Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. N.J.: Defective vehicle claims must be brought under California unfair competition law, (Oct 10, 2013)

By Edward L. Puzzo, J.D.

California plaintiffs could not bring a claim under the New Jersey Consumer Fraud Act against a New Jersey-based company in circumstances where the state with the most significant relationship to the transaction was California, but they could maintain claims under California unfair competition laws, the federal district court in Newark, New Jersey has ruled (Majdipour v. Jaguar Land Rover North America, LLC, October 9, 2013, Walls, W.).

California residents Simon Majdipour and Pamela Austin, on behalf of a class, brought claims against New Jersey-based Jaguar Land Rover North America in connection with alleged air-suspension defects in Range Rover vehicles they purchased from a Land Rover authorized dealership in California.

Claims brought under New Jersey law. One of plaintiffs’ allegations was that Land Rover’s actions violated the New Jersey Consumer Fraud Act (NJCFA). Land Rover countered that California’s Consumer Legal Remedies Act (CLRA) and the California Unfair Competition Law (UCL) should apply to the claims, not the NJCFA.

The first step in the choice of law inquiry in this diversity jurisdiction case was to determine whether the substance of the respective state laws conflicted, the court stated. The NJCFA requires proof of unlawful conduct by defendant, ascertainable loss by plaintiff, and a causal relationship between the two, but does not require proof of reliance on the unlawful act. The CLRA and UCL laws, in contrast, do require proof of actual reliance. Therefore, the court concluded, the state laws do conflict.

The second step in the inquiry is to determine which state had the most significant relationship to the case. The only allegation related to New Jersey was that Land Rover is headquartered there, the court noted. All other factors—such as where plaintiffs purchased their vehicles after reviewing marketing material and interacting with Land Rover employees—all clearly pointed to California as the state with the most significant relationship to the transaction. Therefore, the court ruled that plaintiffs’ claims under the New Jersey Consumer Fraud Act must be dismissed.

Claims brought under California law. As to the claims brought under the California laws (CLRA and UCL), Land Rover sought dismissal for failure to satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). The plaintiffs did satisfy the “who, what, when, where and how” of events required for their pleadings, the court responded. “Who” was Land Rover; “what” and “how” was the alleged failure to disclose a defect in the vehicles’ rubber air bellows suspension system causing a serious safety hazard; “when” and “where” were alleged by specifying the dealership, date of purchase and the representations made prior to purchase. The court ruled that plaintiffs’ pleadings met the 9(b) requirements and denied Land Rover’s motion to dismiss the counts brought under the CLRA and UCL

The case is Civil Action No. 2:12-cv-07849 (WHW).

Attorneys: Matthew Ross Mendelsohn (Mazie Slater Katz & Freeman LLC) for Simon Majdipour and Pamela Austin. Brian D. Sullivan (Fox Rothschild LLP) for Jaguar Land Rover North America, LLC

Companies: Jaguar Land Rover North America, LLC.

Cases: StateUnfairTradePractices NewJerseyNews CaliforniaNews