New Jersey District Court Cleans Up Complaint in Washing Machine Class Action Litigation

by Cozen O'Connor
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Washing machine class actions have been so active recently that some firms may be scrambling to form their own appliance-law practice groups.  And who knows?  That might not be a bad idea.  Some of our greatest legal minds, like Judge Posner, have been weighing in on this litigation.  In two of his opinions, the Seventh Circuit certified a washing-machine purchaser class (see our comments on that decision here) and later reinstated it after the Supreme Court vacated and remanded the certification decision for reconsideration consistent with its decision in Comcast v. Behrend

We’re not sure what all the excitement is about.  Washing machines seem fine to us.  Great, really.  You put the clothes in, turn it on, and they come out clean.  You move the clothes to the dryer, turn it on, and they come out dry and clean.  No washboard, no scrubbing, no clothes line.  That’s tremendous.  Where’s the problem? 

Well, the class action complaints say the problem is mold.  And, admittedly, that doesn’t sound good.  But does it sound like a class action?  Judge Posner thought so.  And the Supreme Court (recently) decided not to disturb his decision.

So, regardless of whether we believe that these cases are properly treated as class actions, it is clear that opposing class certification has gotten harder.  Fortunately for defendants, however, much can happen to the claims before the class certification stage.  In particular, a Rule 12(b)(6) challenge to the legal viability of the claims can be very helpful.  That’s what Samsung America tried, to great success, in Spera v. Samsung Electronics America, another washing-machine class action in which plaintiffs from New Jersey, Missouri and Colorado asserted warranty claims, unjust enrichment claims, and claims under the New Jersey Consumer Fraud Act (“NJ CFA”) as well as the Missouri and Colorado consumer protection statutes.

Some of the claims against Samsung America simply weren’t viable.  The implied warranty of merchantability claim never stood a chance.  The user manual disclaims – in all capital letters – “any implied warranties of merchantability”:

EXCEPT AS SET FORTH HEREIN, THERE ARE NO WARRANTIES ON THIS PRODUCT EITHER EXPRESS OR IMPLIED, AND SAMSUNG DISCLAIMS ALL WARRANTIES INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.

That reads like a winner.  And, as the court recognized in a string cite, New Jersey law honors such clear and conspicuous disclaimers.  The claim was dismissed. 

The Missouri and Colorado plaintiffs’ claims under the NJ CFA weren’t viable either.  While these out-of-state plaintiffs no doubt found attractive the availability of treble damages under the NJ CFA, the court cited a long line of Third Circuit case law “holding that a consumer’s home state law should apply to transactions that bear no relationship to New Jersey other than the location of the defendant’s headquarters.”  So, as much as these particular plaintiffs may have wanted to sue under the NJ CFA, they couldn’t. 

One claim – the unjust enrichment claim – just couldn’t work.  The plaintiffs didn’t purchase directly from Samsung America.  The court noted:  “Under New Jersey law, an indirect purchaser cannot succeed on a claim for unjust enrichment.  When an individual purchases a consumer product from a third-party store and not the manufacturer, the purchaser has not conferred a benefit directly to the manufacturer such that the manufacturer could be found to have been unjustly enriched.”

Other claims went away because of pleading deficiencies that could present lasting difficulties for plaintiffs.  For their express warranty claims, the plaintiffs didn’t allege that they gave Samsung America the required notice during the warranty period.  While the plaintiffs may turn around and simply add the notice element to their amended pleadings, it may not be so simple.  The notice element adds complexity and individuality to the plaintiffs’ claims, which is never good for plaintiffs in a class action.  It will also reduce the number of potential class members, which is never good for plaintiffs’ attorneys in a class action. 

The plaintiffs also failed to plead sufficient facts to suggest an ascertainable loss under what remained of their New Jersey, Missouri and Colorado consumer fraud act claims.  They alleged no more than that the washing machines were worth less than what they paid for them.  Under TwIqbal (that’s Twombly and Iqbal for the uninitiated), however, plaintiffs must plead facts that make their claim plausible.  These types of conclusory allegations don’t work:

Here Plaintiffs have not alleged how much they paid to purchase, repair or replace their washers.  Instead, Plaintiffs claim broadly that they “have suffered an ascertainable loss in the form of…monies spent to repair and replace the Washing Machines and diminution in value of the Washing Machines.”  For Plaintiffs to adequately plead ascertainable loss, they must set forth more specific facts as to their out-of-pocket loss and/or the alleged diminution in value of the Washing Machines they purchased.  Ultimately, Plaintiffs must make a more detailed attempt to quantify the difference in value between the promised product and the actual product received.

In fact, since each of these consumer fraud act claims are based in fraud, the plaintiffs’ allegations must satisfy the heightened pleading requirement for fraud under Rule 9(b).  Plaintiffs’ allegations that Samsung America knew of the alleged defect in the washing machines didn’t meet this standard either:

The Complaints do not pinpoint a specific time at which Samsung allegedly became aware of the purported defect.  Plaintiffs’ Complaints allege that Samsung received an “avalanche of consumer complaints.”  However, Plaintiffs fail to identify a particular complaint, who it was made by, who it was received by, or when it would have put Samsung on notice of the alleged defect.  Overall, the Complaints do not provide sufficient factual allegations to establish that Samsung knew of the alleged defects prior to the sale at issue in this litigation.

This was an additional reason to dismiss the consumer fraud act claims.

Now, it is true that the plaintiffs will have an opportunity to amend their complaint.  And they may or may not fix some of these problems.  But they’ve been hobbled a bit.  The purchasers outside of New Jersey will not have treble damages available to them.  Those who failed to give notice to Samsung America during the warranty period cannot be members of the potential class or may become members of a much smaller class, all of which may tempt the plaintiffs to drop that claim altogether.  And stating a proper complaint, particularly as to the consumer fraud act claim elements, has now become more costly and difficult for the plaintiffs.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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