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Schneider v. BMW of North America, LLC

United States District Court, D. Massachusetts

September 27, 2019

JOHN SCHNEIDER, POSNETT OMONYI, BARBARA REYES, RAINERIO REYES and OSCAR ROSARIO, Plaintiffs,
v.
BMW OF NORTH AMERICA, LLC, and BAVARIAN MOTOR WORKS, Defendants.

          MEMORANDUM & ORDER

          Indira Talwani United States District Judge

         Before the court is Defendant BMW of North America, LLC's (“BMW”) Motion to Dismiss or in the Alternative Sever [#21] Plaintiffs John Schneider, Posnett Omonyi, Barbara Reyes, Rainerio Reyes, and Oscar Rosario's First Amended Complaint [#15] (“Complaint”). Plaintiffs bring their action based on alleged defects in their BMW vehicles. BMW argues that the Complaint must be dismissed in whole or in part for lack of subject-matter jurisdiction and failure to state a claim upon which relief may be granted. BMW argues in the alternative that the claims should be severed or dismissed because they are not appropriately joined. As set forth below, the court ALLOWS BMW's motion to dismiss with leave to amend the complaint.

         I. Factual Background as Alleged in the Complaint

         Plaintiffs each purchased BMW vehicles between 2010 and 2013. Compl. ¶¶ 11, 21, 28, 37. When Plaintiffs purchased their vehicles, BMW made representations regarding the vehicles' performance and quality and assured Plaintiffs that their vehicles were free from defects of workmanship. Compl. ¶ 44. Furthermore, Plaintiffs relied on a warranty provided by BMW at the time of sale that promised that BMW would repair or replace components found to be defective in material or workmanship for four years or 50, 000 miles after delivery. Compl. ¶¶ 45-46.

         The vehicles that BMW sold to Plaintiffs were all equipped with the “N63” model engine. Compl. ¶ 55. The N63 engine is subject to a manufacturing defect that causes the vehicle to consume oil at an abnormally high rate. Compl. ¶ 51. Specifically, BMW initially marketed the vehicles with a recommended oil service interval of 15, 000 miles or two years, but Plaintiffs have experienced oil consumption at a level that requires them to frequently add oil to the engine (“make-up oil”) during this interval. Compl. ¶¶ 15, 25, 34, 38.

         BMW first became aware of these oil consumption issues no later than 2008 through sources not currently available to Plaintiffs. Compl. ¶ 84. These sources include but are not limited to pre-release testing data, durability testing, early consumer complaints about the oil consumption defect, testing conducted in response to those complaints, aggregate data from BMW dealers, including dealer repair orders and high warranty reimbursement rates, as well as other internal sources. Id.

         BMW has acknowledged the oil consumption problem through the issuance of technical service bulletins (“Bulletins”) and incentive offers intended to appease dissatisfied customers. Compl. ¶¶ 67-80. The Bulletins evince the severity of the oil consumption problem, reflecting that some engines will consume oil at the rate of 2.5 quarts per 1, 000 miles. Compl. ¶ 71. Based on this level of consumption, consumers would have to add almost 40 quarts of make-up oil between the recommended 15, 000-mile oil service intervals. It is not normal to add any oil between scheduled oil changes. Compl. ¶ 75.

         Plaintiffs have asked BMW to address the issue under the terms of their warranty agreements. BMW has disclaimed any problem with the engines, calling the oil consumption experienced by Plaintiffs “normal.” Compl. ¶¶ 14, 17, 24, 31.

         II. Procedural Background

         Plaintiffs were members of a certified class of plaintiffs in an action filed in the District of New Jersey in 2015. See Bang v. BMW of North America, LLC, No. CV 15-6945 (D.N.J.) (“Bang Class Action”). Plaintiffs Omonyi, Reyes, and Schneider opted out of the certified class on August 10, 2018, and Plaintiff Rosario opted out on August 23, 2018. See Pls.' Opp'n, Exhs. C, D [#23-3], [#23-4].

         Plaintiffs initiated this action on October 26, 2018. In their First Amended Complaint [#15], Plaintiffs allege: (1) that BMW violated the Magnuson-Moss Warranty Act (“Warranty Act”) by failing to remedy the defects in the Plaintiffs' vehicles, (2) that BMW violated the Warranty Act and Mass. Gen. L. ch. 106, § 2-314 by selling vehicles that were not merchantable, (3) that BMW violated the Warranty Act and Mass. Gen. L. ch. 106, § 2-313 by breaching express warranties, and (4) that BMW violated Mass. Gen. L. ch. 93A, § 2 (“ch. 93A”) by engaging in unlawful or deceptive trade practices. Compl. ¶¶ 108-34.

         BMW responded with the pending Motion to Dismiss [#21]. BMW contends that dismissal is required in whole or part on the following grounds: (1) that the court lacks subject matter jurisdiction, (2) that Plaintiffs have failed to state a claim for breach of express warranty, (3) that Plaintiffs have failed to state a claim for breach of the implied warranty of merchantability, (4) that Plaintiffs' claims are time-barred, and (5) that Plaintiffs failed to state a claim for violation of Massachusetts' consumer protection statute. BMW moves in the alternative that the claims should be severed or dismissed because they are not appropriately joined. The court proceeds first with the question of subject matter jurisdiction. Although the motion is allowed on this ground, the court proceeds to the related issue of joinder, and then addresses the 12(b)(6) arguments, and concludes that the complaint survives these other challenges such that leave to amend is allowed.

         III. Discussion

         a. Subject Matter Jurisdiction under the Warranty Act

         Under the Warranty Act, a United States district court may exercise subject-matter jurisdiction over claims for breach of express and implied warranty:

(A) if the amount in controversy of any individual claim is less than the sum or value of $25;
(B) if the amount in controversy is less than the sum or value of $50, 000 (exclusive of interests and costs) computed on the basis of all claims to be determined in this suit; or (C) if the action is brought as a class action, and the number of named plaintiffs is less than one hundred.

15 U.S.C. § 2310(d)(3). BMW contends that the court lacks subject-matter jurisdiction over Plaintiffs' claims because “Plaintiffs, to a legal certainty, do not meet the $50, 000 amount in controversy threshold” for claims brought under the Warranty ...


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