In an opinion authored by Judge Debevoise, a federal district court in New Jersey denied Ford Motor Company’s attempt to toss out a putative class action regarding an alleged defect in the fuel tanks of various Ford trucks and vans. In Coba v. Ford Motor Co., Judge Debevoise held that the plaintiffs’ claims of breach of express warranty and breach of the implied covenant of good faith and fair dealing were adequately pleaded based on allegations that Ford knowingly replaced defective fuel tanks with other defective tanks. But Judge Debevoise dismissed, with leave to replead, the plaintiffs’ claims of common law fraud and violations of the New Jersey Consumer Fraud Act because there were no allegations that Ford knew the plaintiffs’ tanks were defective when they were sold.
The plaintiffs alleged that Ford knew of a fuel tank defect, as evidenced by two Special Service Messages (SSMs) and a Ford engineer’s presentation, but failed to uphold its “repair or replace” warranty because the plaintiffs’ fuel tanks were replaced with the same defective fuel tank. Based on these allegations, Judge Debevoise allowed the express warranty claim to stand because, he reasoned, permitting Ford to satisfy its warranty by replacing “one defective part with another equally defective part would render [the warranty] meaningless.”
Likewise, Judge Debevoise upheld the the plaintiffs’ claim for breach of the implied covenant of good faith and fair dealing because the plaintiffs’ allegations allowed him to infer that Ford knew it would be unable to remedy the defect, “thus depriving Plaintiffs of the benefits of their warranty coverage.”
But Judge Debevoise dismissed the plaintiffs’ fraud and consumer fraud claims because the plaintiffs did not adequately allege that Ford knew at the time of sale that the defect existed in the plaintiffs’ fuel tanks. Fraud claims must be based on Ford’s knowledge at the time of the plaintiffs’ purchases of the vehicles, not Ford’s knowledge at the time of the vehicles’ repairs. Judge Debevoise explained that the plaintiffs failed to allege Ford’s knowledge at the required time because they had not alleged whether their vehicles contained an “old” fuel tank, or the “new” fuel tank that Ford (unsuccessfully) implemented to remedy the defect.
For class action defense attorneys, it will be interesting to see whether the Coba plaintiffs can replead their claims of fraud using the precise parameters that Judge Debevoise cautioned they must meet: Ford’s knowledge of the defect at the time of purchase, and the specification of whether their vehicles contained the old or new fuel tanks. If not, the plaintiffs’ putative class action will be significantly weakened without the treble damages and attorneys’ fees available under the NJCFA.