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In re Polaris Marketing, Sales Practices, and Products Liability Litigation

United States District Court, D. Minnesota

March 6, 2019

In re Polaris Marketing, Sales Practices, and Products Liability Litigation.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

          Wilhelmina M. Wright United States District Judge

         In this consolidated putative class action litigation, Defendants move to dismiss Plaintiffs' amended complaint pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6) for failure to plead fraud with particularity and failure to state a claim on which relief can be granted. (Dkt. 42.) For the reasons addressed below, the motion is granted in part and denied in part.

         BACKGROUND

         Plaintiffs are eleven individuals who reside in eleven states throughout the United States.[1] Defendant Polaris Industries, Inc., is a Delaware corporation based in Minnesota and Defendant Polaris Sales Inc., a subsidiary of Polaris Industries, is a Minnesota corporation also based in Minnesota. Defendants design and manufacture off-road vehicles and their component parts, including engines. In the past five years, Plaintiffs each purchased an off-road vehicle manufactured by Defendants.

         Between 2013 and 2018, Defendants recalled more than one dozen off-road vehicle models (collectively, the “class vehicles”), including the vehicles purchased by Plaintiffs. These recalls occurred because of a design defect that creates a significant risk of overheating and catching fire. This design defect has caused more than 250 fires, more than 30 severe injuries, and at least three deaths. According to Plaintiffs, the design defect is common to all the class vehicles, which are equipped with an unusually high-powered “ProStar” engine. Three of the eleven Plaintiffs, Jose Luna, Clint Halvorsrod, and Chad Rogers, allege that the off-road vehicles that they purchased caught fire while operating, which resulted in a total loss of the vehicles.

         Plaintiffs commenced multiple putative class-action lawsuits against Defendants in or about April 2018 arising from the defects and fire hazards associated with the class vehicles. Subsequently, United States Magistrate Judge David T. Schultz consolidated these cases and appointed interim counsel to act on behalf of the putative class, pursuant to Federal Rules of Civil Procedure 23(g)(3) and 42(a). Magistrate Judge Schultz also ordered Plaintiffs to file a consolidated amended complaint, which Plaintiffs filed on June 15, 2018. The amended complaint alleges 54 counts against Defendants. Count 1 alleges that Defendants breached a written warranty and an implied warranty of merchantability, in violation of the Magnuson-Moss Warranty Act (MMWA), 15 U.S.C. §§ 2301 et seq. Counts 2 through 54 allege violations of state laws in the eleven states in which Plaintiffs purchased defective off-road vehicles. These claims allege violations of state consumer fraud laws, breaches of express and implied warranties, fraudulent omission, and unjust enrichment. As a result of the engine defects, Plaintiffs allege, their vehicles have diminished in value. Plaintiffs either would not have purchased their vehicles or they would have paid significantly less for their vehicles had they known about the engine defects. Plaintiffs seek injunctive and monetary relief. But they expressly do not seek damages for any personal injuries resulting from the engine defects.

         Defendants move to dismiss each count except Counts 7, 8, 9, and 12, which allege violations of California law with respect to Plaintiff Jose Luna. Advancing several alternative arguments, Defendants maintain that Plaintiffs claims must be dismissed pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6) for failure to plead fraud with particularity and failure to state a claim on which relief can be granted. First, Defendants contend that most of Plaintiffs' state-law claims must be dismissed because they do not allege that the defect manifested in their vehicles. Second, Defendants argue that most of Plaintiffs' warranty claims must be dismissed in light of Defendants' limited warranty because Plaintiffs do not allege pre-suit notice and the viability of Plaintiffs' MMWA claim depends on Plaintiffs' state-law warranty claims. Third, Defendants assert that Plaintiffs' unjust enrichment claims must be dismissed because Plaintiffs have an adequate remedy at law and Plaintiffs did not directly confer a benefit on Defendants. Fourth, Defendants argue that Plaintiffs' fraudulent omission and consumer fraud claims must be dismissed because Plaintiffs either fail to plead fraud with particularity or the claims are barred by the applicable state laws.

         ANALYSIS

         A complaint must allege sufficient facts such that, when accepted as true, a facially plausible claim to relief is stated. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). If a complaint fails to state a claim on which relief can be granted, dismissal is warranted. See Fed. R. Civ. P. 12(b)(6). When determining whether a complaint states a facially plausible claim, a district court accepts the factual allegations in the complaint as true and draws all reasonable inferences in the plaintiff's favor. Blankenship v. USA Truck, Inc., 601 F.3d 852, 853 (8th Cir. 2010). Factual allegations must be sufficient to “raise a right to relief above the speculative level” and “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). Mere “labels and conclusions” are insufficient, as is a “formulaic recitation of the elements of a cause of action.” Id. at 555. And legal conclusions couched as factual allegations may be disregarded. See Iqbal, 556 U.S. at 678.

         I. Standing (Counts 2-6, 17-25, and 31-54)

         Defendants contend that eight of the eleven Plaintiffs-those who do not allege that their vehicles experienced overheating or caught fire-lack standing under Article III of the United States Constitution. As a jurisdictional prerequisite, standing must be established before reaching the merits of a lawsuit, City of Clarkson Valley v. Mineta, 495 F.3d 567, 569 (8th Cir. 2007), and a federal district court must dismiss any aspect of a lawsuit over which it lacks subject-matter jurisdiction, see Fed. R. Civ. P. 12(h)(3). For these reasons, the Court addresses the standing issue first.

         The jurisdiction of federal courts only extends to actual cases or controversies. U.S. Const. art. III, § 2, cl. 1; accord Neighborhood Transp. Network, Inc. v. Pena, 42 F.3d 1169, 1172 (8th Cir. 1994). To satisfy the case-or-controversy requirement of Article III, a plaintiff must establish standing as an “indispensable part of the plaintiff's case.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992); accord Hargis v. Access Capital Funding, LLC, 674 F.3d 783, 790 (8th Cir. 2012). A court determines standing based on the facts as they existed when the complaint was filed. Lujan, 504 U.S. at 569 n.4.

         To satisfy the requirements of standing, each plaintiff must (1) have suffered an injury in fact, (2) establish a causal relationship between the contested conduct and the alleged injury, and (3) show that a favorable decision would redress the injury. Id. at 560-61; accord Hargis, 674 F.3d at 790. Only the injury-in-fact requirement is at issue here. An injury in fact “must be concrete, particularized, and actual or imminent.” Clapper v. Amnesty Int'l USA, 568 U.S. 398, 409 (2013) (internal quotation marks omitted). The imminence requirement “ensure[s] that the alleged injury is not too speculative for Article III purposes-that the injury is certainly impending.” Id. (internal quotation marks omitted). Allegations of a possible future injury do not confer standing. Id. In addition, “standing must be particularized, meaning the alleged ‘injury must affect the plaintiff in a personal and individual way.' ” Wallace v. ConAgra Foods, Inc., 747 F.3d 1025, 1030 (8th Cir. 2014) (quoting Lujan, 504 U.S. at 560 n.1).

         To satisfy the injury-in-fact requirement arising from a defective product, a plaintiff must allege that the particular product purchased by the plaintiff exhibited the alleged defect. Id. (citing In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604, 616 (8th Cir. 2011)). Allegations that a product line contains a defect or that a product poses a risk of exhibiting a defect are insufficient. Id. (citing Zurn, 644 F.3d at 616). Moreover, to assert claims as a class representative in a putative class action lawsuit, the class representative must have standing to assert his or her own claims. See In re Milk Prods. Antitrust Litig., 195 F.3d 430, 436 (8th Cir. 1999).

         In Wallace, for example, when several consumers sought to represent a class of all purchasers of the defendant's beef products over a multi-year period, the United States Court of Appeals for the Eighth Circuit held that the plaintiffs had not pleaded the requisite injury in fact for Article III standing. 747 F.3d at 1027, 1030. The plaintiffs in Wallace alleged that not all of the hot dogs the defendant sold were 100% kosher, as defendant had advertised. Id. at 1030-31. But the plaintiffs did not allege that they had purchased or consumed any defective hot dogs. Id. Although the plaintiffs' alleged economic injury was concrete, the injury was neither “particularized” nor “actual.” Id. at 1029-30.

         Here, eight of the eleven Plaintiffs-Bruner, Lenz, Zeeck, Berens, Bailey, Jacks, Forrest, and Beattie-have failed to allege an injury in fact sufficient to confer Article III standing as to their claims. These Plaintiffs do not allege that their vehicles malfunctioned in any way. There are no allegations that their vehicles ever overheated, caught fire, or otherwise failed to perform as intended. Instead, the amended complaint repeatedly references the “risk” or “propensity” of malfunctions, such as overheating or catching fire, that “could” or “may” occur in some vehicles.[2]

         To distinguish this case from Wallace, Plaintiffs argue that the vehicles they purchased contain an “inherent” defect that creates an “ever-present safety risk.” But this distinction falls short. In Zurn, a putative class of homeowners alleged that brass fittings used in the defendant's plumbing systems were inherently defective because they were susceptible to stress corrosion cracking. 644 F.3d at 609. The Eighth Circuit concluded that the homeowners whose pipes had not leaked had adequately pleaded an injury in fact by alleging “a universal inherent defect” supported by expert testimony. Id. at 617. That injury was “already manifest in all systems” because it necessarily “afflict[ed] all of the [products] upon use.” Id. No such allegations or expert testimony exists here. See Thunander v. Uponor, Inc., 887 F.Supp.2d 850, 864-65 (D. Minn. 2012) (concluding that plaintiffs lacked Article III standing because their broad allegation that all the products ever sold by defendants failed to comply with applicable safety standards was unsupported by plausible facts).

         Here, the amended complaint does not allege, directly or by reasonable inference, that all of the vehicles that contain the defective engine necessarily overheat, catch fire, or otherwise malfunction. The amended complaint merely alleges that the vehicles have an “unreasonable propensity to catch fire, ” create a “risk of overheating and fire, ” or “could overheat and melt, ” not that the class vehicles will inevitably exhibit a defect. (Emphasis added.) Although Plaintiffs allege that dozens of vehicle models contain the allegedly defective engine, for the purpose of Article III standing, “it is not enough for a plaintiff to allege that a product line contains a defect or that a product is at risk for manifesting this defect.” Wallace, 747 F.3d at 1030 (quoting Zurn, 644 F.3d at 616). Here, eight of the eleven Plaintiffs ...


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