United States District Court, N.D. California
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
PLAINTIFF SZEP'S CLAIMS IN THE FIFTH AMENDED COMPLAINT
DOCKET NO. 158
EDWARD
M. CHEN, UNITED STATES DISTRICT JUDGE
I.
INTRODUCTION
Plaintiffs
allege that Defendant General Motors (“GM”)
knowingly manufactured and sold a car engine with inherent
defects that caused excessive oil consumption and engine
damage. The defects affect 2010 to 2014 model-year GM
vehicles. Based on those allegations, Plaintiffs assert
claims under various state consumer-protection and fraud
statutes on behalf of a nationwide class as well as
twenty-nine statewide classes. Plaintiffs' original class
action complaint was filed in December 19, 2016. Docket No.
2. They have since amended their pleadings several times, and
the operative complaint is the Fifth Amended Complaint
(“5AC”). Docket No. 157. Before the Court is
Defendant's Motion to Dismiss Plaintiff Szep's Claims
in the Fifth Amended Complaint. Docket No. 158.
II.
BACKGROUND
A.
Factual Background
Although
individual Plaintiffs' discussion of the alleged
defects' impact on their own vehicles has evolved
somewhat since prior complaints, the core factual background
of this case remains the same. Plaintiffs allege that the Gen
IV Vortec 5300 engine suffers from an “inherent”
“Oil Consumption Defect.” 5AC ¶ 7. The
engine was installed in each of the Class Vehicles: the
2010-2014 Chevrolet Avalanche; 2010-2012 Chevrolet Colorado;
2010-2013 Chevrolet Express; 2010-2013 Chevrolet Silverado;
2010-2014 Chevrolet Suburban; 2010-2014 Chevrolet Tahoe;
2010-2013 GMC Canyon; 2010-2013 GMC Savana; 2010-2013 GMC
Sierra; 2010-2014 GMC Yukon; and the 2010-2014 GMC Yukon XL.
Id. ¶ 2.
Plaintiffs
identify five defects that “contribute” to the
overall “Oil Consumption Defect.” Id.
¶ 7-13. First, the “primary cause” is
“piston rings . . . [that] do not maintain sufficient
tension to keep oil in the crankcase.” Id.
¶ 8. Second, the Active Fuel Management (AFM) system
“contributes” to the defect by “spraying
oil directly at the piston skirts, ” which
“overloads and fouls the defective piston rings,
triggering oil migration past the rings.” Id.
¶ 9. Third, the PCV system “vacuums oil from the
valvetrain into the intake system, where it is ultimately
burned in the combustion chambers” contributing to
excessive oil combustion. Id. ¶ 10. Fourth, the
defective “Oil Life Monitoring System” does not
monitor oil level, but rather, engine conditions like
revolutions and temperature to predict oil quality.
Id. ¶ 11. Because it does not take oil
level into account, the system “directs
drivers to travel thousands of miles with inadequate engine
lubricity levels, wearing out and damaging moving internal
engine components.” Id. Fifth, the oil
pressure gauge “does not provide any
indication as to when the oil pressure . . . falls to levels
low enough to damage internally lubricated parts or cause
engine failure” and the oil canister symbol does not
illuminate “until well past the time when the Class
Vehicles are critically oil starved.” Id.
¶ 13. Furthermore, plaintiffs contend that “oil
migration from the Oil Consumption Defect fouls spark plugs
no matter how often drivers top off their oil levels.”
Id. ¶ 14. This problem can, in turn, cause
“engine misfires and shutdown events.”
Id.
Plaintiffs
allege that, GM “instructed its dealers to address the
excessive oil loss problem . . . by performing stop-gap fixes
. . . [and] decarbonize[ing] combustion chambers and rings
with chemical abrasives, ” id. ¶ 15, an
approach which “failed to provide a complete, and
adequate, remedy for the Oil Consumption Defect that has
plagued - and continues to plague - each of the Class
Vehicles.” Id. In 2014, GM replaced the
Generation IV Vortec 5300 Engine with a Generation V version
that was “designed and intended to remedy the excessive
oil consumption problem plaguing the Class Vehicles.”
Id. ¶ 16. Plaintiffs contend, however, that the
change “did nothing for the owners and lessees of the
Class Vehicles, namely, Plaintiffs and the other Class
members . . . [who] remain saddled with their defective
Generation IV Vortec 5300 Engines with no relief from
GM.” Id. ¶ 17. Those owners and lessees
were “damaged in that they paid more for their Class
Vehicles than they would have paid had they known about the
defect that GM failed to disclose, or they would not have
purchased or leased their Class Vehicles at all.”
Id. ¶ 20.
Plaintiffs
allege that “GM has long known of the Oil Consumption
Defect and the resulting engine damage.” Id.
¶ 18. They point to the “extraordinary number of
complaints” GM received about excessive oil consumption
and GM's issuance of “Technical Service
Bulletins” to dealers addressing problems with
excessive oil consumption as evidence of the company's
knowledge. Id. However, Plaintiffs contend that
“[d]espite this knowledge, GM continued selling and
leasing Class Vehicles without ever disclosing the Oil
Consumption Defect. Indeed, GM has never disclosed the Oil
Consumption Defect to consumers.” Id. ¶
19.
Turning
to Thomas Szep's claims in particular, he is a resident
of Mayfield, Ohio, id. ¶ 155, who “owns a
2011 Chevrolet Silverado, equipped with a Generation IV
Vortec 5300 Engine. Mr. Szep purchased his Silverado from Tim
Lallie Chevrolet in Bedford Heights, Ohio, ”
id. ¶ 156. He alleges that “GM failed to
disclose the Oil Consumption Defect to [him] before he
purchased his Silverado, despite GM's knowledge of the
defect, and [he], therefore, purchased his Silverado with the
incorrect understanding that it would be a reliable
vehicle.” Id. ¶ 157. As summarized in
Defendant's Motion to Dismiss Plaintiff Szep's Claims
in the Fifth Amended Complaint, “Szep attempts to bring
five claims under Ohio law: (1) violation of the Ohio
Consumer Sales Practices Act, Ohio Rev. Code Ann.
§§ 1345.01, et seq. (Count 93); (2) breach of
express warranty, Ohio Rev. Code Ann. §§ 1302.26
and 1310.17 (Count 94); (3) breach of implied warranty in
tort (Count 95); (4) fraudulent omission (Count 96); and (5)
unjust enrichment (Count 97). Szep also joins in
Plaintiffs' nationwide claim under the Magnuson Moss
Warranty Act (“MMWA”), but admits . . . he is
re-stating this dismissed claim only to preserve it for
appeal.” Motion to Dismiss Plaintiff Szep's Claims
in the Fifth Amended Complaint (“MTD”) at 1,
Docket No. 158.
B.
Procedural Background
Plaintiffs
all “purchased or leased one or more model year
2010-2013 GM vehicles fitted with GM's defective
Generation IV 5.3 Liter V8 Vortec 5300 engines.” 5AC at
2. The named plaintiffs bring their claims on behalf of a
nationwide class and also seek to represent the following
statewide classes:
-
Named Plaintiff
|
State of Intended Representation
|
Raul Siqueiros
Todd and Jill Cralley
|
California
|
Joseph Brannan
|
Alabama
|
Larry Goodwin
|
Arkansas
|
Marc Perkins
|
Delaware
|
Thomas Shorter
|
Florida
|
Derick Bradford
|
Georgia
|
Gabriel Del Valle
|
Idaho
|
Kevin Hanneken
Katelyn Doepel and Edwin Doepel III
|
Illinois
|
Dan Madson
|
Kansas
|
James Faulkner
|
Kentucky
|
Joseph Olivier
|
Louisiana
|
Scott Smith
|
Massachusetts
|
Ross Dahl
Drew Peterson
|
Minnesota
|
Michael Ware
|
Mississippi
|
Steve Kitchen
|
Missouri
|
John Knoll
|
New Jersey
|
Barbara Molina
|
New Mexico
|
Dennis Vita
|
New York
|
William Davis, Jr.
|
North Carolina
|
Thomas Szep
|
Ohio
|
Mike Warpinski
|
Oklahoma
|
William Martell
|
Oregon
|
John Graziano
|
Pennsylvania
|
Monteville Sloan, Jr.
|
South Carolina
|
Joshua Byrge
|
Tennessee
|
Rudy Sanchez
|
Texas
|
Christopher Thacker
|
Virginia
|
Kelly Harris
|
Washington
|
James Robertson
|
West Virginia
|
Jonas Bednarek
|
Wisconsin
|
Id. at 58-60.
Plaintiffs
first filed their complaint in December 2016, see
Docket No. 2, followed by a First Amended Complaint
(“FAC”) in February 2017, see Docket No.
29. The named plaintiffs who filed the original complaint
sought to represent classes from thirteen states.
Id. at 25-26. On August 1, 2017, the Court dismissed
the FAC in its entirety with leave to amend. See
Docket No. 62 (“FAC Order”). Later that same
month, Plaintiffs filed a Second Amended Complaint
(“SAC”), see Docket No. 67, which added
named plaintiffs from twenty additional states, id.
at 55-56. After extensive briefing, the Court dismissed the
Second Amended Complaint in part. See Docket No. 99
(“SAC Order”). In March 2018, Plaintiffs filed a
Third Amended Complaint (“TAC”), see
Docket No. 107, which added a plaintiff from one additional
state, id. at 11. Plaintiffs subsequently sought
leave to file a Fourth Amended Complaint (“4AC”),
see Docket No. 120 (“First Mot. for
Leave”), in order to “substitute William Davis,
Jr., a member of the putative North Carolina class, in place
of the current North Carolina class representative, Steven
Ehrke, who is no longer able to participate in this
litigation.” First Mot. for Leave at 1. No other change
to the complaint was sought. Id. The Court granted
the parties' joint stipulation to the filing of a Fourth
Amended Complaint, permitting substitution of the North
Carolina class representative. See Docket No. 122.
After filing a Fourth Amended Complaint in November 2018,
see Docket No. 123, Plaintiffs again sought leave to
file a Fifth Amended Complaint in May 2019, see
Docket No. 141 (“Second Mot. for Leave”). The
purpose behind the request to file a Fifth Amended Complaint
was the substitution of “Thomas Szep in place of the
current Ohio class representatives, Thomas Gulling and Ronald
Jones, who are for personal reasons no longer able to
participate in this litigation.” Second Mot. for Leave
at 1. No other modification of the Fourth Amended Complaint
was sought. Id.
Defendant
opposed Plaintiffs' Motion for Leave to File a Fifth
Amended Complaint, see Docket No. 153
(“Opposition to 5AC”), on the grounds that
“add[ing] an Ohio plaintiff . . . comes too late and
would be unfair and prejudicial to GM based on the history of
this case and governing legal standards.” Opposition to
5AC at 1. More specifically, GM argued that “[c]hanging
the parties and allegations after discovery is closed would
deprive GM of the ability to fully defend itself. It would
embroil the court again in pleadings and motions practice,
upheave the current schedule, and disrupt the class
certification proceedings set to begin in a few weeks.”
Id. at 2. On July 2, 2019, the Court granted
Plaintiffs' Motion for Leave to File a Fifth Amended
Complaint. See Docket No. 156. Plaintiffs filed a
Fifth Amended Complaint that same day, see Docket
No. 157, and Defendant subsequently filed a Motion to Dismiss
Plaintiff Szep's Claims in the Fifth Amended Complaint,
see Docket No. 158.
As
noted in the Court's prior orders, in order to address
manageability concerns raised by the Court, the parties
agreed that Plaintiffs' initial motion for class
certification would be limited to five bellwether states:
California, New Jersey, Ohio, North Carolina, and Texas.
See Docket No. 113. A Motion to Certify the Class
was filed with the Court on September 3, 2019. See
Docket No. 175. A hearing on the issue of class certification
...