Corp., 699 F.3d 778, 787 (4th Cir. 2012)).) “Egregious or aggravating
circumstances,” however, signifies only that the claim cannot be based on a
mere breach of contract. Ellis, 699 F.3d at 787 (citing Becker v. Graber
Builders, Inc., 561 S.E.2d 905, 910–11 (N.C. Ct. App. 2002)). “Aggravating
circumstances include conduct of the breaching party that is deceptive.” Id.
(quoting Becker, 561 S.E.2d at 911). Plaintiffs have alleged deceptive practices
in that Defendants failed to disclose a defect within their knowledge. Ferro v.
Volvo Penta of the Ams., LLC, 731 F. App’x 208, 210 (4th Cir. 2018) (per
curiam).
Under Ohio law, VW America argues that an alleged defect that manifests
after the warranty period cannot support a claim. (VW Mot. at 55.) The only
case VW America cites for this proposition, Eisert v. Kantner, No. 2-10-13, 2010
WL 3836205, at *6–7 (Ohio Ct. App. Oct. 4, 2010), is inapposite because it does
not involve allegations, like those here, that defendants concealed a defect and
limited the warranty accordingly. Nor did Eisert “confront the issue of safety
concerns and is therefore not persuasive on this point.” In re Porsche Cars N.
Am., Inc., 880 F. Supp. 2d 801, 871 (S.D. Ohio 2012). Given the allegations
present here that were not addressed in Eisert, I decline to conclude that Eisert
compels dismissal of Plaintiffs’ Ohio claims.
iii. Availability of Class-Wide Relief under Colorado, Georgia,
and Ohio Law
Under Colorado and Georgia law, VW America argues that Plaintiffs
cannot seek monetary relief on a class-wide basis. (VW Mot. at 56–57 (citing
Colo. Rev. Stat. § 6-1-113; Ga. Code Ann. § 10-1-399).) Under Ohio law, VW
America argues that Plaintiffs can only maintain a class action if they satisfy
certain pre-suit requirements, which they have not. (Id. at 57–59 (citing Ohio
Rev. Code § 1345.09(B)).) These arguments involve a complicated issue:
whether a state law’s prohibitions or limitations on proceeding as a class action
applies in federal court, where Federal Rule of Civil Procedure 23 governs class
actions. Compare Lisk v. Lumber One Wood Preserving, LLC, 792 F.3d 1331,
1337 (11th Cir. 2015) (analyzing the Supreme Court’s fractured decision in
Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 559 U.S. 393
(2010), to hold that Rule 23 displaces a state’s contrary bar), with In re Lipitor
Antitrust Litig., 336 F. Supp. 3d 395, 416–17 (D.N.J. 2018) (disagreeing with
Lisk’s analysis of Shady Grove and holding). VW America’s opening brief does
not even mention Shady Grove. This is a thorny issue requiring more
development. That development will occur in connection with class
certification. Even if Plaintiffs cannot maintain their Colorado, Georgia, Ohio
claims as a class, they will likely revert to maintaining them individually. It is
thus unnecessary to decide this issue now, so I decline to dismiss the
Colorado, Georgia, and Ohio claims. Timing Chain, 2017 WL 1902160, at *24.
iv. Applicability of the Economic Loss Rule under
Pennsylvania and Florida Law
Under Pennsylvania and Florida law, VW America argues that the
economic loss rule bars claims for common-law fraudulent concealment that
assert only economic harm. (VW Mot. at 59–60.) More recent authority suggests
that the rule only applies to negligence claims under Pennsylvania law. Earl v.
NVR, Inc., 900 F.3d 310, 313 (3d Cir. 2021); Knight v. Springfield Hyundai, 81
A.3d 940, 951–52 & n.9 (Pa. Super. Ct. 2013). Regardless, the rule does not
apply when fraud is extrinsic to the contract or fraud induced the plaintiff to
enter a contract. Timing Chain, 2017 WL 1902160, at *17. By alleging that
Defendants fraudulently concealed the defect, Plaintiffs’ allegations cross the
hazy line into fraud-in-the-inducement claims. Id.
v. Timeliness of Claims under California, Florida, Ohio, and
Oregon Law
VW America argues that fraud claims under California, Florida, Ohio,
and Oregon law are all untimely. But those claims’ timeliness turns on when
precisely the defect was discovered and the nature of Defendants’ alleged
fraudulent concealment. See Aryeh v. Canon Bus. Sols., Inc., 292 P.3d 871, 882
(Cal. 2013); Keegan v. Am. Honda Motor Co., 284 F.R.D. 504, 543 (C.D. Cal.
2012); Farmers Ins. Exch. v. First Choice Chiro. & Rehab., 2014 WL 3591558, at
*12 (D. Or. July 18, 2014); Ponzio, 447 F. Supp. 3d at 251. It is thus premature
to dismiss claims as untimely. (Section III.B.1.a, supra.)
* * *
For the foregoing reasons, VW America’s motion to dismiss the fraud
claims is granted to the extent those claims rely on affirmative
misrepresentations, but the motion is otherwise denied.
Negligent Misrepresentation
VW America puts forward several grounds to dismiss certain negligent
misrepresentation claims.
First, VW America argues that, under Illinois, Florida, and California law,
claims for negligent misrepresentation are barred by the economic loss rule.
(VW Mot. at 61.) But “those states allow claims to proceed when the tort claim
is based on conduct that is either independent of a contract or where there is a
risk of personal injury.” Timing Chain, 2017 WL 1902160, at *21 (collecting
cases). Plaintiffs have alleged as much here.
Second, VW America argues that, under Colorado, North Carolina, Ohio,
and California law, a negligent misrepresentation claim cannot be based on an
omission. (VW Mot. at 62.) However, Plaintiffs plead that Defendants
misrepresented the need to repair the timing chain in the maintenance
schedules and warranty booklets. (Section III.B.4.a.i, supra.) Defendants do not
raise reliance or causation problems that would prevent Plaintiffs from relying
on these misrepresentations for a negligent misrepresentation claim.
Third, VW America argues that, under New Jersey and Washington law,
there is no duty to disclose that can form the basis of a negligent
misrepresentation claim unless disclosure is necessary to make a previous
statement true or the parties share a special relationship. (VW Mot. at 64.)
Plaintiffs allege that defendants made misrepresentations in maintenance
schedules and warranty booklets but did not amend them despite their
knowledge of the defect. Thus, Plaintiffs’ allegations satisfy the rule VW
America puts forward.
Fourth, VW America argues that, under Massachusetts law, Plaintiffs
have not adequately pleaded reliance. (VW Mot. at 64.) But to the extent
Plaintiffs’ claims negligent misrepresentation claims rely on omissions, they
adequately plead reliance. (See Section III.B.4.a.ii, supra.) In any event,
Massachusetts law leaves reliance, once pled, to the jury. First Marblehead
Corp. v. House, 473 F.3d 1, 11 (1st Cir. 2006) (citing Nota Constr. Corp. v.
Keyes Assocs., 694 N.E.2d 401, 405 (Mass. Ct. App. 1998)).
Finally, VW America argues that, under California law, the negligent
misrepresentation claim is untimely. (VW Mot. at 65.) Again, timeliness
depends on the time of discovery, Cal. Code Civ. P. § 338(d), which cannot be
decided now. (Section III.B.1.a, supra.)
VW America’s motion to dismiss the negligent misrepresentation claims
will be denied.
Unjust Enrichment
VW America puts forward several reasons to dismiss the unjust
enrichment claims.
First, VW America argues that Plaintiffs cannot pursue unjust
enrichment claims, which are equitable, without showing that they lack an
adequate legal remedy. (VW Mot. at 65–66.) Similarly, VW America argues that
Plaintiffs cannot pursue unjust enrichment claims when they have an express
contract. (Id. at 68–69.) But Plaintiffs may plead unjust enrichment claims in
the alternative to their claims at law. Gap Props., LLC v. Cairo, Civ. No. 19-
20117, 2020 WL 7183509, at *4 (D.N.J. Sept. 17, 2020) (citations omitted); see
also Timing Chain, 2017 WL 1902160, at *22.
Second, VW America argues that some of the unjust enrichment claims
are untimely. (VW Mot. at 67–68.) Again, deciding timeliness is premature.
(Section III.B.1.a, supra.)
Third, VW America argues that some states do not recognize unjust
enrichment claims by purchasers from third-party entities because those
purchasers did not confer a direct benefit upon the manufacturer-defendant.
(VW Mot. at 67–68.) Similarly, VW America argues that New Jersey requires a
direct relationship between the parties. (Id. at 70.) But the precise nature of the
benefit here and relationships underlying it requires factual development. See
In re K-Dur Antitrust Litig., 338 F. Supp. 2d 517, 544 (D.N.J. 2004) (“The critical
inquiry is whether the plaintiff’s detriment and the defendant’s benefit are
related to, and flow from, the challenged conduct.”). That is, the nature of the
dealerships and manufacturers’ relationship is not yet clear. In any event,
“Defendant benefited, at Plaintiffs’ expense, when they sold Plaintiffs a vehicle
that would not operate properly until the end its purported usual lifespan.”
Timing Chain, 2017 WL 1902160, at *22.
Finally, VW America argues that the unjust enrichment claims fail
because they are predicated on the fraud conduct, which VW America views as
inadequately alleged. (VW Mot. at 69.) I disagree and find some fraud
allegations plausible, so this argument fails. (Section III.B.4.a.ii, supra.)
For those reasons, the motion to dismiss the unjust enrichment claims
will be denied.
IV. CONCLUSION
For the reasons set forth above, Audi AG’s motion to dismiss for lack of
personal jurisdiction is denied without prejudice to renewal following
jurisdictional discovery. VW America’s motion to dismiss is granted as to the
MMWA claims, fraud claims based on affirmative misrepresentations, implied
warranty claims under Illinois and Oregon law, and negligent
misrepresentation claims under Georgia and Oregon law. The motion is
otherwise denied.
A separate order will issue.
Dated: June 25, 2021

/s/ Kevin McNulty
___________________________________
Hon. Kevin McNulty
United States District Judge

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10270908. Public record. Not legal advice.