Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D.N.J.: BMW may be liable for omitting defect information, (Jan 28, 2014)

By Jody Coultas, J.D.

Vehicle purchasers stated New Jersey and Georgia consumer protection law claims against BMW of North America, LLC for allegedly omitting information regarding a defect in their vehicles, the federal district court in Newark has held (Skeen v. BMW of North America, LLC, January 24, 2014, Walls, W.). Claims based on affirmative misrepresentations and the Illinois consumer protection law were dismissed without prejudice.

MINI Cooper purchasers alleged a problem with the timing chain tensioner, which caused a loud noise and eventually required replacement of that part or even the entire engine. BMW allegedly made various misrepresentations and omissions in relation to the sales and marketing of the vehicles.

Choice of law. To determine whether a state had the most significant relationship to a claim, courts look at: (a) the place where the plaintiff acted in reliance on the representations; (b) the place where the plaintiff received the representations; (c) the place where the representations were made; (d) the place where the defendant was located; (e) the place of the transaction; and (f) the place where the plaintiff is to render performance under a contract.

The laws of the state in which the purchasers lived applied to the claims, according to the court. The purchasers requested that the court apply the NJCFA to all nationwide defendants. BMW argued that each purchaser must bring claims under the consumer protection statute of the state in which they reside. The NJCFA “encourages private class actions for consumer fraud,” allows actions related to commercial purposes, and authorizes treble damages. Each of the potentially relevant consumer protection laws conflicted with the NJCFA. Thus, the court was required to determine which state had the most significant relationship to each action.

The purchasers received the representations in their home states, relied upon those representations in their home states, the vehicles were in the home states, and the purchases were made according to a contract in the home states.

Rule 9(b). BMW was denied dismissal of the NJCFA claims and Georgia Fair Businesses Practice Act regarding omissions, but the court dismissed the claims regarding affirmative misstatements. To state claims under the applicable statutes, the purchasers were required to allege a violation of the statutes, an injury, and a causal connection between the two. The New Jersey and Georgia purchasers adequately pleaded unlawful conduct by stating the elements of a latent defect claim. The purchasers adequately alleged ascertainable loss as well by claiming that their vehicles dropped in value and that they suffered an injury based on repair costs which they should not have had to pay. The allegation that BMW’s express warranty did not include a conspicuous statement about the defect was sufficient to allege causation between the omissions and the alleged injury. However, the purchasers failed to identify the allegedly affirmative misrepresentations and failed to allege exposure to either the general or specific statements. Thus, they could not show causation between the misrepresentations and the injury.

The Illinois purchaser’s claim was also denied by the court. The Illinois statute requires that affirmative misrepresentation and omission claims include a specific pleading that the plaintiff actually saw or heard the allegedly deceptive act. A purchaser of a new car engages in communication with the dealer and manufacturer of the car, either in the form of advertisements, sales communications, or other ways. However, the purchaser was required to allege the circumstances under which she saw or heard or read those communications and identify them with particularity. The purchaser failed to identify BMW’s alleged statements with particularity.

The case is No. 2:13-cv-1531-WHW-CLW.

Attorneys: Jeffrey Alan Koncius (Kiesel Larson LLP) for Joshua Skeen. Christopher J. Dalton (Buchanan, Ingersoll & Rooney, PC) for BMW of North America, LLC.

Companies: BMW of North America, LLC

Cases: StateUnfairTradePractices NewJerseyNews