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Callaghan v. BMW of North America, LLC

United States District Court, N.D. California, San Francisco Division

April 2, 2014

MICHAEL CALLAGHAN, MATTHEW CALDWELL, RODNEY PENA, JEANNE DOSE-ALDERSON, and STEVE MUELLER individually, and on behalf of other members of the public similarly situated, Plaintiffs,
v.
BMW of NORTH AMERICA, LLC, a New Jersey limited liability company, and BAYERISCHE MOTOREN WERKE AG, a corporation organized under the laws of the Federal Republic of Germany, Defendant.

ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS AND DENYING MOTION TO STRIKE CLASS ALLEGATIONS

RICHARD SEEBORG, District Judge.

I. INTRODUCTION

Plaintiffs bring this putative class action on behalf of themselves and other individuals who have purchased Mini Cooper S models, alleging that defendants failed to disclose a material safety defect concerning the vehicle-to wit that, unbeknownst to plaintiffs, the automatic transmission fluid would need to be replaced at some point during the lifetime of the vehicles. Defendants now move to dismiss the complaint or, in the alternative, to strike plaintiffs' class allegations. For the reasons explained below, defendants' motions to dismiss are granted because the complaint does not sufficiently allege any material misrepresentation or omission and, separately, fails to attribute any of the alleged wrongdoing to Bayerische Motoren Werke AG. The motion to strike is denied.

II. FACTUAL BACKGROUND[1]

Plaintiffs each purchased used, model year 2005 MINI Cooper S vehicles from authorized dealers. As alleged in the complaint, plaintiffs were led by defendants BMW of North America, LLC ("BMW NA") and Bayerische Motoren Werke AG ("BMW AG") (collectively, "BMW Group") to believe their vehicles were equipped with "lifetime" automatic transmission fluid that need never be changed. Over time, each plaintiff reports, his or her transmission suffered problems or failed. As a result, plaintiffs aver that they were forced to spend thousands of dollars to repair or replace their damaged or destroyed transmissions or to sell their vehicles without repair at a substantial loss.

According to plaintiffs, BMW Group promoted the S-Class vehicles as high-quality, low maintenance automobiles that required little, if any maintenance or repair. For example, plaintiffs point to the Maintenance Program currently described on the BMW Group website, which boasts "NO COST MAINTANCE & WARRANTY" and "BOOT TO BONNET NO COST MAINTENANCE" for the first 3-years or 36, 000 miles for every new Mini. The web site copy included in the complaint makes no reference to the vehicles' transmission fluid. Nor does the "Service and Warranty Information" booklet provided by defendants for each S-Class vehicle specify any time period in which to change the transmission fluid, in contrast to other recommendations including oil service and ongoing inspections. Plaintiffs note that the instructions for one recommended inspection indicated that the service facility should "change CVT (automatic) transmission fluid" for MINI Cooper vehicles, but omits any such directive for the Mini S-Class.

Plaintiffs also point to a technical service bulletin issued by BMW Group to authorized dealerships and repair facilities suggesting that the transmission fluid should be changed "every 100, 000 miles." According to plaintiffs, this recommendation exceeds the "industry standard" that automatic transmission fluid needs to be replaced after approximately every 30, 000 miles. The complaint, however, identifies no affirmative statements by defendants to consumers referring to the transmission fluid as lasting a "lifetime" or recommending any particular timeline for inspecting or changing the fluid.

Plaintiffs each allege having experienced transmission problems with their used S-Class vehicles at some time after purchase. For example, Michael Callaghan purchased a used 2005 model with approximately 65, 445 miles in April 2011. At some unspecified time after that purchase, Callaghan began experiencing problems with the vehicle's transmission. According to the complaint, the vehicle had accrued approximately 69, 000 miles when he took it in for repairs in November 2012, at which time he was quoted a replacement cost of $8, 000 for a new transmission. The complaint does not aver the cause of his transmission failure.

Plaintiffs also point to various consumer complaints to the National Highway Traffic and Safety Administration reporting transmission problems with S-Class vehicles. One of the quoted complaints suggested that the transmission failed 1 year or 8, 000 miles after the car was purchased new. Another suggested the problem began seven years and an unspecified number of miles driven after the initial purchase.

Plaintiffs seek to represent a nationwide class of consumers who purchased or leased one of the S-Class vehicles, as well as subclasses of consumers from California, New York, Washington, and Alabama. Plaintiffs allege violations of the consumer protection statutes in California, New York, New Jersey, and Washington; negligence; and suppression of a material fact under Alabama statutory law. They further allege that any applicable statutes of limitations were tolled by BMW Group's knowing and active concealment of the facts alleged in the complaint.

Defendants move to dismiss each of these claims for lack of standing and failure to state a claim. BMW AG also moves separately to dismiss on the grounds that it did not market the vehicle in the United States and was not directly involved with the sales transactions at issue in the complaint. Defendants further move to strike the class allegations.

III. LEGAL STANDARD

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) challenges the court's subject matter jurisdiction over the asserted claims. A jurisdictional challenge under Rule 12(b)(1) may be made either on the face of the pleadings or by presenting extrinsic evidence. Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003). A district court accepts all allegations of fact in the complaint as true and construes them in the light most favorable to the plaintiff. Zimmerman v. City of Oakland, 255 F.3d 734, 737 (9th Cir. 2001).

To survive a Rule 12(b)(6) motion to dismiss for failure to state a claim, the complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). "Pleadings must be so construed so as to do justice." Fed.R.Civ.P. 8(e). While "detailed factual allegations are not required, " a complaint must have sufficient factual allegations to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible "when the pleaded factual content allows the court to draw the reasonable inference that the defendant ...


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