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In re General Motors LLC Ignition Switch Litigation

United States District Court, S.D. New York

June 30, 2017

IN RE GENERAL MOTORS LLC IGNITION SWITCH LITIGATION This Document Relates To All Actions

          OPINION AND ORDER

          JESSE M. FURMAN, UNITED STATES DISTRICT JUDGE

         [Regarding New GM's Partial Motion To Dismiss the Fourth Amended Consolidated Class Action Complaint]

         INTRODUCTION...........................................................................................................................1

         BACKGROUND.............................................................................................................................3

         LEGAL STANDARDS...................................................................................................................5

         DISCUSSION..................................................................................................................................7

         A. Brand Devaluation Claims.......................................................................................7

         B. Damages for Lost Time.........................................................................................12

         C. The Relevant Time Period for New GM's Economic Loss Liability....................17

         D. State Law Claims...................................................................................................23

         1. Alabama.....................................................................................................23

         a. The ADTPA...................................................................................24

         b. Fraudulent Concealment................................................................28

         c. Unjust Enrichment.........................................................................32

         2. Illinois........................................................................................................33

         a. The ICFA.......................................................................................34

         b. Fraudulent Concealment................................................................39

         c. Unjust Enrichment.........................................................................42

         3. Massachusetts............................................................................................46

         a. The Massachusetts CPA................................................................47

         b. Unjust Enrichment.........................................................................49

         4. Michigan....................................................................................................51

         a. The MCPA.....................................................................................52

         b. Fraudulent Concealment ................................................................ 59

         c. Breach of Implied Warranty .......................................................... 62

         d. Unjust Enrichment ......................................................................... 63

         5. New York ................................................................................................... 66

         a. GBL Section 349 ............................................................................ 68

         b. Fraudulent Concealment ................................................................ 72

         c. Unjust Enrichment ......................................................................... 75

         6. Pennsylvania .............................................................................................. 77

         a. Economic Loss Doctrine ................................................................ 79

         b. Manifestation ................................................................................. 80

         c. The UTPCPL ................................................................................. 87

         d. Fraudulent Concealment ................................................................ 90

         e. Unjust Enrichment ......................................................................... 95

         7. Texas .......................................................................................................... 98

         a. The Texas DPTA ......................................................................... 100

         b. Fraudulent Concealment .............................................................. 110

         c. Unjust Enrichment ....................................................................... 113

         8. Wisconsin ................................................................................................. 115

         a. The WDTPA ................................................................................ 116

         b. Fraudulent Concealment .............................................................. 125

         c. Unjust Enrichment ....................................................................... 125

         CONCLUSION ............................................................................................................................ 127

         INTRODUCTION

         This multidistrict litigation (“MDL”), familiarity with which is assumed, arose from the recall in February 2014 by General Motors LLC (“New GM”) of General Motors (“GM”) vehicles that had been manufactured with a defective ignition switch - a switch that could too easily move from the “run” position to the “accessory” and “off” positions, causing moving stalls and disabling critical safety systems (such as the airbag). Following that recall, New GM recalled millions of other vehicles, some for ignition switch-related defects and some for other defects. In this litigation, Plaintiffs seek recovery on behalf of a broad putative class of GM car owners and lessors whose vehicles were subject to those recalls, arguing that they have been harmed by, among other things, a drop in their vehicles' value due to the ignition switch defect and other defects. Their operative complaint - the Fourth Amended Consolidated Complaint or “FACC” - runs to over a 1700 pages and 7500 paragraphs, and includes claims under state law brought by named Plaintiffs in all fifty states and the District of Columbia.

         In conjunction with the parties, the Court decided early on not to entertain a motion to dismiss all of the Plaintiffs' economic loss claims at once - given, among other things, the number and scope of those claims; the possibility that the litigation would be materially affected by parallel proceedings in (and arising out of) bankruptcy court; and the likelihood that the parties could ultimately agree upon how the Court's rulings as to some state law claims would apply to others, saving the need for the parties to brief and the Court to decide the same issues in fifty-one different jurisdictions. In an opinion filed almost exactly one year ago with respect to the then-operative Third Amended Consolidated Complaint (“TACC”), the Court ruled on the validity of, among other things, Plaintiffs' claims in eight jurisdictions. Since that time, Plaintiffs filed the FACC and New GM filed another partial motion to dismiss, pursuant to Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure, focusing - by agreement - on the claims of Plaintiffs from eight jurisdictions that were not addressed in the Court's last Opinion. This Opinion and Order addresses those claims and a few issues that are not state-specific (that is, that apply to all Plaintiffs' claims) - namely, a revised version of Plaintiffs' “brand devaluation” theory of damages, which was pled in the TACC and dismissed in the Court's last Opinion; Plaintiffs' claims for damages in the form of “lost time” spent having their vehicles repaired; and the viability of economic loss claims brought by Plaintiffs who purchased their vehicles before New GM came into existence on July 10, 2009, or who disposed of their vehicles prior to GM's announcement of the recalls in 2014. .

         For the reasons stated below, New GM's motion to dismiss is GRANTED in part and DENIED in part. More specifically, it is GRANTED with respect to Plaintiffs' repleaded “brand devaluation” claims, but DENIED with respect to Plaintiff's lost-time-to repair claims. Additionally, it is GRANTED with respect to Plaintiffs who purchased their vehicles prior to New GM's inception or disposed of their vehicles prior to the recall announcement. And finally, New GM's motion to dismiss Plaintiffs' claims in Alabama, Illinois, Massachusetts, Michigan, New York, Pennsylvania, Texas, and Wisconsin is GRANTED in part and DENIED in part, depending on, among other things, whether each state's law allows claims in the absence of a manifested defect, requires a special trust relationship between the parties for a duty to disclose to arise, and permits plaintiffs to plead both contract claims and unjust enrichment claims. Ultimately, for the reasons that follow, most of Plaintiffs' consumer fraud, fraudulent concealment, and breach of implied warranty claims survive, while the bulk of Plaintiffs' unjust enrichment claims must be and are dismissed.

         BACKGROUND

         The underlying facts giving rise to this MDL proceeding are set forth in this Court's prior opinions, familiarity with which is presumed. See, e.g., In re General Motors LLC Ignition Switch Litig., 14-MD-2543 (JMF), 2016 WL 3920353 (S.D.N.Y. July 15, 2016). To the extent relevant here, pursuant to a Sale Order entered on or about July 10, 2009, New GM emerged from the bankruptcy of General Motors Corporation (“Old GM”) as the operative GM business entity and the largest car manufacturer in the world. (Docket No. 3356 (“FACC”) ¶¶ 291, 336, 873). Prior to the bankruptcy, however, Old GM personnel learned of a defect with the ignition switches in certain car models that allowed them to move from the “run” to the “off” or “accessory” positions too easily. See In re Gen. Motors, 2016 WL 3920353, at *3. New GM opened several investigations into incidents - including fatal crashes - involving the defective ignition switch, but ultimately did not recall any vehicles until February 2014. See Id. at *4. Thereafter, between 2014 and 2015, New GM issued more than eighty-four recalls relating to more than seventy defects and affecting over twenty-seven million GM cars. Id.

         On June 12, 2014, the Judicial Panel on Multidistrict Litigation transferred to this Court fifteen actions relating to the alleged ignition switch defect for “coordinated or consolidated pretrial proceedings” pursuant to Title 28, United States Code, Section 1407. (Docket No. 1). The MDL has since grown to hundreds of cases (comprised of several thousand individual claims), with new cases transferred to, or filed directly with, the Court every month. Broadly speaking, the Court and the parties have divided the cases into two categories: personal injury and wrongful death claims, on the one hand, and economic loss claims, on the other. (See Docket No. 215). With respect to the latter, at issue here, the Court ordered Plaintiffs to proceed by submitting a “master” consolidated complaint that would supersede individual complaints, at least for purposes of pretrial proceedings (including motion practice). See In re Gen. Motors, 2016 WL 3920353, at *5; In re General Motors LLC Ignition Switch Litig., No. 14-MD-2543 (JMF), 2015 WL 3619584, at *10 (S.D.N.Y. June 10, 2015).

         Plaintiffs did so, and later amended the consolidated complaint twice. On February 24, 2016, New GM filed a partial motion to dismiss the then-operative TACC. (Docket No. 2356). In an opinion entered on July 15, 2016, the Court granted New GM's motion in part and denied it in part. See In re Gen. Motors, 2016 WL 3920353. In particular, the Court dismissed Plaintiffs' claims under the federal Racketeer Influenced and Corrupt Organization (“RICO”) Act, 18 U.S.C. § 1961, et seq., and rejected Plaintiff's broadest theory of damages, which it called the “brand devaluation theory.” See Id. at *7-18. The Court characterized the “brand devaluation theory” of damages as “unprecedented and unsound, ” after finding that “persuasive precedent interpreting consumer protection law and general principles of tort recovery” precluded it from being a basis for recovery. Id. at *2, 42. The Court also considered Plaintiffs' claims under the laws of eight different states, upholding the majority of Plaintiffs' consumer fraud, common law fraud, and implied warranty claims while dismissing the bulk of their unjust enrichment and negligence claims. See Id. at *18-42.

         On September 15, 2016, Plaintiffs filed the FACC at issue here. The FACC asserts claims on behalf of a class of millions of Old GM and New GM vehicle owners whose vehicles were affected by various alleged defects and recalls. (See FACC 2-4). The FACC defines the plaintiff class as “[a]ll persons who bought or leased (i) a Delta Ignition Switch Vehicle on or before February 14, 2014; (ii) a Low Torque Ignition Switch Vehicle prior to July 3, 2014; (iii) a Knee-to-Key Camaro Defect Vehicle prior to July 3, 2014; (iv) a Side Airbag Defect Vehicle prior to March 17, 2014; and/or (v) a Power Steering Defect Vehicle Prior to April 1, 2014.” (Id. ¶ 34; see also Id. at 2-3; Docket No. 3578 (“GM Mem.”), at 2-7). It does not seek damages for physical injury or property damage; nor does it allege that Plaintiffs were promised defect-free vehicles. Instead, Plaintiffs allege that their vehicles diminished in value because of the recalls and New GM's alleged conduct. (FACC ¶¶ 32-33, 44, 1104). They also allege that “all Plaintiffs incurred damages in at least the form of lost time required to repair their vehicles.” (E.g., FACC ¶ 1145). Plaintiffs bring a variety of state law claims, sounding in consumer fraud, common law fraud, implied warranty, and unjust enrichment. By agreement between the parties, the instant motion is largely limited to claims of the named Plaintiffs who reside in eight states not addressed in New GM's motion to dismiss the TACC: Alabama, Illinois, Massachusetts, Michigan, New York, Pennsylvania, Texas, and Wisconsin. (Docket No. 3431).[1]

         LEGAL STANDARDS

         In evaluating a motion to dismiss, a court must accept all facts set forth in the complaint as true and draw all reasonable inferences in the plaintiff's favor. See, e.g., Burch v. Pioneer Credit Recovery, Inc., 551 F.3d 122, 124 (2d Cir. 2008) (per curiam). A claim will survive a Rule 12(b)(6) motion, however, only if the plaintiff alleges facts sufficient “to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). A plaintiff must show “more than a sheer possibility that a defendant has acted unlawfully, ” id., and cannot rely on mere “labels and conclusions” to support a claim, Twombly, 550 U.S. at 555. If the plaintiff's pleadings “have not nudged [his or her] claims across the line from conceivable to plausible, [the] complaint must be dismissed.” Id. at 570.

         To the extent that a plaintiff alleges fraud, as Plaintiffs do here, Rule 9(b) requires a plaintiff to plead claims “with particularity, ” specifying “the circumstances constituting fraud.” Fed.R.Civ.P. 9(b). Rule 9(b) “provides that a party alleging fraud ‘must state with particularity the circumstances constituting fraud or mistake, ” to ensure that the defendant has “fair notice of a plaintiff's claim and adequate information to frame a response.” United States v. Wells Fargo Bank, 972 F.Supp.2d 593, 615 (S.D.N.Y. 2013). Generally, to satisfy Rule 9(b), a complaint must “(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” Lerner v. Fleet Bank, N.A., 459 F.3d 273, 290 (2d Cir. 2006) (internal quotation marks omitted). For fraud claims premised on concealment, a plaintiff must allege “(1) what the omissions were; (2) the person responsible for the failure to disclose; (3) the context of the omissions and the manner in which they misled the plaintiff; and (4) what the defendant obtained through the fraud.” Schneider v. Pearson Educ., Inc., 12-CV-6392 (JPO), 2013 WL 1386968, at *4 (S.D.N.Y. Apr. 5, 2013). Notably, “where the alleged fraudulent scheme involved numerous transactions that occurred over a long period of time, courts have found it impractical to require the plaintiff to plead the specifics with respect to each and every instance of fraudulent conduct.” Wells Fargo Bank, 972 F.Supp.2d at 616 (internal quotation marks omitted). Failure to satisfy the Rule 9(b) standard, if applicable, is grounds for dismissal. See, e.g., Lerner, 459 F.3d at 293; Slayton v. Am. Express Co., 604 F.3d 758, 766 (2d Cir. 2010).

         DISCUSSION

         As noted, New GM's present motion is largely limited to claims of the named Plaintiffs from eight new states: Alabama, Illinois, Massachusetts, Michigan, New York, Pennsylvania, Texas, and Wisconsin. As in the earlier opinion concerning New GM's partial motion to dismiss the TACC, the Court will address each state separately because there are differences, small and large, in the relevant law from one state to the next. Before doing so, however, the Court will address three broader (that is, non-state-specific) arguments made by New GM - namely, that the Court should dismiss (1) Plaintiffs' revised version of the “brand devaluation” theory; (2) Plaintiffs' claims for “lost time” (that is, time devoted to repairing vehicles as part of the recalls); and (3) benefit-of-the-bargain claims brought on behalf of (a) Plaintiffs who purchased their vehicles before July 2009, when New GM was created, and (b) Plaintiffs who disposed of their vehicles before New GM announced its recalls in 2014.[2]

         A. Brand Devaluation Claims

         As an initial matter, New GM moves to dismiss the FACC to the extent that it repleads the brand devaluation claims that the Court dismissed in its prior Opinion. (Docket No. 3547 (“GM Supp. Br.”), at 1; see also Docket No. 3543; Nov. 10, 2016 Status Conf. Tr. 33-35). In its prior Opinion, the Court dismissed that theory of damages “as unprecedented and unsound.” In re Gen. Motors, 2016 WL 3920353, at *42. The Court reasoned that the theory was unprecedented in both its breadth and scope in at least two respects. First, it was brought on behalf of anyone who owned a GM brand car - without regard for whether a car had a defect. See Id. at *7. Second, if recognized, it would amount to an indefinite guarantee of both “the product's resale value and the brand's continuing good name.” Id. The Court acknowledged that “labels and brands have independent economic value, ” yet stated that “it does not follow that a consumer can recover if he or she buys a defect-free and functional product that performs as expected, but the company's actions somehow affect the value of the company's brand.” Id. at *8. Indeed, the Court noted that doing so might well have perverse effects: It might over-deter manufacturers and “diminish the resources available to plaintiffs who have been more directly injured by the manufacturer's products.” Id. at *9. “If such a sea change in consumer protection policy and law [was] warranted, ” the Court ultimately concluded, “it should emerge from the legislative, not the judicial, realm.” Id.

         Plaintiffs replead the brand devaluation theory in the FACC, but contend that they do so in a “narrowed and revised” form that cures the defects identified by the Court in its last Opinion. (FACC ¶ 1086; Docket No. 3438 (“Pls.' Ltr.”), at 1). Specifically, Plaintiffs identify two differences between the brand devaluation claims pleaded in the TACC and the brand devaluation claims pleaded in the FACC. First, Plaintiffs amended their brand devaluation claims to apply only to “Plaintiffs and putative class members who have (or had) defective cars.” (Docket No. 3546 (“Pls.' Supp. Br”), at 2). Second, “the FACC incorporates the work of a brand expert and explains how the theory applies in this specific context to affected cars.” (Id. (citing FACC ¶¶ 308-335). That is, “[t]he FACC makes allegations about how the repeated recalls had a negative impact on the brands and models that were recalled, about the relationship of New GM to its sub-brands, about New GM's brand architecture, and it identifies some of the primary variables that will inform the calculation of the spillover effect of the ignition switch recalls to other recalled cars.” (Id. (citing FACC ¶¶ 332-335). New GM counters that these changes are immaterial for either of two reasons: (1) because the Court dismissed the brand devaluation claims in the TACC with prejudice; and (2) because, in any event, the claims, as amended, still fall short. (GM Supp. Br. 2-8). The Court agrees with New GM on both scores.

         First, New GM is correct that the Court dismissed Plaintiffs' brand devaluation claims with prejudice. In its motion to dismiss the TACC, New GM certainly asked that Plaintiffs' brand devaluation claims be dismissed with prejudice. (Docket No. 2357, at 1-3). And while the Court was silent on the issue in its Opinion, see 2016 WL 3920353 at *42, the law deems such silence to mean dismissal with prejudice, see, e.g., Lerma v. Falks, 338 F. App'x 472, 474 (5th Cir. 2009) (“The district court's dismissal, though, will be construed as a dismissal with prejudice because it was silent on the issue.”); Stern v. Gen. Elec. Co., 924 F.2d 472, 477 n.7 (2d Cir. 1991) (“A district court's dismissal under rule 12(b)(6) is, of course, with prejudice unless it specifically orders dismissal without prejudice.”); Crawford v. W.V. Governor's Office, 935 F.2d 1285 (4th Cir. 1991) (per curiam) (noting that final orders that were “silent” as to whether a dismissal is with or without prejudice “indicat[e] dismissal with prejudice”). Notably, Plaintiffs themselves come close to conceding as much. In a footnote in the FACC itself, for example, they state that their brand devaluation “allegations remain in the Complaint to preserve these claims for appeal.” (FACC 1 n.1 (emphasis added)). And in their memorandum of law in opposition to New GM's motion to dismiss (which Plaintiffs filed after they had briefed the question of whether the Court's earlier dismissal was with or without prejudice), they note that the FACC includes “enhanced brand diminution allegations for appellate purposes.” (Docket No. 3661 (“Pls.' Opp'n”), at 4-5 (emphasis added)).[3]

         Plaintiffs concede that “12(b)(6) dismissals unrelated to pleading infirmities . . . are generally with prejudice, even if silent as to the point.” (Pls.' Ltr. 1-2). Nevertheless, they argue that the Court “made clear that further amendments - without limitation - were authorized” in the final paragraph of its earlier Opinion. (Id. at 2). That argument barely passes the laugh test.

         The final paragraph of the Court's earlier Opinion read in full:

Although this ruling addresses only some of the claims in the TACC, it will undoubtedly inform the parties with respect to the viability of other claims and, more generally, bear upon the further progress of the MDL. The July 13, 2016 ruling from the Second Circuit, which held that purchasers of Old GM cars with ignition switch defects can bring claims for Old GM's wrongdoing against New GM has, in all likelihood, also substantially redefined the scope of the claims that may proceed. The parties should be prepared to discuss the implications of this Court's ruling and the Second Circuit's ruling at the July 28, 2016 status conference - including but not limited to implications for the next phase of discovery. (See Docket Nos. 1569, 2156). Additionally, within thirty days from the date of this Opinion and Order, Plaintiffs shall submit their proposed amendments to the TACC. (See Docket No. 2323).

In re Gen. Motors, 2016 WL 3920353, at *42. Nowhere in that paragraph (or elsewhere in the Opinion, for that matter) did the Court grant Plaintiffs carte blanche to re-plead the claims that had been found deficient. To be sure, the Court did invite Plaintiffs to submit “proposed amendments to the TACC” within thirty days, id., but that invitation - as the citation to Docket No. 2323 made clear - was limited to Plaintiffs' agreement “to make certain amendments to the TACC” to comply with rulings of the Bankruptcy Court. (Docket No. 2323, at 2; see also Docket No. 2389 (adopting the parties' proposal regarding the proposed amendments)). Accordingly, to the extent the Court dismissed Plaintiffs' claims - including their brand devaluation claims - that dismissal was plainly with, not without, prejudice.

         Second, and in any event, Plaintiffs' revised brand devaluation claims still fail as a matter of law. See, e.g., Williams v. Citigroup Inc., 659 F.3d 208, 214 (2d Cir. 2011) (noting that a court need not grant leave to amend when “where the proposed amendment would be futile” (internal quotation marks omitted)). The FACC's new paragraphs about the importance of labels and brands do little more than provide a factual basis for the proposition that “labels and brands have independent economic value” - a proposition explicitly accepted by the Court in its earlier Opinion. See In re Gen. Motors, 2016 WL 3920353, at *8. And while the revised claims are brought on behalf of a narrower universe of Plaintiffs - namely, “Plaintiffs and putative class members who have (or had) defective cars” (Pls.' Supp. Br. 2) - that does not make them any less “unprecedented and unsound.” In re Gen. Motors, 2016 WL 3920353, at *42. For one thing, Plaintiffs provide no conceptual basis for narrowing the universe of plaintiffs who could recover under their theory; that is, ipse dixit aside, they identify no limiting principle that would justify applying the brand devaluation theory to only a subset of GM car owners generally, all of whom the theory would view as having suffered harm. Additionally, whether the claims are asserted on behalf of all GM car owners or some subset of that universe, the claims suffer from the more fundamental problems identified in the Court's earlier opinion - namely, that existing law does not provide a guarantee of both “the product's resale value and the brand's continuing good name.” Id. at *7.

         As they did in their briefing in opposition to New GM's motion to dismiss the TACC, Plaintiffs rely primarily (if not exclusively) on In re Toyota Motor Corp., 790 F.Supp.2d 1152 (C.D. Cal. 2011). (See Pls.' Supp. Br. 5). But that decision does not support Plaintiffs' argument, let alone bear the weight that Plaintiffs would put on it. Far from acknowledging the brand devaluation theory, the Toyota Court merely recognized that the plaintiffs in that case had established injury-in-fact as a result of their defective cars under the benefit-of-the-bargain theory. See 790 F.Supp.2d at 1165 (“Because every lead Plaintiff alleges a safety defect, and defective cars are not worth as much as defect-free cars, Plaintiffs plausibly establish an economic loss.”); see also In re Gen. Motors, 2016 WL 3920353, at *8 (noting that the Toyota Court recognized the plaintiffs to have a claim solely under the benefit-of-the-bargain defect theory). More broadly, the portion of the Toyota opinion upon which Plaintiffs here rely concerns the question of standing, not the viability of any particular damages theory. See In re Toyota, 790 F.Supp.2d at 1166 (finding injury-in-fact for a plaintiff that “plausibly established an economic loss by alleging that he saw the trade-in value of his 2007 Toyota Sienna drop according to various sources ‘once the recalls were made public'”). And as the Toyota Court itself observed, “[a]n injury-in-fact differs from a ‘legal interest'; an injury-in-fact need not be capable of sustaining a valid cause of action under applicable tort law.” Id. at 1160 (quoting Denney v. Deutsche Bank AG, 443 F.3d 253, 264-65 (2d Cir. 2006). Thus, Toyota provides no more support with respect to Plaintiffs' amended brand devaluation claims than it did with respect to their original claims, and those claims remain dismissed.

         B. Damages for Lost Time

         Next, New GM moves to dismiss Plaintiffs claims to the extent that they seek damages in the form of “lost time” - that is, the time they spent getting repairs done on their defective vehicles in connection with the recalls. (See GM Mem. 24-25; Docket No. 3734 (“GM Reply”), at 13-14; see also, e.g., FACC ¶¶ 1145, 2794, 3790, 3918, 5182, 5958, 6573, 7298; Pls.' Opp'n 28-29). New GM contends that time spent having a vehicle repaired for free as part of a recall does not constitute a legally cognizable or compensable injury. (See GM Mem. 24-25; GM Reply 13-14). Significantly, however, it frames that argument in categorical terms. That is, New GM does not move to dismiss Plaintiffs' claims under the law of any particular jurisdiction (either the eight states that are the focus of this round of motion practice or otherwise); instead, it argues that Plaintiffs' theory of damages for lost time - a theory alleged for the first time in the FACC - fails as a matter of law, without regard for the substantive law to be applied. In light of that, the question for present purposes is whether any jurisdiction would recognize Plaintiffs' theory of “lost time” damages. If so, then New GM's motion can be denied, and the question of whether any particular Plaintiff has a viable claim for “lost time” damages under his or her jurisdiction's law can be postponed to another day.

         The Court concludes that some states do recognize “lost time” as a valid theory of consequential damages. Consequential damages are generally “defined as damages which arise from special circumstances that make them probable, although they would be unusual apart from such circumstances.” Nat'l Investor Servs. Corp. v. Integrated Fund Servs., Inc., 85 F. App'x 779, 781 (2d Cir. 2004) (summary order) (internal quotation marks omitted). By contrast, general damages are “the natural and probable consequence of the breach.” Id. While all states permit the recovery of general damages in some form, states diverge with respect to the availability of consequential damages and, in particular, whether lost time can be recovered as a form of consequential damage. For example, courts in Illinois - one of the states at issue here - have recognized “lost time” as a viable theory of damages. See, e.g., Fed. Ins. Co. v. J.K. Mfg. Co., 933 F.Supp.2d 1065, 1073 (N.D. Ill. 2013) (“Economic loss includes some incidental and consequential losses as lost profits, rental expenses and lost time.” (emphasis added) (quoting Reed v. Central Soya Co., 621 N.E.2d 1069, 1074 (Ind. 1993))); Dacor Corp. v. Sierra Precision, 753 F.Supp. 731, 732-733 (N.D. Ill. 1991) (declining to dismiss the plaintiff's request for “incidental and consequential damages flowing from the recall of the defective products” as duplicative of the request for “damages in an amount equal to the difference between the value” of the product as sold versus the value of the product as warranted).

         More broadly, as Plaintiffs note (Pls.' Opp'n 28-29), most state courts construe their consumer protection statutes to permit recovery beyond actual damages, including incidental and consequential damages. See, e.g., Jersild v. Aker, 775 F.Supp. 1198, 1206 (E.D. Wis. 1991) (discussing the Wisconsin Supreme Court's acknowledgment that damage measures must be flexible depending “on the nature of the bargain and the circumstances of each case, ” such that parties can be entitled to “indirect or consequential damages” if not duplicative of direct damages); Stutman v. Chem. Bank, 731 N.E.2d 608, 612 (N.Y. 2000) (requiring a plaintiff to prove only actual injury rather than “pecuniary harm” to recover under New York's consumer protection statute); Hauf v. Life Extension Found., 547 F.Supp.2d 771, 780 (W.D. Mich. 2008) (observing that the Michigan consumer protection statute is “remedial” and “must be liberally construed to achieve its intended goals, ” such that a plaintiff can recover for a broad array of damages, even for injuries such as mental distress (quoting Forton v. Laszar, 609 N.W.2d 850, 853 (Mich. Ct. App. 2000))); Aspinall v. Philip Morris Cos., 813 N.E.2d 476, 492 (Mass. 2004) (observing that defendants “confused issues of whether the plaintiffs will be able to prove actual damages with whether they have been injured by the defendants' allegedly unlawful conduct, ” which would entitled them to damages regardless under the Massachusetts consumer protection statute). In light of these examples, New GM's categorical challenge to Plaintiffs' claims for “lost time” damages falls short.

         In fact, despite New GM's claims to the contrary (GM Reply 13-14), some courts have even recognized “lost time” as a basis for recovery in cases involving vehicle recalls. See, e.g., Frederick v. DaimlerChrysler Corp., No. 05-CV-2085 (JWL), 2005 WL 1319135, at *2 (D. Kan. May 12, 2005) (remanding to state court a case in which the plaintiffs were seeking, inter alia, “[c]ompensation for loss of time, loss of vehicle use, rental car expenses, inconvenience, and consequential damages” incurred for having their Grand Cherokees serviced and repaired); In re Myford Touch Consumer Litig., No. 13-CV-3072 (EMC), 2016 WL 7734558, at *15-17 (N.D. Cal. Sept. 14, 2016) (declining to certify a class where the plaintiffs “presented no methodology at all” relating to incidental and consequential damages, particularly because the plaintiffs did not even tell the court whether “they [sought] to recover for the loss of time in taking their vehicles to Ford to repair” and, if so, whether that would “include time driving their vehicles to and from Ford for repair” and “[l]ost wages as a result”); Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353, 357 n.1 (3d Cir. 2015) (considering, for purposes of diversity jurisdiction, the scope of damages pleaded by the plaintiffs “including but not limited to costly repairs, loss of vehicle use, substantial loss in value and resale value of the vehicles, and other related damages”); Ford Motor Co. v. Ocanas, 138 S.W.3d 447, 449-50 (Tex. App. 2004) (considering the trial court's certification of a class where the damages sought included, among other things, “loss of use of the vehicle during the time of replacement”).

         Hadley v. Chrysler Group LLC, 624 F. App'x 374 (6th Cir. 2015), upon which New GM relies, does not call for a different conclusion. In Hadley, the plaintiffs alleged injuries “in the form of the diminished value and loss of enjoyment of their vehicle, the cost of having their airbag system diagnosed or repaired, and the expense incurred from having to obtain alternative means of transportation.” Id. at 377. The Sixth Circuit dismissed the claims on standing grounds because, in relevant part, the plaintiffs had failed to allege that they ever stopped using their vehicle as a result of the defect or repairs. See Id. at 378-79. Thus, the Hadley Court did not reach the question of whether a party can recover damages for “lost time” (or, as framed in that case, “lost use”), particularly when a plaintiff can “establish a casual connection” between his or her injuries and the defendant's misconduct. Id. at 378. On top of that, this Court previously distinguished Hadley and the other cases relied on by New GM because the plaintiffs in those cases were “seeking declaratory and injunctive relief for existing defects through a court-ordered recall.” In re Gen. Motors, 2016 WL 3920353, at *40. By contrast, Plaintiffs here “seek to recover damages from New GM for fraud - not to obtain declaratory and injunctive relief for existing defects.” Id. Accordingly, the Court sees no reason why Plaintiffs (who plainly have standing to sue) should not be entitled to consequential damages if they are able to make out the necessary elements under the applicable state law.

         None of this is to say that Plaintiffs in every jurisdiction will be able to recover for “lost time”; there may well be states that do (or would) not recognize “lost time” as a valid theory of damages. Additionally, with respect to jurisdictions that do recognize “lost time” as a valid theory, Plaintiffs may face obstacles to certification of a class. Compare, e.g., In re Myford Touch, 2016 WL 7734558, at *17 (“Absent a clear model, the Court might be tasked with conducting individualized inquiries into how each class member was harmed, not just into the extent of the harm. [The p]laintiffs have therefore failed to satisfy Rule 23(b)(3) with respect to their requests for incidental and consequential damages.”), with Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 429-430 (4th Cir. 2003) (“Plaintiffs' other damages claims - those relating to injury to credit, time lost, and loss of enjoyment of life - may require individualized inquiry. But even considering [p]laintiffs' claims against [the defendant] as a whole, we cannot conclude that the district court abused its discretion in finding that at this juncture common issues predominate over the individual issues that may be involved in resolving these claims.”). But those are questions for another day - either in connection with motions for class certification or dispositive motions examining the laws of each applicable state. For present purposes, it suffices to say that some states do recognize the “lost time” theory of damages alleged by Plaintiffs. It follows that New GM's motion to dismiss that theory on a categorical basis is denied.

         C. The Relevant Time Period for New GM's Economic Loss Liability

         Before turning to New GM's state-specific arguments, the Court addresses two final issues that affect Plaintiffs in multiple jurisdictions (including jurisdictions beyond those specifically addressed in New GM's current motion). The first issue is whether Plaintiffs who purchased their vehicles prior to July 10, 2009 - the date on which New GM purchased most of the assets of Old GM as part of the bankruptcy proceedings - can pursue claims for economic loss.[4] New GM contends that they may not, on the ground that any economic injury occurred at the time of sale - prior to New GM's existence - while Plaintiffs argue that New GM's own misconduct caused a decrease in the value of their vehicles, independent from any damages caused by Old GM. (Pls.' Opp'n 23-24). The second issue is whether Plaintiffs who disposed of - that is, sold, traded in, or returned - their vehicles prior to New GM's announcement of the recalls beginning in 2014 can pursue such claims. New GM asserts these Plaintiffs could not have realized any “diminished value” damages because they did not own any affected GM vehicles at the time of the recall; Plaintiffs contend that New GM's argument cannot be squared with its own assertion that the relevant point in time for assessment of benefit-of-the-bargain damages is the date of sale. (GM Mem. 22-24; Pls.' Opp'n 24 n.17).

         The Court agrees with New GM on both issues. As discussed at length in the Court's prior Order (and reaffirmed above in the discussion of the reframed brand devaluation claims), Plaintiffs' injuries here are limited to the “benefit-of-the-bargain defect theory.” See In re Gen. Motors, 2016 WL 3920353, at *7-10. That theory holds “that Plaintiffs who purchased defective cars were injured when they purchased for x dollars a New GM car that contained a latent defect; had they known about the defect, they would have paid fewer than x dollars for the car (or not bought the car at all), because a car with a safety defect is worth less than a car without a safety defect.” Id. at *7. Most relevant here, the theory “does not compensate a plaintiff for a decrease in resale value.” Id. at *10 (emphasis added). Instead, a plaintiff is compensated “for the fact that he or she overpaid, at the time of the sale, for a defective vehicle.” Id. (emphasis added). It follows that Plaintiffs who purchased cars from Old GM suffered an injury before New GM even existed and cannot now recover from New GM for those injuries. Put differently, while New GM's alleged concealment of the ignition switch defect may have caused economic injury to Plaintiffs who purchased their vehicles after New GM came into existence, it did not cause economic injury to Plaintiffs who purchased their vehicles before; the latter Plaintiffs' injury, if any, was complete at the time of sale, and thus is not attributable to New GM's conduct.

         That conclusion is consistent with the decisions of courts confronting similar facts. In Hadley, for example, the plaintiffs argued that they had been injured by the diminished value of their vehicles due to New Chrysler's delay in implementing repairs. See 624 F. App'x at 378. The Hadley Court rejected that argument as follows: “New Chrysler did not manufacture the plaintiffs' vehicle. Old Chrysler did. The plaintiffs have not shown how they suffered diminished-value injuries based on solely on New Chrysler's delay in repairing the [defect].” Id. Similarly, in In re Old Carco LLC, 492 B.R. 392 (Bankr. S.D.N.Y. 2013), the plaintiffs brought claims against New Chrysler, as the purchaser of Carco LLC's assets, even though the plaintiffs owned vehicles that had been manufactured and sold by the then-bankrupt Carco. See Id. at 395-97. With respect to the claims of the plaintiffs who had purchased vehicles before New Chrysler acquired Carco, the Bankruptcy Court concluded: “Each purchased a defective vehicle manufactured by Old Carco that requires more servicing and is worth less money. New Chrysler's failure to warn them that they purchased a defective vehicle manufactured by Old Carco did not proximately cause their economic injury . . . .” Id. at 405. The Bankruptcy Court contrasted those plaintiffs' situations with the situation of a plaintiff who suffered a personal injury as a result of a defect that could have warned about at an earlier date. See Id. In such a case, the Court reasoned, the failure to warn would have “proximately cause[d]” a plaintiff's subsequent injuries. Id.; see also Holland v. FCA U.S. LLC, 656 F. App'x 232, 240 (6th Cir. 2016) (“Even if FCA had warned the [p]laintiffs, nothing would have changed. The only injuries the [p]laintiffs allege involve the costs of the repairs, but the [p]laintiffs would have needed these repairs irrespective of any warning. The injuries were the result of the defect, not FCA's failure to warn. Thus, the [p]laintiffs have failed to sufficiently allege that FCA's failure to warn caused their injury to survive a motion for judgment on the pleadings.”).

         Plaintiffs' attempts to distinguish these cases are weak at best. With respect to In re Old Carco, Plaintiffs make much of the fact that the purchasers in that case had knowledge of the design defects, whereas the purchasers here did not. (See Pls.' Opp'n 27). But that is a distinction without a difference. That is, whether or not Plaintiffs who purchased their vehicles prior to July 10, 2009, knew at the time of their purchase that a defect existed, they still purchased their vehicles prior to the creation of New GM. Moreover, although Plaintiffs are correct that the defendant-manufacturer had issued several recalls relating to the defect at issue in that case (specifically, a fuel-spit back problem), the plaintiffs there were the owners of particular models and years that had not previously been recalled. See In re Old Carco, 492 B.R. at 395-96, 399. Plaintiffs seek to distinguish Hadley (and Holland), meanwhile, on the ground that it did “not involve a massive fraudulent cover-up, but a voluntary recall.” (See Pls.' Opp'n 27). But again, Plaintiffs do not explain why - even taking that difference as true - a cover-up would render New GM liable for economic injuries to Plaintiffs who, by their own admission, were harmed by “depriv[ations] of the benefits of their bargains.” (Id.). Those deprivations took place at the time of sale, and no amount of arm-waving or finger-pointing can change the basic fact that New GM did not exist at that time and thus could not have caused the harm.

         Finally, Plaintiffs rely on state-law cases allowing recovery for “diminished value” (see Pls.' Opp'n 24-26), but those cases are immaterial. The Court does not take New GM to be arguing that “diminished value” can never be a proper measure of damages. Several of the states at issue here plainly permit recovery of that sort in some circumstances. See, e.g., Miller v. William Chevrolet/Geo, Inc., 762 N.E.2d 1, 10 (Ill.App.Ct. 2001) (“Illinois courts have generally allowed damages claims based on diminished value of a product regardless of whether it has yet malfunctioned, provided the product contains a manifested defect or current condition affecting value.”); Parkway Co. v. Woodruff, 901 S.W.2d 434, 441 (Tex. 1995) (“Diminution in value does not duplicate the cost of repairs if the diminution is calculated based on a comparison of the original value of the property and the value after repairs are made.” (emphasis omitted)). But none of the cases cited by Plaintiffs addresses the real issues here: whether “diminished value” damages occur at or after the time of sale and, relatedly, whether an entity that did not exist when the product was sold can be held liable for such damages. See, e.g., Franklin Corp. v. Prahler, 932 N.Y.S.2d 610, 616 (2011) (holding that a plaintiff should be able “to recover the cost of [] diminution in value” where that diminution was caused “by the negligence of the defendant” (emphasis added)). Thus, the Court relies on the reasoning in its prior Opinion and the authority of Hadley, Holland, and In re Old Carco to conclude that the claims of all Plaintiffs who bought their vehicles prior to entry of the Sale Order on must be dismissed.[5]

         This brings the Court to the final non-state-specific issue: New GM's contention that economic loss claims brought by Plaintiffs who sold, traded-in, or returned their vehicles prior to the announcement of the recalls must also be dismissed. (GM Mem. 23-24). Plaintiffs' respond solely by saying “this argument flatly contradicts New GM's argument that only the point of sale is relevant.” (Pls.' Opp'n 24 n.17). But the Court takes New GM to be arguing that, even under Plaintiffs' theory, those who disposed of their vehicles before the recall could not have realized any “diminished value” because they did not own the defective vehicles when the recalls were announced. If so, the Court agrees. Crucially, though, New GM's point is limited to economic loss damages. In all likelihood, a plaintiff who resold her car before the recall suffered no economic loss damages, as the then-unknown defect could not have affected the resale price. See, e, g., Avery v. State Farm Mut. Auto. Ins. Co., 835 N.E.2d 801, 859-60 (Ill. 2005) (finding no actual damages where the plaintiff sold his vehicle for fair market value prior to any public knowledge that certain parts were of inferior quality).

         That said, for reasons not discussed by the parties, it does not necessarily follow that the claims of all such Plaintiffs must be dismissed in their entirety. In theory, a plaintiff who purchased her car after the Sale Order, but sold it before the recall was announced, could still plead and prove damages in the form of out-of-pocket expenses and lost time. For instance, Lisa McClellan, who purchased her car on November 22, 2010, but returned the car to the dealership prior to the announcement of the recalls, alleges that her car “shut off while she was driving at least fifty or sixty times” in the year and a half that she owned it, requiring her to take it to “the service repair shop often.” (FACC ¶ 275). McClellan further alleges that “[s]he suffered economically because of the vehicle, ” presumably because of the need for frequent repairs. (Id.). By contrast, Greg Theobald - the only other Plaintiff who purchased a vehicle from New GM but traded in the car prior to the recalls - does not allege paying for any defect-related repairs or suggest that the defect, even if not announced, had any impact on the amount he received for the car. Accordingly, New GM's motion to dismiss is denied with respect to McClellan and granted with respect to Theobald. Plaintiffs, however, are granted leave to amend to the FACC to allege other damages incurred by Theobald, if any.[6]

         D. State Law Claims

         The Court turns, then, to Plaintiffs' state claims, which sound in consumer fraud, common law fraud, warranty law, unjust enrichment, and negligence. As noted, Plaintiffs bring claims under the laws of all fifty states and the District of Columbia, but this motion deals with claims under the laws of only eight jurisdictions: Alabama, Illinois, Massachusetts, Michigan, New York, Pennsylvania, Texas, and Wisconsin. In their briefs, the parties largely addressed these claims together on an issue-by-issue basis. By contrast - and despite the repetition it entails - the Court will address each claim with respect to each jurisdiction separately, as subtle differences in state law can compel different results ...


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