MEMORANDUM AND ORDER
JULIE A. ROBINSON, District Judge.
Plaintiff Michael Knopke brings this action against Defendant Ford Motor Company ("Ford"), on behalf of himself and others similarly situated, alleging that the throttle body component of the 2011 Ford Edge vehicle is defective, that Ford knew the throttle was defective yet concealed that information from consumers, and that Ford breached its warranties by denying any defect in the vehicle during the term of the extended warranty. Before the Court is Defendant Ford's Motion to Dismiss the Complaint and to Strike Nationwide Class Allegations (Doc. 4) and Plaintiff's Motion for Leave to File Sur-Reply (Doc. 11). The motions are fully briefed and the Court is prepared to rule. As explained more fully below, Plaintiff's motion for leave to file sur-reply is granted; the Court has considered the sur-reply attached to Plaintiff's motion for leave in deciding the motion to dismiss and strike. Defendant's motion to dismiss is granted as to Count II and otherwise denied; Defendant's motion to strike is denied.
I. Facts Alleged in the Complaint
The following facts are alleged in the Complaint and are assumed to be true for purposes of deciding these motions. On July 15, 2013, Plaintiff Michael Knopke purchased a used 2011 Ford Edge SEL from Speedway Chrysler-Dodge-Jeep, Inc. in Lansing, Kansas. At the time of purchase, Plaintiff's vehicle had a mileage reading of 32,195. Prior to making this purchase, Plaintiff read materials provided by Ford regarding the 2011 Ford Edge, including the vehicle's sales brochure and material on the Ford website. In its sales brochure, Ford represented that the 2011 Ford Edge contained "smart new engines," "maximum V6 efficiency and power no one in the class can beat," and "state-of-the-art safety."
On October 31, 2013, Plaintiff was attempting to pass another vehicle on Interstate 435 in his Ford Edge when, without warning, the vehicle went "limp" and quickly decelerated, failing to respond to his depression of the accelerator. Plaintiff, his wife, and two young children were nearly rear-ended at high speed by another vehicle as a result. An amber wrench warning appeared in the vehicle's instrument cluster indicating "Powertrain malfunction/reduced power (RTT): Illuminates when a powertrain or an AWD fault has been detected." The failure was caused by a defective throttle body in Plaintiff's 2011 Ford Edge SEL.
Ford's New Vehicle Limited Warranty ("NVLW") on the Ford Edge covers all powertrain parts that "malfunction or fail during normal use" within five years of service or 60,000 miles, whichever occurs first. Plaintiff took his vehicle to an authorized Ford dealer for warranty-covered service, but was told that they could not retrieve the error code, that there were no Technical Service Bulletins addressing the issue, and that they were unable to duplicate the problem. Plaintiff telephoned Ford customer service, and was told by a customer service agent that Ford was not aware of any such problems with the Class Vehicle.
On December 27, 2013, Plaintiff was attempting to accelerate on the highway when his 2011 Ford Edge SEL once again went "limp" and quickly decelerated, with no responsiveness upon depression of the accelerator pedal. The odometer reading at the time of this failure was 44,950 miles and the vehicle was less than five years old, making it covered under the NVLW. Plaintiff again returned to his local authorized Ford dealer for service, but was told that they could not duplicate the problem.
On or about December 28, 2013, Plaintiff's wife Christina telephoned Ford's customer service department and informed Ford of the recurring throttle problem with their vehicle. Christina was told by a customer service agent that Ford was elevating the Knopkes' complaint because it was a safety issue, and a Ford representative would call them back. On or about December 30, 2013, Plaintiff received a phone call from a Ford customer service agent who identified himself as "Jason." Plaintiff informed Jason of the recurring problem, but was told by Jason that no Technical Service Bulletins had been issued addressing the problem, and that Ford did not see the issue as "technically relevant." Jason suggested that Mr. Knopke purchase an extended warranty from Ford.
The 2011 Ford Edge was originally manufactured with throttle body part number AT4Z9E926A, but at some point Ford "superseded" that part with a new part: AT4Z9E926B. As of May 7, 2014, 54 of the 190 (28%) official complaints about the 2011 Ford Edge registered with the National Highway Traffic Safety Administration ("NHTSA") relay issues with spontaneous rapid deceleration, throttle failure and stalling. Most of these consumers reported that they were operating their vehicles at highway speeds at the time of throttle failure. Many consumers reported being told by Ford service professionals that the throttle failure problem in the 2011 Ford Edge is the result of a defective throttle body, and that Ford is aware of the issue. Plaintiff's Complaint contains ten representative examples of official complaints about loss of throttle control in the 2011 Ford Edge, all of which describe failures that are substantially similar to that experienced by the Knopkes. The public complaints to NHTSA regarding this issue occurred as early as May 26, 2012, more than one year prior to Plaintiff's purchase.
Ford represented that purchasing a 2011 Ford Edge would entitle a consumer to certain rights and remedies under the NVLW. The warranty benefits promised by Ford's NVLW were part of the basis of the bargain for Plaintiff and the putative class. Ford knows and has known that the original throttle body in the Class Vehicle is defective, but it has concealed that information from its customers and refused to provide appropriate warranty benefits to correct the defect.
Plaintiff had no opportunity to negotiate the terms of the warranty (including its durational limits), and had no meaningful choice but to accept the unilaterally imposed warranty terms. Ford concealed its unique and superior knowledge as to the defective nature of the 2011 Ford Edge and its inability or unwillingness to offer adequate warranty repairs. Ford also attempts to exclude, modify or otherwise limit the implied warranty of merchantability's reach under Kansas law, stating that "You may not bring any warranty-related claim as a class representative" and "Ford and your dealer are not responsible for any time or income that you lose . . . or for any other incidental or consequential damages you may have."
II. Motion to Dismiss under Fed. R. Civ. P. 12(b)(6)
As to Counts II, IV, and the attorneys' fees and civil penalties claims in Count III, Ford moves to dismiss for failure to state a claim upon which relief may be granted. To survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a complaint must present factual allegations, assumed to be true, that "raise a right to relief above the speculative level" and must contain "enough facts to state a claim to relief that is plausible on its face."
The plausibility standard enunciated in Bell Atlantic v. Twombly,
The Supreme Court has explained the analysis as a two-step process. For purposes of a motion to dismiss, the court "must take all the factual allegations in the complaint as true, [but] we `are not bound to accept as true a legal conclusion couched as a factual allegation.'"
A. Count II, Unconscionability
Count II seeks a declaratory judgment that the NVLW's durational limit of five years or 60,000 miles is unconscionable and therefore unenforceable. Plaintiff relies on a line of cases that identify an unconscionability exception that allows breach of express warranty claims to survive when the alleged defect manifests itself outside of the warranty period.
Nonetheless, the Court proceeds to address the merits of this claim. Courts have traditionally taken the view that
"However, the rule has been qualified by the doctrine of unconscionability."
"The burden of establishing unconscionability is on the party attacking the contract. Whether a contract is unconscionable under the Uniform Commercial Code or the Kansas Consumer Protection Act is a question of law."
Courts often distinguish between "procedural" and "substantive" unconscionability. Substantive unconscionability may be found "`when the terms of the contract are of such an oppressive character as to be unconscionable.'"
Plaintiff maintains that his claim is similar to the procedural unconscionability claim alleged in Meyers v. Garmin International, Inc., which survived dismissal because the plaintiff alleged a lack of meaningful choice in determining the durational warranty limitation of a GPS device, as well as gross disparity in bargaining power because the defendants knew or should have known at the time they issued the warranty that the product's battery would fail shortly after the warranty period expired.
Plaintiff's claim and factual allegations in this case are distinguishable from Meyers, and from the other cases upon which he relies. Plaintiff alleges that at some point after the 2011 Ford Edge was first manufactured, Ford superseded the original throttle body with a new part. Plaintiff pled that there had been fifty-four official complaints with the NHTSA about the 2011 Ford Edge that concerned throttle failure, and he identified and quoted ten of these complaints, which are substantially similar to the throttle failures Plaintiff experienced. Nine of the ten quoted complaints were made before Plaintiff's first alleged throttle failure, but no earlier than 2012. But there are no specific allegations that Ford was aware of a throttle defect before it issued the warranty, allowing an inference that it concealed its knowledge of the defect in order to avoid warranty coverage.
The Complaint alleges as follows:
Plaintiff's allegations about Ford's knowledge at the time the warranty issued are conclusory and unsupported by the facts alleged elsewhere in the Complaint. The Complaint alleges that sometime after the 2011 Edge was manufactured, the throttle part was replaced. It alleges further that starting in 2012, consumers reported problems with the throttle substantially similar to the problems experienced by Plaintiff and members of the putative class. However, the Complaint is devoid of facts to support the allegation that the throttle defect was known to Ford when it originally issued the warranty. Instead, the well-pleaded facts allege that Ford learned of the problem after the warranty was drafted and issued.
Plaintiff alleges that Ford's concealment of the problem created a propensity for the throttle failure to occur outside the warranty period, but again, this fact does not support a claim that Ford knew of the problem before it issued the durational warranty. Plaintiff maintains in the sur-reply that he only needs to show Ford's actual or constructive knowledge before he purchased the used 2011 Ford Edge in July 2013. But Plaintiff offers no authority or argument in support of this contention. As already stated, unconscionability is to be measured at the inception of the contract.
Second, Plaintiff is unable to allege facts in addition to Ford's knowledge of the defect to show procedural unconscionability.
B. Count III, Remedies Under K.S.A. § 50-639
Count III alleges that Ford breached the implied warranty of merchantability. As part of this claim, Plaintiff alleges that Ford violated K.S.A. § 50-639 by attempting to exclude, modify, or otherwise limit the implied warranty of merchantability. In the Complaint, Plaintiff provides two examples: the NVLW prohibits Plaintiff from making warranty-related claims as a class representative, and it states that neither Ford nor the dealer is responsible for any lost time or income, or for any other damages Plaintiff may have. Under K.S.A. § 50-639(e), a disclaimer or limitation on an implied warranty of merchantability is void, and if a consumer prevails on claim for breach of the implied warranty on this basis, the Court may award civil penalties and attorneys' fees under K.S.A. § 50-636. The Kansas Court of Appeals has explained: "Basically, K.S.A. 50-639 creates a free-standing KCPA violation when a supplier attempts to limit either a UCC warranty of merchantability or a UCC warranty of fitness for a particular purpose and then breaches the warranty in connection with a consumer transaction involving property."
Defendant argues for dismissal of Plaintiff's claim for civil penalties and attorneys' fees under § 50-639(e) because: (1) Plaintiff is not an "aggrieved consumer" under the KCPA, and (2) Plaintiff has not alleged sufficient facts that Ford attempted to enforce the warranty limitations. Defendant relies on the private remedies provision of the KCPA, which provides that only "a consumer aggrieved by an alleged violation of this act may recover, but not in a class action, damages or a civil penalty as provided" in § K.S.A. 50-636.
While the Act does not define the term "aggrieved," the Kansas Supreme Court has defined the term as "having suffered loss or injury."
The Court further finds that Defendant's arguments about the sufficiency of the warranty limitation allegations are misplaced. Defendant argues essentially that the claim should be dismissed for want of specific warranty language from the NVLW. At this stage of the litigation, Plaintiff has alleged facts that give rise to a plausible claim that Ford limited the implied warranty of merchantability. To the extent Defendant seeks to avoid liability based on the specific language of the policy, that is properly addressed when the warranty itself is before the Court on summary judgment. The motion to dismiss the civil penalty and attorneys' fees remedies in Count III is therefore denied without prejudice to refiling after class certification is resolved.
C. Count IV, Kansas Consumer Protection Act
Defendant next moves to dismiss Count IV, which alleges a KCPA claim for unfair, deceptive, and unconscionable acts and practices. Defendant argues that the Complaint fails to satisfy the heightened pleading requirements in Fed. R. Civ. P. 9(b) that apply to this claim. Plaintiff responds that the Rule 9 pleading requirement is relaxed when it is shown that Plaintiff requires discovery to plead with more particularity when that information is exclusively in the hands of the opposing party.
This claim is based on Plaintiff's allegation that Ford fraudulently represented that the 2011 Ford Edge was safe and that it omitted and concealed the fact that the throttle body in the is defective. Such a claim is subject to the pleading requirements of Fed. R. Civ. P. 9(b).
While this relaxed standard applies to Plaintiff's fraud claims here because he alleges a factual basis for his belief that Ford possessed actual or constructive knowledge of the throttle failure, at least when Plaintiff purchased the used vehicle in 2013, the Court finds that Plaintiff has pleaded fraud with sufficient particularity under the heightened standard in Rule 9(b) as well. Plaintiff alleges that specific dealers and customer service representatives misrepresented to Plaintiff and his wife that there was no documented throttle problem with the 2011 Ford Edge, despite several specifically averred facts that should have put Ford on notice of the problem. Plaintiff details consumer complaints in 2012 and 2013 before he purchased his used vehicle. Even if Plaintiff is unable to plead that Ford had knowledge of the defects prior to the original purchase of the vehicle, he has certainly pled sufficient facts to support his allegation that Ford had knowledge before he purchased the used vehicle in 2013. He alleges that the throttle part was replaced without disclosing that fact to consumers, and he alleges details about substantially similar consumer complaints to the NHTSA made in 2012 and early 2013. The KCPA governs deceptive acts and practices "in connection with a consumer transaction."
III. Motion to Strike Nationwide Class Allegations
As to Count V, Defendant asks the Court to strike the nationwide class allegations under Fed. R. Civ. P. 12(f) and 23. Defendant moves to strike on the grounds that it is evident from the face of the Complaint that Plaintiffs are unable to satisfy the requirements for certification under Rule 23 as a matter of law.
The Supreme Court has endorsed a critical examination of class allegations at the pleading stage, stating that "[s]ometimes the issues are plain enough from the pleadings to determine whether the interests of absent parties are fairly encompassed within the named plaintiff's claim."
Because Kansas' choice of law rules utilizes the lex loci test, it appears that certification of a national class would require this Court to apply the laws of all 50 states to each respective plaintiff's claim.
While Plaintiff acknowledges that a motion to strike is procedurally permissible at the pleading stage, he argues that he should be permitted to engage in class discovery and move for class certification, at which time Defendant can make the arguments they raise herein. Although the Court has the authority to strike the class allegations at this time, it is also mindful of its obligation to conduct a "rigorous analysis" into whether the prerequisites of Rule 23 are met. Much of the authority cited by Ford in support of its proposition that state law variances defeat the predominance requirement of Rule 23 deals with that requirement in the context of a class certification motion. While the Court is mindful of the challenges posed by the nationwide class claims in Count V of Plaintiff's Complaint, it finds that the better course is to allow discovery to proceed on issues of class certification and to consider these issues in the context of a motion to certify the class. This approach will allow the Court to conduct the rigorous analysis required to determine these issues.