WOLFSON, District Judge:
Plaintiffs Mark Maniscalco ("Maniscalco") and Walter Huryk ("Huryk") ("Plaintiffs"), individually, and on behalf of a putative class of consumers, bring various claims relating to Plaintiffs' purchases of Defendant Brother International Corporation's ("BIC" or "Defendant") Multi-Function Center line of all-in-one devices ("MFC machines"). Presently before the Court is BIC's second motion to dismiss Counts I, II, and III of the Third Amended Complaint ("TAC"), insofar as they are predicated on the alleged "Machine Error 41" ("ME41") defect. Specifically, Count I seeks declaratory judgment under the New Jersey Consumer Fraud Act ("CFA"), N.J.S.A. § 56:8-2; Count II seeks damages and equitable relief under the CFA; and Count III alleges unjust enrichment.
I. Factual Background
BIC's motion only relates to claims arising out of the ME41 print-head defect; thus, Plaintiffs' other allegations predicated on using BIC print cartridges only and the ink-wasting characteristics of BIC machines need not be considered here. TAC at ¶¶ 4-6. Since Defendant moves to dismiss Plaintiffs' claims, in part, for lack of standing pursuant to Fed.R.Civ.P. 12(b)(1) and for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6), the following account of the facts assumes all of Plaintiffs' allegations to be true.
BIC distributes MFC machines, which function as printers, fax machines, scanners, and copiers, TAC, ¶ 1. Plaintiffs contend, among other things, that their MFC machines contained a defect "referred to as the `ME41 defect' because most model MFC machines display the error code, `Machine Error 41' on their LCD screens when their print heads failed." Id. at ¶ 7. The TAC alleges that BIC knew of the defect since 2001: "[i]nternal documents reveal that BIC has known, since at least 2001, that the ME41 defect was causing premature print-head failure in MFC machines." Id. at ¶ 53. Further, Plaintiffs allege that BIC then acted by "intentionally concealing and failing to disclose that information [the ME41 defect] to prospective purchasers; and ... unconscionably limiting warranty coverage for print-head failure caused by the ME41 defect[.]" TAC ¶ 112. In or near February 2005, BIC "implemented a limited extended warranty... which extends the warranty coverage on some MFC print heads that fail as a result of the ME41 defect from 90 days to 24 months from the date of purchase or 30 months from the date on the serial number[.]" Id. at ¶ 57. Both parties agree that Plaintiffs did get the benefit of the extended warranty. Around that time, BIC sent an email broadcast and posted an announcement on its website to inform consumers of the extended warranty. Id. at ¶ 57, 59. However, Plaintiffs claim that while taking these actions, BIC purposely downplayed the true "nature, scope, and extent of [the] ME41 [defect]." Id. at ¶ 61. Plaintiffs suggest that BIC "has made no efforts to notify consumers of the existence of that defect—including any mention on its website" other than the 2005 Report. Id. at ¶ 35. Further, Plaintiffs allege that BIC has not "promptly" offered repairs to consumers, but rather "blames the consumer, claiming that it was their use of non-OEM ink that caused the problem." Id. at ¶ 36. Consequently, Plaintiffs allege that consumers "were forced to replace the defective print heads (or the entire MFC machine) at their own expense." Id. at ¶ 60.
Plaintiff Walter Huryk, a South Carolina resident, purchased his 3220c MFC machine on December 11, 2003, TAC ¶ 88, and experienced a "Machine Error 41" problem with his MFC machine around March 2007, Id. at ¶ 90. Plaintiff Maniscalco, a California resident, purchased his MFC machine from Office Depot on June 28, 2004 and experienced a "Machine Error 41" defect in May 2007. See Maniscalco Interrog. No. 1; Micheletti Cert. ¶ 12
Plaintiffs filed suit in October 2006, filed a Second Amended Complaint in October 2007, and filed a Third Amended Complaint in July 2008.
II. Standard Of Review
BIC suggests that Plaintiffs' claims in the TAC are too vague and conclusory in nature to justify Plaintiffs' claims or standing. Therefore, it is important to elaborate on the standard for reviewing the sufficiency of a complaint. "[T]he standard is the same when considering a facial attack under Rule 12(b)(1) or a motion to dismiss for failure to state a claim under Rule 12(b)(6)." Petruska v. Gannon University, 462 F.3d 294, 299 n. 1 (3d Cir. 2006).
In Phillips v. County of Allegheny, 515 F.3d 224 (3d Cir.2008), the Third Circuit elaborated the appropriate standard for evaluating a Rule 12(b)(6) or 12(b)(1) motion in light of the Supreme Court's recent decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The Third Circuit made clear that an acceptable statement of the standard remains: "courts accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Phillips, 515 F.3d at 233 (internal quotations and citation omitted). Though Twombly "emphasized throughout its opinion that it was neither demanding a heightened pleading of specifics nor imposing a probability requirement," Id., the Third Circuit emphasized the importance of Twombly's attention to the concept of a "showing."
Fed.R.Civ.P. 8(a)(2) requires a "showing" that the plaintiff is entitled to relief:
Id. at 231-32. Because a "showing" rather than a bare assertion is required, Twombly instructs "that a situation may arise where, at some point, the factual detail in a complaint is so undeveloped that it does not provide a defendant the type of notice of claim which is contemplated by Rule 8." Id. at 232 (citation omitted) (emphasis added). Further, "[w]e caution that without some factual allegation in the complaint, a claimant cannot satisfy the requirement that he or she provide not only `fair notice,' but also the `grounds' on which the claim
The Third Circuit summarized:
Id. Although only notice of a claim and its grounds are required to survive a motion to dismiss, a complaint must have "enough factual matter (taken as true) to suggest" the elements of the claim.
III. Plaintiffs' ME41 Claim Under The CFA
BIC argues that the TAC fails to state a claim under the CFA with respect to the "Machine Error 41" defect.
A. Unlawful Conduct
BIC contends that Plaintiffs fail to sufficiently allege the first element of a CFA claim, an unlawful practice. "The NJCFA creates three categories of unlawful practices: affirmative acts, knowing omissions, and violations of state regulations." Vukovich v. Haifa, No. 03-737, 2007 WL 655597, *9 (D.N.J. Feb. 27, 2007) (citing Cox v. Sears Roebuck & Co., 138 N.J. 2, 17, 647 A.2d 454 (1994)). With respect to the "Machine Error 41" defect, Plaintiffs allege a knowing omission. TAC ¶ 112. The knowing omission provision reads as follows:
N.J.S.A. § 56:8-2 (emphasis added). "[W]hen the alleged consumer fraud consists of an omission, a plaintiff must show that the defendant acted with knowledge, thereby making intent an essential element of the fraud." Vukovich, 2007 WL
Further, "[t]he pleading requirements of Rule 9(b) apply to ... NJCFA claims as well as ... common law fraud claims." Slim CD, Inc. v. Heartland Payment Sys., No. 06-2256, 2007 WL 2459349, at *11, 2007 U.S. Dist. LEXIS 62536, at *32 (D.N.J. Aug. 22, 2007) (citing F.D.I.C. v. Bathgate, 27 F.3d 850, 856 (3d Cir. 1994)). In Frederico v. Home Depot, 507 F.3d 188, 202 (3d Cir.2007), the court elucidated what must be alleged to satisfy the heightened pleading standard:
Frederico, 507 F.3d at 200. While the heightened pleading standard of Rule 9(b) allows essential elements of the omission under the NJCFA, such as intent, to be alleged generally, such elements still need to be alleged. See Fed.R.Civ.P. 9(b) ("Malice, intent, knowledge and other conditions of mind of a person may be alleged generally").
BIC first argues that Plaintiffs fail to sufficiently allege the requisite knowledge and intent for a "knowing omission" because the TAC relies on mere speculation and conclusory statements. The Court disagrees. Plaintiffs do sufficiently allege, generally, that BIC acted with knowledge and intent by:
TAC ¶ 112 (emphasis added). Further, Plaintiffs specifically allege that BIC knew of the ME41 defect before Plaintiffs purchased their ME41 machines: "[i]nternal documents reveal that BIC has known, since at least 2001, that the ME41 defect was causing premature print-head failure in MFC machines." Id. at ¶ 54. Plaintiffs both purchased their MFC machines after 2001, TAC ¶¶ 83, 88, and taking Plaintiffs allegations as true, Plaintiffs have sufficiently plead the requisite intent and knowledge.
Next, BIC argues that the existence of a warranty, coupled with the product lasting beyond the warranty period, exempts it from the duty to disclose the fact that the MFC machine may fail beyond the warranty period.
Id. In Perkins, the purchaser of a Jeep alleged a violation of the CFA "because defendant did not reveal that the vehicle was manufactured with a tubular exhaust manifold allegedly susceptible to cracking and premature failing, and unlikely to last for 250,000 miles, which, plaintiff claims without support, is the industry standard for such a part." Id. at 103, 890 A.2d 997. In Perkins the claim was dismissed because:
Id. at 113, 890 A.2d 997. Simply put, Perkins stands for the proposition that merely alleging that the warranty is shorter than the industry standard useful life of the product does not state a claim under the CFA. Id.
However, BIC's reliance on the warranty defense is misplaced in the present case as is the alleged act of concealment on which Plaintiffs base their claims. Without addressing the general warranty defense espoused by Perkins, the present case requires a somewhat different analysis based upon the extant facts. In Perkins the allegedly substandard car part never actually failed, Id. at 103, 890 A.2d 997, while in the present case Plaintiffs allege that their products did suffer the defect. TAC ¶¶ 85, 90. Further, in Perkins plaintiff did not allege that the defendant knew that its specific product contained a defect that would cause it to fail before that product's expected useful life. 383 N.J.Super. at 103, 890 A.2d 997. Instead, the plaintiff in Perkins alleged only that the product contained an allegedly substandard part which may, but did not, cause the product to fail before the industry lifetime standard. Id. Although a manufacturer or seller need not warrant that its product will survive for the useful life of the product, the present case is different because it deals with BIC's expectations of its own product.
The Court further notes that New Jersey courts have not provided clear precedent for the specific facts alleged in the present case
B. Ascertainable Loss
BIC also contends that the named Plaintiffs fail to sufficiently allege the second element of a CFA claim, an ascertainable loss.
BIC also relies on Perkins for the proposition that where a product outlasts its warranty period, there can be no ascertainable loss. BIC's reliance is misplaced. Perkins specifically distinguishes between the element of ascertainable loss and the warranty defense and even suggested that the trial judge's finding of no ascertainable loss was premature. 383 N.J.Super. at 111-12, 890 A.2d 997. Thus, Plaintiffs sufficiently allege the second CFA element.
C. Causal Nexus
Finally, BIC contends that Plaintiffs fail to sufficiently allege a causal connection between the purported unlawful conduct and the asserted ascertainable loss. BIC again relies on the existence of the warranty to immunize itself from any connection between the unlawful act and the harm and, as discussed supra at III.A., BIC's contention is without merit.
Further, BIC argues that Plaintiffs must prove a connection in order to succeed and that they fail to do so. However, to survive a motion to dismiss, Plaintiffs are only required to put forth "enough factual matter (taken as true) to suggest" the elements of the claim. Phillips, 515 F.3d at 234. In that connection, it is sufficient if a plaintiff avers that "had the alleged [d]efect been disclosed, consumers would not have purchased [defendant's product]." McCalley v. Samsung Elecs. Am., Inc., No. 07-2141, 2008 WL 878402, at *9, 2008 U.S. Dist. LEXIS 28076, at *26 (D.N.J.2008); see also Strzakowlski v. GMC, No. 04-4740, 2005 U.S. Dist. LEXIS 18111, 2005 U.S. Dist. LEXIS, at *25 (D.N.J. Aug. 16, 2005) (plaintiff adequately alleged a NJCFA claim where plaintiff claimed that she would not have purchased her vehicle if GM had disclosed the defect at issue). Plaintiffs, in the present case, allege that they were not aware of the ME41 defect prior to purchase and would not have purchased the product if not for BIC's failure to disclose the existence of the defect. TAC ¶¶ 87, 93. Thus, Plaintiffs
For the foregoing reasons, BIC's motion to dismiss Plaintiffs' ME41 CFA claim is denied.
IV. ME41 Declaratory Judgment
BIC maintains that Plaintiffs are not entitled to a declaratory judgment. The Declaratory Judgment Act provides: "In a case of actual controversy within its jurisdiction ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The "actual controversy" requirement refers to the case or controversy requirement of Article III. Teva Pharmaceuticals USA, Inc. v. Novartis Pharmaceuticals Corp., 482 F.3d 1330, 1336 (Fed.Cir.2007). In Teva Pharmaceuticals, the Third Circuit recently stated that standing in the declaratory judgment context requires:
Id. (citing MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 S.Ct. 764, 771, 166 L.Ed.2d 604 (2007)). The court continued: "Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Id. (quoting MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 S.Ct. 764, 771, 166 L.Ed.2d 604 (2007)); see also Khodara Environmental, Inc. v. Blakey, 376 F.3d 187, 193-94 (3d Cir.2004). Specifically, the Third Circuit makes clear that "[i]n order to establish standing and thereby satisfy the `case or controversy' requirement of Article III, a party requesting a declaratory judgment `must allege facts from which it appears there is a substantial likelihood that he will suffer injury in the future.'" Lattaker v. Rendell, 269 Fed.Appx. 230, 233 (3d Cir.2008) (quoting Bauer v. Texas, 341 F.3d 352, 358 (5th Cir.2003)). The Court also notes that the granting of declaratory relief is discretionary and it is within the province of a Federal Court to deny declaratory relief where the Court finds denial appropriate. See, e.g., Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 718-19, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996).
The TAC does not clearly delineate the declaratory relief being sought here. In the section of the TAC on Count I, Plaintiffs specifically ask the Court to declare:
TAC ¶ 112.
As such, Plaintiffs' claim seeking a declaratory judgment is dismissed and BIC's alternative arguments need not be considered.
V. ME41 Unjust Enrichment
BIC maintains that Plaintiffs fail to sufficiently allege an unjust enrichment claim. An unjust enrichment claim may be sustained independently as an alternative theory of recovery. In re K-Dur Antitrust Litigation, 338 F.Supp.2d 517, 544 (D.N.J.2004) (finding defendant's motion to dismiss plaintiff's unjust enrichment claim as premature even where other remedies at law were available to plaintiff); see also United States v. Kensington Hosp., 760 F.Supp. 1120, 1135 (E.D.Pa. 1991) (allowing plaintiff to assert an unjust enrichment claim as an alternative theory of recovery when plaintiff had asserted a cognizable contract claim in the same complaint). Thus, this Court must determine whether Plaintiff's allegations give rise to an unjust enrichment claim.
At the outset, the Court notes that an unjust enrichment claim need not be pled with the same specificity as a claim sounding in fraud. Rather, the more liberal notice pleading standard of Fed. R.Civ.P. 8(a) applies. An unjust enrichment claim requires plaintiff to allege "(1) at plaintiff's expense (2) defendant received benefit (3) under circumstances that would make it unjust for defendant to retain benefit without paying for it." In re K-Dur, 338 F.Supp.2d at 544 (quoting RESTATEMENT OF RESTITUTION 1 (1937)). Further, "[t]he unjust enrichment doctrine requires that plaintiff show that it expected remuneration from the defendant at the time it performed or conferred a benefit on defendant and that the failure of remuneration enriched defendant beyond its contractual rights." VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 554, 641 A.2d 519 (1994).
BIC first asserts that Plaintiffs' unjust enrichment claims fail as a matter of law for the same reasons that Plaintiffs' ME41 claims fail under the CFA. Plaintiffs' unjust enrichment claims predicated on the "Machine Error 41" defect are identical to their claims under the CFA: "BIC obtained secret profits by which it became unjustly enriched at the expense of Plaintiffs and proposed class members ... [and it] would be unfair for BIC to retain the profits[.]" TAC ¶ 118. However, as explained supra at III, the TAC alleges a sufficient claim under the CFA. Therefore, BIC's argument based solely on Plaintiffs' purportedly failed CFA allegations, has no merit.
Nevertheless, BIC also argues that Plaintiffs' claims must fail because Plaintiffs did not sufficiently allege that BIC was enriched beyond its contractual rights nor did they allege that they purchased their MFC machines directly from
Id. at *10 (emphasis added) (citations omitted); See also Premier Pork L.L.C. v. Westin Inc., No. 07-1661, 2008 WL 724352, at *14 (D.N.J.2008) ("quasicontract claims involve either some direct relationship between the parties or a mistake on the part of the person conferring the benefit..."); Union Trust Co. of Md. v. Wakefern Food Corp., No. 86-728, 1989 WL 120756, at *21 (D.N.J.1989) ("unjust enrichment requires a relationship or course of dealings between parties which, if left undisturbed by the intervention of the law, permits one party to obtain `unjust enrichment or unconscionable advantage' over the other") (citation omitted); Callano v. Oakwood Park Homes Corp., 91 N.J.Super. 105, 109, 219 A.2d 332 (App. Div.1966) (citing importance of either a direct relationship or a mistake in quasi-contract). In the present case, Plaintiff Maniscalco concedes that he purchased his MFC machine from Office Depot and not directly from BIC. See Maniscalco Interrog. No. 1. Therefore, his benefit is not directly conferred upon BIC and his unjust enrichment claim is dismissed. Plaintiff Huryk does not allege that he purchased his MFC machine from BIC. TAC ¶ 88. Because Plaintiff Huryk fails to allege that he conferred a benefit directly upon BIC, Plaintiff Huryk's pleading does not sufficiently allege the elements of the claim. See generally Twombly, 550 U.S. 544, 127 S.Ct. 1955. Therefore, Plaintiff Huryk's unjust enrichment claim is dismissed without prejudice.
For the following reasons, BIC's motion to dismiss is granted in part, and denied in part; the Motion to dismiss is denied with respect to Count II and granted with respect to Counts I and III. With respect to Plaintiff Huryk, Count III is dismissed without prejudice.