Court: District Court, S.D. Florida; October 7, 2014; Federal District Court
The Court denied Ford Motor Company's Motion to Dismiss in a case initiated by Plaintiff Angela Sanchez-Knutson regarding the sale of a defective 2013 Ford Explorer. The vehicle allegedly allowed dangerous exhaust gases, including carbon monoxide, to infiltrate the passenger area during normal use, a defect not readily apparent upon inspection. Sanchez-Knutson purchased the vehicle on March 31, 2012, without being informed of its hazardous condition. She reported an exhaust odor to an authorized dealership multiple times, where her complaints were acknowledged but inadequately addressed, including the performance of a service bulletin (TSB 12-12-4) that failed to resolve the issue. Despite assurances from the dealership that there was no health risk, Sanchez-Knutson later discovered the presence of lethal carbon monoxide in the vehicle, prompting her to cease its operation in April 2014. The Court considered the motions and arguments presented during a hearing and concluded that the case should proceed.
The 2011-2013 model year Ford Explorers were manufactured with design flaws and defective exhaust and HVAC systems, allowing carbon monoxide and other harmful exhaust gases to infiltrate the passenger compartments during normal driving. Ford was aware or should have been aware of these defects, which pose risks to drivers and passengers. As of the Complaint's filing date, Ford has not repaired the plaintiff's 2013 Explorer nor acknowledged the vehicles' safety issues.
Key design flaws include:
- Exhaust gases entering the passenger compartments due to faulty vehicle design.
- Defective designs of bumpers and tailpipes that allow gas accumulation and permeation.
- Ineffective rear air extractors that fail to prevent gas ingress.
- Poorly designed liftgates with faulty drain valves permitting gas entry.
- Sheet metal constructions that enable gas infiltration.
- Defective design and placement of rear auxiliary air conditioning components.
These vehicles were sold or leased under express and implied warranties guaranteeing their defect-free condition and suitability for intended use. The vehicles violated these warranties at the time of sale or lease. The warranties are still valid, or their limitations should not apply due to Ford's conduct. Ford's authorized dealers serve as its agents, tasked with managing repairs and consumer interactions, operating under Ford's directives regarding warranty services and complaint management.
Ford's express and implied warranties related to alleged defects were addressed through Technical Service Bulletin (TSB) 12-12-4, issued in December 2012, following customer complaints about exhaust odors in 2011 to 2013 model year Ford Explorers. TSB 12-12-4 provided instructions for authorized dealerships to remedy these complaints but did not specify a definitive fix for the exhaust odor issue. Instead, it mandated various repairs and replacements of unrelated vehicle components, indicating Ford's awareness of the defect without knowledge of an effective solution to protect occupants from exhaust gases, including carbon monoxide.
The bulletin identified several flawed design and manufacturing issues, prescribing inadequate and defective repairs, such as the replacement of the driver side rear air extractor with a dual rate air extractor. The original rear air extractor design allowed exhaust gases to enter the passenger compartment, and the proximity of the auxiliary air conditioning system's intake to the driver side extractor exacerbated the problem. Although the replacement dual rate air extractor, priced significantly higher than the original, failed to resolve the exhaust issue, it was designed with features intended to function as a one-way valve.
Ford's modifications to the replacement part included the addition of a silicone-like substance to the living hinges, which was not part of the original design and resulted in the hinges remaining open, thereby allowing gases to enter the vehicle. Furthermore, valve assembly auto drains on the rear liftgate were also identified as dangerous and defective, contributing to the infiltration of exhaust and other gases into the passenger area.
The replacement valve assembly in the 2011-2013 Ford Explorers is ineffective in preventing exhaust and harmful gases, including carbon monoxide, from entering the passenger compartment, rendering it dangerous and defective. Ford did not adequately seal critical components, such as the horizontal sheet metal lap joints, rear metal overlap flange, and auxiliary air conditioning lines, which has led to the infiltration of these gases. Although Technical Service Bulletin (TSB) 12-12-4 recommends applying rubberized undercoating and seam sealer to these areas, these measures have failed to prevent gas entry. Ford did not inform consumers, including the Plaintiff, about the safety risks associated with these defects, which are life-threatening due to the presence of carbon monoxide. The Plaintiff alleges damages from exposure to carbon monoxide, the purchase of a defective vehicle, and anticipated repair costs. The defect significantly devalues the vehicle, as it poses a serious health hazard, making it virtually worthless compared to a defect-free vehicle.
The document also outlines the legal standard for a motion to dismiss, referencing the Supreme Court's decision in Bell Atlantic Corp. v. Twombly, which established that complaints must contain factual allegations sufficient to raise a right to relief above a speculative level. While detailed factual allegations are not necessary, the complaint must provide more than mere labels and conclusions. Courts may dismiss claims if no set of facts supports the plaintiff's cause of action based on legal grounds. This standard was further clarified in Ashcroft v. Iqbal, emphasizing that only well-pleaded factual allegations warrant an assumption of truth, while legal conclusions do not.
Plaintiff alleges four claims against Ford: (1) violation of the Magnuson-Moss Warranty Act; (2) violation of Florida's Deceptive and Unfair Trade Practices Act; (3) breach of express warranty; and (4) breach of implied warranty. Ford has filed a motion to dismiss all claims with prejudice, and the Court will evaluate each claim in a different order than presented in the Complaint.
For Count III, breach of express warranty, Ford's motion relies on the 2013 Model Year Ford Warranty Guide, which is attached to its motion. The Court will consider this guide because it is central to the breach of express warranty claim and is referenced in the Complaint. Plaintiff does not dispute its authenticity. The Court cites precedent allowing consideration of documents attached to a motion to dismiss if the documents are central to the claim and their authenticity is unchallenged.
The Court distinguishes this case from a prior ruling in Rosen et al. v. J.M. Auto, where warranty authenticity was disputed. To establish a breach of express warranty under Florida law, the plaintiff must provide facts regarding the sale of the goods, identify the types of warranties created, and detail how the warranty was established. Specifically, for an implied warranty of fitness, the complaint must show that the seller knew the particular purpose for which the goods were purchased and that the buyer relied on the seller’s expertise.
Section 672.313 of the Florida Statutes establishes the creation of express warranties by sellers, which can arise from affirmations of fact or promises related to goods, descriptions of the goods, or samples/models that form part of the bargain. The statute clarifies that formal warranty language is not necessary for an express warranty to exist, although mere statements of value or opinions do not constitute warranties. A breach of an express limited warranty claim requires the consumer to prove non-compliance with its terms.
In the context of a dispute involving Ford, the company contends that the plaintiff's claim is solely based on a design defect, which it argues is excluded from warranty coverage in its Warranty Guide. However, the court finds that the plaintiff's allegations include defective manufacturing, assembly, engineering, and inspection, not limited to design defects. The Warranty Guide states that Ford will repair or replace parts that malfunction due to manufacturing defects, without indicating an exclusion for design defects. The court interprets any ambiguity against Ford, concluding that design defects are indeed covered by the express warranty. Furthermore, the warranty's exclusive remedy of repair or replacement does not fail its essential purpose as long as Ford fulfills its obligations.
Ford's motion to dismiss the Plaintiff's breach of express warranty claim is denied. In Count IV, the Plaintiff alleges breach of implied warranty under Fla. Stat. 672.313, claiming that Ford impliedly warranted the vehicles were merchantable and safe for ordinary use, yet they were designed in an unsafe condition that risks carbon monoxide exposure to occupants. Ford argues for dismissal based on a lack of privity, as the Plaintiff purchased the vehicle from an authorized dealership rather than directly from Ford. Citing Mesa v. BMW of North America, Ford asserts that Florida law prohibits recovery for breach of implied warranty without privity. Mesa established that a plaintiff cannot pursue an implied warranty claim against a manufacturer when the sale was made through a dealer. The court referenced Kramer v. Piper Aircraft Corp., which similarly held that implied warranty claims for personal injury require privity.
In contrast, the Plaintiff argues that the rulings in Manheim v. Ford Motor Co. and Kramer can coexist, asserting that Manheim allows for implied warranty claims regardless of privity. The Plaintiff references Marano v. BMW of North America, which criticized strict privity requirements in vehicle transactions and suggested a more integrated view of manufacturer and purchaser relationships. Ford contends that the Manheim decision has been effectively overruled by Kramer, although not explicitly. The Court is guided by the Third District Court of Appeal’s ruling in Mesa, indicating that under Florida law, recovery for economic losses due to breach of implied warranty is not permitted in the absence of privity.
Plaintiff can pursue a breach of implied warranty claim through third-party beneficiary law despite the lack of explicit legal theory in the Complaint. The relationship between Plaintiff, class members, and Ford or its dealerships establishes sufficient privity of contract, with Plaintiff and the class recognized as intended beneficiaries of Ford's express and implied warranties. The dealerships are not considered ultimate consumers and lack rights under the warranty agreements, which are meant solely for consumers. Consequently, Ford's motion to dismiss the breach of implied warranty claim (Count IV) is denied.
Regarding the Magnuson-Moss Warranty Act (MMWA) claim (Count I), the Court notes that this claim is derivative of the warranty claims. If the Court denies Ford's dismissal motion on the warranty claims, the MMWA claim will proceed. Ford argues for dismissal based on exhaustion, asserting that consumers must first engage in the informal dispute settlement procedure outlined in its warranty before initiating legal action, as per the statutory language of the MMWA. Ford cites its Warranty Guide, which requires disputes to be submitted to BBB AUTO LINE prior to legal action. Plaintiff counters that she is not obligated to plead exhaustion and that this requirement should be an affirmative defense for Ford. Ford references two cases, Mady v. DaimlerChrysler Corp. and Davis v. Southern Energy Homes, Inc., but neither case clarifies whether the exhaustion requirement is a pleading obligation or an affirmative defense for MMWA claims.
Ford's reliance on In re Toyota Motor Corp. to support its motion for dismissal of MMWA claims is deemed misplaced. In that case, the court rejected the argument that claims should be dismissed due to plaintiffs not utilizing the manufacturer’s informal dispute resolution procedures, instead allowing for an inference of futility regarding such procedures. Similarly, in TGB Marine, LLC v. Midnight Express Power, the court did not dismiss claims but compelled arbitration for some while staying others, without addressing whether exhaustion of the informal dispute program is a pleading requirement or an affirmative defense.
The only case where dismissal occurred for failure to plead MMWA requirements was Kearney v. Hyundai Motor Co. However, that court provided limited reasoning and did not consider the informal dispute resolution program as an affirmative defense that the manufacturer must plead. The current Court agrees with the plaintiff that Ford's failure to engage in the informal dispute procedure is an affirmative defense—subject to waiver, tolling, and estoppel—which Ford can assert, rather than a requirement for the plaintiff to negate in her complaint.
Citing Jones v. Bock, the Court notes that silence in a statute regarding the need to plead exhaustion suggests it should be treated as an affirmative defense. This principle has been upheld in various contexts, confirming that failure to exhaust is an affirmative defense rather than a jurisdictional issue. While participation in Ford's informal dispute resolution is a prerequisite for pursuing an MMWA claim, the determination of whether this participation occurred is a factual issue that cannot be resolved at the motion to dismiss stage. The Court's analysis indicates that Ford's motion to dismiss the MMWA claim (Count I) will be denied.
Count II presents a claim against Ford for breaching the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). The FDUTPA prohibits unfair methods of competition and deceptive acts in trade or commerce, aiming to protect consumers and legitimate businesses from such practices. A practice is deemed unfair if it violates established public policy or is considered immoral or substantially harmful to consumers. The Plaintiff alleges that Ford failed to disclose defects in 2011-2013 Ford Explorers that allowed exhaust odors and dangerous gases to enter the passenger compartments, a violation of the TREAD Act. Additional claims include misleading consumers about the safety and quality of the vehicles, disseminating false advertisements, failing to reveal material facts, and causing confusion regarding legal rights and obligations. Ford seeks to dismiss the FDUTPA claim on several bases: 1) the TREAD Act's reporting obligations cannot constitute grounds for a FDUTPA claim; 2) no private right of action exists under the TREAD Act; 3) the primary jurisdiction doctrine calls for dismissal; and 4) the Plaintiff has not provided sufficient factual allegations to meet the pleading standards established by Twombly and Iqbal.
Ford contends that the reporting obligations under the TREAD and the National Traffic and Motor Vehicle Safety Act cannot serve as the basis for a Florida Deceptive and Unfair Trade Practices Act (FDUTPA) claim. Ford argues that consumer protection statutes do not automatically justify a FDUTPA claim, and the Court need not determine if these acts provide a sufficient basis because most allegations do not involve TREAD-regulated conduct. Additionally, Ford asserts there is no private right of action for violations of these acts; however, this point is irrelevant to the FDUTPA claim, which does not require establishing such a private cause of action. Ford also raises a primary jurisdiction argument, suggesting the Court should defer to the National Highway Traffic Safety Administration (NHTSA) due to the agency's expertise in regulating motor vehicle safety. Ford claims that if any reporting obligations were violated, the Plaintiff should report these to NHTSA, the agency with primary jurisdiction. However, the Court finds that the presumption against invoking primary jurisdiction is strong and that Ford’s argument for deference to NHTSA has previously been rejected. The Court agrees with reasoning from a related case, stating that it does not find the exercise of primary jurisdiction necessary at this stage to ensure regulatory uniformity or because NHTSA is better suited to address the issues raised by the Plaintiff's claims.
Plaintiff's claims do not challenge any safety standard or NHTSA regulation, and no conflict has been established between this case and the ongoing NHTSA investigation. Therefore, the doctrine of primary jurisdiction is not applicable. The Court finds that the claims do not involve complex issues beyond the judges' conventional experience. Consequently, the issues can be addressed without prior NHTSA involvement.
Ford's motion to dismiss the FDUTPA claim is denied. The Court finds that the Plaintiff's allegations meet the pleading standards set by Twombly and Iqbal, despite Ford's argument of generality and alleged shotgun pleading. The Court also concludes that Rule 9(b) does not apply to FDUTPA claims, which has been a contested point in the district.
The Court orders Ford to file its Answer within 14 days. Questions regarding the class action status are premature as no responsive pleadings or discovery have occurred. The Plaintiff has successfully stated a claim for breach of express warranty related to both design and manufacturing defects. Although the FDUTPA claim initially sought damages and a vehicle recall, the recall demand has been withdrawn. The Court clarifies that FDUTPA claims must arise from statutes prohibiting unfair practices, rather than any law that might benefit consumers. Violations of the TREAD act can serve as a basis for state consumer protection claims, further supporting the Plaintiff's position.
