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Gentry v. Hyundai Motor America, Inc.

United States District Court, W.D. Virginia, Charlottesville Division

January 23, 2017




         These three cases are before the Court on motions to dismiss. Each involves allegations that Hyundai Motor America, Inc. (“HMA”) misstated or misrepresented the gas mileage obtained by Hyundai Elantras. Gentry is a class action against a single defendant, HMA. Abdurahman is a mass action of over 700 plaintiffs against 29 defendants: HMA and various Virginia dealerships. Abdul-Mumit-also a mass action with substantively identical allegations to Abdurahman-has over 500 named plaintiffs suing 27 defendants. The cases previously were stayed, transferred to MDL 2424, and then partially remanded by the MDL back to this Court in September 2015. Each case contains a claim under the Virginia Motor Vehicle Warranty Enforcement Act (“Lemon Law”), Va. Code §§ 59.1-207.9 et seq.; the Virginia Consumer Protection Act of 1977 (“VCPA”), Va. Code §§ 59.1-196 et seq.; and for false or misleading advertising, Va. Code §§ 18.2-216 & 59.1-68.3.

         An important date in these cases is November 2, 2012, when HMA announced its “recalculation” of fuel economy estimates for certain vehicles (“Announcement”). At the MDL, a class settlement was reached for pre-November 2nd purchasers and is now on appeal before the Ninth Circuit. Thus, the MDL remanded these cases for proceedings on two sets of claims: (1) any pre-November 2nd purchasers who opted out of the settlement, and; (2) post-November 2nd purchasers of 2011-13 Hyundai Elantras sold in Virginia. (Gentry, dkt. 91).

         The parties have presented numerous jurisdictional and merits arguments. After briefing and oral argument, the Court concludes that aspects of the Lemon Law claim in Gentry based on the on-board mileage calculator may proceed. But the aspect of the Lemon Law claim based on fuel economy, as well as Mr. Gentry's VCPA and false advertising claims, will be dismissed because those counts do not state a claim. As for Abdul-Mumit and Abdurahman, the Court finds that it has jurisdiction based on the Class Action Fairness Act (“CAFA”). In addition to sharing some shortcomings with the Gentry complaint, the complaints in Abdul-Mumit and Abdurahman are devoid of facts pertaining to any of the hundreds of named plaintiffs or to any Defendant other than HMA. Therefore, those complaints will be dismissed.


         I. Gentry Filed and Stayed.

         Gentry was filed in this Court in August 2013. The complaint was amended that October, but Defendant HMA moved both to dismiss the complaint and to stay the case. The case was stayed in November 2013 pending a decision from the MDL.

         II. Abdurahman Filed and Removed, so Abdul-Mumit Is Filed (and Removed).

         After Gentry was stayed, the Plaintiffs' attorney, Mr. Feinman, filed a mass action, Abdurahman, in state court in December 2013. Defendants removed the case to this Court on January 2014, citing the Class Action Fairness Act (“CAFA”) as the basis for removal.

         The next day, Mr. Feinman filed Abdul-Mumit in the Roanoke Circuit Court, a complaint which was substantively identical to Abdurahman, except that the caption of named plaintiffs and defendants differed somewhat. Predictably, Defendants removed Abdul-Mumit in February 2014, although this time-in addition to CAFA jurisdiction-they also relied on traditional diversity jurisdiction (arguing that that defendant dealerships in Virginia were fraudulently joined or were nominal defendants) and federal question jurisdiction (arguing that the attempt to evade the Court's stay in Gentry implicated the Court's authority to control its own proceedings).

         III. MDL Transfers, then Remands, the Cases

         With motions to dismiss pending in all three cases, the MDL on June 9, 2014 ordered the transfer of all three cases to the Central District of California.

         After extensive proceedings, the MDL returned the cases on September 15, 2015 to this Court, identifying the two classes noted above: pre-November 2nd opt-outs and post-November 2nd purchasers. From late 2015 to mid-2016, the parties-at the Court's repeated urging- attempted with only modest success to resolve various case management issues: e.g., deadlines; identification of proper plaintiffs and possible duplication of cases; and whether discovery, repleading, or both should occur.

         In June and July 2016, the Court ordered Plaintiffs to amend their complaints to reflect developments in the case, or else have their prior complaints deemed operative. (See Gentry, dkts. 86, 89). They chose the latter, and Defendants filed renewed motions to dismiss in all three cases.


         Gentry was filed as a class action with five named plaintiffs. Defendant HMA asserts- and Plaintiff does not contest-that the four other named class representatives were not remanded by the MDL because those plaintiffs fell within the settlement and did not opt out. Thus, Mr. Gentry is the only remaining named plaintiff in Gentry.

         The Complaint brings claims for violations of Virginia's “Lemon Law, ” the VCPA, and deceptive advertising law. (Dkt. 27 [hereinafter “Complaint”] ¶ 4). The case involves allegedly deceptive practices surrounding HMA's 2011-2013 Elantra vehicle.

         In November 2010, HMA's CEO introduced the “All New 40 MPG Hyundai Elantra.” (Complaint ¶ 5). Ad campaigns represented that the Elantra would obtain 40 miles per gallon (“MPG”) on the highway. (Id.). Allegedly, 16, 000 Virginians bought the 2011-2013 edition. (Id.). Mr. Gentry was one of them. He commutes several miles to work, and in early 2013 began researching a new vehicle. (Id. ¶ 7). He recalled ads for the 2011-2012 Elantra touting its 40 MPG highway and later saw others about the 2013 Elantra claiming 38 MPG. (Id.). He thus purchased a 2013 Elantra on February 18, 2013 from a dealer in Staunton, Virginia. (Id. ¶ 8). He asserts that his “warranty book” stated his car would receive “up to” 40 MPG. (Id. ¶ 7).

         Post-purchase, Mr. Gentry kept track of his car's MPG. Rather than obtaining 38 MPG, his Elantra received only 30 to 33 MPG. (Complaint ¶ 9). Plaintiff returned to the local HMA dealership, where employees relayed that his car should get 38 MPG on the highway. (Id. ¶¶ 9- 10). Indeed, the dealership's owner drove the vehicle himself and calculated that Gentry's car was receiving 32 MPG, and that the on-board mileage calculator was overstating the actual gas mileage. (Id. ¶ 10). Further testing by the dealership employees and HMA representatives occurred.

         On June 18, 2013, HMA employees performed tests in Staunton, Virginia. (Complaint ¶ 11). Their tests yielded 62 MPG and 42 MPG calculations, while the on-board mileage calculator yielded 37-40 MPG and 38-44 MPG, respectively. (Id.). In subsequent conversations with Mr. Gentry, the dealership's owner expressed doubt about the accuracy of these calculations, which contradicted his experiences, as well as Mr. Gentry's, when driving the car. (Id. ¶ 12). The dealership owner claimed the HMA employees insisted that: the Elantra obtained the proper gas mileage; Mr. Gentry's calculations were caused by his driving style; and the car received the proper gas mileage. (Id.).

         Facing a nonresponsive HMA, Gentry sought legal representation. During his search, he discovered “for the first time” details of a separate class action where HMA admitted in November 2012 that it has submitted false and incorrect mileage calculations to the EPA for its 2011-2013 Elantras. (Complaint ¶ 13). Plaintiff alleges additional facts regarding two of his claims.

         Lemon Law.

         Plaintiff alleges that HMA published on its website in April 2012 statements that 39% of Elantras obtain 40 MPG. (Complaint ¶ 21). HMA cannot fix its 2011- 2013 Elantras to make them produce 40 MPG. (Id. ¶ 24). Further, HMA represented that Elantra's on-board mileage calculators would give “accurate” MPG assessments but in fact do not. (Id. ¶ 25). Mr. Gentry alleges “on information and belief” that HMA knew its MPG tests for the Elantra model, as well as its on-board mileage calculator, were inaccurate. (Id.).


         Plaintiff asserts several statements or actions by HMA constituted violations of the VCPA: (A) HMA's statement that Elantras would receive 40 MPG; (B) HMA's refusal to sell an Elantra to Mr. Gentry that conformed to the 40 MPG representation; (C) HMA's representation that the on-board calculator was accurate; (D) statements from a HMA website that 2013 Elantras could obtain 38 MPG had deceptively obscure and difficult-to-read disclaimers; (E) HMA employees' statements about the gas mileage Mr. Gentry's Elantra actually received when they tested it. (See Complaint ¶ 31).


         I. Additional Facts Presented by HMA.

         HMA submitted several exhibits to its motion to dismiss. HMA uses the first class of exhibits to advance its legal arguments about preemption. The second batch of documents is used in support of HMA's argument that the EPA has primary jurisdiction over this case. Even if the Court were to consider these documents, the arguments they support do not succeed or fail by reference to the exhibits.

         For Exhibits A through E, HMA urges judicial notice of statements made by the government on its websites. See Johnson v. Clarke, No. 7:12CV00410, 2012 WL 4503195, at *2 n.1 (W.D. Va. Sept. 28, 2012) (compiling cases). These exhibits contain statements made on the EPA's website about fuel economy, HMA's Elantra, and the relevant regulatory regime. HMA observes that federal law mandates fuel economy labels and authorizes the EPA to issue effecting regulations. See 48 U.S.C. § 32908(b); 40 C.F.R. §§ 600.302-12(a)-(f), (h). One regulation mandates that these labels state: “actual results will vary for many reasons.” 40 C.F.R. § 600.302-12(b)(4). According to the EPA, the purpose of the fuel estimates is to “help consumers compare the fuel economy of different vehicles when shopping for new cars.” (Dkt. 91-3 at ECF 2).

         On November 2, 2012-before Gentry purchased his car-EPA and HMA announced that, as a result of a federal investigation, HMA would lower fuel estimates on most 2012 and 2013 models by an average of 1-2 MPG; the change for Elantras was 2 MPG. (Dkt. 91-5 at ECF 2; dkt. 91-6 at ECF 2). The Announcement advised that HMA would be submitting a plan to relabel all cars on dealership lots with corrected mileage estimates. (Ex. D).

         From this, HMA states that Gentry saw a corrected label before he purchased his vehicle. And from that purported fact, HMA asserts that the Court may take judicial notice of a reproduced sticker in its brief because it is integral to the complaint. Based on the existence of the sticker-so HMA's argument goes-Gentry's claims fail because he had notice of the accurate MPG estimate for his Elantra.

         However, this line of argument assumes that HMA actually re-labeled the car Mr. Gentry bought before he bought it. Indeed, HMA admits the sticker is a “replica” of what Mr. Gentry “would have seen at the time of purchase.” (Dkt. 91-1 at 7). At the motion to dismiss stage, the Court cannot use the additional facts HMA has submitted to make further factual inferences that (1) HMA properly relabeled the car Gentry bought, and (2) Gentry saw the corrected mileage sticker before purchasing his vehicle. See Zak v. Chelsea Therapeutics Int'l, Ltd., 780 F.3d 597, 607 (4th Cir. 2015).

         HMA also relies upon a consent decree between it, other parties, and the EPA entered on January 9, 2015 in a Washington, D.C. court. (Ex. I, J). Specifically, HMA must submit a “Corrective Measures Completion Report” by April 2018 and annual reports for monitoring by the EPA. (Ex. J., ¶ 19; Id. App'x A, ¶ 10). The import of these documents is discussed, infra, where the Court finds that the primary jurisdiction doctrine does not apply, and thus the EPA's consent decree is no impediment to deciding these cases.

         II. Standing

         To bring a federal case, a “plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547, 194 L.Ed.2d 635 (2016). HMA argues that Gentry lacks standing because he did not suffer injury in fact and, even if he did, such injury was not fairly traceable to HMA. The Court concludes that Mr. Gentry has standing.

         Under the injury-in-fact inquiry, an alleged injury must affect the plaintiff in a personal and individual way. Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 n.1 (1992). HMA argues that Mr. Gentry cannot base his claims on pre-Announcement fuel estimates because those estimates were not in effect when he purchased his car in February 2013. It says that representations about models he did not purchase are irrelevant, and Mr. Gentry never claims to have seen (before his purchase) the advertisements he cites about the 2013 Elantra. (Dkt. 91-1 at 11). But the Announcement does not affect Gentry's claim, which is that he bought a 2013 Elantra falsely represented to achieve 38 MPG highway mileage. (Complaint ¶ 7). The fact that HMA or the EPA made a generic announcement about an incorrect 40 MPG estimate for some vehicles does not negate Plaintiff's assertion that his vehicle still did not achieve the corrected mileage. HMA's arguments simply go to the merits of whether Mr. Gentry states a plausible claim for relief. See infra Part III.

         As for the “causal connection” prong, HMA claims that the November 2, 2012 Announcement and the window (or “Monroney”) sticker sever any connection between the injury he suffered and the conduct complained of. But HMA's claim about the sticker fails, as it implies the Court may assume (against Gentry) the corrected sticker was placed on Gentry's vehicle and seen by him. At the motion-to-dismiss stage, the Court must make factual inferences from the complaint (or judicially-noticed materials) in favor of Gentry, not against him. See Zak, 780 F.3d at 607 (“when a court considers relevant facts from the public record at the pleading stage, the court must construe such facts in the light most favorable to the plaintiffs”). Without this inferential crutch, HMA's argument fails and Mr. Gentry has standing.

         III. Preemption and Other Difficulties

          HMA next claims that Gentry's state law claims are preempted by Section 32919(b), which states that when a requirement under § 32908 is in effect, “a State may adopt or enforce a law or regulation on disclosure of fuel economy . . . only if the law or regulation is identical to that requirement.” Section 32908(b) and the EPA's effectuating regulations specifically describe the content of the window-sticker fuel economy estimates. Moreover, the Federal Trade Commission has declared that car advertisements must include the relevant EPA mileage estimates. See 16 C.F.R. 259.2; see also Guide Concerning Fuel Economy Advertising of New Automobiles, 60 Fed. Reg. 56230-01, 1995 WL 652912 (Nov. 8, 1995). Courts have thus found that-to the extent a plaintiff's claims are based on ads or window-stickers using EPA estimates and not defendants' statements about “actual” fuel economy calculations-such claims are preempted. See In re Ford Fusion & C-Max Fuel Econ. Litig., ...

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