Abraham v. Volkswagen of America, Inc.

795 F.2d 238, 55 U.S.L.W. 2068, 5 Fed. R. Serv. 3d 646, 1 U.C.C. Rep. Serv. 2d (West) 681, 1986 U.S. App. LEXIS 26660
CourtCourt of Appeals for the Second Circuit
DecidedJune 26, 1986
DocketNo. 367, Docket 85-7552
StatusPublished
Cited by47 cases

This text of 795 F.2d 238 (Abraham v. Volkswagen of America, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Abraham v. Volkswagen of America, Inc., 795 F.2d 238, 55 U.S.L.W. 2068, 5 Fed. R. Serv. 3d 646, 1 U.C.C. Rep. Serv. 2d (West) 681, 1986 U.S. App. LEXIS 26660 (2d Cir. 1986).

Opinion

WINTER, Circuit Judge:

This litigation originated as a class action suit brought under the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301-2312 (1982) (“Magnuson-Moss,” “the Act”), involving alleged defects in the oil systems of Volkswagen Rabbits. The district court dismissed the class action for lack of subject matter jurisdiction. It concluded that [241]*241only 75 of the 119 named plaintiffs had viable claims for relief, and thus that the Act’s unique jurisdictional provision requiring a minimum of 100 named plaintiffs to bring a class action in a federal court had not been satisfied. The remaining individual claims were dismissed on the ground that they did not meet the joinder requirements of Rule 20(a), Fed.R.Civ.P., and thus could not be aggregated to satisfy another of the Act’s jurisdictional provisions requiring a total amount in controversy of at least $50,000. Abraham v. Volkswagen of America, Inc., 103 F.R.D. 358 (W.D.N.Y.1984).

We hold that: (i) the district court used an improper procedure in resolving the 100 named plaintiffs jurisdictional question; (ii) implied warranty claims brought under the Magnuson-Moss Act are subject to state law privity rules; (iii) the express warranties in this case do not cover automobile defects manifesting themselves after expiration of the time/mileage limits of the relevant warranties; (iv) joint owners of automobiles may be counted only once toward satisfaction of the 100 named plaintiffs requirement; and (v) joinder of the remaining plaintiffs should have been allowed under Rule 20(a). We affirm in part, reverse in part, and remand.

BACKGROUND

The 119 plaintiffs are owners of Volkswagen Rabbits, model years 1975-79. They brought a class action lawsuit against the manufacturer, Volkswagen of America (“VWOA”) alleging, inter alia, breach of the express warranty given in connection with the sale of each car and breach of the implied warranty of merchantability. Their claim, as originally stated, was that the oil system in the 1975-79 Rabbits was defective, causing excessive oil consumption, engine damage and failure, and decreased resale value of the cars. Not all plaintiffs claim to have suffered each form of damage, but all claim to have suffered at least one of the varieties specified. The complaint, as later amended, alleged that the damages claimed resulted from a single defective part, the valve stem seal, which is supposed to prevent oil from leaking into the engine’s combustion chamber. The seal allegedly was made of an inferior material that caused it to harden and crack prematurely, which in turn led to oil leakage and the other types of damage claimed.

Federal jurisdiction was invoked under the Magnuson-Moss Act. 15 U.S.C. §§ 2301-2312 (1982). This Act applies to all sales of consumer products in which a written warranty is given.1 Section 2310(d)(1) of the Act provides that “a consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under [the Act], or under a written warranty, implied warranty, or service contract, may bring suit for damages and other legal and equitable relief....” 15 U.S.C. § 2310(d)(1). Federal and state courts have concurrent jurisdiction over Magnuson-Moss actions, id. § 2310(d)(1)(A), (B), but no claim is cognizable by a federal court if: (i) the amount in controversy of any individual claim is less than $25; (ii) the total amount in controversy is less than $50,000; or (iii) the action is brought as a class action by fewer than- 100 named plaintiffs. 15 U.S.C. § 2310(d)(3)(A), (B), (C).

VWOA moved to dismiss the class action claims on the ground that the 100 named plaintiffs requirement was not satisfied and that the court thus lacked subject matter jurisdiction. It also moved to sever, and then dismiss for lack of subject matter jurisdiction, the individual damage claims on the ground that they did not satisfy the joinder requirements of Fed.R.Civ.P. 20(a) and thus could not be aggregated toward the $50,000 requirement.

VWOA sought discovery in connection with its motion to dismiss the class action for failing to comply with the 100 named plaintiffs requirement. The plaintiffs op[242]*242posed discovery on the ground that it was a “merits inquiry” that was improper in determining a subject matter jurisdiction question. Following Walsh v. Ford Motor Co., 588 F.Supp. 1513, 1519-21 (D.D.C. 1984), the district court held, however, that the 100 named plaintiffs requirement could not be determined merely by examining the face of the complaint. 103 F.R.D. at 360-61. The district court stated that if individual claims could not be examined on the merits at the jurisdiction stage, “plaintiff could simply open up the local telephone directory and find 99 other individuals willing to place their names on a complaint and thereby defeat a motion to dismiss and permit the lone individual to proceed with discovery.” Id. at 361. The district court thus required the 119 named plaintiffs to answer interrogatories and comply with document requests regarding the details of tneir individual damage claims, such as place of purchase and mileages at which breakdowns had occurred.

The district court then proceeded to determine which individual claims should be counted. Again following Walsh, 588 F.Supp. at 1521, it held that joint owners2 named in the complaint as owners of Rabbits could be counted only once toward satisfaction of the 100 named plaintiffs threshold. 103 F.R.D. at 361-62. Thirteen pairs of plaintiffs fell into this category. The district court also ruled that express warranty claims for damage that occurred outside the time/mileage limits of the warranty were barred as a matter of law. 103 F.R.D. at 362. For 1975 Rabbits, the manufacturer’s warranty covered the first 24 months or 24,000 miles, whichever came first. For 1976-79 Rabbits, the relevant coverage was 12 months or 20,000 miles. Evidence obtained during discovery revealed that 59 plaintiffs had claims for damage occurring after their respective express warranties had expired. Finally, the district court held that implied warranty claims were subject to the privity requirements of the law of the state in which the particular vehicle was purchased. The court determined that at least five relevant states — New York, New Jersey, Illinois, Indiana, Wisconsin (and perhaps Ohio, see Note 12 infra) — required privity as an element of a valid implied warranty claim. Thirty-one plaintiffs had purchased their Rabbits in these five states and were not in privity with VWOA.

The final step in the district court’s jurisdictional inquiry was a compilation of the named plaintiffs who possessed no valid claim. The court read the Act as requiring 100 named plaintiffs with either a valid express or implied warranty claim. 103 F.R.D. at 361 (citing Walsh, 588 F.Supp. at 1538). This holding is not challenged on appeal.

The named plaintiff count was reduced from 119 to 106 after subtraction of 13 joint owners.

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795 F.2d 238, 55 U.S.L.W. 2068, 5 Fed. R. Serv. 3d 646, 1 U.C.C. Rep. Serv. 2d (West) 681, 1986 U.S. App. LEXIS 26660, Counsel Stack Legal Research, https://law.counselstack.com/opinion/abraham-v-volkswagen-of-america-inc-ca2-1986.