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Burton v. Chrysler Group LLC

United States District Court, D. Delaware

August 27, 2014

AUTUMN BURTON, MORRIS E. McMILLIAN, MIKE BURKE, and AMANDA SHEPHERD, individually and in their respective capacity for all others similarly situated, Plaintiffs,
v.
CHRYSLER GROUP LLC, Defendant.

MEMORANDUM ORDER

LEONARD P. STARK, District Judge.

Presently before the Court is Defendant's Motion to Dismiss Plaintiffs' Third Amended Complaint. (D.I. 63) The Court heard argument on the motion on August 20, 2014. ( See Transcript ("Tr.")) For the reasons discussed below, the Court will grant the motion.

BACKGROUND

This case is a putative class action against Defendant Chrysler Group, LLC ("Chrysler Group" or "Defendant") alleging negligence and breach of warranty. Plaintiffs own model 2006-2008 cars manufactured and built by Old Carco LLC, formerly known as Chrysler LLC and Chrysler Motors LLC (collectively, "Chrysler Motors").[1] See In re Old Carco LLC, 492 B.R. 392, 394 (Bankr. S.D.N.Y. 2013).[2] Plaintiffs' claims pertain to a "fuel spit-back problem, " a defect in the vehicles causing fuel to spill out of the filler tube during refueling. (See D.I. 62 ¶¶ 1-2) In 2002 and 2005, Chrysler Motors issued safety recalls for certain affected model year vehicles to address this problem. ( Id. ¶¶ 3-4) In April 2009, Chrysler Motors filed for bankruptcy in the Bankruptcy Court for the Southern District of New York. See In re Old Carco LLC, 492 B.R. at 394. Then, in June of that year, Chrysler Group purchased Chrysler Motors' assets free of certain liabilities, pursuant to a Sale Order entered by the Bankruptcy Court. Id. at 396.

In 2011, Plaintiffs filed their complaint against this new owner of Chrysler Motors' assets - Defendant Chrysler Group - under a variety of legal theories; they filed their suit in Delaware state court. (D.I. ¶ 1) In January 2012, Defendant removed the action to this Court. (D.I. 1) Defendant later filed a motion to dismiss, arguing that the Sale Order entered in the bankruptcy proceedings involving Chrysler Group barred Plaintiffs' claims; the economic loss doctrine barred Plaintiffs' negligence claims; and the Court should abstain from exercising its jurisdiction under the doctrine of primary jurisdiction. (D.I. 4; D.I. 5 at 4-5, 8) After hearing oral argument in August 2012, the Court transferred the action to the Southern District of New York, which had presided over the bankruptcy and had entered the Sale Order. (D.I. 58; D.I. 60) The Court's expectation was that the New York Bankruptcy Court would determine the effect of the Sale Order on Plaintiffs' claims and thereafter, if necessary, the case would return to this Court.

In announcing its ruling from the bench, the Court added:

[I]f the case returns here, the Plaintiff will need to file a third amended complaint which accounts for whatever the New York court rules, and... [such claims, ] if any, will be limited to actions that Defendant took in 2011 and 2012.... Additionally, in the Court's view, and the Court holds, the economic loss doctrine applies here and the de minimis loss of the value of gas that is spilled, which is concededly de minimis, does not get around the application of that doctrine.

(D.I. 60 at 70-71) After the case was transferred, the New York Bankruptcy Court dismissed several of Plaintiffs' claims based on the Sale Order, but also determined that the Sale Order did not bar claims related to repair or replacement warranties issued by Chrysler Group in 2011 and 2012 (after the Sale Order); nor did it bar any "Lemon Law" claims arising under non-bankruptcy law. See In re Old Carco LLC, 492 B.R. at 395, 407.

On October 18, 2013, Plaintiffs filed in this Court their Third Amended Complaint (the "Complaint") against Chrysler Group, seeking compensation and remedial repairs for damages allegedly caused by Chrysler Group in relation to a Technical Service Bulletin ("TSB") and several warranties Defendant had issued, providing coverage for any repair or replacement of parts necessitated by the fuel spit-back problem for certain models (the "Extended Lifetime Warranties"). (D.I. 62 ¶¶ 1, 11-14) Specifically, Count I of Plaintiffs' Complaint alleges Chrysler Group acted negligently in connection with the issuance of the TSB and the Extended Lifetime Warranties ( id. ¶¶ 32-41), and Count II alleges a breach of the Extended Lifetime Warranties ( id. ¶¶ 42-44). In its motion to dismiss, Chrysler Group contends that: (1) the Court lacks subject matter jurisdiction; (2) Plaintiffs have failed to plead a cause of action for negligence and breach of warranty; and (3) Plaintiffs' claim for relief is preempted by federal law. (D.I. 64)

LEGAL STANDARDS

I. Rule 12(b)(1)

Motions brought under Rule 12(b)(1) may present either facial or factual challenges to a court's subject matter jurisdiction. See Gould Elec. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). In reviewing a factual challenge to the Court's subject matter jurisdiction, the Court is not confined to the allegations of the complaint, and the presumption of truthfulness does not attach to those allegations. See Mortensen v. First Fed. Say. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). Instead, the Court may consider evidence outside the pleadings, including affidavits, depositions, and testimony, to resolve any factual issues bearing on jurisdiction. See Gotha v. United States, 115 F.3d 176, 179 (3d Cir. 1997). Once the Court's subject matter jurisdiction is challenged, the plaintiff bears the burden of proving jurisdiction exists. See Mortensen, 549 F.2d at 891.

II. Rule 12(b)(6)

When presented with a motion to dismiss for failure to state a claim pursuant to Federal Rules of Civil Procedure 12(b)(6), courts conduct a two-pert analysis. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). First, courts separate the factual and legal elements of a claim, accepting "all of the complaint's well-pleaded facts as true, but [disregarding] any legal conclusions." Id. at 210-11. This step requires courts to draw all reasonable inferences in favor of the non-moving party. See Maio v. Aetna, Inc., 221 F.3d 472, 500 (3d Cir. 2000). However, courts are not obligated to accept as true "bald assertions, " Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997), "unsupported conclusions and unwarranted ...


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