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Penrod v. K&N Engineering, Inc.

United States District Court, D. Minnesota

May 2, 2019

John Penrod, Gus Erpenbach, and Juan Welsh, individually and on behalf of themselves and all others similarly situated, Plaintiffs,
K&N Engineering, Inc., Defendant.

          Matthew D. Schelkopf and Joseph B. Kenney, Sauder Schelkopf LLC, Berwyn, PA; Daniel E. Gustafson, Daniel C. Hedlund, Catherine K. Smith, and Ling S. Wang, Gustafson Gluek PLLC, Minneapolis, MN; and David C. Wright, McCune Wright Arevalo LLP, Ontario, CA, for plaintiffs John Penrod, Gus Erpenbach, and Juan Welsh.

          Mark C. Goodman and Anne M. Kelts, Baker McKenzie LLP, San Francisco, CA; and Amanda M. Cialkowski and Leah N. Kippola-Friske, Nilan Johnson Lewis PA, Minneapolis, MN, for defendant K&N Engineering, Inc.


          Eric C. Tostrud United States District Court

         Plaintiffs filed this case in federal district court seeking to represent a nationwide class-or, alternatively, state-specific classes-of persons who sustained damages caused by Defendant's allegedly defective oil filters. Plaintiffs assert only state-law claims and allege there is subject-matter jurisdiction over this case on the basis of the Class Action Fairness Act (“CAFA”). Defendant K&N Engineering seeks dismissal of the case on several grounds, including that Plaintiffs' claims do not satisfy CAFA's $5 million amount-in-controversy threshold. Because Plaintiffs' complaint does not allege facts plausibly establishing this jurisdictional requirement, the complaint will be dismissed. Plaintiffs will be permitted to file an amended complaint.


         Plaintiffs-three individuals from Minnesota, Missouri, and Oregon-allege that K&N designs and sells defective engine-oil filters for use in motorcycles and powersport vehicles (like jet skis and ATVs). Compl. ¶¶ 1, 11, 18, 26 [ECF No. 1]; Williams Decl. ¶ 2 [ECF No. 19] (clarifying that K&N does not manufacture oil filters). Plaintiffs allege specifically that three models of K&N filters (the KN-138, KN-204, and KN-303) share “a structural and manufacturing defect whereby they can suddenly separate or fracture causing pressurized and hot engine oil to erupt and spill onto the person, engine, components, tires, and riding surfaces.” Compl. ¶¶ 2-3. At the very least, Plaintiffs allege, this “separation defect” renders the oil filter unusable; at worst, the defect can result in “engine fires, engine failures, vehicle crashes, personal injuries, and other economic damages.” Id. ¶ 3; see also Id. ¶ 45 (“Typically, on motorcycles, oil filters are located directly in front of the rear tire. Because of the placement, an oil filter failure can result in an immediate loss of traction to the rear tire and cause a serious accident.”).

         Plaintiffs do not identify when these oil filters entered the market, but allege that “Defendant has long known, since at least 2014, that the Oil Filters are defective.” Id. ¶ 53. Plaintiffs describe in their complaint how K&N initiated a voluntary recall in August 2017. Id. ¶¶ 63, 68-69. The recall was limited to the KN-204 model and implicated seven months' worth of filters-those manufactured between March 1, 2016, and September 30, 2016. Id. ¶ 69. K&N offered as part of the recall to “replace the affected oil filters at no charge.” Id. Plaintiffs also allege that around this same time, K&N modified the filter design, “revis[ing] the shape of the removal nut and canister end to improve the mating of the two components” in order to address “improper welding of the nut to the canister” at the location where oil would leak. Id. ¶¶ 67, 69.

         Plaintiffs, all motorcycle owners who used the KN-204 model filter, allege that their oil filters failed around or after the time of the recall (July 2017, April 2018, and July 2018). See Id. ¶¶ 12-13, 19-20, 27-28. Plaintiffs Penrod and Erpenbach experienced failures resulting in oil spillage; Plaintiff Welsh experienced oil spillage and engine failure. See Id. ¶¶ 13, 20, 28. K&N offered Penrod $300 to compensate him, but Penrod declined; Erpenbach attempted to contact K&N, but was unable to do so; the complaint does not allege that Welsh ever contacted K&N or that any Plaintiff participated in the recall. Id. ¶¶ 14, 22, 26-31.

         Plaintiffs seek to represent a nationwide class of “[a]ll persons or entities in the United States that purchased a KN138, KN204, and/or KN303 Oil Filter.” Id. ¶ 73. Alternatively, they seek to represent three subclasses of Minnesota, Missouri, and Oregon purchasers. Id. ¶ 74. Plaintiffs assert claims for negligence (id. ¶¶ 82-89), strict liability for a product defect and failure to warn (id. ¶¶ 90-103), breach of express warranty (id. ¶¶ 149-155), breach of implied warranty (id. ¶¶ 156-161), and violation of various state consumer-protection statutes (id. ¶¶ 104-48). Plaintiffs seek an “award [of] all actual, general, special, incidental, statutory, and consequential damages and restitution, ” as well as attorneys' fees, but do not seek punitive damages at this time. Id. at 37-38. They also seek injunctive relief including “an order that requires Defendant to recall and/or replace the Oil Filters and to extend the applicable warranties to a reasonable period of time.” Id.

         In lieu of an answer, K&N moved to dismiss on several grounds, including lack of subject-matter jurisdiction, lack of personal jurisdiction, and failure to state a claim. Mot. at 1-2 [ECF No. 16]. K&N requests that the Court dismiss the complaint in its entirety with prejudice, or alternatively that the Court “strike Plaintiffs' overbroad class allegations from the complaint.” Id. at 2.



         The first priority is subject-matter jurisdiction. Crawford v. F. Hoffman-La Roche Ltd., 267 F.3d 760, 764 (8th Cir. 2001) (“It is axiomatic that a court may not proceed at all in a case unless it has jurisdiction.”). “CAFA gives federal courts jurisdiction over certain class actions, defined in § 1332(d)(1), if the class has more than 100 members, the parties are minimally diverse, and the amount in controversy exceeds $5 million.” Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547, 552 (2014) (citing 28 U.S.C. § 1332(d)(2), (5)(B)). Here, the Parties do not disagree that they are minimally diverse or that the class contains at least 100 members. They disagree about whether the amount in controversy meets the $5 million threshold.

         The task of determining whether a case meets CAFA's $5 million threshold is not intended to be difficult. “[T]he claims of the individual class members shall be aggregated to determine whether the matter in controversy exceeds the sum or value of $5, 000, 000, exclusive of interest and costs.” 28 U.S.C. § 1332(d)(6). CAFA “tells the District Court to . . . add[] up the value of the claim of each person who falls within the definition of [the] proposed class and determine whether the resulting sum exceeds $5 million.” StandardFire Ins. Co. v. Knowles, 568 U.S. 588, 592 (2013); Faltermeier v. FCA U.S. LLC, 899 F.3d 617, 621 ...

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