Gilvin v. FCA US LLC

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

MELISSA GILVIN, Case No. 1:18-CV-107

Plaintiff, Dlott, J.

Bowman, M.J.

v.

FCA USA, LLC., et al.,

Defendants.

REPORT AND RECOMMENDATION

This civil action is now before the Court on Plaintiff’s motion for leave to file a

second amended complaint (Doc. 32) and the parties’ responsive memoranda. (Docs.

37, 39, 41, 43).

I. Background and Facts

Plaintiffs reside in Clermont County, Ohio. Defendant FCA US LLC, distributes,

markets, and sells FCA US LLC motor vehicles to persons in Ohio. (Doc. 3). Defendant,

ISG is an agent of FCA US LLC. In May 2016, Plaintiffs leased a new 2016 Ram 1500

truck which was sold, manufactured or distributed by FCA US LLC. Plaintiffs leased the

motor vehicle from Jeff Wyler, Eastgate Auto Mall in Batavia, Ohio, at which time they

received a written statement of their rights under the Ohio Lemon Law. (See Doc. 1, ¶¶

8-11). “Upon initially leasing the [truck], [] Plaintiffs did not pay the costs of the taxes,

security deposit, or title fees.” Id. at ¶ 25. Plaintiffs’ claim that their vehicle was out of

service by reason of repair for a cumulative total of 30 or more calendar days. Plaintiffs

further assert that their motor vehicle was “possessed substantially the same

nonconformity, which was subject to repair three or more times, and the nonconformity

either continued to exist or was recurring. Id. at ¶ 17.

According to Plaintiffs, FCA US LLC, their agents and/or their authorized dealer,

were unable to conform Plaintiffs motor vehicle to any applicable express warranty by

repairing or correcting the nonconformity after a reasonable number of repair attempts.

Id. at ¶ 18. In January 2017, “Plaintiffs were forwarded to Defendant FCA US LLC’s

agent, ISG, to facilitate an informal dispute resolution to this nonconforming motor

vehicle issue.” (Id. at ¶ 19). During the informal negotiations, ISG made a “refund” offer

to Plaintiffs. See Doc. 1, Ex. B at pp. 3-6. ISG explained to Plaintiffs that, as a matter of

course, the amount of an offer made for the return of a vehicle included a deduction for

“the costs for taxes, title fees, and security deposits if the consumer had not paid the

costs of these items at the outset of the consumer’s dealings with FCA US LLC.” Id. at

p. 3. Plaintiffs were told that since “FCA US LLC had paid the costs of taxes, title fees,

and security deposits (or simply waived these costs),” they were not included in the offer

being made. Id. at pp. 3- 4. After ISG “explained … that FCA US LLC was entitled to

these costs,” ISG gave Plaintiffs “a few days to either accept the settlement offer or ISG

would close the case.” Id. at p. 4. “Plaintiffs did not accept the settlement offer from

ISG.” Id. Thereafter, Plaintiffs initiated this action for alleged violations of Ohio’s Lemon

Law, O.R.C. § 1345.72. Notably, Plaintiffs originally filed this action in the Court of

Common Pleas for Clermont County, Ohio in January 2018. Plaintiffs seek relief for,

inter alia, “damages in excess of $25,000 … for the refund of the full purchase price of

their nonconforming motor vehicles.” Doc. 1, Ex. B at p. 25. In addition to compensatory

damages, Plaintiffs also seek punitive damages, attorneys’ fees, and injunctive and

declaratory relief. Id. at ¶ 92 (averring that for their fraud claim Plaintiffs are “seeking

damages, plus punitive damages, interest, and attorneys’ fees”); (Id. at ¶¶ 105-06)

(requesting injunctive and declaratory relief); See also Id. at ¶¶ 107-08) (seeking

recovery of attorneys’ fees). Plaintiffs’ also seek to bring this action on behalf of

themselves as well as two classes of persons.

Thereafter, Defendants filed a notice of removal with this court on February 14,

2018. (Doc. 1). Defendants’ notice of removal asserted jurisdiction under 28 U.S.C. §

1332(d)(2), which is commonly referred to as the Class Action Fairness Act (“CAFA”),

as well as diversity jurisdiction pursuant to 28 U.S.C. § 1332(a).

Plaintiffs then sought to remand this matter back to state court. Defendants also

asked the Court to dismiss Plaintiffs’ claims. Plaintiff motion to remand was denied.

Defendants motion to dismiss was granted in part and denied in part. Namely, Plaintiffs’

class allegations relating to a “fail-safe” class, paragraphs 45, 57, and 94 were

dismissed and Defendant Ally was dismissed from this action. (Doc. 27, 29)

Plaintiffs now move for leave to amend their Amended Complaint to modify class

definitions that were deemed to be fail-safe classes, add a subclass to include

consumers who financed their motor vehicle purchase through former Defendant Ally

Financial (“Ally”), and add again, formally, as a defendant in this case, Ally, based on

clarified allegations and new information provided by Plaintiffs. Plaintiffs’ request is not

well-taken.

II. Analysis

Leave to amend a complaint shall be freely granted when justice requires.

Fed.R.Civ.P. 15(a). Rule 15(a) embodies “a liberal policy of permitting amendments to

ensure the determinations of claims on their merits.” Marks v. Shell Oil Co., 830 F.2d

68, 69 (6th Cir. 1987). Nevertheless, leave may be denied when there has been undue

delay, bad faith, a repeated failure to cure deficiencies by previous amendments, undue

prejudice to the opposing party....” Hobart v. Waste Management of Ohio, Inc., 923

F.Supp.2d 1086, 1098 (6th Cir. 2013), citing Foman v. Davis, 371 U.S. 178, 182, 83

S.Ct. 227, 9, L.Ed. 222 (1962). A denial of a motion to amend is also proper if the

proposed amendment would be futile in as much as it would not withstand a motion to

dismiss under Rule 12(b)(6). See Commercial Money Ctr., Inc. v. Illinois Union Ins. Co.,

508 F.3d 327, 346 (6th Cir. 2007).

Here, Plaintiffs seek to amend their complaint to add claims that were previously

dismissed by the Court. As noted by Defendant FCA, it moved to dismiss the class

allegations in this case. (Doc. 17). Plaintiffs did not oppose such a dismissal.

Thereafter, the undersigned entered a Report and Recommendation indicating that

these allegations should be dismissed, Plaintiffs did not file any objection to it. The

Report and Recommendation was adopted by the District Judge and the class

allegations were dismissed. Plaintiffs now seek leave to file a second amended

complaint to, inter alia, replead class allegations.

Defendant FCA contends that Plaintiffs’ Motion to Amend should be denied

because they made the voluntary choice to sit and wait until after a final, non-

appealable Order was entered by this Court dismissing their class allegations, and they

admit that they waited hoping that the Court’s final Order would provide them with some

guidance for repleading. Under Sixth Circuit law, Defendant FCA contends that

Plaintiffs’ wait-and-see approach was improper. Plaintiffs simply cannot wait for a final

adverse ruling before seeking leave to amend so that they can use the district court as

“as a sounding board to discover holes in their arguments.” See, e.g., Pond v. Haas,

674 Fed.Appx. 466, 468 (6th Cir. 2016). The undersigned agrees.

Additionally, Plaintiffs’ proposed amendments are also futile. As detailed above,

the Court previously determined that Plaintiffs stated a Lemon Law claim under Ohio

law. (Doc. 30). In order to prevail on this claim, two issues must be resolved: 1)

whether Plaintiffs’ vehicle had such significant nonconformities that they are entitled to

the remedies provided under the Lemon Law; and 2) if so, the amount of damages (if

any) that Plaintiffs can collect.

Plaintiffs, however, seek leave to amend so that they can represent a class

consisting of individuals who own unidentified vehicles with unidentified defects,

provided, however, that these individuals have already received a determination

(through some unidentified process) that their vehicles have nonconformities entitling

them to Lemon Law relief. (Doc. 32, Ex. 2, PageID ##373, 375, 381). As such,

Defendants contend that Plaintiffs cannot represent the class they proffer because they

are not yet members of that class. Notably, Plaintiffs have not yet received any final

determination that through any process that their vehicle has nonconformities sufficient

to entitle them to relieve under the Lemon law.

It is axiomatic that a plaintiff must be a member of the class defined in the

complaint for the class to be legally viable. As the Sixth Circuit recently explained, “‘[a]s

[the Supreme Court] has repeatedly held, a class representative must be part of the

class and possess the same interest and suffer the same injury as the class members.’”

Lossia v. Flagstar Bancorp, Inc., 895 F.3d 423, 431 (6th Cir. 2018) (quoting E. Texas

Motor Freight Sys. Inc. v. Rodriguez, 431 U.S. 395, 403 (1977)). See also Durham v.

Cincinnati Children's Hosp. Med. Ctr., No. 1:15-CV-438, 2017 WL 3142366, at *2 (S.D.

Ohio July 25, 2017) (dismissing class allegations because “Mr. Durham is clearly not a

member of the class he seeks to represent”). Thus, in Plaintiffs’ proposed amendment

Plaintiffs are not members of the defined class and therefore cannot be an adequate

representative.

Defendants further assert that the proffered new class allegations are also

overbroad. Namely, the new class allegations encompass all individuals whose vehicles

have already been found to be “lemons” regardless of the relief such vehicle owners

have already received as a result of that finding. As such, Defendants assert that

individuals who already have received everything they are entitled to under the Lemon

law would have no standing to bring suit in their own right. Defendants are correct.

Notably, “[a] proposed class may be deemed overly broad if it would include

members who have not suffered harm at the hands of the Defendant and are not at risk

to suffer such harm. A properly defined class includes only members who would have

standing to bring suit in their own right.” Pilgrim v. Universal Health Card, LLC, No.

5:09CV879, 2010 WL 1254849, at *2 (N.D. Ohio Mar. 25, 2010), aff'd, 660 F.3d 943 (6th

Cir. 2011) (internal quotation marks and citation omitted) (striking class allegations

based on finding they were “overbroad” because they encompassed “members who

have not suffered harm at the hands of the Defendant and are not at risk to suffer such

harm” because “[a] properly defined class includes only members who would have

standing to bring suit in their own right” (internal punctuation and citations omitted)). In

light of the foregoing, the undersigned finds that Plaintiffs’ motion to amend is not well-

taken in this regard.

Next, Plaintiffs’ proposed second amended complaint purports to assert

individual and class action claims against Ally Financial Inc. (“Ally”) for allegedly “failing

to comply with Ohio’s Lemon Law, R.C. §1345.71 et seq.” and allegedly “allowing a

lease or loan to go un-cancelled despite consumers returning the motor vehicle as

required under Ohio Lemon Law R.C. §1345.71 et. seq.” (Doc. 32, at pp. 5 & 12;

Plaintiffs’ proposed second Amended Complaint at ¶¶ 109-127).

Plaintiffs’ proposed second amended complaint asserts that Plaintiffs have

suffered financial hardship because Ally has not cancelled the lease associated with the

alleged nonconforming vehicle. Plaintiffs assert that Ally “may have an interest in this

action and has therefore been included as a Defendant in this matter.” (Doc. 32, Ex. 2).

Ally, however, asserts that Plaintiffs’ Motion as to Ally is frivolous and should be denied.

Lemon Law claims may only be asserted against a vehicle “manufacturer, its dealer, or

its authorized agent.” Ally is none of these.

Ally further asserts that R.C. §1345.72(D) expressly states that a lessor, such as

Ally here, is only required to cancel the lease after it has either: (1) received the “full

purchase price” owed on the lease (including any fees charged for canceling the lease);

or (2) consented to lease a “new motor vehicle” provided by the manufacturer to the

lessee. See R.C. §1345.72(D). Here, Ally has not received the “full purchase price” for

the vehicle or consented to a new lease. As such, Ally asserts that it has not violated

Ohio Lemon Law by failing to cancel the Plaintiffs’ lease because the express conditions

precedent to Ally having an obligation to do so have indisputably not happened.

Notably, a proposed amended complaint is “futile” and thus leave to file it should

be denied when the statute at issue “does not provide for a private right of action” for

the plaintiff against the proposed defendant. See Prakash v. Altadis USA, Inc., 2012 WL

1109918 (N.D. Ohio 2012) (Pearson, J.); Gates v. Ohio Savings Bank, 2008 WL 928489

(N.D. Ohio 2008) (Lioi, J.). Here, the statute does not provide a private right of action

against the “lessor” of a vehicle under Ohio Lemon Law, such as Ally here.

III. Conclusion and Recommendation

For the reasons explained herein, IT IS RECOMMENDED THAT Plaintiffs’

motion for leave to file a second amended complaint (Doc.32) be DENIED.

s/Stephanie K. Bowman

Stephanie K. Bowman

United States Magistrate Judge

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

MELISSA GILVIN, Case No. 1:18-CV-107

Plaintiff, Dlott, J.

Bowman, M.J.

v.

FCA USA, LLC., et al.,

Defendants.

NOTICE

Pursuant to Fed. R. Civ. P. 72(b), any party may serve and file specific, written

objections to this Report & Recommendation (“R&R”) within FOURTEEN (14) DAYS of

the filing date of this R&R. That period may be extended further by the Court on timely

motion by either side for an extension of time. All objections shall specify the portion(s)

of the R&R objected to, and shall be accompanied by a memorandum of law in support

of the objections. A party shall respond to an opponent’s objections within FOURTEEN

(14) DAYS after being served with a copy of those objections. Failure to make

objections in accordance with this procedure may forfeit rights on appeal. See Thomas

v. Arn, 474 U.S. 140 (1985); United States v. Walters, 638 F.2d 947 (6th Cir. 1981)