UNITED STATES DISTRICT COURT FOR THE SOUTHERN...

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

IN RE: GENERAL MOTORS LLC IGNITION SWITCH LITIGATION This Document Relates To All Actions

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No. 14-MD-2543 (JMF) No. 14-MC-2543 (JMF) Hon. Jesse M. Furman

DEFENDANT GENERAL MOTORS LLC’S MEMORANDUM IN SUPPORT OF ITS MOTION TO DISMISS CLAIMS OF CERTAIN PLAINTIFFS

IN THE THIRD AMENDED CONSOLIDATED COMPLAINT

Richard C. Godfrey, P.C. Andrew B. Bloomer, P.C. KIRKLAND & ELLIS LLP 300 N. LaSalle Chicago, IL 60654-3406 Phone: 312-862-2000 Fax: 312-862-2200 [email protected] [email protected] Attorneys for Defendant General Motors LLC

Case 1:14-md-02543-JMF Document 2357 Filed 02/24/16 of 78

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TABLE OF CONTENTS

Page

INTRODUCTION .......................................................................................................................... 1

FACTUAL ALLEGATIONS ......................................................................................................... 3

A. The TACC Asserts Claims Based On Approximately 72 Recalls. ......................... 3

1. Delta Ignition Switch And Other Ignition-Related Recalls. ....................... 3

2. Other Recalls Conducted By New GM in 2014. ......................................... 4

B. Plaintiffs Seek Diminution-In-Value Damages. ..................................................... 5

C. The Named Plaintiffs At Issue In This Motion. ...................................................... 5

ARGUMENT .................................................................................................................................. 7

I. PLAINTIFFS WITHOUT A MANIFESTED DEFECT CANNOT STATE A CLAIM. ............................................................................................................................... 8

A. A Manifested Defect Is A Prerequisite For A Cognizable Claim. .......................... 8

B. Alleging Diminished Value Is Insufficient To Support A Claim. ........................ 11

C. No Exceptions Apply To The Rule Requiring A Manifested Defect. .................. 13

1. Claims Under Maryland Law Should Be Dismissed For Lack of Manifested Defect. .................................................................................... 13

2. Claims Under California Law Should Be Dismissed For Lack of Manifested Defect. .................................................................................... 14

II. NEW GM’S RECALLS MOOT PLAINTIFFS’ CLAIMS. ............................................. 16

III. PLAINTIFFS CANNOT ASSERT CLAIMS BASED ON DEFECTS IN CARS THEY DO NOT OWN OR LEASE. ................................................................................ 20

A. The Second Circuit Has Held That Parties Cannot Bring Claims For Products They Did Not Purchase. ......................................................................... 20

B. Named Plaintiffs Do Not Have Individual Or Class Standing To Bring Claims For Defects Not Present In Their Vehicles. .............................................. 23

1. Plaintiffs Lack Individual Standing To Pursue A Damages Theory Based On Vehicles They Never Owned And Defects They Never Experienced. .............................................................................................. 23


TABLE OF CONTENTS (CONT'D)

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2. Plaintiffs Lack Class Standing Because Of The Myriad Differences Among The Vehicles And Requirements For Different Proof. ................ 24

IV. PLAINTIFFS HAVE FAILED TO PLEAD ANY VIABLE RICO CLAIM. .................. 26

A. Plaintiffs Do Not Plead Damages Recoverable Under RICO. .............................. 27

1. Benefit-of-the-Bargain and Diminution-in-Value Damages Cannot Be Recovered Under RICO. ..................................................................... 27

2. Plaintiffs Who Have Not Sold Or Traded-In Their Vehicles Do Not Have A Ripe RICO Claim. ....................................................................... 29

B. Plaintiffs’ Claim Is An Artful Pleading Of A Safety Act Violation That Falls Outside The Scope Of RICO. ....................................................................... 30

C. Plaintiffs Fail To Allege Predicate Acts That Could Support A RICO Claim. .................................................................................................................... 33

1. Litigation Conduct And Settlements Are Not RICO Predicate Acts. ....... 33

2. A Technical Service Bulletin Does Not Satisfy The Predicate Act Requirement. ............................................................................................. 36

3. The TACC’s Allegations Concerning Misrepresentations To NHTSA Fail To State Any Predicate Acts. .............................................. 37

D. Plaintiffs Have Not Properly Alleged Any Enterprise. ......................................... 39

V. THE UNJUST ENRICHMENT CLAIMS OF EACH NAMED PLAINTIFF FAIL UNDER STATE LAW. .................................................................................................... 42

A. State Law Bars Unjust Enrichment Claims Where There Is A Contract, Such As An Express Warranty. ............................................................................ 42

B. Many States Do Not Allow An Unjust Enrichment Claim If Plaintiffs Have An Adequate Remedy At Law. ................................................................... 43

C. Certain Plaintiffs’ Unjust Enrichment Claims Should Be Dismissed Because They Do Not Allege That They Conferred A Benefit On New GM. ....................................................................................................................... 44

D. California Law Does Not Recognize Unjust Enrichment As A Cause Of Action. ................................................................................................................... 46

E. Louisiana Bars Unjust Enrichment Claims Against A Manufacturer Based On Product Defects. .............................................................................................. 46


TABLE OF CONTENTS (CONT'D)

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VI. THE CONSUMER PROTECTION CLAIMS OF CERTAIN PLAINTIFFS ARE BARRED AS A MATTER OF LAW. .............................................................................. 47

A. Plaintiffs Do Not Adequately Allege Misrepresentations Or Omissions In Support Of Their Consumer Fraud Claims. .......................................................... 47

1. Plaintiffs Fail To Identify Any Specific Misrepresentations Relied On By Named Plaintiffs. ........................................................................... 47

2. Plaintiffs Fail To Sufficiently Allege That New GM Concealed Information For Many Of The Alleged Omissions................................... 49

B. Certain Plaintiffs’ Consumer Act Claims Fail Under State Law. ......................... 51

VII. THE FRAUDULENT CONCEALMENT AND NEGLIGENCE CLAIMS OF CERTAIN PLAINTIFFS ARE BARRED AS A MATTER OF LAW. ........................... 52

A. Claims Cannot Be Based On Allegations Concerning Culture Or General Quality, But Must Be Based on Specific Defects. ................................................ 52

B. Certain States Do Not Impose A Duty To Disclose Under The Facts Here. ........ 53

C. Fraudulent Concealment Claims Under Florida Law Are Barred By The Economic Loss Rule. ............................................................................................ 54

D. Plaintiffs’ Negligent Recall Claim Under California Law Is Barred By The Economic Loss Rule. ............................................................................................ 55

E. The Louisiana Products Liability Act Bars Fraudulent Concealment And Negligence Against A Manufacturer Based On Product Defects. ........................ 56

VIII. OWNERS OF NEW GM VEHICLES CANNOT HAVE A STATE LAW THIRD PARTY BENEFICIARY CLAIM AGAINST NEW GM BASED ON AN ALLEGED BREACH OF THE SALE AGREEMENT. .................................................. 56

CONCLUSION ............................................................................................................................. 58


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TABLE OF AUTHORITIES

Page(s)

Cases

Allen v. Wright, 468 U.S. 737 (1984) .................................................................................................................. 20

Am. Suzuki Motor Corp. v. Superior Court of Los Angeles Cnty., 37 Cal. App. 4th 1291 (Cal. Ct. App. 1995) ................................................................. 10, 14, 15

Angus v. Shiley, Inc., 989 F.2d 142 (3d Cir. 1993) ........................................................................................................ 8

Aprigliano v. Am. Honda Motor Co., 979 F. Supp. 2d 1331 (S.D. Fla. 2013) ...................................................................................... 55

Arias v. Jokers Wild, Inc., 2007 WL 6013198 (Va. Cir. Ct. May 2, 2007) ......................................................................... 42

Armstrong v. McAlpin, 699 F.2d 79 (2d Cir. 1983) ........................................................................................................ 50

Ashcroft v. Iqbal, 556 U.S. 662 (2009) ........................................................................................................ 8, 18, 19

Atlantis Estate Acquisitions, Inc. v. DePierro, 125 So. 3d 889 (Fla. Dist. Ct. App. 2013) ................................................................................. 43

Auburn Med. Ctr., Inc. v. Andrus, 9 F. Supp. 2d 1291 (M.D. Ala. 1998) ........................................................................................ 35

Ayres v. Gen. Motors Corp., 234 F.3d 514 (11th Cir. 2000) ............................................................................................. 31, 32

Barbarin v. Gen. Motors Corp., 1993 WL 765821 (D.D.C. Sept. 22, 1993) ............................................................................... 10

Barnes v. Fed. Home Loan Mortg. Corp., 2013 WL 1314200 (W.D. Mo. Mar. 28, 2013) ......................................................................... 51

Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) .................................................................................................... 7, 8, 18, 19

Bennett v. Crane, 289 S.W. 26 (Mo. Ct. App. 1926) ............................................................................................. 43


TABLE OF AUTHORITIES (CONT'D)

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v

Bezet v. Smith & Wesson Corp., 2009 WL 632080 (M.D. La. Mar. 11, 2009) ............................................................................. 56

Birdsong v. Apple, Inc., 590 F.3d 955 (9th Cir. 2009) ....................................................................................................... 8

Bladen v. C.B. Fleet Holding Co., 487 F. Supp. 2d 759 (W.D. La. 2007) ....................................................................................... 51

Blair v. Wachovia Mortg. Corp., 2012 WL 868878 (M.D. Fla. Mar. 14, 2012) ............................................................................ 47

Blake v. Career Educ. Corp., 2009 WL 140742 (E.D. Mo. Jan. 20, 2009) .............................................................................. 47

Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008) .................................................................................................................. 27

Bridges v. Blue Cross and Blue Shield Assoc., 935 F. Supp. 37 (D.D.C. 1996) ................................................................................................. 31

Briehl v. Gen. Motors Corp., 172 F.3d 623 (8th Cir. 1999) ..................................................................................... 9, 11, 14, 15

Briggs v. Freeport-McMoran Copper & Gold, Inc., 2015 WL 1461884 (W.D. Okla. Mar. 30, 2015) ....................................................................... 44

Brown v. First Tenn. Bank Nat’l Ass’n, 753 F. Supp. 2d 1249 (N.D. Ga. 2009) ..................................................................................... 31

Burns v. Winnebago Indus., Inc., 2013 WL 4437246 (M.D. Fla. Aug. 16, 2013) .................................................................... 54, 55

Bushendorf v. Freightliner Corp., 13 F.3d 1024 (7th Cir. 1993) ..................................................................................................... 45

Callaghan v. BMW, 2014 WL 1340085 (N.D. Cal. April 2, 2014) ........................................................................... 55

Callahan v. A.E.V., Inc., 182 F.3d 237 (3d Cir. 1999) ...................................................................................................... 38

Cardinal Health 301, Inc. v. Tyco Elec. Corp., 169 Cal. App. 4th 116 (Cal. App. 4th 2008) ................................................................... 8, 14, 15

Carlson v. General Motors Corp., 883 F.2d 287 (4th Cir. 1989) ............................................................................................... 11, 12



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vi

Cattie v. Wal-Mart Stores, Inc., 504 F. Supp. 2d 939 (S.D. Cal. 2007) ....................................................................................... 51

Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285 (5th Cir. 2004) ..................................................................................................... 45

Central Facilities Operating Co., LLC v. Cinemark USA, Inc., 36 F. Supp. 3d 700 (M.D. La. 2014) ......................................................................................... 54

Chambers v. Time Warner, Inc., 282 F.3d 147 (2d Cir. 2002) ...................................................................................................... 34

Cheng v. BMW of N. Am., LLC, 2013 WL 3940815 (C.D. Cal. July 26, 2013) ..................................................................... 16, 17

Chiarelli v. Nissan N. Am., Inc., 2015 WL 5686507 (E.D.N.Y. Sept. 25, 2015) .......................................................................... 45

Chin v. Chrysler Corp., 182 F.R.D. 448 (D.N.J. 1998) ................................................................................................... 10

Cirulli v. Hyundai Motor Co., 2009 WL 5788762 (C.D. Cal. June 12, 2009) ........................................................................... 53

City of Pontiac Policemen’s & Firemen’s Retirement Sys. v. UBS AG, 752 F.3d 173 (2d Cir. 214) ........................................................................................................ 52

Cleveland v. United States, 531 U.S. 12 (2000) .................................................................................................................... 37

Cnty. Line Inv. Co. v. Tinney, 933 F.2d 1508 (10th Cir. 1991) ................................................................................................. 44

Cohen v. Guidant Corp., 2011 WL 637472 (C.D. Cal., Feb. 15, 2011) ........................................................................ 8, 14

Collins/Snoops Associates, Inc. v. CJF, LLC, 988 A.2d 49 (Md. Ct. Spec. App. 2010) ................................................................................... 43

Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv., 911 F.2d 242 (9th Cir. 1990) ..................................................................................................... 49

County Comm’rs of Caroline County v. J. Roland Dashiell & Sons, Inc., 747 A.2d 600 (Md. Ct. Spec. App. 2000) ................................................................................. 42

Crichton v. Golden Rule Ins. Co., 576 F.3d 392 (7th Cir. 2009) ..................................................................................................... 37



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vii

D’Orange v. Feely, 877 F. Supp. 152 (S.D.N.Y. 1995) ............................................................................................ 35

Daigle v. Ford Motor Co., 2012 WL 3113854 (D. Minn. 2012) ......................................................................................... 53

DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (2006) ............................................................................................................ 20, 25

Dalton v. Ford Motor Co., 2002 WL 338081 (Del. Sup. Ct. Feb. 28, 2002) ....................................................................... 10

Danielsen v. Burnside–Ott Aviation Training Ctr., Inc., 941 F.2d 1220 (D.C. Cir. 1991) ................................................................................................ 31

David v. Am. Suzuki Motor Corp., 629 F. Supp. 2d 1309 (S.D. Fla. 2009) ...................................................................................... 16

Davis v. Allstate Ins. Co., 2009 WL 122761 (E.D. La. Jan. 15, 2009) ............................................................................... 49

Davis v. Chase Bank U.S.A., N.A., 650 F. Supp. 2d 1073 (C.D. Cal. 2009) ..................................................................................... 51

Davis v. Fed. Election Comm’n, 554 U.S. 724 (2008) ............................................................................................................ 20, 25

DDR Constr. Servs. v. Siemens Indus., 770 F. Supp. 2d 627 (S.D.N.Y. 2011) ....................................................................................... 38

Diamond “S” Dev. Corp. v. Mercantile Bank, 989 So.2d 696 (Fla. Dist. Ct. App. 2008) .................................................................................. 42

DiMuro v. Clinique Labs., LLC, 572 F. App’x 27 (2d Cir. 2014) ............................................................................... 21, 22, 24, 25

Dinwiddie v. Suzuki Motor of Am., Inc., 111 F. Supp. 3d 1202 (W.D. Okla. 2015) ................................................................................. 52

Discon, Inc. v. NYNEX Corp., 93 F.3d 1055 (2d Cir. 1996) ...................................................................................................... 41

DLJ Mortgage Capital, Inc. v. Kontongiannis, 726 F. Supp. 2d 225 (E.D.N.Y. 2010) ....................................................................................... 29

Doll v. Ford Motor Co., 814 F. Supp. 2d 526 (D. Md. 2011) .......................................................................................... 45



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viii

Dow Chem. Co. v. Exxon Corp., 30 F. Supp. 2d 673 (D. Del. 1998) ............................................................................................ 39

ECA, Local 134 IBEW Joint Pension Trust of Chicago v. JP Morgan Chase Co., 553 F.3d 187 (2d Cir. 2009) ...................................................................................................... 52

El Paso Cnty., Tex. v. Bank of New York Mellon, 2013 WL 285705 (W.D. Tex. Jan. 22, 2013) ...................................................................... 31, 33

Ervin v. Guidant Corp., 2010 WL 3081306 (E.D. La. Aug. 5, 2010) .............................................................................. 56

Extraordinary Title Servs. v. Fla. Power & Light Co., 1 So.3d 400 (Fla. Dist. Ct. App. 2009) ...................................................................................... 44

Farasat v. Wells Fargo Bank, N.A., 913 F. Supp. 2d 197 (D. Md. 2012) .......................................................................................... 47

Feinstein v. Firestone Tire & Rubber Co., 535 F. Supp. 595 (S.D.N.Y. 1982) ...................................................................................... 10, 14

Fidelity Tel. Co. v. Shields, Britton & Fraser, 159 F.R.D. 518 (E.D. Mo. 1995) ............................................................................................... 42

First Capital Asset Mgmt. v. Satinwood, Inc., 385 F.3d 159 (2d Cir. 2004) .................................................................................... 26, 34, 40, 42

First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763 (2d Cir. 1994) ............................................................................................ 27, 29, 30

Fitzgerald v. Chrysler Corp., 116 F.3d 225 (7th Cir. 1997) ..................................................................................................... 40

Ford Motor Co. v. Rice, 726 So.2d 626 (Ala. 1998) .............................................................................................. 9, 10, 14

Frank v. DaimlerChrysler Corp., 741 N.Y.S.2d 9 (N.Y. App. Div. 2002) ............................................................................... 10, 15

Gallien v. Procter & Gamble Pharm., Inc., 2010 WL 768937 (S.D.N.Y. March 5, 2010) ............................................................................ 51

Gambale v. Deutsche Bank AG, 377 F.3d 133 (2d Cir. 2004) ...................................................................................................... 36

Gen. Accident Ins. Co. of Am. v. Aggreko, LLC, 2012 WL 6738217 (E.D. La. Dec. 28, 2012) ............................................................................ 43



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ix

Gentek Bldg. Prods, Inc. v. Sherwin-Williams Co., 2005 WL 6778678 (N.D. Ohio Feb. 22, 2005) ........................................................................... 9

Gentry v. Harborage Cottages-Stuart, LLLP, 602 F. Supp. 2d 1239 (S.D. Fla. 2009) ...................................................................................... 49

George v. Nat’l Water Main Cleaning Co., 286 F.R.D. 168 (D. Mass. 2012) ............................................................................................... 38

Gifford v. Meda, 2010 WL 1875096 (E.D. Mich. May 10, 2010) ........................................................................ 31

Goldberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 1998 WL 321446 (S.D.N.Y. June 18, 1998) ............................................................................. 35

Gross v. Waywell, 628 F. Supp. 2d 475 (S.D.N.Y 2009) ........................................................................................ 26

H.J. Inc. v. N.W. Bell Tel. Co., 492 U.S. 229 (1989) ...................................................................................................... 33, 37, 39

Hadley v. Chrysler Grp., LLC, 624 F. App’x 374, 2015 WL 4940370 (6th Cir. Aug. 20, 2015) .................................. 16, 17, 19

Halpin v. Crist, 405 F. App’x 403 (11th Cir. 2010) ............................................................................................ 38

Ham v. Hain Celestial Grp., Inc., 70 F.Supp.3d 1188 (N.D. Cal. 2014) ........................................................................................ 46

Harbinger Capital Partners Master Fund I, Ltd. v. Wachovia Capital Mkts., 347 F. App’x 711 (2d Cir. 2009) ............................................................................................... 29

Harvell v. Goodyear Tire & Rubber Co., 164 P.3d 1028 (Okla. 2006) ...................................................................................................... 43

Hemi Grp., LLC. v. City of New York, 559 U.S. 1 (2010) ...................................................................................................................... 38

Hill v. Roll Int’l Corp., 128 Cal. Rptr. 3d 109 (Cal. Ct. App. 2011) .............................................................................. 46

Hilton v. Atlas Roofing Corp. of Miss., 2006 WL 1581239 (E.D. La. May 18, 2006) ............................................................................ 47

Hoffmeister v. Kranawetter, 407 S.W.3d 59 (Mo. Ct. App. 2013) ......................................................................................... 44



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Holmes v. Secs. Inv. Prot. Corp., 503 U.S. 258 (1992) .................................................................................................................. 38

Honda Motor Co. v. Superior Court, 199 Cal. App. 4th 1367 (Cal. Ct. App. 2011) ........................................................................... 15

Hope v. Nissan N. Am., Inc., 353 S.W.3d 68 (Mo. Ct. App. 2011) ..................................................................................... 9, 10

Hubbard v. Gen. Motors Corp., 1996 WL 274018 (S.D.N.Y. May 22, 1996) ......................................................................... 9, 12

In re Air Bag Prods. Liab. Litig., 7 F. Supp. 2d 792 (E.D. La. 1998) ................................................................................ 10, 13, 15

In re Atlas Roofing Corp. Chalet Shingle Prods. Liab. Litig., 2015 WL 3796456 (N.D. Ga. June 18, 2015) ........................................................................... 55

In re Bridgestone/Firestone, Inc., 288 F.3d 1012 (7th Cir. 2002) ......................................................................................... 9, 11, 17

In re Canon Cameras, 237 F.R.D. 357 (S.D.N.Y. 2006) ........................................................................................... 8, 11

In re Ford Motor Co. E-350 Van Prods. Liab. Litig. (No. II), 2010 WL 2813788 (D.N.J. July 9, 2010) .................................................................................. 53

In re G-Fees Antitrust Litig., 584 F. Supp. 2d 26 (D.D.C. 2008) ............................................................................................ 43

In re iPhone Application Litig., 844 F. Supp. 2d 1040 (N.D. Cal. 2012) .................................................................................... 46

In re Lidoderm Antitrust Litig., 103 F. Supp. 3d 1155 (N.D. Cal. 2015) .................................................................................... 46

In re Motors Liquidation Co., 541 B.R. 104 (Bankr. S.D.N.Y. 2015) ...................................................................................... 57

In re Oil Spill by the Oil Rig “Deepwater Horizon,” 802 F. Supp. 2d 725 (E.D. La. 2011) ........................................................................................ 39

In re Sony Grand Wega KDF-E A10/A20 Series Rear Projection HDTV Television Litig., 758 F. Supp. 2d 1077 (S.D. Cal. 2010) ............................................................................... 47, 49



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xi

In re Teligent, Inc., 640 F.3d 53 (2d Cir. 2011) ........................................................................................................ 36

In re Toyota Motor Corp. Hybrid Brake Mktg., Sales Practices & Prods. Liab. Litig., 915 F. Supp. 2d 1151 (C.D. Cal. 2013) ..................................................................................... 12

In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales Practices & Prods. Liab. Litig., 754 F. Supp. 2d 1145 (C.D. Cal. 2010) ............................................................................... 14, 15

In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales Practices, and Prods. Liab. Litig., 826 F. Supp. 2d 1180 (C.D. Cal. 2011) ..................................................................................... 40

In re U.S. Foodservice Inc. Pricing Litig., 729 F.3d 108 (2d Cir. 2013) ...................................................................................................... 27

Ingram v. Bayer Corp., 2002 WL 1163613 (E.D. La. May 30, 2002) ............................................................................ 56

Jarman v. United Indus. Corp., 98 F. Supp. 2d 757 (S.D. Miss. 2000) ......................................................................................... 8

Jasper v. Abbott Labs., Inc., 834 F. Supp. 2d 766 (N.D. Ill 2011) ........................................................................................... 9

Jogani v. Superior Court, 81 Cal. Rptr. 3d 503 (Cal. Ct. App. 2008) ................................................................................ 46

Johnson Enters. of Jacksonville, Inc. v. FPL Grp., Inc., 162 F.3d 1290 (11th Cir. 1998) ................................................................................................. 38

Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009) ................................................................................................... 48

Kia Motors Am. Corp. v. Butler, 985 So.2d 1133 (Fla. Dist. Ct. App. 2008) ................................................................................ 10

King v. Bayer Pharms. Corp., 2009 WL 2135223 (W.D. La. July 13, 2009) ........................................................................... 47

Lambert v. Downtown Garage, Inc., 553 S.E.2d 714 (Va. 2001) ........................................................................................................ 49

Lee v. Enter. Fin. Grp., 2009 WL 1362605 (W.D. Okla. May 14, 2009) ....................................................................... 47



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Lewis v. Casey, 518 U.S. 343 (1996) .................................................................................................................. 20

Livingston v. Shore Slurry Seal, Inc., 98 F. Supp. 2d 594 (D.N.J. 2000) ............................................................................................. 31

Lloyd v. Gen. Motors Corp., 916 A.2d 257 (Md. 2007) .................................................................................................... 13, 14

Low v. Linkedin Corp., 900 F. Supp. 2d 1010 (N.D. Cal. 2012) .................................................................................... 46

Lundy v. Catholic Health Sys. of Long Island Inc., 711 F.3d 106 (2d Cir. 2013) .................................................................................... 26, 34, 36, 39

Macomb Interceptor Drain Drainage District v. Kilpatrick, 896 F. Supp. 2d 650 (E.D. Mich. 2012) .................................................................................... 38

Majdipour v. Jaguar Land Rover N. Am., LLC, 2015 WL 1270958 (D.N.J. Mar. 18, 2015) ............................................................................... 56

Matthews v. Ford Motor Co., 479 F.2d 399 (4th Cir. 1973) ..................................................................................................... 45

McCulloch v. PNC Bank Inc., 298 F.3d 1217 (11th Cir. 2002) ................................................................................................. 31

McDonald’s Corp. v. Turner-James, 2005 WL 7873649 (E.D. Va. Nov. 29, 2005) ........................................................................... 43

McLaughlin v. Am. Tobacco Co., 522 F.3d 215 (2d Cir. 2008) .......................................................................................... 27, 28, 29

McLaughlin v. Anderson, 962 F.2d 187 (2d Cir. 1992) ...................................................................................................... 34

McLaughlin v. GlaxoSmithKline, LLC, 2014 WL 669349 (W.D. La. Jan. 6, 2014) ................................................................................ 47

McMurtry v. Brasfield, 654 F. Supp. 1222 (E.D. Va. 1987) ........................................................................................... 35

McVicar v. Goodman Global, Inc., 1 F. Supp. 3d 1044 (C.D. Cal. 2014) ......................................................................................... 46

Melchior v. New Line Prods., Inc., 131 Cal. Rptr. 2d 347 (Cal. Ct. App. 2003) .............................................................................. 46



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Meserole v. Sony Corp. of Am., 2009 WL 1403933 (S.D.N.Y. May 19, 2009) ..................................................................... 47, 48

Morin v. Trupin, 711 F. Supp. 97 (S.D.N.Y. 1989) .............................................................................................. 35

Morrison v. Stonebridge Life Ins. Co., 2015 WL 137261 (W.D. Okla. Jan. 9, 2015) ............................................................................ 42

Motorola Credit Corp. v. Uzan, 322 F.3d 130 (2d Cir. 2003) ...................................................................................................... 29

Mouzon v. Radiancy, Inc., 85 F. Supp. 3d 361 (D.D.C. 2015) ............................................................................................ 47

Murphy v. Capella Educ. Co., 589 F. App’x 646 (4th Cir. 2014) .............................................................................................. 47

Myklatun v. Flotek Indus., Inc., 734 F.3d 1230 (10th Cir. 2013) ................................................................................................. 54

Nakahara v. Bal, 1998 WL 35123 (S.D.N.Y. Jan. 30, 1998) ................................................................................ 35

Nat’l Gypsum Co. v. Ace Wholesale, Inc., 738 So. 2d 128 (La. App. 5th Cir. 1999) ................................................................................... 51

NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145 (2d Cir. 2012) ............................................................................................... passim

New York Inst. of Dietetics, Inc. v. Great Lakes Higher Educ. Corp., 1995 WL 562189 (S.D.N.Y. Sept. 21, 1995) ............................................................................ 31

Newcal Indus., Inc. v. Ikon Office Solutions, 513 F.3d 1038 (9th Cir. 2008) ................................................................................................... 53

Nolan v. Galaxy Scientific Corp., 269 F. Supp. 2d 635 (E.D. Pa. 2003) ........................................................................................ 35

Norman v. Niagara Mohawk Power Corp., 873 F.2d 634 (2d Cir. 1989) ................................................................................................ 30, 32

NYNEX Corp. v. Discon, Inc., 525 U.S. 128 (1998) .................................................................................................................. 41

O’Gea v. Home Depot USA, Inc., 2009 WL 799757 (E.D. La. Mar. 20, 2009) ........................................................................ 43, 44



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O’Neil v. Simplicity, Inc., 574 F.3d 501 (8th Cir. 2009) ........................................................................................... 8, 11, 13

Ocean Commc’ns, Inc. v. Bubeck, 956 So.2d 1222 (Fla. Dist. Ct. App. 2007); .............................................................................. 42

Paul S. Mullin & Assocs., Inc. v. Bassett, 632 F. Supp. 532 (D. Del. 1986) ............................................................................................... 35

Pfizer Inc. v. Farsian, 682 So.2d 405 (Ala. 1996) .......................................................................................................... 8

Pinero v. Jackson Hewitt Tax Serv. Inc., 594 F. Supp. 2d 710 (E.D. La. 2009) ........................................................................................ 47

R.C.M. Executive Gallery Corp. v. Rols Capital Co., 1997 WL 27059 (S.D.N.Y. Jan. 23, 1997) ................................................................................ 41

R.M. Harrison Mech. Corp. v. Decker Indus., Inc., 2008 WL 10669311 (Va. Cir. Ct. Aug. 28, 2008) ..................................................................... 43

Ray v. Spirit Airlines, Inc., 2015 WL 5168367 (S.D. Fla. July 27, 2015) ............................................................................ 41

Retirement Board of the Policemen’s Annuity and Benefit Fund of the City of Chicago v. Bank of New York Mellon, 775 F.3d 154 (2d Cir. 2014) .................................................................................... 22, 23, 24, 25

Reves v. Ernst & Young, 507 U.S. 170 (1993) .................................................................................................................. 37

Reynolds v. City of Mount Vernon, 2015 WL 1514894 (S.D.N.Y. April 1, 2015) .............................................................................. 8

Rezner v. Bayerische Hypo-Und Vereinsbank AG, 630 F.3d 866 (9th Cir. 2010) ............................................................................................... 38, 39

Rivera v. Wyeth-Ayerst Labs., 283 F.3d 315 (5th Cir. 2002) ....................................................................................................... 8

Roberts v. The Scott Fetzer Co., 2010 WL 3937312 (M.D. Ga. Sept. 30, 2010) .......................................................................... 28

Sabol v. Ford Motor Co., 2015 WL 4378504 (E.D. Pa. 2015) ........................................................................................... 53



Page(s)

xv

Sanchez v. ASA College Inc., 2015 WL 3540836 (S.D.N.Y. June 5, 2015) ....................................................................... 26, 27

Schiff v. Am. Ass’n of Retired Persons, 697 A.2d 1193 (D.C. 1997) ....................................................................................................... 42

Sharma v. BMW of N. Am., LLC, 2014 WL 2795512 (N.D. Cal. June 19, 2014) .......................................................................... 55

Silk v. Phillips Petroleum Co., 760 P.2d 174 (Okla. 1988) ........................................................................................................ 54

Slover v. Equitable Variable Life Ins. Co., 443 F. Supp. 2d 1272 (N.D. Okla. 2006) .................................................................................. 45

Spiegel v. Continental Illinois Nat’l Bank, 609 F. Supp. 1083 (N.D. Ill. 1985), aff’d, 790 F.2d 638 (7th Cir. 1986) ............................ 35, 36

Stahl v. Novartis Pharms. Corp., 283 F.3d 254 (5th Cir. 2002) ..................................................................................................... 56

State v. Mark Marks, P.A., 698 So. 2d 533 (Fla. 1997) ........................................................................................................ 53

Taragan v. Nissan N. Am., Inc., 2013 WL 3157918 (N.D. Cal. June 20, 2013) ...................................................................... 9, 10

Thomas v. Metro. Life Ins. Co., 540 F. Supp. 2d 1212 (W.D. Okla. 2008) ................................................................................. 52

Tiara Condominium Ass’n, Inc. v. Marsh & McLennan Cos., Inc., 110 So.3d 399 (Fla. 2013) ......................................................................................................... 54

Tietsworth v. Harley-Davidson, Inc., 677 N.W.2d 233 (Wis. 2014) .............................................................................................. 10, 12

Toups v. Synthes, Inc., 2015 WL 6738541 (E.D. La. Nov. 4, 2015) .............................................................................. 56

TransPetrol, Ltd. v. Radulovic, 764 So. 2d 878 (Fla. Dist. Ct. App. 2000) ................................................................................. 53

United Food & Commercial Workers Local 1776 & Participating Employers Health & Welfare Fund v. Teikoku Pharma USA, Inc., 74 F. Supp. 3d 1052 (N.D. Cal. 2014) ...................................................................................... 46



Page(s)

xvi

United States v. Bollinger Shipyards, Inc., 2013 WL 393037 (E.D. La. Jan. 30, 2013) ............................................................................... 42

United States v. Mueller, 74 F.3d 1152 (11th Cir. 1996) ................................................................................................... 35

United States v. Pendergraft, 297 F.3d 1198 (11th Cir. 2002) ................................................................................................. 35

United States v. Turkette, 452 U.S. 576 (1981) .................................................................................................................. 40

von Bulow v. von Bulow, 657 F. Supp. 1134 (S.D.N.Y. 1987) .......................................................................................... 35

Walker v. USAA Cas. Ins. Co., 474 F. Supp. 2d 1168 (E.D. Cal. 2007), aff’d, 558 F.3d 1025 (9th Cir 2009) .......................... 46

Walus v. Pfizer, Inc., 812 F.Supp. 41 (D.N.J. 1993) ..................................................................................................... 8

Weaver v. Chrysler Corp., 172 F.R.D. 96 (S.D.N.Y. 1997) ....................................................................................... 9, 12, 15

Weisblum v. Prophase Labs, Inc., 88 F. Supp. 3d 283 (S.D.N.Y. 2015) ......................................................................................... 25

Welborn v. Bank of New York Mellon, 2013 WL 149707 (M.D. La. Jan. 14, 2013) .............................................................................. 31

Wexner v. First Manhattan Co., 902 F.2d 169 (2d Cir. 1990) ...................................................................................................... 50

Wilson v. Style Crest Prods. Inc., 627 S.E.2d 733 (S.C. 2006) ......................................................................................................... 8

Winslow v. Nolan, 319 S.W.3d 497 (Mo. Ct. App. 2010) ....................................................................................... 44

Winzler v. Toyota Motor Sales U.S.A., Inc., 681 F.3d 1208 (10th Cir. 2012) ................................................................................................. 16

Yost v. Gen. Motors Corp., 651 F. Supp. 656 (D.N.J. 1986) .......................................................................................... 10, 15

Yu v. Int’l Bus. Mach. Corp., 732 N.E.2d 1173 (Ill. App. Ct. 2000) .......................................................................................... 8



Page(s)

xvii

Zaccagnino v. Nissan N. Am., Inc., 2015 WL 3929620 (S.D.N.Y. 2015) ......................................................................................... 53

Ziegelmann v. DaimlerChrysler Corp., 649 N.W.2d 556 (N.D. 2002) .............................................................................................. 10, 15

Statutes

18 U.S.C. § 1961(5) .......................................................................................................... 33, 37, 39

18 U.S.C. § 1962 ........................................................................................................................... 26

18 U.S.C. § 1962(c) .......................................................................................................... 33, 37, 40

18 U.S.C. § 1964(c) ................................................................................................................ 27, 29

42 U.S.C. § 5851(a) ...................................................................................................................... 30

Cal. Bus. & Prof. Code § 17200 ................................................................................................... 47

Cal. Civil Code § 1750.................................................................................................................. 47

D.C. Code § 28-3901 .................................................................................................................... 47

Fla. Stat. § 501.203(7)................................................................................................................... 47

La. Rev. Stat. § 2800.52 ................................................................................................................ 46

La. Rev. Stat. § 51:1405(A) .......................................................................................................... 47

La. Rev. Stat. Ann. § 9:2800.52 .................................................................................................... 51

Md. Com. Law Code § 13-303 ..................................................................................................... 47

Mo. Rev. Stat. § 407.020 .............................................................................................................. 47

Okla. St. Ann. § 754(2) ................................................................................................................. 52

Okla. Stat. tit. 15, § 751 ................................................................................................................ 47

Va. Code Ann. § 59.1-200 ............................................................................................................ 47

Other Authorities

Fed. R. Civ. P 12(b)(6).................................................................................................................... 7

Fed. R. Civ. P. 9(b) ............................................................................................................... passim


INTRODUCTION

Plaintiffs’ Third Amended Consolidated Complaint (“TACC”) seeks to assert claims on

behalf of millions of GM vehicle owners whose vehicles are subject to more than 70 different

recalls covering such disparate issues as shift cables, turn signals, and seat hook welds. The vast

majority of these vehicle owners never have—and never will—experience manifestation of any

of the defects referenced in the recall notices. Indeed, every one of the defects in the vehicles at

issue is subject to a recall campaign that provides owners a full repair at New GM’s sole

expense. For the overwhelming majority of defects, plaintiffs do not challenge the efficacy of

the offered repairs, or the sufficiency of the recalls. As soon as vehicle owners receive their

recall remedies (and millions already have), their vehicles will satisfy safety regulations and be

fully functional.

Plaintiffs nevertheless assert that the value of their vehicles has been diminished because

New GM conducted these federally mandated safety recalls. But New GM does not warrant the

resale values of its vehicles (which depend on myriad factors including mileage, condition,

equipment, gas prices, and location). And New GM does not (indeed cannot) promise that

vehicles will never be recalled; to the contrary, New GM endeavors to conduct recalls whenever

necessary. Allowing plaintiffs to pursue their extraordinary claims would impose unprecedented

additional liability on vehicle manufacturers that are complying with the Motor Vehicle Safety

Act (“Safety Act”). In addition to lacking a factual basis, the economic loss claims at issue

should be dismissed because they are contrary to established legal principles.1

First, the mere fact that a vehicle is subject to a recall is legally insufficient to state a

1 New GM fully stands by its Deferred Prosecution Agreement (“DPA”) with the United States Attorney for the Southern District of New York, dated September 16, 2015, and the Statement of Facts associated with that DPA. Nothing in this filing contradicts or is intended to contradict the Statement of Facts or New GM’s representations in the DPA.


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claim. Unless the defect has manifested itself, causing injury, the plaintiff has suffered no actual

loss and therefore has no cognizable claim. Allegations of diminished value, poor reputation, or

that the plaintiff would not have purchased the vehicle cannot circumvent this black letter law.

Second, plaintiffs acknowledge, as they must, that New GM issued recalls for each defect

alleged in the TACC. Plaintiffs do not sufficiently allege that the recalls failed to adequately

remedy all defects. These NHTSA-regulated recalls therefore moot any claims plaintiffs have

for diminution-in-value damages.

Third, each named plaintiff lacks standing to assert claims based on vehicle makes and

models that plaintiff never owned. This is a pervasive legal impediment to plaintiffs’ claims

because each plaintiff’s damages claim is premised on an alleged diminution in value based on

alleged defects in vehicles he or she never owned. Furthermore, of the approximately 72 recalls

referenced in the TACC, 44 concern vehicles that are not owned by any plaintiff, and claims

based on these recalls similarly should be dismissed.

Fourth, plaintiffs’ individual claims are fundamentally flawed:

• RICO — all plaintiffs’ RICO claims based on alleged delays in providing notification of defects fail because (1) the Second Circuit has held that benefit-of-the-bargain damages, such as diminution-in-value, are not recoverable under RICO; (2) RICO cannot be used to enforce a detailed administrative scheme like the Safety Act; and (3) this Court has already ruled, in its November 25, 2015 Opinion (Docket No. 1747), that nearly all of the alleged predicate acts were not done in furtherance of any crime or fraud.

• Unjust Enrichment — all plaintiffs’ unjust enrichment claims are barred because (1) the written vehicle warranty is an express contract that governs these claims; (2) plaintiffs have adequate remedies at law such as consumer fraud claims; and/or (3) several states bar plaintiffs from bringing unjust enrichment claims where, as here, plaintiffs do not allege that they directly conferred any benefit on New GM when they purchased their vehicles.

• Consumer Protection Act — plaintiffs’ consumer protection act claims fail because (1) the TACC does not allege that the plaintiffs relied on any specific misrepresentations and, for many defects, does not allege that New GM concealed information; and (2) the claims of certain plaintiffs fail for lack of privity, failure to provide notice, or because the state’s consumer protection laws are inapplicable to regulated activity such as vehicle manufacturers’ responsibilities under the Safety Act.


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• Fraudulent Concealment/Negligent Recall — certain plaintiffs’ fraudulent concealment claims fail because under applicable state law New GM had no duty to disclose. Additionally, certain plaintiffs’ fraudulent concealment and negligent recall claims are barred under the economic loss rule.

• Third Party Beneficiary — plaintiffs cannot state a claim for breach of the Sale Agreement because that Agreement expressly disclaims vehicle owners as third party beneficiaries and does not contain any covenant to recall New GM vehicles.

Accordingly, plaintiffs’ claims should be dismissed in their entirety with prejudice.2

FACTUAL ALLEGATIONS

A. The TACC Asserts Claims Based On Approximately 72 Recalls.

Plaintiffs’ sweeping complaint is brought by approximately 121 individual vehicle

owners purporting to assert claims on behalf of an unprecedented putative nationwide class and

subclasses for all 51 jurisdictions. (TACC ¶¶ 36-167, 1027-41.) The TACC covers

approximately 72 recalls that New GM issued in 2014. The scope of the recalls ranges from

ignition switches and seat belts to transmissions, hood latches, and radio chimes. Forty-four of

these recalls do not apply to a vehicle owned by any of the plaintiffs.

1. Delta Ignition Switch And Other Ignition-Related Recalls.

Plaintiffs’ defect allegations center primarily on the “Delta Ignition Switch” (e.g., id. ¶¶

283-387), which New GM addressed with its February and March 2014 ignition switch recalls.3

These recalls fully addressed all safety-related issues with the Delta Ignition Switch; the ignition

switches, lock cylinders, and keys for these vehicles have been replaced free of charge for all

2 Given the number of plaintiffs, claims, and defenses, attached as Exhibit 1 is a summary chart listing each plaintiff’s claims and the reasons they should be dismissed as a matter of law.

3 These recalls covered the following vehicles (the “Delta Ignition Switch Vehicles”): (1) Model Year (“MY”) 2005-2007 Chevrolet Cobalt, MY 2007 Pontiac G5, MY 2003-2007 Saturn Ion, MY 2006-2007 Chevrolet HHR, MY 2005-2006 Pontiac Pursuit (Canada), MY 2006-2007 Pontiac Solstice, and MY 2007 Saturn Sky vehicles; and (2) MY 2008-2010 Pontiac Solstice and G5, MY 2008-2010 Saturn Sky, MY 2008-2010 Chevrolet Cobalt, and MY 2008-2011 Chevrolet HHR. Vehicles in the first category were manufactured with a faulty ignition switch, while those in the second category may have been repaired using a faulty ignition switch that had been sold to dealers or aftermarket wholesalers.


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consumers who brought their vehicles to an authorized New GM dealership. (Id. ¶¶ 381-84.)

In addition to the Delta Ignition Switch recalls, the TACC covers four separate key-

rotation recalls.4 The ignition issues in these vehicles are being fully remedied by New GM at its

sole expense through new keys, key rings, and/or key inserts. (Id. ¶¶ 388-516.)

Plaintiffs admit that New GM has conducted a NHTSA-regulated recall for both the

Delta Ignition Switch and the key-rotation issues. (E.g., id. ¶¶ 380-84.) Plaintiffs allege, without

any factual support, that the recall repairs for the Delta Ignition Switch were insufficient.

Specifically, with respect to the Delta Ignition Switch Vehicles, plaintiffs do not allege any

airbag malfunctions. They assert only that unidentified putative class members (but no named

plaintiffs) reported stalls after having the ignition switch recall performed. Plaintiffs have not,

however, alleged any specific incidents or offered any factual basis to conclude that any such

alleged stalls related to a Delta ignition switch as opposed to the myriad other reasons a vehicle

may stall. (Id. ¶¶ 536-41.) Nor do plaintiffs allege injury or loss as a result of the alleged stalls.

For the key-rotation recalls, the TACC contains even less substance—plaintiffs do not allege any

post-recalls stalls or airbag malfunctions. (Id. ¶ 551.)

2. Other Recalls Conducted By New GM in 2014.

The TACC addresses the remaining approximately 67 recalls more summarily, often in a

couple of paragraphs. (E.g., id. ¶ 746, 748, 750.) Most of these recalls have no relation to

ignition switch or key rotation issues. For example, the TACC alleges that the brake lights in

certain vehicles may not illuminate when the brakes are applied but admits that in 2014 New GM

4 These four recalls are: (1) a June 2014 recall of MY 2010-2014 Chevrolet Camaro vehicles (id. ¶¶ 392-416); (2) a June 2014 recall of the MY 2005-2009 Buick Lacrosse, MY 2006-2014 Chevrolet Impala, MY 2000-2005 Cadillac Deville, MY 2006-2011 Cadillac DTS, MY 2006-2011 Buick Lucerne, and MY 2006-2008 Chevrolet Monte Carlo vehicles (id. ¶¶ 417-451); (3) a July 2014 recall of MY 2003-2014 Cadillac CTS and MY 2004-2006 Cadillac SRX vehicles (id. ¶¶ 452-504); and (4) a September 2014 recall of MY 2011-2013 Chevrolet Caprice and MY 2008-2009 Pontiac G8 vehicles (id. ¶ 505-16)


5

conducted a recall and instructed dealers how to remedy the issue. (Id. ¶¶ 718-19, 735-36.) The

TACC also alleges that, for certain vehicles, a radio chime may not sound when the door is

opened or the seat belt is not buckled, but again plaintiffs admit that New GM recalled these

vehicles to update their software, curing the issue. (Id. ¶¶ 883-86.) Importantly, plaintiffs do not

challenge the sufficiency of New GM’s repairs for any of the approximately 67 recalls. (E.g., id.

¶¶ 636, 639, 653, 659.)

B. Plaintiffs Seek Diminution-In-Value Damages.

Plaintiffs do not seek damages for physical injury, property damage, or out-of-pocket

losses for repairs. Instead, they seek “damages” for an alleged diminution in their vehicles’

value after New GM announced its recalls. Plaintiffs assert that their vehicles “have now

diminished in value, as the truth about the New GM culture has come out and a stigma has

attached to those vehicles” such “that no rational consumer would pay what otherwise would

have been fair market value.” (Id. ¶¶ 10, 26, 1017.)

To recover for this alleged diminution in value, plaintiffs bring multiple federal and state

law claims, including alleged RICO and Magnuson-Moss Warranty Act (“MMWA”) violations,

claims that they are third party beneficiaries of the Sale Agreement whereby New GM acquired

certain Old GM assets and liabilities, unjust enrichment, breach of implied warranty, fraudulent

concealment, violation of consumer protection laws, and (for a few states) negligence.

C. The Named Plaintiffs At Issue In This Motion.

Pursuant to Order No. 93 (Docket No. 2156), this motion addresses the claims of named

plaintiffs who both (i) owned or leased vehicles manufactured by New GM and (ii) reside in

California, the District of Columbia, Florida, Louisiana, Maryland, Missouri, Oklahoma, and

Virginia. Those plaintiffs, their vehicles, and the recalls applicable to those vehicles are as

follows:


6

Name State Vehicle Applicable Recalls Alleges

Manifested Defect?

Alleges Sale /

Trade-In? Andrews,

Anna CA 2010 Buick LaCrosse

None No No

Koppelman, Marc &

Madeline CA 2010 Chevrolet HHR

Ignition switch (¶¶ 283–387); ignition cylinder (¶¶ 624–36); power steering loss

(¶¶ 754–72)

Yes No

Padilla, David

CA 2010 Chevrolet Cobalt Ignition switch (¶¶ 283–387); ignition

cylinder (¶¶ 624–36); power steering loss (¶¶ 754–72)

No Yes

Pina, Randall

CA 2011 Chevrolet HHR Ignition switch (¶¶ 283–387); ignition

cylinder (¶¶ 624–36) No No

Jackson, Pajja

DC 2011 Buick Regal Seat bolt (¶¶ 714–17); front turn signal (¶¶

873-76) No No

Ferden-Precht, Joni

FL 2011 Chevrolet

Traverse Wiring harness (¶¶ 640–53); seat belt

connector (¶¶ 694–701) No No

Fagans, Nathaniel & Frances Ann

LA 2012 Cadillac CTS 2013 Cadillac SRX

CTS: Unintended ignition key rotation (¶¶ 452–504)

SRX: Acceleration-lag (¶¶ 837-42); rear suspension nut (¶¶ 943-49)

Yes for CTS. No for SRX.

Traded-in CTS in

2013. No for SRX

Albert, Harry MD 2012 Chevrolet

Camaro 2013 Chevrolet Impala

Camaro: Key fob ignition bump (¶¶ 392–416); driver-side airbag shorting bar (¶¶

654–59); seat bolt (¶¶ 714–17)

Impala: Ignition key slot (¶¶ 417–51)

Yes for Camaro. No for Impala.

Yes for Camaro. No for Impala.

Robinson, Ronald

MO 2010 Chevrolet Impala Ignition key slot (¶¶ 417–51) No No

Washington, Michelle

MO 2014 Chevrolet Impala

Ignition key slot (¶¶ 417–51); electronic parking brake (¶¶ 751–53); joint fastener

(¶¶ 786–92); power steering control module (¶¶ 775–81); Transmission shift cable

adjuster (¶¶ 849–51); front storage door latch (¶¶ 904–05)

No No

Hawkins, Cynthia

MO 2010 Chevrolet Cobalt Ignition switch (¶¶ 283–387); ignition

cylinder (¶¶ 624–36); power steering loss (¶¶ 754–72)

No No

Wright, Bruce & Denise

OK 2011 Chevrolet

Camaro

Key fob ignition bump (¶¶ 392–416); seat bolt (¶¶ 714–17)

No Yes

Reeder, Jennifer

OK 2010 Chevrolet Cobalt 2012 Chevrolet Impala

Cobalt: Ignition switch (¶¶ 283–387); power steering loss (¶¶ 754–72); ignition

cylinder (¶¶ 624–36)

Impala: Unintended ignition key rotation (¶¶ 417–51)

Yes for Cobalt. Yes for Impala.

Insurance settlement for Cobalt.

No for Impala.

Hall-Abbott, Ashlee

VA 2014 Chevrolet

Silverado

Steering tie rod (¶¶ 784–85); transmission oil cooler line (¶¶ 813–27); transfer case

control module (¶¶ 828–36); power management mode software (¶¶ 852–53); seat hook weld (¶¶ 871–72); radio chime

(¶¶ 883–86); floor mats (¶¶ 929–33); chassis-control module (¶¶ 956–58)

No No

Only the five plaintiffs in italicized text—the Koppelmans, Padilla, Pina, Hawkins, and Reeder

with respect to her 2010 Chevrolet Cobalt—have Delta Ignition Switch Vehicles.


7

Only four plaintiffs—Padilla, Albert (with respect to his 2012 Chevrolet Camaro, but not

his 2013 Chevrolet Impala), Reeder (with respect to her 2010 Chevrolet Cobalt, but not her 2012

Impala), and the Wrights—allege that they sold, traded-in, or received an insurance settlement

for their vehicles after the recalls were announced. (Id. ¶¶ 57, 90, 138, 140.)

And only four—the Koppelmans, the Fagans, Reeder, and Albert (with respect to his

2012 Chevrolet Camaro, but not his 2013 Chevrolet Impala)—allege that they have experienced

a problem with their vehicle potentially caused by a defect alleged in the TACC. (TACC ¶¶ 55,

87, 90, 137.) The ten other plaintiffs do not. With the lone exception of Reeder,5 no plaintiff

claims to have experienced actual injury or damage caused by any defect. Ferden-Precht alleges

that her airbag service light illuminated at an unspecified date and time, but not that her airbags

failed to function or that her vehicle manifested any defect or caused any injury or damages. (Id.

¶ 67.) Jackson alleges that his 2011 Buick Regal was recalled to remedy turn-signal lights and

seat adjustment issues (id. ¶¶ 714, 83), but the only vehicle issues he claims to have had relate to

brakes and the battery (id. ¶ 66), which are not the subject of any recall or defect allegations.

The other eight plaintiffs do not allege that they experienced any manifested defect or incurred

any injuries, damages, or losses. (Id. ¶¶ 51, 57-58, 105-07, 112, 140.) Indeed, Andrews’ 2010

Buick LaCrosse is not subject to any defect or recall alleged in the TACC, and she does not

allege the manifestation of any defect. (Id. ¶ 51.)

ARGUMENT

A claim will survive a FRCP 12(b)(6) motion only if the plaintiff alleges facts sufficient

“to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S.

544, 570 (2007). A claim is facially plausible “when the plaintiff pleads factual content that

5 Reeder alleges that her 2010 Cobalt was totaled in a crash in May 2014 and that she received an insurance settlement. (TACC ¶¶ 138-39.)


8

allows the court to draw the reasonable inference that the defendant is liable for the misconduct

alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). A

plaintiff must show “more than a sheer possibility that a defendant has acted unlawfully,” id.,

and cannot rely on mere “labels and conclusions” to support a claim. Twombly, 550 U.S. at 555.

If the plaintiff’s pleadings “have not nudged [his or her] claims across the line from conceivable

to plausible, [the] complaint must be dismissed.” Id. at 570; see generally Reynolds v. City of

Mount Vernon, 2015 WL 1514894, at *2 (S.D.N.Y. April 1, 2015).

I. PLAINTIFFS WITHOUT A MANIFESTED DEFECT CANNOT STATE A CLAIM.

A. A Manifested Defect Is A Prerequisite For A Cognizable Claim.

“It is well established that purchasers of an allegedly defective product have no legally

recognizable claim where the alleged defect has not manifested itself in the product they own.”

O’Neil v. Simplicity, Inc., 574 F.3d 501, 503 (8th Cir. 2009).6 “It is not enough to allege that a

product line contains a defect or that a product is at risk for manifesting this defect; rather, the

plaintiffs must allege that their product actually exhibited the alleged defect.” Id.; see also In re

Canon Cameras, 237 F.R.D. 357, 359 (S.D.N.Y. 2006) (rejecting argument that plaintiffs had

6 See also, e.g., Angus v. Shiley, Inc., 989 F.2d 142, 147 (3d Cir. 1993) (rejecting claims based on emotional distress, physical ailments such as insomnia, panic, and headaches, and future costs to treat these conditions based on potentially defective heart valve: “whatever may have been true in other cases, Angus has not alleged that the valve implanted in her is defective, a prerequisite to liability in a products liability action”); Rivera v. Wyeth-Ayerst Labs., 283 F.3d 315, 320 (5th Cir. 2002) (rejecting claims of plaintiffs where they did not allege they were injured by drugs); Birdsong v. Apple, Inc., 590 F.3d 955, 960-61 (9th Cir. 2009) (dismissing claims where plaintiffs did not allege injury to their own hearing from iPod use, but instead alleged that other users might injure themselves); In re Canon Cameras, 237 F.R.D. 357, 359-60 (S.D.N.Y. 2006) (holding that “proof of malfunction is a prerequisite to any of the plaintiffs’ claims” and that a “plaintiff who purchases a digital camera that never malfunctions over its ordinary period of use cannot be said to have received less than what he bargained for when he made the purchase”); Cohen v. Guidant Corp., 2011 WL 637472, *2 (C.D. Cal., Feb. 15, 2011); Jarman v. United Indus. Corp., 98 F. Supp. 2d 757, 768 (S.D. Miss. 2000); Walus v. Pfizer, Inc., 812 F.Supp. 41, 44 (D.N.J. 1993); Pfizer Inc. v. Farsian, 682 So.2d 405, 407 (Ala. 1996); Wilson v. Style Crest Prods. Inc., 627 S.E.2d 733, 735-36 (S.C. 2006); Cardinal Health 301, Inc. v. Tyco Elec. Corp., 169 Cal. App. 4th 116, 152 (Cal. App. 4th 2008); Yu v. Int’l Bus. Mach. Corp., 732 N.E.2d 1173, 1177-78 (Ill. App. Ct. 2000).


9

claims because “most or all of the cameras in issue contained ‘defective’ parts, i.e., parts that

could have resulted in malfunctions,” where those malfunctions had not manifested).7

Numerous decisions have applied this principle to reject claims—whether under fraud,

consumer fraud, implied warranty, or other theories—against automotive manufacturers where a

defect did not manifest in the plaintiff’s own vehicle, causing injury and damage. E.g., Briehl v.

Gen. Motors Corp., 172 F.3d 623, 627-28 (8th Cir. 1999) (“Where, as in this case, a product

performs satisfactorily and never exhibits an alleged defect, no cause of action lies. Since the

Plaintiffs have failed to allege any manifest defect and their vehicles perform in a satisfactory

manner, the District Court was correct when it dismissed the Plaintiffs’ Original Complaint.”); In

re Bridgestone/Firestone, Inc., 288 F.3d 1012, 1017 (7th Cir. 2002) (explaining that most states

would not entertain plaintiffs’ “theory that selling products with undisclosed attributes, and thus

worth less than represented,” stated a claim, in the absence of actual injury); Weaver v. Chrysler

Corp., 172 F.R.D. 96, 99 (S.D.N.Y. 1997) (dismissing claims such as fraud, negligent

misrepresentation, and breach of warranty where the defect in an integrated child seat did not

manifest in plaintiff’s vehicle) (internal citations and brackets omitted); Hubbard v. Gen. Motors

Corp., 1996 WL 274018, at *3-4 (S.D.N.Y. May 22, 1996) (holding that plaintiff could not

recover for claims based on defective braking system absent allegations that the defect

7 See also Gentek Bldg. Prods, Inc. v. Sherwin-Williams Co., 2005 WL 6778678, at *11 (N.D. Ohio Feb. 22, 2005) (“The great weight of authority from other jurisdictions indicates that a plaintiff has not suffered a present injury compensable in contract, express warranty, implied warranty, or tort until the very product in question has caused some harm to person or property, even if the product in question contains a latent defect that has manifested in other, identical products.”); Taragan v. Nissan N. Am., Inc., 2013 WL 3157918, at *4 (N.D. Cal. June 20, 2013) (holding that allegations that “there is a ‘risk’ that vehicles equipped with the Intelligent Key system will roll away if the operator fails to place the transmission in park after shutting off the engine” could not establish a claim where “none of the Plaintiffs has actually experienced a rollaway incident”); Jasper v. Abbott Labs., Inc., 834 F. Supp. 2d 766, 772 (N.D. Ill 2011) (holding that “allegations that she feared that her [product] was defective are insufficient to state a damages claim”); Ford Motor Co. v. Rice, 726 So.2d 626, 631 (Ala. 1998); Hope v. Nissan N. Am., Inc., 353 S.W.3d 68, 87-88 (Mo. Ct. App. 2011).


10

manifested in his vehicle); Feinstein v. Firestone Tire & Rubber Co., 535 F. Supp. 595, 602

(S.D.N.Y. 1982) (holding that owners of tires that performed to satisfaction over their lifetime

had not suffered damage to support a claim, even though tires of others had failed).8

Here, the vast majority of plaintiffs (as well as putative class members overall) do not,

and cannot, allege that a defect manifested itself in their vehicles, causing damage. Plaintiffs

Andrews, Padilla, Randall, Robinson, Washington, Hawkins, the Wrights, and Hall-Abbott make

no such claim at all. Plaintiff Ferden-Precht alleges that her airbag service light illuminated, but

she does not allege that her airbags malfunctioned or that the vehicle exhibited any other defect

resulting in actual injury or damage. Plaintiff Jackson’s 2011 Buick Regal was recalled to

remedy turn-signal lights and a seat-adjustment issues (TACC ¶¶ 714, 873), but he does not

allege either of those defects actually manifested in his vehicle. Instead, he cites issues with the

brakes and battery on his car, neither of which are the subject of actual defect claims in the

TACC. (Id. ¶ 66).

Therefore, all the claims of Andrews, Padilla, Randall, Robinson, Washington, Hawkins,

the Wrights, Hall-Abbott, Ferden-Precht, and Jackson, as well as Albert’s claims with respect to

his 2013 Chevrolet Impala, should be dismissed for lack of a manifested defect. Andrews’

claims should be dismissed for the additional reason that she does not allege any defect in her

vehicle.

8 See also Taragan v. Nissan N. Am., Inc., 2013 WL 3157918, at *5 (N.D. Cal. June 20, 2013); In re Air Bag Prods. Liab. Litig., 7 F. Supp. 2d 792, 805 (E.D. La. 1998); Chin v. Chrysler Corp., 182 F.R.D. 448, 460 (D.N.J. 1998); Barbarin v. Gen. Motors Corp., 1993 WL 765821, at *1-2 (D.D.C. Sept. 22, 1993); Yost v. Gen. Motors Corp., 651 F. Supp. 656, 658 (D.N.J. 1986); Ford Motor Co. v. Rice, 726 So. 2d 626, 629, 631 (Ala. 1998); Ziegelmann v. DaimlerChrysler Corp., 649 N.W.2d 556, 561 (N.D. 2002); Tietsworth v. Harley-Davidson, Inc., 677 N.W.2d 233, 240-41 (Wis. 2014); Am. Suzuki Motor Corp. v. Superior Court of Los Angeles Cnty., 37 Cal. App. 4th 1291, 1296 (Cal. Ct. App. 1995); Kia Motors Am. Corp. v. Butler, 985 So.2d 1133, 1139 (Fla. Dist. Ct. App. 2008); Hope v. Nissan N. Am., Inc., 353 S.W.3d 68, 87-88 (Mo. Ct. App. 2011); Frank v. DaimlerChrysler Corp., 741 N.Y.S.2d 9, 12-17 (N.Y. App. Div. 2002); Dalton v. Ford Motor Co., 2002 WL 338081, at *5-6 (Del. Sup. Ct. Feb. 28, 2002).


11

B. Alleging Diminished Value Is Insufficient To Support A Claim.

Plaintiffs cannot circumvent the requirement of a manifested defect by alleging that they

have been injured by overpaying for the vehicles when they bought them or that the vehicles

have diminished in value. Courts regularly reject such arguments. In O’Neil, for example, the

plaintiffs insisted that “they [had] not received the benefit of the bargain: they paid for a drop-

side [baby] crib and now they do not use the crib because the drop-side is not safe,” and sought

to recover the difference in value between a crib with a functional drop-side and a crib without

one. 574 F.3d at 504. The Eighth Circuit rejected this argument and affirmed dismissal of

plaintiff’s claim. Because the plaintiffs’ “crib has not exhibited the alleged defect, they have

necessarily received the benefit of their bargain.” Id. Plaintiff’s bargain with the defendant “did

not contemplate the performance of cribs purchased by other consumers.” Id.; see also

Bridgestone/Firestone, 288 F.3d at 1017 (“If tort law fully compensates those who are physically

injured, then any recoveries by those whose products function properly mean excess

compensation.”).

Likewise, in Carlson v. General Motors Corp., the Fourth Circuit rejected plaintiffs’

claim that they were injured because of the diminished resale value of vehicles equipped with

allegedly defective diesel engines. 883 F.2d 287, 297 (4th Cir. 1989). Carlson explained that

the implied warranty of merchantability “clearly does not encompass consumer expectations that

a product will hold its value; and it is for this reason that several courts have rejected claims

similar to those pressed here.” Id. at 297-98. Carlson also specifically rejected plaintiffs’

attempts to recover damages based on the vehicles’ “poor reputation.” Id. at 289. Accord Briehl,

172 F.3d at 629 (“The plaintiffs’ assertion that their ABS-equipped vehicles are defective and

that they have suffered a loss in resale value as a result of the defect is insufficient as a matter of

law to plead a claim under any theory the Plaintiffs have advanced.”); In re Canon Cameras, 237


12

F.R.D. 357, 359-60 (S.D.N.Y. 2006) (holding that “proof of malfunction is a prerequisite to any

of the plaintiffs’ claims” and that a “plaintiff who purchases a digital camera that never

malfunctions over its ordinary period of use cannot be said to have received less than what he

bargained for when he made the purchase”); Weaver, 172 F.R.D. at 99 (rejecting plaintiff’s

argument he sufficiently pleaded damages by alleging “that he paid more for his vehicle than he

would have had he known of the defect”); Hubbard, 1996 WL 274018, at *3 (rejecting plaintiff’s

argument that he and the putative class members “were damaged at the moment they purchased

their Suburban vehicles, for they would not have made such a purchase had they known of the

alleged defect”); In re Toyota Motor Corp. Hybrid Brake Mktg., Sales Practices & Prods. Liab.

Litig., 915 F. Supp. 2d 1151, 1157-58 (C.D. Cal. 2013) (rejecting plaintiff’s argument that “he

suffered an actual injury because he would not have paid the same purchase price for his vehicle

had he known of the problem with the ABS prior to Toyota’s national recall”); Tietsworth v.

Harley-Davidson, Inc., 677 N.W.2d 233, 240-41 (Wis. 2004) (holding that “[d]iminished value

premised upon a mere possibility of future product failure is too speculative and uncertain to

support a fraud claim”).

Under black letter law, plaintiffs whose vehicles did not manifest a defect do not have

cognizable claims, even if they would have paid less for their vehicles or not purchased them had

they known of the defects. The same is true for allegations that the vehicles have a diminished

resale value or a “stigma.” Plaintiffs’ allegations that they would not have purchased the cars

had they known of New GM’s supposed “true corporate culture” is even further removed from

stating an actual injury and is insufficient to state a claim. As held in cases such as Carlson,

even the alleged “poor reputation” of a specific product line cannot support claims based on

diminished product value. Allegations that a company has a deficient “corporate culture” says


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nothing about whether a defect is present in any vehicle, and does nothing to establish a

manifested defect as required under the law.

C. No Exceptions Apply To The Rule Requiring A Manifested Defect.

Notwithstanding the great weight of the case law, New GM anticipates that plaintiffs will

argue that Maryland and California do not require defect manifestation to recover diminution-in-

value “damages.” But neither Maryland nor California law contemplates recovery here.

1. Claims Under Maryland Law Should Be Dismissed For Lack of Manifested Defect.

The narrow exception in Lloyd v. Gen. Motors Corp., 916 A.2d 257 (Md. 2007)—

allowing plaintiff to seek recovery of repair costs to address a safety-related defect in the absence

of a recall—does not govern here. In Lloyd, which did not involve a recall, the Maryland Court

of Appeals created a narrow exception to the well-recognized rule requiring defect manifestation

that would allow plaintiffs to recover “the cost to repair[ing] defective seatbacks” (not

diminution in value) without a manifested defect if possible injuries are “extraordinarily severe”

or the probability of injury occurring is “extraordinarily high.” Id. at 262, 269.

Lloyd’s narrow exception should not be extended beyond Maryland. The Lloyd court

acknowledged that its holding was contrary to the vast majority of cases, noting that courts

generally hold that, absent product malfunction, a plaintiff cannot recover for economic losses,

and “a significant amount of case law” applies this rule “in automobile product defect cases.” Id.

at 292.9

9 Indeed, numerous cases have dismissed claims for failure to allege a manifest defect even where the defect was life-threatening or otherwise “extraordinarily severe.” For example, O’Neil involved a defect in a baby crib that had resulted in three infant deaths, 574 F.3d at 502, yet the Eighth Circuit held that plaintiffs could not recover unless the defect actually had manifested in the cribs they owned, id. at 504. In In re Air Bag Prods. Liab. Litig., 7 F. Supp. 2d 792 (E.D. La. 1998), plaintiff sought to distinguish the case law on no-manifest defect “by asserting that the defect here is a life threatening condition.” Id. at 804. The court rejected this argument and explained that “plaintiff disregards the common thread of the


14

Moreover, even with respect to Maryland resident Albert’s claims concerning his 2013

Chevrolet Impala (or, for that matter, any plaintiff’s claims), Lloyd does not apply. The court

explained that “the reasoning behind the exception” it created is that where there is great

likelihood of severe physical injury, “we substitute actual present injury or product malfunction

with the cost to repair the problem.” Id. at 293-94 (emphasis added). Thus, Lloyd’s exception

is limited to the cost of repairs, the amount that would allow the plaintiff to pay to remedy the

defect in a non-recall situation. Here, the narrow Lloyd exception does not apply to plaintiff

Albert’s claims concerning his 2013 Chevrolet Impala because Albert’s vehicle was recalled, and

he either already has received, or is eligible to receive, a full repair free of charge. Indeed,

plaintiffs do not seek (and there is no basis for) repair costs as part of the TACC because all

vehicles at issue in the complaint are fully covered by recalls.

2. Claims Under California Law Should Be Dismissed For Lack of Manifested Defect.

California law also prohibits recovery where there is no manifested defect. E.g.,

Cardinal Health 301, Inc. v. Tyco Elec. Corp., 169 Cal. App. 4th 116, 152 (Cal. App. 4th 2008);

Am. Suzuki Motor Corp. v. Superior Court of Los Angeles Cnty., 37 Cal. App. 4th 1291, 1296

(Cal. Ct. App. 1995); Cohen v. Guidant Corp., 2011 WL 637472, *2 (C.D. Cal. Feb. 15, 2011).

Nevertheless, In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales Practices &

cases: that the absence of manifest injury is so fundamental a deficiency in tort or implied warranty claims that such claims are more appropriately dismissed than preserved.” Id. Similarly, in Ford Motor Co. v. Rice the Alabama Supreme Court rejected plaintiff’s argument that a condition rendering the product “unreasonably dangerous” (there, a propensity to roll over) necessarily meant that the purchaser had lost the benefit of his bargain. 726 So. 2d 626, 630 (Ala. 1998). That court held that “it may be possible for a product to present an ‘unreasonable’ risk of harm … and yet cause no loss of bargain where the product is able to perform its intended purpose.” Id. Accord Briehl, 172 F.3d at 626 (rejecting claims for lack of manifested defect despite plaintiff’s allegations that defective brakes would cause drivers to “misapply the brakes during emergency where braking is required” and thus resulted in an “unsafe condition”); Feinstein v. Firestone Tire & Rubber Co., 535 F. Supp. 595, 597, 602 (S.D.N.Y. 1982) (applying no manifest defect rule to potentially defective tires, even though some tires had failed and allegedly led to deaths and physical injuries).


15

Prods. Liab. Litig., the court concluded that allegations of economic loss were sufficient to

establish Article III standing. 754 F. Supp. 2d 1145, 1161 (C.D. Cal. 2010). Indeed, the Toyota

court distinguished numerous cases such as Briehl v. GMC, 172 F.3d 623, 627-28 (8th Cir.

1999), on the grounds that they “did not address whether an ‘injury in fact’ had been sufficiently

alleged for purposes of Article III standing, but rather whether damages were sufficiently alleged

in order to support a claim under the theories pled.” Toyota, 754 F. Supp. at 1163. In other

words, the Toyota court held that economic loss allegations were sufficient to confer standing,

but it did not address whether these allegations were sufficient to state a claim under California

law. Here, New GM’s argument is that the California plaintiffs have failed to state a claim by

not alleging a manifested defect.10 Therefore, Toyota is inapplicable.

Although most California cases such as Cardinal Health and American Suzuki adhere to

the general rule requiring a manifested defect, there are some cases that recognize an exception.

See Honda Motor Co. v. Superior Court, 199 Cal. App. 4th 1367, 1375 (Cal. Ct. App. 2011)

(concluding that current manifestation of a defect is unnecessary if the defect is “substantially

certain to result in malfunction during the useful life of the product”). But even if California

does recognize an exception where a defect is “substantially certain” to occur, it would not

10 See Briehl, 172 F.3d at 628 (“Under each of the theories the Plaintiffs invoke …, damages constitutes an essential element of the cause of action. Where, as in this case, a product performs satisfactorily and never exhibits an alleged defect, no cause of action lies.”); Weaver, 172 F.R.D. at 100 (holding that “Plaintiff’s allegation of possible economic loss fails to plead adequately the required damages element for fraud, negligent misrepresentation, and breach of warranty”); In re Air Bag Prods. Liab. Litig., 7 F. Supp. 2d 792, 806 (E.D. La. 1998) (“Thus, plaintiffs’ failure to demonstrate or, even allege, manifest injury or defect shatters an essential element of all their tort and implied warranty claims.”); Yost v. Gen. Motors Corp., 651 F. Supp. 656, 658 (D.N.J. 1986) (holding that without a manifested defect, plaintiffs could not show damage, “a necessary element of both counts—breach of warranty and common law fraud”); Ziegelmann v. DaimlerChrysler Corp., 649 N.W.2d 556, 559, 565 (N.D. 2002) (explaining that actual damages was an essential element of plaintiff’s negligence, fraud and deceit claims and that without manifestation the plaintiff could not prove damages); Frank v. DaimlerChrysler Corp., 741 N.Y.S.2d 9, 12-17 (N.Y. App. Div. 2002) (holding that without manifestation plaintiffs failed to “plead actual injuries or damages, resulting from defendants’ conduct,” which was “an essential element of each of the first six causes of action,” and thus all claims were properly dismissed).


16

apply. Plaintiffs do not allege that the vehicle defects in the TACC are substantially certain to

occur. Nor can they. These defects have been or will be remedied through recall repairs free of

charge. Therefore, the claims of California plaintiffs without a manifested defect should be

dismissed.

II. NEW GM’S RECALLS MOOT PLAINTIFFS’ CLAIMS.

Plaintiffs’ claims also should be dismissed in their entirety because the availability of a

full repair under each of the NHTSA-regulated recalls at issue in the TACC provides each

plaintiff with a complete remedy, thereby mooting any potential claim. A case is prudentially

moot where, even “though a flicker of life may be left in it, even though it may still qualify as an

Article III ‘case or controversy,’ a case … reach[es] the point where prolonging the litigation any

longer would itself be inequitable.” Winzler v. Toyota Motor Sales U.S.A., Inc., 681 F.3d 1208,

1210 (10th Cir. 2012). Numerous courts have applied the prudential mootness doctrine to

dismiss claims alleging automotive defects where the defendant conducts a NHTSA-regulated

recall. Given a recall, “there remains not enough value left for the courts to add in this case to

warrant carrying on with the business of deciding its merits.” Id. at 1211; see also Hadley v.

Chrysler Grp., LLC, 624 F. App’x 374, 2015 WL 4940370, at *4 (6th Cir. Aug. 20, 2015)

(affirming 2014 WL 988962, *4-7 (E.D. Mich. Mar. 13, 2014)); Cheng v. BMW of N. Am., LLC,

2013 WL 3940815, at *2-4 (C.D. Cal. July 26, 2013); David v. Am. Suzuki Motor Corp., 629 F.

Supp. 2d 1309, 1320-21 (S.D. Fla. 2009).

That result, of course, is consistent with the goal of encouraging product manufacturers to

review product safety and conduct recalls to address potential safety-related concerns.

Prudential mootness therefore bars damages claims for diminution in value as well as claims for

declaratory or equitable relief. In Hadley, for example, “the plaintiffs allege a diminished-value

claim against TRW [the manufacturer of the defective component] … based on the existence of


17

the defective component from the moment of purchase.” 2015 WL 4940370, at *4. The Sixth

Circuit rejected plaintiff’s argument that this allegation could save his claims once the recall was

announced: “the repair of the [defective component] that the plaintiffs received removed the

defect upon which the plaintiffs’ diminished-value injury claim is based.” Id. Similarly, in an

alternative holding, the Cheng court rejected the argument that the case was not prudentially

moot because the plaintiff sought money damages, explaining that “simply as a practical matter,

it is unclear how Plaintiff can demonstrate injury in light of BMW’s offer to completely repair

the roll away defect.” 2013 WL 3940815, at *4.

These holdings flow from the basic principle (described in greater detail in Section I.B)

that a party cannot recover diminution-in-value damages without a manifested defect. NHTSA-

regulated recalls under the Safety Act remediate any defect. See generally In re

Bridgestone/Firestone, Inc., 288 F.3d at 1016 (in case alleging risk of tire failure, explaining that

“[m]any class members face no future threat of failure either, because about 30 million tires were

recalled and replaced”). Because even the potential defect will no longer exist—much less a

manifested defect required under the law for damages based on diminution in value—there is no

basis for diminution in value damages and thus claims for such damages are moot when a recall

is conducted.

Here, the TACC itself concedes that every single defect is subject to a NHTSA-regulated

recall. (E.g., TACC ¶¶ 616.)11 Plaintiffs’ theory, in essence, is that the fact of safety recalls

11 The only instance plaintiffs cite where New GM has not conducted a recall concerns allegations that the steering wheels of 2013-2014 Buick Verano, Chevrolet Cruz, and Chevrolet Malibu can “stick” in one position after driving a long time. (TACC ¶¶ 612-15.) As stated in the news article cited in TACC ¶ 612 n.130, the condition is remedied simply by turning the wheel and NHTSA itself concluded that an investigation was not warranted because the issue caused merely a “brief, perceptible change in steering feel that has little to no effect on the driver’s ability to safely steer the vehicle.” Christopher Jensen, G.M. Deems Steering Issue Unowrthy of Recall, N.Y. Times, April 10, 2015, available at http://www.nytimes.com/2015/04/11/business/gm-steering-issue-pushes-automakers-limits.html.


18

somehow has damaged their vehicles and diminished their value. That unprecedented theory has

no support in the law and runs contrary to the very purpose of the Safety Act. The Act was

designed to encourage manufacturers to recall vehicles to address safety issues. Creating a cause

of action that recognizes diminished resale value every time a vehicle is recalled would chill

recalls and undermine the purpose of the Safety Act. As all of plaintiffs’ claims are based on

defects subject to NHTSA-regulated recalls, the TACC should be dismissed.

Nor can plaintiffs avoid this result by arguing that the recalls are insufficient or will not

remedy the defects. As a threshold matter, for the vast majority of recalls at issue in the TACC,

plaintiffs do not even attempt to allege that the recalls are insufficient or do not remedy the

defects. In the absence of any such allegations, let alone allegations with the “factual content”

required by Iqbal, 556 U.S. at 678, and Twombly, 550 U.S. at 556, all claims based on these

defects should be dismissed.

Further, the only recalls identified in the TACC that plaintiffs make any effort to

challenge as inadequate are (1) the key-rotation recalls conducted in June and July 2014 (TACC

¶ 547), and (2) the Delta Ignition Switch recall. (Id. ¶ 518). But their allegations are insufficient.

For the June and July 2014 key-rotation recalls, the TACC asserts that the recalls were

inadequate in a single conclusory paragraph, without providing any example of an ineffective

repair. (Id. ¶ 551.) According to plaintiffs, the recall remedy does not prevent a driver from

impacting the key with his or her knee (id. ¶ 551), but the TACC does not allege that such

contact has happened or caused a stall after the recall repairs. Plaintiffs cite a handful of

complaints regarding these vehicles stalling after the recalls were announced, but these

complaints expressly state that the vehicle had not been repaired under the recall or are silent

Regardless, none of the named plaintiffs owns any of the vehicles supposedly affected by this issue, and thus none has standing to assert claims based on it, as described in Section III.


19

concerning repairs and thus do not show that the repairs are ineffective. (Id. ¶¶ 416, 445-448.)

Similarly, the TACC asserts that the recall remedy did not change the airbag system but do not

cite any instance of airbags not deploying. (Id. ¶ 551.)

The TACC’s allegations that recall repairs for the Delta Ignition Switch Vehicles were

inadequate fail for similar reasons. (Id. ¶ 536-541). Plaintiffs assert that unidentified putative

class members (but no named plaintiffs) reported stalls after their vehicles were repaired (id. ¶¶

536, 540), but they do not identify a single incident or offer any factual basis to conclude that

any purported stall had any connection to the ignition switch as opposed to the myriad other

reasons a vehicle may stall. Nor does the TACC claim that any stalls occurred in vehicles

manufactured by New GM (the only vehicles at issue in this motion) as opposed to Old GM.

And none of the named plaintiffs who own Delta Ignition Switch Vehicles claim to have

experienced any stalls after the recall repairs were performed.

In sum, such conclusory allegations devoid of any factual content—and unrelated to the

claims of any named plaintiff—are legally insufficient under Iqbal, 556 U.S. at 678, and

Twombly, 550 U.S. at 555-56, and must be dismissed. The TACC does not allege sufficient

factual content for the Court to draw any inference, let alone a reasonable one, that the recall

remedies are ineffective. Moreover, the hypothetical possibility that a repair is ineffective

cannot forestall dismissal of the claim as moot. Hadley, 2015 WL 4940370 at *5 (“The

plaintiffs’ assertion that the [] repair may not be effective does not evidence an actual or

imminent injury. On the record before us, it instead evidences a hypothetical possibility that the

plaintiffs’ vehicle was not adequately repaired.”). The claims of all named plaintiffs should be

dismissed with prejudice as moot based on the recalls and repair of their vehicles.


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III. PLAINTIFFS CANNOT ASSERT CLAIMS BASED ON DEFECTS IN CARS THEY DO NOT OWN OR LEASE.

The named plaintiffs in the TACC allege damages based on defects that were never

applicable to the vehicles they own or lease. Under basic principles of standing, plaintiffs cannot

allege a claim or seek damages based on a defect present in someone else’s vehicle. Standing is

essential for any action and requires that a claimant “present an injury that is concrete,

particularized, and actual or imminent.” Davis v. Fed. Election Comm’n, 554 U.S. 724, 733

(2008). “‘[S]tanding is not dispensed in gross.’” Id. at 734 (quoting Lewis v. Casey, 518 U.S.

343, 358 n. 6 (1996)). “Rather, ‘a plaintiff must demonstrate standing for each claim he seeks to

press’ and ‘for each form of relief’ that is sought.” Id. (quoting DaimlerChrysler Corp. v. Cuno,

547 U.S. 332, 352 (2006)). “‘[T]he standing inquiry requires careful judicial examination of a

complaint’s allegations to ascertain whether the particular plaintiff is entitled to an adjudication

of the particular claims asserted.’” Cuno, 547 U.S. at 352 (emphasis in original) (quoting Allen

v. Wright, 468 U.S. 737, 752 (1984)).

A. The Second Circuit Has Held That Parties Cannot Bring Claims For Products They Did Not Purchase.

The Second Circuit has applied these principles in three recent decisions to hold that

named plaintiffs cannot bring claims based on products they did not purchase. In NECA-IBEW

Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145 (2d Cir. 2012), plaintiff NECA

alleged class-wide securities claims for 17 offerings of mortgage-backed certificates based on the

same registration statement, and underwritten and issued by Goldman Sachs. Id. at 149. But

NECA had purchased certificates from only 2 offerings, and the question was whether it could

nevertheless bring claims based on all 17 offerings.

The Second Circuit rejected individual standing, that is, whether NECA could seek

damages on its own behalf for the 15 offerings it did not purchase. The Second Circuit held that


21

“NECA clearly lacks standing to assert such claims on its behalf because it did not purchase

those [other] Certificates,” even though all certificates used the same registration statement and

were underwritten and issued by Goldman Sachs. Id. at 158. Thus, NECA could not bring

claims or seek damages on its own behalf for certificates it did not purchase.

The NECA court also considered whether the plaintiff had “‘class standing’—that is

standing to assert claims on behalf of purchasers of” [other] certificates, instead of seeking

damages for itself. Id. at 158 (emphasis in original). The court recognized class standing only

where (1) the plaintiff has personally suffered injury from the defendant’s putatively illegal

conduct and (2) such conduct implicates “the same set of concerns” as for other members of the

putative class. Id. at 162. The court applied “the same set of concerns” standard narrowly,

holding that NECA had class standing only to assert claims on behalf of purchasers of

certificates backed by mortgages from the same originators as the 2 offerings NECA had

purchased, but lacked class standing for certificates where the mortgage originators were

different. Id. at 163-64.

Similarly, in DiMuro v. Clinique Labs., LLC, 572 F. App’x 27 (2d Cir. 2014), the named

plaintiffs asserted marketing claims based on seven cosmetic products all manufactured by

Clinique, even though the named plaintiffs purchased only three of those products. Id. at 29.

The named plaintiffs alleged they had class standing to bring claims for products they had not

purchased. Id. DiMuro noted that in “NECA, we held that plaintiffs who had purchased certain

securities had class standing to assert claims on behalf of purchasers of other related securities

where the allegedly fraudulent conduct was a ‘nearly identical misrepresentation[ ].... common to

every Certificate’s registration statement.’” Id. (quoting NECA, 693 F.3d at 162.) By contrast,

in DiMuro each of the seven products had different ingredients, the defendants made different


22

advertising claims for each product, and thus unique evidence would be required to prove that

the statements for each of the products were false. Id. The Second Circuit affirmed dismissal of

plaintiffs’ claims relating to the four products the plaintiffs had not purchased. Id.

Further, in Retirement Board of the Policemen’s Annuity and Benefit Fund of the City of

Chicago v. Bank of New York Mellon, 775 F.3d 154 (2d Cir. 2014), the plaintiff asserted that the

Bank of New York Mellon (“BNYM”) violated its obligations as trustee for 530 residential

mortgage-backed securities originated by the same company, Countrywide. Id. at 156. The

Second Circuit considered individual standing and confirmed that “the named plaintiff ‘clearly

lack[ed] standing to assert such claims on its behalf because it did not purchase those

Certificates’ and so was not injured by any misstatements the defendants might have made about

them.” Id. at 160 (emphasis and modifications in original) (quoting NECA, 693 F.3d at 158).

The Second Circuit also rejected class standing because claims relating to other trusts did

not “implicate[] the ‘same set of concerns.’” Id. at 161, 163. In NECA, “the absent class

members’ claims were similar to those of the named plaintiff in all essential respects.” Id. at

161. “In contrast to NECA, where the defendants’ alleged Securities Act violations inhered in

making the same misstatements across multiple offerings, BNYM’s alleged misconduct must be

proved loan-by-loan and trust-by-trust.” Id. at 162; see also id. at 161 (citing DiMuro). The

Second Circuit rejected plaintiffs’ argument that “evidence of BNYM’s policy of ‘inaction’ in

the face of widespread defaults will be applicable to all of the trusts at issue” as insufficient to

establish class standing, and affirmed the dismissal of claims regarding trusts in which the named

plaintiffs did not invest for lack of standing. Id. at 162-63.


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B. Named Plaintiffs Do Not Have Individual Or Class Standing To Bring Claims For Defects Not Present In Their Vehicles.

1. Plaintiffs Lack Individual Standing To Pursue A Damages Theory Based On Vehicles They Never Owned And Defects They Never Experienced.

As in NECA and Retirement Board, two concepts of standing must be considered for the

named plaintiffs here. The first of these is individual standing, which is a plaintiff’s standing to

recover damages on its own behalf. Here, each named plaintiff lacks individual standing to

bring claims or seek damages based on vehicles he or she did not purchase. Where a named

plaintiff does not purchase a product—whether mortgage-backed certificates, cosmetics, or

vehicles—the plaintiff “clearly lacks standing to assert such claims on its behalf.” NECA, 693

F.3d at 158; Retirement Board, 775 F.3d at 160. Therefore, each named plaintiff cannot bring

claims or seek damages based on defects in vehicles he or she did not own or lease.

This lack of individual standing is fatal to the TACC’s damages theory alleging

diminution-in-value purportedly caused by the combined effect of all New GM’s recalls in 2014.

(E.g., TACC ¶ 26.) A named plaintiff lacks individual standing—and thus cannot recover

damages on his or her own behalf—based on defects alleged by the owner of some different

vehicle. For example, plaintiff Hall-Abbott, who owns a 2014 Chevrolet Silverado cannot seek

damages based on defects in a Delta Ignition Switch Vehicle. Likewise, plaintiff Andrews’ 2010

Buick LaCrosse does not have any defects and is not subject to any recalls, so Andrews has no

standing to seek recovery based on defects in other plaintiffs’ vehicles that were recalled. In

short, the TACC’s theory of damages—where each plaintiff seeks diminished-value damages

based on defects in different vehicles owned by others—violates basic standing law in the

Second Circuit. Because each named plaintiff’s claims are based on an invalid theory of

damages, all claims of each plaintiff should be dismissed.


24

2. Plaintiffs Lack Class Standing Because Of The Myriad Differences Among The Vehicles And Requirements For Different Proof.

Each named plaintiff also lacks class standing to represent the owners of vehicles whose

defects differ from those present in his or her own vehicle. Class standing exists only where the

facts are “essentially the same across all of the” different products. Retirement Board, 775 F.3d

at 161-62; see also DiMuro, 572 Fed. App’x at 29 (requiring a “nearly identical” “set of

concerns” for class standing). Where different proof will be required for each product, class

standing does not exist. See Retirement Board, 775 F.3d at 163 (“In short, the nature of the

claims in this case unavoidably generates significant differences in the proof that will be offered

for each trust.”).

Here, the vehicles at issue in each recall and the defects addressed in each recall are

inherently different, involving different vehicle parts or systems, such as the ignition switch, the

wiring harness, airbag shorting-bars, seat belts, seats, brakes, transmission cables, transmission

lines, power management mode software, and dozens of others. (TACC ¶¶ 257-968.) The

differences among the vehicles and their conditions establish that they do not raise the same set

of concerns.12 Cf. DiMuro, 572 Fed. App’x at 29 (no class standing where the “products had

different ingredients” and the defendants “made different advertising claims for each product”).

12 That the TACC’s 72 defects do not raise the same set of concerns is confirmed by examining the different evidence relating to each potential defect. For example, New GM’s knowledge is an element of most of plaintiffs’ claims, and different evidence will be required to show when New GM knew of each of the alleged defects. Evidence regarding when New GM was aware of the ignition switch defect in Delta vehicles will show nothing about when New GM became aware of, for example, the light control module defects or the seat hook weld potential defect. Compare TACC ¶¶ 265 (alleging New GM was aware of the Delta Ignition Switch Defect at New GM’s inception in 2009, based on statements by Old GM employees) with TACC ¶¶ 855 (alleging New GM did not learn of the light control module defect until March 2012) with TACC ¶ 871 (failing to allege when New GM learned of the seat hook weld defect, but it necessarily would have been based on different facts given that all of the vehicles affected by that recall are model year 2013 or later.) The scores of different defects alleged in the TACC all will require different evidence on issues such as advertising or purported representations, materiality, merchantability, and whether the retention of any benefit is unjust, among others.


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Plaintiffs cannot acquire class standing by arguing that their disparate claims all flow

from a purportedly defective corporate culture, because different proofs will be required for each

alleged defect. NECA, 693 F.3d at 162-63 (rejecting class standing even though “the alleged

injury suffered by each Offering’s Certificate-holder may ‘flow from’ … nearly identical

misstatements” because “each of those alleged injuries has the potential to be very different—

and could turn on different proof”). For the same reason, plaintiffs have no valid argument for

class standing that defects harmed the “GM Brand,” and thus had a common effect on the value

of their vehicles.13

Accordingly, for each named plaintiff, the Court should dismiss for lack of class standing

any claims based on defects in vehicles that he or she did not own or lease. The Court also

should dismiss all claims relating to the 44 defects for which no named plaintiff has individual or

class standing.14

13 In Weisblum v. Prophase Labs, Inc., 88 F. Supp. 3d 283 (S.D.N.Y. 2015), this Court found that the named plaintiffs had standing to assert claims based on products they did not purchase because plaintiffs could state a claim against the defendant. Id. at 291. New GM submits that Weisblum is no longer correct in light of Retirement Board. Moreover, Supreme Court cases such as Davis and Cuno also make clear that standing must be decided claim by claim, and thus standing for one claim against a defendant does not confer standing for all claims against that defendant, especially those based on alleged injuries to different plaintiffs. Moreover, Retirement Board (as well as DiMuro and NECA) affirmed the dismissal of claims against a defendant for products the named plaintiffs did not purchase, even though the named plaintiff had claims against the defendant based on products they had bought. These cases confirm that simply because a named plaintiff has purchased some of the defendant’s products, he or she does not have standing to assert claims based on all products manufactured by the defendant. Finally, Weisblum relied on the plaintiffs alleging “nearly identical” misrepresentations, 88 F. Supp. 3d at 291, while here the evidence required to prove plaintiffs’ claims will vary widely among each condition or recall.

14 Those defects are: brake booster pump (¶¶ 738–44); front passenger instrument panel (¶¶ 685–87); electronic stability control software (¶¶ 927–28); front axle half shaft (¶¶ 865–70); unsecured fuel pump connection (¶¶ 941–42); engine control module software (¶¶ 887–93); transmission shift cable (¶¶ 797–808); brake rotor (¶¶ 747–48); hydraulic boost assist (¶¶ 745–46); low-bream circuit wire (¶¶ 877–82); brake sensor voltage (¶¶ 718–37); windshield wipers (¶¶ 898–903); airbag weld (¶¶ 671–76); headlamp switch/running light module (¶¶ 854–60); running light module (¶¶ 854–60); fuse block (¶¶ 934–40); airbag inflator weld (¶¶ 679–84); SDM short circuit (¶¶ 688–93); transmission turbine shaft (¶¶ 843–48); driver’s door wiring (¶¶ 906–11); driver’s seatbelt (¶¶ 702–06); transmission shift cable (¶¶ 809–12); power steering hose clamp (¶¶ 773–74); roof rail airbag (¶¶ 665–70); sport seats (¶¶ 677–78); driver’s airbag inflator (¶¶ 660–64); windshield wiper motor (¶¶ 917–22); rear shock weld (¶¶ 925–26); master


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IV. PLAINTIFFS HAVE FAILED TO PLEAD ANY VIABLE RICO CLAIM.

To “prevail on their civil RICO claim, Plaintiffs must show (1) a substantive RICO

violation under 18 U.S.C. § 1962, (2) injury to the plaintiff’s business or property, and (3) that

such injury was by reason of the substantive RICO violation. To satisfy the first prong, a

plaintiff must show that the defendant conducted, or participated in the conduct, of a RICO

enterprise’s affairs through a pattern of racketeering activity.” Sanchez v. ASA College Inc.,

2015 WL 3540836, at *4 (S.D.N.Y. June 5, 2015) (Furman, J.) (citations and internal quotations

marks omitted).

The TACC must comply with FRCP 9(b) by pleading “with particularity the

circumstances constituting fraud or mistake.” Thus, the “complaint must adequately specify the

statements it claims were false or misleading, give particulars as to the respect in which plaintiff

contends the statements were fraudulent, state when and where the statements were made, and

identify those responsible for the statements.” Lundy v. Catholic Health Sys. of Long Island Inc.,

711 F.3d 106, 119 (2d Cir. 2013). Plaintiffs also “must allege facts that give rise to a strong

inference of fraudulent intent.” First Capital Asset Mgmt. v. Satinwood, Inc., 385 F.3d 159, 179

(2d Cir. 2004) (emphasis in original).

“[C]ourts have noted that they have an obligation to scrutinize civil RICO claims early in

the litigation to separate the rare complaint that actually states a claim for civil RICO from that

more obviously alleging common law fraud.” ASA College, 2015 WL 3540836, at *5; see also

Gross v. Waywell, 628 F. Supp. 2d 475, 479–80 (S.D.N.Y 2009). “Further, because virtually

power window switch (¶¶ 861–64); auxiliary battery overload (¶¶ 912–16); block heater power cord insulation (¶¶ 923–24); lower control arm bolt (¶¶ 782–83); brake fluid (¶¶ 749–50); front lap-belt pretensioner (¶¶ 707–13); ignition key pull out (¶¶ 637–39); unintended ignition key rotation (¶¶ 505–16); hood latch (¶¶ 950–55); headlamp driver module (¶¶ 959–60); ignition lock actuator (¶¶ 961–62); tire tread cracking (¶¶ 963–64); power steering loss (¶¶ 793–94); idling software (¶¶ 965–65); power steering loss (¶¶ 795–96); and valve cover gasket (¶¶ 967–68).


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every ordinary fraud is carried out in some form by means of mail or wire communication …

RICO claims premised on mail or wire fraud must be particularly scrutinized because of the

relative ease with which a plaintiff may mold a RICO pattern from allegations that, upon closer

scrutiny, do not support it.” ASA College, 2015 WL 3540836, at *5 (ellipsis in original).

The TACC alleges a RICO enterprise among New GM, the King & Spalding law firm,

and claims administrator ESIS. (TACC ¶ 1063.) (Other “unnamed law firms” also are included

in the allegations, but plaintiffs fail even to identify these firms and so do not comply with FRCP

9(b) or the basic pleading requirements for RICO claims.) According to plaintiffs, this

“enterprise” was designed and conducted to conceal information regarding the scope of the

defects, particularly the Delta Ignition Switch Defect. (Id. ¶ 1058.) When assessed against

applicable legal requirements, the TACC’s RICO claims fail for multiple reasons.

A. Plaintiffs Do Not Plead Damages Recoverable Under RICO.

1. Benefit-of-the-Bargain and Diminution-in-Value Damages Cannot Be Recovered Under RICO.

RICO permits civil actions only for actual injuries to “business or property.” 18 U.S.C. §

1964(c). In calculating damages under RICO, the Second Circuit follows the “general rule of

fraud damages [] that the defrauded plaintiffs may recover out-of-pocket losses caused by the

fraud.” First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 768 (2d Cir. 1994). Thus,

“damages based on the benefit of [plaintiffs’] bargain … are generally unavailable in RICO

suits.” McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 228 (2d Cir. 2008), abrogated in part on

other grounds by Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008); see also In re U.S.

Foodservice Inc. Pricing Litig., 729 F.3d 108, 122-23 (2d Cir. 2013) (“we have said that because

RICO compensates only for injury to ‘business or property,’ a victim who is induced to part with

his property by the misrepresentations of a fraudster is generally not entitled to ‘benefit of the


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bargain’ damages—meaning recovery of what the fraudster promised, as opposed to the property

the victim lost”).15 Expectancy or benefit-of-the-bargain damages “plainly are not” available in

cases “that sound in fraud in the inducement.” McLaughlin, 522 F.3d at 228-29.

McLaughlin held that RICO claims were barred where they sought benefit of the bargain

damages virtually identical to what plaintiffs seek here. The McLaughlin plaintiffs were smokers

who alleged they were deceived into buying “light” cigarettes in the belief that they were

healthier than “full-flavored” cigarettes. 522 F.3d at 219. To show damages under RICO,

plaintiffs relied on a “‘loss of value’ model [that] purports to measure the difference between the

prices plaintiffs paid for light cigarettes as represented by defendants and the (presumably lower)

price they would have paid (but for defendants’ misrepresentation) had they known the truth.”

Id. at 228. The Second Circuit rejected this theory because “the loss of value model is designed

to award plaintiffs damages based on the benefit of their bargain.” Id.

McLaughlin bars plaintiffs’ RICO claims here. The TACC expressly alleges that

plaintiffs were “fraudulently induced” into purchasing their vehicles or paying more than they

otherwise would have. (TACC ¶ 1139(a); see also, e.g., id. ¶¶ 26, 51.) Plaintiffs also seek

diminution-in-value damages, claiming their vehicles are worth less because of the recalls and

defects. (Id. ¶ 1139(b)-(d).) These benefit-of-the-bargain and diminished-value damages are the

same as those sought by the McLaughlin plaintiffs through their loss-of-value model. Because

named plaintiffs have no recoverable damages under their RICO claims, those claims should be

dismissed with prejudice.

15 See also Roberts v. The Scott Fetzer Co., 2010 WL 3937312, at *10 (M.D. Ga. Sept. 30, 2010) (rejecting RICO claims based on plaintiffs purchasing a used cleaning system that they believed was new: “Moreover, the intangible, expectancy-type, benefit of the bargain damages that Plaintiff seeks are not what are contemplated as being recoverable as RICO damages.”).


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2. Plaintiffs Who Have Not Sold Or Traded-In Their Vehicles Do Not Have A Ripe RICO Claim.

Independently, named plaintiffs who have not sold or traded-in their vehicles cannot seek

damages under RICO. “A plaintiff asserting a claim under 18 U.S.C. § 1964(c) must allege

actual, quantifiable injury.” McLaughlin, 522 F.3d at 227 (emphasis in original). A “cause of

action does not accrue under RICO until the amount of damages becomes clear and definite.”

Motorola Credit Corp. v. Uzan, 322 F.3d 130, 135 (2d Cir. 2003). Where “the extent of

‘damages are still unknown,’ a RICO injury remains ‘speculative’ and ‘unprovable.’” DLJ

Mortgage Capital, Inc. v. Kontongiannis, 726 F. Supp. 2d 225, 236-37 (E.D.N.Y. 2010) (quoting

Harbinger Capital Partners Master Fund I, Ltd. v. Wachovia Capital Mkts., 347 F. App’x 711,

713 (2d Cir. 2009) and Motorola, 322 F.3d at 135).

In First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763 (2d Cir. 1994), for

example, the plaintiff claimed it was fraudulently induced to make mortgage loans because

defendants overstated the value of the properties. Id. at 766. These loans were riskier than

expected because the market values of the underlying properties were lower. Id. at 766-67.

Plaintiff alleged that “it suffered immediate quantifiable injury when the loans were made

because the loans were undersecured” and plaintiffs “assumed additional risk of loss … the

moment the loans were made.” Id. at 768. The Second Circuit rejected this argument for loans

that had not yet been foreclosed, holding that the plaintiff did not have definite damages

necessary to support a RICO claim. “[A]ny amounts paid on the debt reduce the amount the

plaintiff can claim as damages” and thus “the amount of loss cannot be established until it is

finally determined whether the collateral is insufficient to make the plaintiff whole, and if so, by

how much.” Id. Because “the actual damages it will suffer, if any, are yet to be determined,” the

plaintiff did not have a ripe RICO claim. Id.


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This rule bars the claims of named plaintiffs who have not yet sold their vehicles. Until

each named plaintiff’s vehicle is actually sold, damages cannot be “clear and definite” because

the vehicle’s value may fluctuate. Any argument that the loss was suffered the moment a

plaintiff purchased the vehicle is no more meritorious than in Gelt. 27 F.3d at 768. Thus, the

RICO claims of plaintiffs Andrews, the Koppelmans, Pina, Jackson, Ferden-Precht, the Fagans,16

Albert with respect to his 2013 Chevrolet Impala, Robinson, Washington, Hawkins, Reeder with

respect to her 2012 Chevrolet Impala, and Hall-Abbott should be dismissed.

B. Plaintiffs’ Claim Is An Artful Pleading Of A Safety Act Violation That Falls Outside The Scope Of RICO.

RICO cannot be used to enforce an administrative statute. In Norman v. Niagara

Mohawk Power Corp., 873 F.2d 634 (2d Cir. 1989), plaintiffs claimed that their employer, a

nuclear power plant, retaliated against them for reporting that the plant concealed various

deficiencies. Id. at 635. Such claims are governed by Section 210 of the Energy Reorganization

Act (“ERA”), 42 U.S.C. § 5851(a). Id. The Second Circuit held that plaintiffs’ RICO claims

were barred because ERA Section 210 creates a procedural framework for those who had been

retaliated against for making safety complaints:

Artful invocation of controversial civil RICO, particularly when inadequately pleaded, cannot conceal the reality that the gravamen of the complaint here is section 210 harassment. We agree with the district court that appellant’s 96-paragraph complaint, distilled to its essence, alleges no more than that appellants were discriminated against for having made complaints about safety at a nuclear plant—a section 210 claim.

Id. at 637-68 (citations omitted).

Norman is in accord with a host of cases holding that RICO cannot be used to punish

16 The Fagans sold their 2012 Cadillac CTS on June 19, 2013. (TACC ¶ 87.) The TACC provides no explanation of how any conduct by New GM could have decreased the Fagan’s resale value given that the sale occurred before the 2014 recalls, and thus the Fagans have no claim for damages based on that vehicle. The Fagans continue to own their 2013 Cadillac SRX.


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conduct regulated under an administrative framework with exclusive remedies. E.g., Danielsen

v. Burnside–Ott Aviation Training Ctr., Inc., 941 F.2d 1220, 1227-28 (D.C. Cir. 1991) (violation

of the Service Contract Act (“SCA”) does not “give rise to a private civil action under RICO in

addition to the remedies provided under the SCA”); McCulloch v. PNC Bank Inc., 298 F.3d

1217, 1226-27 (11th Cir. 2002) (“Plaintiffs’ mail and wire fraud claims are nothing more than

purported HEA [Higher Education Act] violations pled in RICO terms. Thus, since Congress did

not intend for Plaintiffs to have a private right of action …, and instead provided administrative

remedies, it follows that Congress could not have intended for that same failure to disclose to

constitute a violation of the mail and wire fraud statute.”).17

This rule has been applied to the Safety Act’s notification and recall provisions. Ayres v.

Gen. Motors Corp., 234 F.3d 514, 521–22 (11th Cir. 2000). In Ayres, plaintiffs based their

RICO claims on allegations that the electronic control modules (“ECMs”) in their vehicles were

defective, “could result in an unsafe situation,” and that “Defendants knew of the defect but

fraudulently concealed it because of the great expense in remedying the defect.” Id. Plaintiffs

sought economic losses for the “diminution in the value of their cars and the expense of assorted

repairs allegedly related to the defect.” Id. at 516.

The Ayres plaintiffs argued “that the Defendants’ failure to disclose the information they 17 See also New York Inst. of Dietetics, Inc. v. Great Lakes Higher Educ. Corp., 1995 WL 562189, at *4 (S.D.N.Y. Sept. 21, 1995) (“Congress has delegated to the Secretary exclusive authority to make such determinations under Title IV [of the Higher Education Act] and remedy violations. Accordingly, those violations cannot form the basis for a RICO claim.”); Welborn v. Bank of New York Mellon, 2013 WL 149707, at *5 (M.D. La. Jan. 14, 2013) (dismissing RICO claims where “the gravamen of the Plaintiffs’ complaint is violation of a regulatory statute [the Trustee Indenture Act] which provides them no private right of action, but includes a regulatory scheme to deal with violations”); El Paso Cnty., Tex. v. Bank of New York Mellon, 2013 WL 285705, at *4-5 (W.D. Tex. Jan. 22, 2013) (dismissing claims where plaintiffs “are attempting to use RICO to enforce a statute [the Trust Indenture Act] Congress intended to be enforced through a regulatory scheme.”); Gifford v. Meda, 2010 WL 1875096, at * 14–15 (E.D. Mich. May 10, 2010); Brown v. First Tenn. Bank Nat’l Ass’n, 753 F. Supp. 2d 1249, 1254 (N.D. Ga. 2009); Livingston v. Shore Slurry Seal, Inc., 98 F. Supp. 2d 594, 600–601 (D.N.J. 2000); Bridges v. Blue Cross and Blue Shield Assoc., 935 F. Supp. 37, 41–43 (D.D.C. 1996).


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possessed about the ECM did violate the mail and wire fraud statutes.” Id. at 521. Thus, “the

crucial issue” was whether the Safety Act was “meant to create the kind of duty, a breach of

which would create criminal liability or civil liability under RICO statutes.” Id. at 521–22. The

court answered “no”:

In light of [the Safety Act’s] extensive administrative scheme, we think it clear that Congress did not intend to equate a violation of the Safety Act’s notification requirements in and of itself with the felony of mail or wire fraud. Moreover, given the limits on the civil penalties, the absence of a private right of action, and the option of private parties to petition for administrative action, it is also clear that Congress did not intend for a violation of the Safety Act’s notification requirements to be the basis for a private civil RICO action, which would permit unlimited, treble damages.

Id. at 522. The Eleventh Circuit also held that “[t]o permit plaintiffs to convert non-compliance

with the notification requirement found in the Safety Act, a regulatory statute with its own

administrative remedies, into mail and wire fraud and thereby to maintain a civil RICO action

would upset the purposes and contradict the intent of the statute.” Id. at 525.

This basic limit on RICO’s scope bars plaintiffs’ claim. Plaintiffs’ RICO claim is based

on the non-disclosure of defects: “For New GM, the purpose of the scheme to defraud was to

conceal the true scope and nature of the defects … .” (TACC ¶ 1068; see also id. ¶¶ 1058,

1072.18) As Ayres recognizes, the Safety Act specifically addresses when, how, and to whom

notice of defects should be given. 234 F.3d at 522. Moreover, it does not create any private

right of action. Id. at 523-23. The Act’s provisions are enforced by NHTSA, and have in fact

been enforced by NHTSA in this case through the Consent Order and its regulation of New

GM’s recalls. The gravamen of the TACC’s RICO claim is that New GM concealed and did not

disclose defects in its vehicles—a violation of the Safety Act. See Norman, 873 F.2d at 637-38;

18 Although plaintiffs also claim that New GM misrepresented the safety and quality of New GM vehicles (TACC ¶ 1058), their RICO claim focuses on allegations of concealment (id. ¶¶ 1508, 1063, 1068, 1072-73).


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see also, e.g., El Paso Cnty., Tex. v. Bank of New York Mellon, 2013 WL 285705, at *3 (W.D.

Tex. Jan. 22, 2013) (“Although Plaintiffs attempt to cast their complaint solely in RICO terms,

this case truly ‘turns on whether the Plaintiffs may use RICO to enforce the TIA [the Trust

Indenture Act].’”). Thus, plaintiffs’ RICO claims should be dismissed.

C. Plaintiffs Fail To Allege Predicate Acts That Could Support A RICO Claim.

The basic requirement of RICO is that a person must control an “enterprise” engaged in

“a pattern of racketeering activity.” 18 U.S.C. § 1962(c); H.J. Inc. v. N.W. Bell Tel. Co., 492

U.S. 229, 237 (1989). Such a pattern requires at least two predicate acts of racketeering activity,

18 U.S.C. § 1961(5), as well as the “continuity of racketeering activity, or its threat.” H.J. Inc.,

492 U.S. at 241. For the defects at issue here, the only predicate acts alleged by the TACC

concern the Delta Ignition Switch.19 Thus, the RICO claims of each plaintiff who does not own

a Delta Ignition Switch Vehicle should be dismissed, specifically Andrews, Jackson, Ferden-

Precht, the Fagans, Albert, Robinson, Washington, the Wrights, Reeder with respect to her 2012

Chevrolet Impala, and Hall-Abbott.

For the Delta Ignition Switch, the TACC attempts to allege three categories of predicate

acts: (i) litigation conduct in state court cases; (ii) the issuance of Technical Service Bulletins;

and (iii) misrepresentations to NHTSA. None constitute predicate acts under RICO.

1. Litigation Conduct And Settlements Are Not RICO Predicate Acts.

The vast majority of the TACC’s allegations relate to allegations concerning (i) King &

Spalding’s evaluation of various cases or potential matters, (ii) New GM’s settlement of those

cases, and (iii) discovery disputes in Melton. (TACC ¶¶ 1074-1125.) These are the same

19 To the extent plaintiffs attempt to assert predicate acts with regard to an alleged power steering defect in 2004-2007 Saturn Ions (TACC ¶¶ 1131-32), those are Old GM vehicles and thus beyond the scope of this motion. (Docket No. 2156 ¶ 1.)


34

allegations plaintiffs relied on unsuccessfully in their crime-fraud briefing. They are likewise

insufficient to state a RICO claim.

First, an act of mail or wire fraud can serve as a RICO predicate only if plaintiff

establishes “the existence of a fraudulent scheme and a mailing [or wire] in furtherance of the

scheme.” See Lundy, 711 F.3d at 119 (emphasis added); McLaughlin v. Anderson, 962 F.2d 187,

190-91 (2d Cir. 1992). In denying plaintiffs’ crime-fraud motion, the Court held that

communications concerning New GM’s settlements and Melton discovery disputes were not in

furtherance of any fraudulent scheme.20 The Court concluded that “the materials upon which

[plaintiffs] rely … appear to be nothing more than good-faith attorney evaluations of whether to

settle individual cases in light of the risks of adverse verdicts and large damage awards against

New GM.” (Opinion and Order, Docket No. 1747 at 12; see also id. at 14). Similarly, the Court

concluded that “the record suggests a good faith (though perhaps mistaken) belief that K&S and

New GM had complied with their discovery obligations” in Melton. (Id. at 17-18.)

The TACC adds nothing new to plaintiffs’ earlier allegations that settlements and

discovery disputes were in furtherance of any fraud, other than to allege that ESIS also sent

settlement communications. (TACC ¶¶ 1087, 1098-1101.) These allegations against ESIS are

legally deficient for the same reasons. This is particularly true given that, just as crime-fraud

looks to whether a party intended for the communications to further fraudulent activity, RICO

claims require a plaintiff to “allege facts that give rise to a strong inference of fraudulent intent.”

First Capital, 385 F.3d at 179 (emphasis in original). The TACC does not meet this standard.

Second, as a matter of law, litigation conduct such as settlements or discovery disputes

20 Because the TACC relies on various documents such as case evaluations and the Melton discovery briefing, the Court can appropriately consider the content of those documents on a motion to dismiss, as well as the conclusions the Court previously has drawn about those documents. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002).


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cannot form the basis for wire fraud, mail fraud, or other RICO predicates. In Goldberg v.

Merrill Lynch, Pierce, Fenner & Smith, Inc., 1998 WL 321446, at *54 (S.D.N.Y. June 18, 1998),

the court held that “litigation and pre-litigation conduct alleged by plaintiff to have been

extortionate” could not “form the basis of a claim for mail or wire fraud.” Goldberg rested its

holding on Spiegel v. Continental Illinois Nat’l Bank, 609 F. Supp. 1083 (N.D. Ill. 1985), aff’d,

790 F.2d 638 (7th Cir. 1986), which explained that “Congress could not have intended that the

mail fraud statute sweep up correspondence between attorneys, dealing at arms’ length on behalf

of their parties, concerning an issue in pending litigation.” Id. at 1089. Numerous other courts

are in accord with Goldberg and Spiegel, and hold that pre-litigation or litigation activity cannot

form the basis of a wire or mail fraud claim. E.g., United States v. Pendergraft, 297 F.3d 1198,

1208 (11th Cir. 2002) (“A number of courts have considered whether serving litigation

documents by mail can constitute mail fraud, and all have rejected that possibility.”); United

States v. Mueller, 74 F.3d 1152, 1159 (11th Cir. 1996) (agreeing with “several district court

cases [that] have held that the mail fraud statute does not extend to false statements by attorneys

in the context of pending litigation”); Morin v. Trupin, 711 F. Supp. 97, 103, 105 (S.D.N.Y.

1989) (quoting Spiegel and holding that letter demanding that plaintiffs make payment on notes

could not be mail fraud, despite plaintiffs’ allegation that this letter omitted discussion of

defenses to payment); D’Orange v. Feely, 877 F. Supp. 152, 156 (S.D.N.Y. 1995) (holding that

“actions in sending these documents cannot be considered predicate acts because they constitute

legitimate conduct of attorneys acting on behalf of a client in the course of pending litigation”).21

21 See also Nolan v. Galaxy Scientific Corp., 269 F. Supp. 2d 635, 643 (E.D. Pa. 2003); McMurtry v. Brasfield, 654 F. Supp. 1222, 1225 (E.D. Va. 1987); Paul S. Mullin & Assocs., Inc. v. Bassett, 632 F. Supp. 532, 540 (D. Del. 1986); see generally von Bulow v. von Bulow, 657 F. Supp. 1134, 1145 (S.D.N.Y. 1987); Nakahara v. Bal, 1998 WL 35123, at *8 (S.D.N.Y. Jan. 30, 1998); Auburn Med. Ctr., Inc. v. Andrus, 9 F. Supp. 2d 1291, 1297 (M.D. Ala. 1998).


36

The TACC’s allegations concerning discovery disputes fall squarely within these

precedents, and cannot constitute mail or wire fraud. Similarly, case evaluations of the merits of

claims or potential claims, and settlements of such claims, likewise are either pre-litigation or

litigation conduct. As in Spiegel, subjecting such communications to the mail or wire fraud

statutes would chill the efforts of attorneys to advise their clients. Moreover, subjecting case

evaluations and settlements to potential RICO liability would discourage settlements, which the

law unambiguously promotes. (Docket No. 1747 at 16 (citing In re Teligent, Inc., 640 F.3d 53,

57-58 (2d Cir. 2011), and Gambale v. Deutsche Bank AG, 377 F.3d 133, 143-44 & n.9 (2d Cir.

2004).) In short, none of the conduct plaintiffs cite falls within the ambit of the mail or wire

fraud statute.

2. A Technical Service Bulletin Does Not Satisfy The Predicate Act Requirement.

Plaintiffs cursorily allege that New GM’s issuance of technical service bulletins (“TSBs”)

were predicate acts, but unidentified TSBs cannot support plaintiffs’ allegations under FRCP

9(b)’s requirements. See Lundy, 711 F.3d at 119. The only alleged TSB identified in the TACC

that could be relevant here22 is one issued by Old GM concerning the Delta Ignition Switch

Vehicles, which the TACC claims New GM re-issued in July 2011 to include new vehicle and

model years.23 That alleged TSB is not a predicate act supporting RICO liability for several

reasons.

22 The TACC cites a second TSB addressing 2004-2007 Saturn Ions, which were manufactured by Old GM and are not owned by any of the plaintiffs whose claims are at issue in this motion. In any case, plaintiffs’ citation to the Saturn Ion power steering TSB fails because plaintiffs do not explain how it is misleading as required by FRCP 9(b); the TSB is not related to the alleged enterprise; the TSB, which disclosed an issue with the Saturn Ion’s power steering, was not “in furtherance” of any fraud; and there are no fact allegations giving rise to a strong inference of fraudulent intent in issuing this TSB.

23 In fact, there was no July 1, 2011 TSB; some copies of an October 25, 2006 TSB issued by Old GM were misprinted with a July 1, 2011 modification date as a result of a computer migration issue.


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First, plaintiffs do not allege that King & Spalding or ESIS had any connection to the

issuance of any TSB. RICO liability must be based on “conduct … through a pattern of

racketeering activity.” 18 U.S.C. § 1962(c) (emphasis added). “[L]iability depends on showing

that the defendants conducted or participated in the conduct of the ‘enterprise’s affairs,’ not just

their own affairs.” Reves v. Ernst & Young, 507 U.S. 170, 185 (1993) (emphasis in original); see

also Crichton v. Golden Rule Ins. Co., 576 F.3d 392, 400 (7th Cir. 2009) (“[W]hat [plaintiff]

alleges here is a fraud perpetrated by [defendant], not an association-in-fact enterprise directed

and controlled by [defendant]”). Here, the supposed “enterprise” consists of New GM, King &

Spalding, and ESIS. As there are no allegations that King & Spalding or ESIS were involved in

any TSBs, New GM simply was conducting its own affairs by issuing TSBs in the regular course

of its business, an act that cannot support RICO liability.

Second, a single predicate act cannot support a “pattern of racketeering activity” under

RICO. 18 U.S.C. § 1961(5), H.J. Inc., 492 U.S. at 240-41. Thus, even if the alleged July 2011

TSB were a predicate act (and it is not), it could not support a RICO claim.

3. The TACC’s Allegations Concerning Misrepresentations To NHTSA Fail To State Any Predicate Acts.

The TACC’s allegations concerning New GM’s misrepresentations to NHTSA do not

constitute a predicate act for multiple reasons. First, wire and mail fraud require that the

defendant seek to obtain “money or property” from another, and government permission to

operate, such as a license, is not “money or property.” Cleveland v. United States, 531 U.S. 12

(2000). A government regulator does not part with “property” when it issues a license, so the

wire and mail fraud statutes do not reach fraud in obtaining a license. Id. at 20. That conclusion

applies here, where New GM’s misrepresentations to NHTSA would have been for the even

more intangible right of not being investigated or having a recall ordered. Id. at 18-19


38

(explaining that the mail and wire fraud cannot be based on “intangible rights,” other than the

“intangible right to honest services”).

Second, plaintiffs cannot show that any supposed New GM underreporting to NHTSA

proximately caused injuries to plaintiffs. Proximate causation under RICO requires a “direct

relation” between the injury asserted and the injurious conduct. Hemi Grp., LLC. v. City of New

York, 559 U.S. 1, 9 (2010) (plurality opinion); Holmes v. Secs. Inv. Prot. Corp., 503 U.S. 258,

268 (1992). Accordingly, damages under RICO do not “go beyond the first step” and are limited

to the “direct victim” of the alleged misconduct, regardless of whether injury to an indirect

victim is foreseeable. Hemi Grp., 559 U.S. at 10-12; Holmes, 503 U.S. at 271-72. Accordingly,

private plaintiffs cannot recover under RICO for misrepresentations made to government

agencies, even if plaintiffs allege that the misrepresentations caused the government to take or

omit some action that injured plaintiffs. E.g., Rezner v. Bayerische Hypo-Und Vereinsbank AG,

630 F.3d 866, 873-74 (9th Cir. 2010) (organizer of unlawful tax shelter scheme did not

proximately cause injury to participant in scheme where the United States was the direct victim

of the fraud); DDR Constr. Servs. v. Siemens Indus., 770 F. Supp. 2d 627, 650-654 (S.D.N.Y.

2011) (dismissing construction corporation’s RICO claims against former associates for falsely

obtaining municipal contracts and improperly distributing proceeds because the direct target of

defendant’s schemes was New York City, not plaintiffs).24

24 See also Halpin v. Crist, 405 F. App’x 403, 405-06 (11th Cir. 2010) (party that unlawfully obtained license to operate canteen in prison did not proximately cause injury to residents of prison where the Department of Corrections was the direct victim of the fraud); Callahan v. A.E.V., Inc., 182 F.3d 237, 261-67 (3d Cir. 1999) (party that fraudulently obtained beer distributorship licenses did not proximately cause competitor’s injury where the Liquor Control Board was the direct victim of the fraud); Johnson Enters. of Jacksonville, Inc. v. FPL Grp., Inc., 162 F.3d 1290, 1318 (11th Cir. 1998) (companies that fraudulently obtained cable franchises did not proximately cause injury to contractor where the franchising authority was the direct victim of the fraud); George v. Nat’l Water Main Cleaning Co., 286 F.R.D. 168, 186 (D. Mass. 2012); Macomb Interceptor Drain Drainage District v. Kilpatrick, 896 F. Supp. 2d 650, 668-69 (E.D. Mich. 2012); In re Oil Spill by the Oil Rig “Deepwater Horizon,” 802 F.


39

These precedents require dismissal of plaintiffs’ RICO claims to the extent they are based

on representations to NHTSA. The direct target of any such representations was NHTSA, not

plaintiffs. NHTSA settled claims against New GM, resulting in the Consent Order. The

Department of Justice likewise brought claims against New GM based in part on its

misrepresentations to NHTSA, resulting in the DPA. See Rezner, 630 F.3d at 873 (“[O]ne

consideration is whether a better suited plaintiff would have an incentive to sue. Here, the direct

victim of [the defendant’s] fraudulent conduct—the United States—did in fact sue.”).

Third, communications with NHTSA are not the act of any alleged “enterprise,” but the

acts of New GM alone in the course of its regular business. (See supra page 37.) The TACC

does not allege that King & Spalding, ESIS, or anyone other than New GM had any involvement

in communicating with NHTSA before the recall.25

Because plaintiffs do not allege any actionable predicate acts, their RICO claims should

be dismissed in their entirety.26

D. Plaintiffs Have Not Properly Alleged Any Enterprise.

The TACC fails to allege the essential element of an “enterprise,” describing nothing

Supp. 2d 725, 728 (E.D. La. 2011); Dow Chem. Co. v. Exxon Corp., 30 F. Supp. 2d 673, 696 (D. Del. 1998).

25 Moreover, to the extent plaintiffs purport to allege misrepresentations to NHTSA for defects other than the Delta Ignition Switch, those allegations do not satisfy FRCP 9(b). The TACC generally alleges that New GM submitted reports to NHTSA regarding potential safety defects and incidents, and that “New GM systematically underreported and omitted relevant information about the nature of the defects and the number of defect-related incidents and complaints from these reports.” (TACC ¶ 1133.) The TACC does not identify these non-Delta Ignition Switch reports and fails to identify the information that supposedly was underreported or omitted. Such conclusory allegations fail to “adequately specify the statements [plaintiff] claims were false or misleading, [and] give particulars as to the respect in which plaintiff contends the statements were fraudulent.” Lundy, 711 F.3d at 119.

26 Because plaintiffs do not allege any proper predicate acts, they also necessarily fail to allege a pattern of racketeering activity, which requires at least two predicate acts of racketeering activity, 18 U.S.C. § 1961(5), as well the “continuity of racketeering activity, or its threat.” H.J. Inc., 492 U.S. at 241.


40

more than three entities engaging in their regular business activities. RICO is limited to “any

person employed by or associated with any enterprise ... to conduct or participate, directly or

indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity.”

18 U.S.C. § 1962(c); First Capital, 385 F.3d at 173. A “RICO enterprise is ‘a group of persons

associated together for a common purpose of engaging in a course of conduct,’ the existence of

which is proven ‘by evidence of an ongoing organization, formal or informal, and by evidence

that the various associates function as a continuing unit.’” First Capital, 385 F.3d at 173

(quoting United States v. Turkette, 452 U.S. 576, 583 (1981).)

No enterprise exists where plaintiffs allege only that the persons comprising the supposed

enterprise are pursuing their own interests, rather than the interests of the enterprise itself. In

Fitzgerald v. Chrysler Corp., 116 F.3d 225 (7th Cir. 1997), the plaintiffs brought RICO claims

against Chrysler, alleging that it sold extended warranties promising protection that Chrysler did

not intend to provide. Id. at 226. Plaintiffs alleged that the RICO enterprise consisted of

Chrysler and its dealers. Id. at 228. The court held that such allegations were legally insufficient

to establish a RICO enterprise:

[W]here a large, reputable manufacturer deals with its dealers and other agents in the ordinary way, so that their role in the manufacturer’s illegal acts is entirely incidental, differing not at all from what it would be if these agents were the employees of a totally integrated enterprise, the manufacturer plus its dealers and other agents (or any subset of the members of the corporate family) do not constitute an enterprise within the meaning of the statute.

Id. Similarly, the Toyota Unintended Acceleration MDL court concluded that “Plaintiffs merely

allege that the Defendants are associated in a manner directly related to their own primary

business activities, which is insufficient to state a claim under § 1962(c).” In re Toyota Motor

Corp. Unintended Acceleration Mktg., Sales Practices, and Prods. Liab. Litig., 826 F. Supp. 2d

1180, 1202-03 (C.D. Cal. 2011).


41

Courts have extended this principle to attorneys acting in the ordinary course of their

obligations. The Second Circuit has held that plaintiff’s “reference to unnamed ‘attorneys,

accountants and other agents’ as part of the enterprise does not alter this analysis” rejecting the

existence of an enterprise. Discon, Inc. v. NYNEX Corp., 93 F.3d 1055, 1064 (2d Cir. 1996),

rev’d in part on other grounds, NYNEX Corp. v. Discon, Inc., 525 U.S. 128 (1998). Similarly,

where plaintiffs allege that the defendant retained an attorney who represented the defendant’s

interests, such allegations cannot establish an enterprise. R.C.M. Executive Gallery Corp. v. Rols

Capital Co., 1997 WL 27059, at *8 (S.D.N.Y. Jan. 23, 1997); see also Ray v. Spirit Airlines,

Inc., 2015 WL 5168367, at *6-7 (S.D. Fla. July 27, 2015) (“Plaintiffs do not plausibly allege that

Spirit is part of a separate RICO enterprise merely by showing that it hires outside developers,

marketers, and software designers, as most large corporations do.”)

The TACC does not allege anything beyond regular business activities by the two

supposed members of the “enterprise” besides New GM. When stripped of plaintiffs’ labels and

conclusions and viewed in light of the Court’s prior crime fraud holding (Docket No. 1747),

plaintiffs allege no more than that King & Spalding provided New GM with advice regarding the

merits of claims brought against New GM. (TACC ¶¶ 1074-97.) King & Spalding also litigated

cases such as Melton, including answering discovery requests and briefing discovery disputes.

(TACC ¶¶ 1102-1121.) There is no factual content in the TACC’s allegations showing that such

activities were to further the goals of a purported “enterprise,” instead of King & Spalding’s

ordinary activities as litigation counsel. The same is true for ESIS. The TACC alleges nothing

more than that ESIS undertook regular activities as a claims administrator (TACC ¶ 1063(d)),

such as investigating claims and communicating with plaintiffs about settlement checks (id. ¶¶

1065, 1087, 1100).


42

The TACC repeatedly makes conclusory allegations that King & Spalding and ESIS were

aware of the Delta Ignition Switch Defect, but “knowledge” alone is not sufficient to make an

entity part of the enterprise. Instead, an enterprise requires a group associated together to serve

the common purpose of the enterprise, as opposed to their own purposes and business activities.

First Capital, 385 F.3d at 173. Moreover, there are no allegations of facts that King & Spalding

or ESIS stepped outside of their proper roles, such as by deliberately concealing or destroying

evidence. Thus, the TACC fails to allege that King & Spalding or ESIS formed any “enterprise”

with New GM, and the RICO claims of all plaintiffs should be dismissed.

V. THE UNJUST ENRICHMENT CLAIMS OF EACH NAMED PLAINTIFF FAIL UNDER STATE LAW.

A. State Law Bars Unjust Enrichment Claims Where There Is A Contract, Such As An Express Warranty.

Jurisdictions generally recognize that unjust enrichment is a quasi-contract remedy that

implies a contract where one does not actually exist. E.g., Diamond “S” Dev. Corp. v.

Mercantile Bank, 989 So.2d 696, 697 (Fla. Dist. Ct. App. 2008). Because unjust enrichment is

premised on implying a contract, it does not apply where an express contract exists. E.g.,

Diamond “S” Dev., 989 So.2d at 697. Every jurisdiction at issue here holds that unjust

enrichment claims are barred as a matter of law where there is an express contract. E.g., Schiff v.

Am. Ass’n of Retired Persons, 697 A.2d 1193, 1194 n.2 (D.C. 1997); Ocean Commc’ns, Inc. v.

Bubeck, 956 So.2d 1222, 1225 (Fla. Dist. Ct. App. 2007); Diamond “S” Dev., 989 So.2d at 697;

United States v. Bollinger Shipyards, Inc., 2013 WL 393037, at *15 (E.D. La. Jan. 30, 2013);

County Comm’rs of Caroline County v. J. Roland Dashiell & Sons, Inc., 747 A.2d 600, 607 (Md.

Ct. Spec. App. 2000); Fidelity Tel. Co. v. Shields, Britton & Fraser, 159 F.R.D. 518, 519 (E.D.

Mo. 1995); Morrison v. Stonebridge Life Ins. Co., 2015 WL 137261, at *7 (W.D. Okla. Jan. 9,

2015); Arias v. Jokers Wild, Inc., 2007 WL 6013198, at *13 (Va. Cir. Ct. May 2, 2007).


43

New GM’s vehicles come with an express limited warranty governing the circumstances

and conditions under which New GM will repair defects in a vehicle. Various named plaintiffs

allege that their vehicles are currently under warranty or were under warranty when purchased.

(TACC ¶¶ 57, 58, 66, 67, 87, 107, 140, 157.) The existence of these express warranties bars

unjust enrichment claims for all of the named plaintiffs. That in some cases the warranties have

expired is irrelevant because the time limitation of the warranties is part of the express contract.

E.g., Atlantis Estate Acquisitions, Inc. v. DePierro, 125 So. 3d 889, 893 (Fla. Dist. Ct. App.

2013) (reversing award of unjust enrichment damages because claim was governed by written

lease despite the fact that defendant had terminated the lease); Collins/Snoops Associates, Inc. v.

CJF, LLC, 988 A.2d 49, 59 (Md. Ct. Spec. App. 2010) (holding that existence of terminated

contract barred claim for unjust enrichment); McDonald’s Corp. v. Turner-James, 2005 WL

7873649, at *4 (E.D. Va. Nov. 29, 2005). Therefore, the unjust enrichment claims of all named

plaintiffs are barred.

B. Many States Do Not Allow An Unjust Enrichment Claim If Plaintiffs Have An Adequate Remedy At Law.

Unjust enrichment, being a claim in equity, will not be awarded where there is an

adequate remedy at law. The District of Columbia, Louisiana, Missouri, Oklahoma, and Virginia

all hold that an unjust enrichment claim is barred where plaintiffs have an adequate remedy at

law. In re G-Fees Antitrust Litig., 584 F. Supp. 2d 26, 46 (D.D.C. 2008); O’Gea v. Home Depot

USA, Inc., 2009 WL 799757, at *2-6 (E.D. La. Mar. 20, 2009); Gen. Accident Ins. Co. of Am. v.

Aggreko, LLC, 2012 WL 6738217 (E.D. La. Dec. 28, 2012); Bennett v. Crane, 289 S.W. 26, 28

(Mo. Ct. App. 1926); Harvell v. Goodyear Tire & Rubber Co., 164 P.3d 1028, 1035 (Okla.

2006); R.M. Harrison Mech. Corp. v. Decker Indus., Inc., 2008 WL 10669311, at *7 (Va. Cir.

Ct. Aug. 28, 2008).


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All of the named plaintiffs allege that they have adequate remedies at law, as shown by

their claims under RICO, MMWA and implied warranty, fraudulent concealment, and consumer

protection laws. Whether plaintiffs can prevail on any of these claims is irrelevant; the fact that

they exist means that they provide adequate remedies at law that bar any unjust enrichment

claims. E.g., O’Gea, 2009 WL 799757, at *3 (“It is not the success or failure of other causes of

action, but rather the existence of other causes of action, that determine whether unjust

enrichment can be applied.”) (collecting cases); Briggs v. Freeport-McMoran Copper & Gold,

Inc., 2015 WL 1461884, at *6 (W.D. Okla. Mar. 30, 2015) (“[W]here a party has an adequate

remedy at law for breach of contract or negligence, regardless of whether the party actually

recovers thereon, the party may not pursue a claim for unjust enrichment.”). The unjust

enrichment claims of all plaintiffs from the District of Columbia, Louisiana, Missouri,

Oklahoma, and Virginia—specifically, Jackson, the Fagans, Robinson, Washington, Hawkins,

the Wrights, Reeder, and Hall-Abbott—should be dismissed.

C. Certain Plaintiffs’ Unjust Enrichment Claims Should Be Dismissed Because They Do Not Allege That They Conferred A Benefit On New GM.

A typical element of unjust enrichment claims is that the plaintiff must confer a benefit

on the defendant. E.g., Hoffmeister v. Kranawetter, 407 S.W.3d 59, 61 (Mo. Ct. App. 2013);

Cnty. Line Inv. Co. v. Tinney, 933 F.2d 1508, 1518 (10th Cir. 1991) (Oklahoma law). Moreover,

some states—including Florida, Missouri, and Oklahoma—hold that this benefit must be

conferred directly on the defendant. E.g., Extraordinary Title Servs. v. Fla. Power & Light Co.,

1 So.3d 400, 404 (Fla. Dist. Ct. App. 2009) (“[T]he Plaintiff cannot allege nor establish that it

conferred a direct benefit upon [defendant]. Therefore, we conclude that the trial court properly

dismissed with prejudice the unjust enrichment claim asserted against [defendant].”); Winslow v.

Nolan, 319 S.W.3d 497, 503-04 (Mo. Ct. App. 2010) (holding that a plaintiff “cannot prevail” on


45

a claim for unjust enrichment where “neither [plaintiff] nor any other witness testified, nor

presented any evidence, of a benefit conferred on [defendant] directly by [plaintiff]”); Slover v.

Equitable Variable Life Ins. Co., 443 F. Supp. 2d 1272, 1280 (N.D. Okla. 2006) (holding that if

the defendant “did not obtain any direct benefit,” then “Plaintiffs’ claim for unjust enrichment

against the [] Defendants must fail as a matter of law”).

Plaintiffs do not allege that they engaged in any transaction directly with New GM.

Instead, plaintiffs purchased their vehicles from dealers or other third parties which were paid the

purchase price. (E.g., TACC ¶¶ 55, 90, 107, 112.) Motor vehicle dealers are independent

business entities. E.g., Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 290 (5th Cir.

2004); Bushendorf v. Freightliner Corp., 13 F.3d 1024, 1026 (7th Cir. 1993); Matthews v. Ford

Motor Co., 479 F.2d 399, 403 & n.13 (4th Cir. 1973). Thus, plaintiffs did not pay anything to

New GM to purchase their vehicles or otherwise allege that they conferred a benefit directly on

New GM when they purchased their vehicles.

Moreover, plaintiffs who purchased vehicles used from third parties (other than pre-

owned vehicles certified by New GM) do not allege that they conferred any benefit on New GM.

The TACC does not plead factual content explaining how the court could draw a reasonable

inference that purchases of used vehicles from third parties conferred any benefit on New GM.

See, e.g., Doll v. Ford Motor Co., 814 F. Supp. 2d 526, 551-52 (D. Md. 2011) (dismissing unjust

enrichment claims of plaintiff who purchased used vehicle from dealership); Chiarelli v. Nissan

N. Am., Inc., 2015 WL 5686507, at *18 n.20 (E.D.N.Y. Sept. 25, 2015) (same).

Because plaintiffs do not allege that they conferred a direct benefit on New GM as

Florida, Missouri, and Oklahoma law requires, the unjust enrichment claims of plaintiffs from

those states—specifically, Ferden-Precht, Robinson, Washington, Hawkins, the Wrights, and


46

Reeder—should be dismissed. In addition, plaintiffs who purchased their vehicles used (other

than pre-owned vehicles certified by New GM)—Andrews, Albert with respect to his 2013

Chevrolet Impala, Robinson, Hawkins, and Reeder—do not alleged that they conferred any

benefit on New GM, and their claims should also be dismissed.

D. California Law Does Not Recognize Unjust Enrichment As A Cause Of Action.

California does not recognize unjust enrichment as a cause of action: “The phrase ‘Unjust

Enrichment’ does not describe a theory of recovery, but an effect: the result of a failure to make

restitution under circumstances where it is equitable to do so. Unjust enrichment is ‘a general

principle, underlying various legal doctrines and remedies,’ rather than a remedy itself.”

Melchior v. New Line Prods., Inc., 131 Cal. Rptr. 2d 347, 357 (Cal. Ct. App. 2003); see also Hill

v. Roll Int’l Corp., 128 Cal. Rptr. 3d 109, 118 (Cal. Ct. App. 2011); Jogani v. Superior Court, 81

Cal. Rptr. 3d 503, 511 (Cal. Ct. App. 2008); Low v. Linkedin Corp., 900 F. Supp. 2d 1010 (N.D.

Cal. 2012) (collecting cases).27 Therefore, the unjust enrichment claims of the California named

plaintiffs—Andrews, the Koppelmans, Padilla, and Pina—should be dismissed.

E. Louisiana Bars Unjust Enrichment Claims Against A Manufacturer Based On Product Defects.

Louisiana’s Products Liability Act “establishes the exclusive theories of liability for

manufacturers for damage caused by their products. A claimant may not recover from a

manufacturer for damage caused by a product on the basis of any theory of liability that is not set

forth in this Chapter.” La. Rev. Stat. § 2800.52. Unjust enrichment is not a liability theory under

27 See also Walker v. USAA Cas. Ins. Co., 474 F. Supp. 2d 1168, 1174 (E.D. Cal. 2007), aff’d, 558 F.3d 1025 (9th Cir 2009); Ham v. Hain Celestial Grp., Inc., 70 F.Supp.3d 1188, 1196 (N.D. Cal. 2014); In re iPhone Application Litig., 844 F. Supp. 2d 1040, 1075 (N.D. Cal. 2012) ; McVicar v. Goodman Global, Inc., 1 F. Supp. 3d 1044, 1059 (C.D. Cal. 2014); United Food & Commercial Workers Local 1776 & Participating Employers Health & Welfare Fund v. Teikoku Pharma USA, Inc., 74 F. Supp. 3d 1052, 1091 (N.D. Cal. 2014); In re Lidoderm Antitrust Litig., 103 F. Supp. 3d 1155, 1176 (N.D. Cal. 2015).


47

the LPLA, and Louisiana courts routinely dismiss unjust enrichment claims based on product

defects. E.g., McLaughlin v. GlaxoSmithKline, LLC, 2014 WL 669349, at *3 (W.D. La. Jan. 6,

2014); King v. Bayer Pharms. Corp., 2009 WL 2135223, at *3-4 (W.D. La. July 13, 2009);

Hilton v. Atlas Roofing Corp. of Miss., 2006 WL 1581239, at *2 (E.D. La. May 18, 2006).

Therefore, the Fagans’ unjust enrichment claim should be dismissed.

VI. THE CONSUMER PROTECTION CLAIMS OF CERTAIN PLAINTIFFS ARE BARRED AS A MATTER OF LAW.

A. Plaintiffs Do Not Adequately Allege Misrepresentations Or Omissions In Support Of Their Consumer Fraud Claims.

1. Plaintiffs Fail To Identify Any Specific Misrepresentations Relied On By Named Plaintiffs.

The TACC fails to allege misstatements or, in most cases, omissions sufficient to support

state-law consumer fraud claims, particularly given that such claims must be pled with

particularity under FRCP 9(b). See In re Sony Grand Wega KDF-E A10/A20 Series Rear

Projection HDTV Television Litig., 758 F. Supp. 2d 1077, 1088 (S.D. Cal. 2010); Meserole v.

Sony Corp. of Am., 2009 WL 1403933, at *3 (S.D.N.Y. May 19, 2009).28

As for affirmative misstatements, the TACC does not identify any New GM statements

that were heard, viewed, or relied on by named plaintiffs, let alone identify which of these

28 See, e.g., Meserole v. Sony Corp. of Am., 2009 WL 1403933, at *3 (S.D.N.Y. May 19, 2009) (California Consumer Legal Remedies Act (Cal. Civil Code § 1750)); Cal. Bus. & Prof. Code § 17200); Mouzon v. Radiancy, Inc., 85 F. Supp. 3d 361, 379 (D.D.C. 2015) (D.C. Consumer Protections Procedures Act, D.C. Code § 28-3901); Blair v. Wachovia Mortg. Corp., 2012 WL 868878 (M.D. Fla. Mar. 14, 2012) (Florida Unfair and Deceptive Trade Practices Act, Fla. Stat. § 501.203(7).); Pinero v. Jackson Hewitt Tax Serv. Inc., 594 F. Supp. 2d 710, 721 (E.D. La. 2009) (Louisiana’s Unfair Trade Practices and Consumer Protection Act La. Rev. Stat. § 51:1405(A)) Farasat v. Wells Fargo Bank, N.A., 913 F. Supp. 2d 197, 205 (D. Md. 2012) (Maryland Consumer Protection Act, Md. Com. Law Code § 13-303); Blake v. Career Educ. Corp., 2009 WL 140742, at *2 (E.D. Mo. Jan. 20, 2009) (Missouri Merchandising Practices Act, Mo. Rev. Stat. § 407.020); Lee v. Enter. Fin. Grp., 2009 WL 1362605, at *4 n.1 (W.D. Okla. May 14, 2009) (Oklahoma Consumer Protection Act, Okla. Stat. tit. 15, § 751); Murphy v. Capella Educ. Co., 589 F. App’x 646, 658 (4th Cir. 2014) (Virginia Consumer Protection Act, Va. Code Ann. § 59.1-200).


48

statements were false or omitted material information or who made these statements.29 See

Meserole, 2009 WL 1403933, at *5 (allegations inadequate under consumer protection statutes

because plaintiffs “fail[ed] to state with any particularity who, when or where made those

representations, or why the statements were fraudulent when made.”).

On the contrary, almost half of the named plaintiffs do not even claim to have viewed or

heard any New GM statements regarding their vehicles or any defects, and those who do fail to

identify the particular advertisements or other statements that were allegedly false or that omitted

material information. (See, e.g., Ferden-Precht, TACC ¶ 67.) These allegations are insufficient

under Rule 9(b). See Kearns v. Ford Motor Co., 567 F.3d 1120, 1126 (9th Cir. 2009)

(dismissing complaint where plaintiff did not “specify when he was exposed to [the

advertisements] or which ones he found material[,] . . . which sales material he relied upon in

making his decision to buy a CPO vehicle[,] . . . [or] who made [the allegedly false statement] or

when this statement was made.”).

Instead, the named plaintiffs point to unidentified advertisements relating to the “quality”

or “reliability” of their vehicles30—allegations that are not only too general to satisfy FRCP 9(b),

but are too general to be actionable under the relevant consumer protection statutes.31 See In re

29 While New GM has admitted in the DPA that it represented to consumers that vehicles containing the Delta Ignition Switch Defect posed no safety concern, the TACC does not identify any statements by New GM that were heard, viewed, or relied on by named plaintiffs regarding either the Delta Ignition Switch Defect or the other conditions subject to the 2014 recalls.

30 See Koppelmans TACC ¶ 55 (“safety”); Pina ¶ 58 (“efficiency, cost effectiveness, and safety”); Ferden-Prech ¶ 67 (“safety and reliability”); Fagans ¶ 87 (“safety features); Robinson ¶ 106 (“quality”); and Wrights ¶ 140 (“five star rating and safety”). Padilla alleges a statement that the vehicle was a “great” and “safe” car, but it was allegedly made by a dealer’s salesman, not New GM. (Id. ¶ 57).

31 New GM admitted in the DPA that it made representations regarding pre-owned vehicles that were certified by New GM. For example, as explained in the DPA, New GM informed consumers “that the certification process involved testing of over a hundred components, including, specifically, the ignition system.” DPA, Statement of Facts ¶ 112. Such representations regarding certified pre-owned vehicles are categorically different from the general statements discussed here.


49

Sony Grand Wega KDF-E A10/A20 Series Rear Projection HDTV Television Litig., 758 F. Supp.

2d 1077, 1089 (S.D. Cal. 2010) (“high” or “superior” quality are mere puffery and cannot

support a claim under the UCL, FAL, or CLRA); Gentry v. Harborage Cottages-Stuart, LLLP,

602 F. Supp. 2d 1239, 1252-53 (S.D. Fla. 2009) (“Statements that are mere opinions or

exaggerations concerning the qualities of an offering by a seller constitute non-actionable

puffery” including that properties are “luxur[ious],” “extraordinary,” “exceptional quality.”),

aff’d in part, vacated in part on other grounds, 654 F.3d 1247 (11th Cir. 2011)); Davis v. Allstate

Ins. Co., 2009 WL 122761, *6 (E.D. La. Jan. 15, 2009) (“‘You’re in good hands with Allstate’ is

nothing more than puffery”); Lambert v. Downtown Garage, Inc., 553 S.E.2d 714, 717 (Va.

2001) (“Merely stating that property is in excellent condition, without more, is clearly a matter of

opinion in the manner of puffing.”); see also Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection

Serv., 911 F.2d 242, 245 (9th Cir. 1990) (no reasonable consumer relies on puffery). For the

same reasons, allegations that New GM failed to disclose its “corporate culture” are

insufficiently particular under FRCP 9(b) and too general to be actionable. See also Section

VII.A.

Therefore, the consumer fraud claims of all named plaintiffs should be dismissed to the

extent they rely on alleged misrepresentations.

2. Plaintiffs Fail To Sufficiently Allege That New GM Concealed Information For Many Of The Alleged Omissions.

Named plaintiffs allege that New GM failed to disclose “many defects,” including “the

Ignition Switch defect and other defects revealed in the 2014 recalls.” (TACC ¶¶ 51, 55, 57-58,

66, 67, 87, 90, 105, 106, 107, 137, 140, 1157.) But for the overwhelming majority of defects

outside the Delta Ignition Switch Defect and the four distinct key-rotation recalls (TACC ¶¶ 283-

516), plaintiffs do not identify the information that was allegedly known to New GM but was


50

allegedly “concealed or suppressed.” Nor, for most defects outside the ignition switch and key-

rotation recalls, does the TACC allege with particularity the context or the manner in which

plaintiffs were misled, or that New GM was even aware of the defect before plaintiffs purchased

their vehicles. See Armstrong v. McAlpin, 699 F.2d 79, 89-90 (2d Cir. 1983) (defendant “was

entitled to know what ‘facts’ it is alleged to have ‘concealed by failing to disclose’”).32

For example, the TACC simply mentions the recall for the transmission shift cable

adjuster in plaintiff Washington’s 2014 Chevrolet Impala, and states that it occurred in February

2014. (TACC ¶¶ 849-51.) The TACC does not allege when New GM first learned of the

underlying issue, much less that New GM concealed information. The same is true for the

electronic parking brake recall, as the TACC merely describes the issues and notes that New GM

conducted a recall, with no allegations concerning New GM’s knowledge or concealment.

(TACC ¶¶ 751–53.) Similarly, for the alleged acceleration-lag defect in the Fagans’ 2013

Cadillac SRX, plaintiffs simply allege that New GM investigated the issue starting in late

October of 2013 before conducting a recall in April 2014. (TACC ¶¶ 837-42.) The TACC does

not explain how New GM’s prompt investigation and recall could constitute concealment. The

same is true of many other defects alleged by the named plaintiffs at issue here. See TACC ¶¶

784-85 (steering tie rod); id. ¶¶ 786-92 (joint fastener); id. ¶¶ 813-27 (transmission oil cooler

line); id. ¶¶828-36 (transfer case control module); id. ¶¶ 852-53 (power management mode

software); id. ¶¶ 871-72 (seat hook weld); id. ¶¶ 883-86 (radio chime); id. ¶¶ 904-05 (front

32 Although plaintiffs allege “[o]n information and belief” that “New GM has still not made full and adequate disclosure and continues to defraud Plaintiffs… and conceal material information” (even though they allege that all of the allegedly defective vehicles have been recalled) (see, e.g., TACC ¶ 1891), plaintiffs fail to allege any facts upon which that belief is based. See Wexner v. First Manhattan Co., 902 F.2d 169, 172 (2d Cir. 1990) (“Where pleading is permitted on information and belief, a complaint must adduce specific facts supporting a strong inference of fraud or it will not satisfy even a relaxed pleading standard.”).


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storage door latch); id. ¶¶ 956-58 (chassis-control module).

Therefore, the consumer protection claims of each named plaintiff should be dismissed to

the extent they are based on the defects listed in the preceding paragraph.

B. Certain Plaintiffs’ Consumer Act Claims Fail Under State Law.

Louisiana. Plaintiffs cannot state a claim under the Louisiana Unfair Trade Practices Act

because the state’s Products Liability Act, La. Rev. Stat. Ann. § 9:2800.52, provides the

exclusive remedy. See Gallien v. Procter & Gamble Pharm., Inc., 2010 WL 768937, at *2

(S.D.N.Y. March 5, 2010); Bladen v. C.B. Fleet Holding Co., 487 F. Supp. 2d 759, 770-71

(W.D. La. 2007). Therefore, the Fagans’ consumer act claims should be dismissed.

Louisiana and Missouri. Louisiana and Missouri law require privity of contract and

therefore plaintiffs’ claims under the consumer protection acts of those states must independently

be dismissed because plaintiffs did not purchase their vehicles from New GM. (Fagans (TACC

¶ 87); Hawkins (id. ¶ 105), Robinson (id. ¶ 106); and Washington (id. ¶ 107).) See Nat’l

Gypsum Co. v. Ace Wholesale, Inc., 738 So. 2d 128, 130 (La. App. 5th Cir. 1999) (requiring a

direct contractual relationship between plaintiff and defendant); Barnes v. Fed. Home Loan

Mortg. Corp., 2013 WL 1314200, at *7 (W.D. Mo. Mar. 28, 2013) (same).

California. The California plaintiffs—Andrews, the Koppelmans, Padilla, and Pina—do

not allege that they provided written notice, by certified or registered mail, before filing their

complaints, and therefore cannot state a claim for damages under the Consumer Legal Remedies

Act. See Davis v. Chase Bank U.S.A., N.A., 650 F. Supp. 2d 1073, 1089 (C.D. Cal. 2009)

(“compliance with the notice requirement ‘is necessary to state a claim’ ... actual notice is not

sufficient”); Cattie v. Wal-Mart Stores, Inc., 504 F. Supp. 2d 939, 949 (S.D. Cal. 2007) (similar).

Oklahoma. Oklahoma’s Consumer Protection Act exempts “actions or transactions

regulated under laws administered by ... any ... regulatory body ... of ... the United States....” 15


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Okla. St. Ann. § 754(2). Because the Safety Act is administered by NHTSA and governs notice

of vehicle defects, the consumer protection claims of the Oklahoma plaintiffs (Reeder and the

Wrights) should be dismissed. Dinwiddie v. Suzuki Motor of Am., Inc., 111 F. Supp. 3d 1202,

1217-1218 (W.D. Okla. 2015) (granting motion to dismiss) (citing Thomas v. Metro. Life Ins.

Co., 540 F. Supp. 2d 1212, 1228 (W.D. Okla. 2008)).

VII. THE FRAUDULENT CONCEALMENT AND NEGLIGENCE CLAIMS OF CERTAIN PLAINTIFFS ARE BARRED AS A MATTER OF LAW.33

A. Claims Cannot Be Based On Allegations Concerning Culture Or General Quality, But Must Be Based on Specific Defects.

Plaintiffs’ fraud claim must be based on defects in their own vehicles and not generalized

claims about New GM’s culture or the quality of its vehicles.34 Yet each of the TACC’s state

law fraud by concealment counts alleges that New GM concealed the “quality of its vehicles and

the New GM brand,” “the culture of New GM,” “that it valued cost-cutting over safety,” and

similar allegations. (E.g., TACC 1470-72, 1805-07.) Such generalized allegations about a

company’s products, or the company itself, are not actionable. E.g., City of Pontiac Policemen’s

& Firemen’s Retirement Sys. v. UBS AG, 752 F.3d 173, 183 (2d Cir. 214) (“It is well-established

that general statements about reputation, integrity, and compliance with ethical norms are

inactionable ‘puffery …’”); ECA, Local 134 IBEW Joint Pension Trust of Chicago v. JP Morgan

Chase Co., 553 F.3d 187, 205-06 (2d Cir. 2009) (holding that statements concerning company’s

discipline, integrity, and risk management process “are too general to cause a reasonable investor

to rely upon them”); Newcal Indus., Inc. v. Ikon Office Solutions, 513 F.3d 1038, 1053 (9th Cir.

33 In addition, as described in Section VII.A.2., the TACC fails to allege New GM’s knowledge or intent for various defects, and fraudulent concealment claims based on those defects should be dismissed.

34 For the same reasons as discussed in footnote 31, New GM’s representations regarding certified pre-owned vehicles are not comparable to generalized claims concerning culture or quality.


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2008) (A “statement that is quantifiable, that makes a claim as to the ‘specific or absolute

characteristics of a product,’ may be an actionable statement of fact while a general, subjective

claim about a product is non-actionable puffery.”).35

Accordingly, the Court should dismiss each named plaintiff’s fraudulent concealment

claim to the extent it relies on New GM’s quality, culture, or similar characteristics rather than

specific defects in particular vehicles. In particular, the fraudulent concealment claim of

Andrews should be dismissed, as the TACC does not allege any defect in her vehicle and thus

there was no concealment of any alleged defect in her vehicle.

B. Certain States Do Not Impose A Duty To Disclose Under The Facts Here.

In Florida, Louisiana, and Oklahoma, a duty to disclose exists only if the parties have a

fiduciary, confidential, or some other special relationship. See TransPetrol, Ltd. v. Radulovic,

764 So. 2d 878, 879-80 (Fla. Dist. Ct. App. 2000) (“A defendant’s knowing concealment or non-

disclosure of a material fact may only support an action for fraud where there is a duty to

disclose. Such duty arises when one party has information that the other party has a right to

know because of a fiduciary or other relation of trust or confidence between them.”) (internal

quotation and citation omitted); State v. Mark Marks, P.A., 698 So. 2d 533, 539 (Fla. 1997)

(same); Central Facilities Operating Co., LLC v. Cinemark USA, Inc., 36 F. Supp. 3d 700, 716-

35 Indeed, general statements about specific vehicles are not actionable under state law. See Zaccagnino v. Nissan N. Am., Inc., 2015 WL 3929620, *4 (S.D.N.Y. 2015) (“[P]romoting a car as generally safe and reliable is too general a representation to be proven true or false. It is puffery”); Sabol v. Ford Motor Co., 2015 WL 4378504, *5 (E.D. Pa. 2015) (statements that vehicle was “safe” and “reliable” were non-actionable puffery); Daigle v. Ford Motor Co., 2012 WL 3113854, *9 (D. Minn. 2012) (“[A]dvertisements that the Freestar [minivan] was safe and reliable are merely statements of opinions or commendation, which are not actionable”); Cirulli v. Hyundai Motor Co., 2009 WL 5788762, at *3 (C.D. Cal. June 12, 2009) (statement that vehicle has “excellent design, construction, and safety” is non-actionable); In re Ford Motor Co. E-350 Van Prods. Liab. Litig. (No. II), 2010 WL 2813788, at *8–9 (D.N.J. July 9, 2010) (statements that vehicle was “very safe” and the like were non-actionable). That conclusion applies even more strongly where, as here, those general statements are not about a specific vehicle but instead about the company as a whole.


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17 (M.D. La. 2014) (surveying Louisiana law and concluding that “courts have consistently

found that a legal duty must be predicated on a special relationship like a fiduciary

relationship”); Myklatun v. Flotek Indus., Inc., 734 F.3d 1230, 1234-35 (10th Cir. 2013)

(Oklahoma law) (holding that a duty to disclose arises from either (1) a fiduciary or confidential

relationship, or (2) peculiar circumstances such as that the defendant made a partial disclosure

that conveys a false impression, and was relied on by the plaintiff); Silk v. Phillips Petroleum

Co., 760 P.2d 174, 179 (Okla. 1988) (same) In these jurisdictions, a duty to disclose does not

normally arise when the “parties were involved in an arms-length business transaction.” Silk, 760

P.2d at 179.

The TACC does not—and cannot—allege any sort of fiduciary, confidential, or other

special relationship between New GM and the named plaintiffs. Instead, the named plaintiffs

purchased their vehicles in arm’s length transactions from dealers or other third parties.

Therefore, the fraudulent concealment claims of all plaintiffs from Florida, Louisiana, and

Oklahoma—specifically, Ferden-Precht, the Fagans, the Wrights, and Reeder—should be

dismissed with prejudice as a matter of law.

C. Fraudulent Concealment Claims Under Florida Law Are Barred By The Economic Loss Rule.

The Florida Supreme Court has held that the economic loss rule applies to products

liability cases. Tiara Condominium Ass’n, Inc. v. Marsh & McLennan Cos., Inc., 110 So.3d 399,

407 (Fla. 2013). The rule prohibits tort actions for economic loss, including “damages for

inadequate value” and “diminution in the value.” Id. at 401. After Tiara, courts applying

Florida law have held that the economic loss rule bars fraud claims based on products liability.

In Burns v. Winnebago Indus., Inc., 2013 WL 4437246 (M.D. Fla. Aug. 16, 2013), plaintiff’s

claims for negligent misrepresentation and fraudulent concealment sought “relief due to the


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inferior quality of the RV, which did not meet his expectations due to the corrosion.” Id. at *3.

Burns dismissed plaintiff’s claims, explaining that to “hold otherwise would allow the economic

loss rule to be manipulated such that any time a purchaser received a defective product that did

not cause any injuries or damage to other property, such a purchaser could assert claims for

negligent and fraudulent concealment regarding the defect to avoid the economic loss rule.” Id.

at *4; see also Aprigliano v. Am. Honda Motor Co., 979 F. Supp. 2d 1331, 1337-38 (S.D. Fla.

2013); In re Atlas Roofing Corp. Chalet Shingle Prods. Liab. Litig., 2015 WL 3796456, at *3

(N.D. Ga. June 18, 2015) (applying Florida law). Accordingly, the fraudulent concealment claim

of the Florida plaintiff, Ferden-Precht, should be dismissed with prejudice.

D. Plaintiffs’ Negligent Recall Claim Under California Law Is Barred By The Economic Loss Rule.

California recognizes the economic loss principle that “where a plaintiff alleges a claim

for negligence based on a defective product, a manufacturer’s liability is limited to damages for

physical injuries and there is no recovery for economic loss alone.” Sharma v. BMW of N. Am.,

LLC, 2014 WL 2795512, at *6 (N.D. Cal. June 19, 2014). “Economic loss consists of damages

for inadequate value, costs of repair and replacement of the defective product or consequent loss

of profits—without any claim of personal injury or damages to other property.” Id. at *6.

California courts have applied the economic loss rule to bar negligent recall claims like

those alleged by plaintiffs here. (TACC ¶¶ 1497-1505.) In Sharma, plaintiffs alleged that design

defects in BMW vehicles caused water damage to critical electronic components in the vehicle’s

trunk. 2014 WL 2795512 at *1. Plaintiffs brought a negligence claim alleging that BMW had

breached a duty to recall these vehicles. Id. at *6-7. Sharma held that these negligence and

negligent failure to recall claims were barred by the economic loss rule. Id.; see also, e.g.,

Callaghan v. BMW, 2014 WL 1340085, at *1, 6 (N.D. Cal. April 2, 2014) (dismissing


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negligence claim under economic loss rule, where plaintiffs alleged defendant “failed to disclose

a material safety defect” in their vehicles but alleged no damage other than “expensive repairs”

and “loss of value in their vehicles”); Majdipour v. Jaguar Land Rover N. Am., LLC, 2015 WL

1270958, *17-18 (D.N.J. Mar. 18, 2015) (California economic loss doctrine bars claim for

economic losses caused by a defective product when the only damage is to the product itself,

resulting from alleged negligent failure to recall defective vehicle). Therefore, the negligent

failure to recall claims of the California named plaintiffs—the Koppelmans, Padilla, and Pina—

should be dismissed.36

E. The Louisiana Products Liability Act Bars Fraudulent Concealment And Negligence Against A Manufacturer Based On Product Defects.

For the same reasons that the Louisiana Products Liability Act bars unjust enrichment

claims, it bars fraudulent concealment claims against manufacturers for alleged damages caused

by their products. Ingram v. Bayer Corp., 2002 WL 1163613, at *2 (E.D. La. May 30, 2002);

Ervin v. Guidant Corp., 2010 WL 3081306, at *2 (E.D. La. Aug. 5, 2010); Bezet v. Smith &

Wesson Corp., 2009 WL 632080, at *1 (M.D. La. Mar. 11, 2009). That Act’s exclusivity

likewise bars negligence claims. E.g., Stahl v. Novartis Pharms. Corp., 283 F.3d 254, 261 (5th

Cir. 2002); Toups v. Synthes, Inc., 2015 WL 6738541, at *4 (E.D. La. Nov. 4, 2015). Thus, the

fraudulent concealment and negligence claims of the Louisiana plaintiffs, the Fagans, should be

dismissed.

VIII. OWNERS OF NEW GM VEHICLES CANNOT HAVE A STATE LAW THIRD PARTY BENEFICIARY CLAIM AGAINST NEW GM BASED ON AN ALLEGED BREACH OF THE SALE AGREEMENT.

The TACC alleges a third-party beneficiary claim on behalf of the owners of Delta

36 Plaintiff Andrews is from California but does not allege a negligent failure to recall claim. (See TACC ¶ 1498 (limiting negligent-failure-to-recall claim to owners and lessors of vehicles with ignition switch or key rotation issues).)


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Ignition Switch Vehicles. This third-party beneficiary claim alleges that plaintiffs can recover

from New GM for its alleged breach of the Sale Agreement related to New GM’s acquisition of

certain assets and assumption of certain liabilities of Old GM. Specifically, the TACC alleges

that New GM covenanted in the Sale Agreement to comply with the TREAD Act obligations

with respect to vehicles manufactured by Old GM, that New GM breached that covenant, and

that the Delta Ignition Switch Vehicle owners can sue New GM for that breach of the Sale

Agreement. (E.g., TACC ¶ 1511.)

These third-party beneficiary claims fail for multiple reasons. As a starting point, the

Sale Agreement expressly disclaims any third party liability. Except for the parties and certain

expressly designated entities, “nothing express or implied in this [Sale] Agreement is intended or

shall be construed to confer upon or give to any Person … any legal or equitable Claims,

benefits, rights or remedies of any nature whatsoever under or by reason of this Agreement.” In

re Motor Liquidation Co., No. 09-BR-50026, Docket No. 2968, Sale Agreement § 9.11 (Bankr.

S.D.N.Y. July 5, 2009). The Bankruptcy Court confirmed “that vehicle owners were not third

party beneficiaries of the Sale Agreement.” In re Motors Liquidation Co., 541 B.R. 104, 129

n.67 (Bankr. S.D.N.Y. 2015); see also id. at 136 (“New GM … points out that the Sale

Agreement expressly disclaims any third-party claims. New GM is plainly right that the Sale

Agreement does so.”).37

37 The Bankruptcy Court noted that “in the context of potential claims under the Safety Act,” that “plaintiffs, not disputing [New GM’s explanation that the Sale Agreement expressly disclaims any third-party claims], argue that even without third-party beneficiary status, and even though they ‘do not assert a private cause of action under the Safety Act,’ they are not precluded from acting under a (presumably existing) state law cause of action.” 541 B.R. at 136 (emphasis added). The Bankruptcy Court then left to other courts to decide whether plaintiffs could rely on the Safety Act to support some state law cause of action. Id. Here, plaintiffs are asserting third-party beneficiary status under the Sale Agreement, and such claims are barred under the plain language of the Sale Agreement as well as the Bankruptcy Court’s orders.


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Moreover, the Sale Agreement does not contain any covenant concerning the TREAD

Act for vehicles manufactured by New GM. That is, the Sale Order provision provides that New

GM will comply with the TREAD Act “in respect of motor vehicles, vehicles, motor vehicle

equipment, and vehicle parts manufactured or distributed by the Sellers [i.e., Old GM] prior to

the Closing.” (Sale Order ¶ 17; see also Sale Agreement § 6.15.) Thus, although New GM has a

statutory obligation to comply with the TREAD Act as to New GM vehicles, that obligation does

not arise from the Sale Agreement and, therefore, cannot give rise to a third-party beneficiary

claim.

Therefore, the third party beneficiary claims of the owners or lessors of Delta Switch

Ignition Vehicles that are New GM vehicles—specifically, the Koppelmans, Padilla, Pina,

Hawkins, and Reeder with respect to her 2010 Chevrolet Cobalt—should be dismissed with

prejudice. (The remaining named plaintiffs are not owners of Delta Switch Ignition Vehicles and

do not bring third party beneficiary claims.)

CONCLUSION

Named plaintiffs’ claims in this case are unprecedented. The vast majority of plaintiffs

own vehicles that have never manifested a defect or product problem, much less experienced

actual economic loss. Plaintiffs’ vehicles are subject to recalls that fully address any potential

safety-related defect that may exist. Plaintiffs nevertheless seek to recover alleged diminution-

in-value “damages” simply because GM vehicles have been recalled. The law does not

recognize such claims, and allowing them would discourage safety-related recalls, contrary to the

Safety Act. Independently, these plaintiffs’ claims suffer from numerous other deficiencies that

require their dismissal. Accordingly, plaintiffs’ claims should be dismissed with prejudice.


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Respectfully submitted,

Dated: February 24, 2016 /s/ Richard C. Godfrey, P.C.

Richard C. Godfrey, P.C. Andrew B. Bloomer, P.C. KIRKLAND & ELLIS LLP 300 N. LaSalle Chicago, IL 60654-3406 Phone: 312-862-2000 Fax: 312-862-2200 [email protected] [email protected] Attorneys for Defendant General Motors LLC


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CERTIFICATE OF SERVICE

I hereby certify that on February 24, 2016, I electronically filed the foregoing Brief

using the CM/ECF system which will serve notification of such filing to the email of all

counsel of record in this action.

By: /s/ Andrew B. Bloomer, P.C. Andrew B. Bloomer, P.C.


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