Cooper v. Samsung Electronics America, Inc. ( 2010 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 08-4736
___________
NATHAN COOPER, on Behalf of Himself
and All Others Similarly Situated
v.
SAMSUNG ELECTRONICS AMERICA, INC.,
a New York Corporation
Nathan Cooper,
Appellant.
___________________
Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 07-cv-03853)
District Court Judge: Hon. Jose L. Linares
___________________
Argued on November 9, 2009
Before: AMBRO, GARTH and ROTH, Circuit Judges.
(Opinion Filed: March 30, 2010)
Darren T. Kaplan, Esquire (Argued)
Chitwood Harley Harnes, LLP
2300 Promenade II
1230 Peachtree Street, N.E.
1
Atlanta, Georgia 30309
Arnold C. Lakind, Esquire
Szaferman, Lakind, Blumstein & Blader, P.C.
101 Grovers Mill Road, Suite 200
Lawrenceville, New Jersey 08648
Counsel for Appellant
Robert A. Assuncao (Argued)
Arthur F. Fergenson
Steven F. Gooby
Ansa Assuncao
Two Tower Center Boulevard, Suite 1600
East Brunswick, New Jersey 08816
Counsel for Appellee
____________
OPINION
____________
ROTH, Circuit Judge:
Appellant Nathan Cooper (“Cooper”) appeals from the District Court’s dismissal
of his complaint against appellee Samsung Electronics America, Inc. (“Samsung”)
pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6), and the District Court’s
decision to construe his consumer fraud claim under Arizona, rather than New Jersey,
law. We will affirm.
I. Background
A. Factual History
2
In October 2005, plaintiff-appellant Cooper purchased a 61-inch television
manufactured by defendant-appellee Samsung from a retail store located in Maricopa
County, Arizona. The model of the television purchased by Cooper was the “Samsung
HL-R6178W,” also known as the “628 Series 1080p DLP HDTV” (hereinafter referred to
as “the 1080p television”). Cooper alleges that, as a result of representations made by
Samsung in the marketing materials it produced for the 1080p television, Cooper was, at
the time of his purchase, under the impression that the 1080p television he was buying
was capable of accepting and displaying a high-quality video signal, known as a 1080p
signal, via an input known as “HDMI.” The ability to accept a 1080p signal via the
HDMI input would allow the television to display high-quality video from sources that
produced native 1080p signals, such as HD-DVD players. Cooper alleges that he paid a
premium price for the television on the expectation that it would be able to display the
high-quality 1080p signal.
In fact, the 1080p television purchased by Cooper was incapable of accepting a
1080p signal via its HDMI input.1 Cooper learned of this problem “several months” after
purchasing the 1080p television, when he “unsuccessfully attempt[ed] to connect native
1
While Cooper’s 1080p television was able to accept a 1080p signal via its VGA
input, this feature was effectively useless for retail consumers such as Cooper, since the
VGA input is primarily used to receive signals from computing hardware. In other
words, while Cooper’s television was, in fact, able to receive a high-quality 1080p signal,
it could do so only when functioning as a computer screen. Since the model purchased by
Cooper was 61 inches wide, usage of the monitor for personal computing purposes would
have been highly impractical.
3
1080p devices” to his television. However, upon learning of the problem, Cooper did not
provide notice to Samsung of the alleged defect in its product. In fact, Cooper failed to
provide formal notice to Samsung regarding the 1080p problem at any time during the
year following his purchase, as is expressly required by the “Samsung Color Television &
Projection Television Limited Warranty to Original Purchases” (referred to hereinafter at
“the Warranty”) included with the 1080p television purchased by Cooper.
Cooper calculates that the loss he sustained as a result of being misled into buying
his 1080p television is $349.
B. Procedural History
On August 10, 2007, Cooper brought a putative class action against Samsung in
the United States District Court for the District of New Jersey. In his complaint, Cooper
alleged that Samsung’s sale of televisions it called “1080p” but in reality were unable to
accept a 1080p signal via HDMI was misleading and deceptive. Cooper asserted six
claims against Samsung in his complaint: (1) breach of express warranty; (2) breach of
implied warranty; (3) violation of the Magnuson-Moss Warranty Act (15 U.S.C.
§2310(d)(1)); (4) violation of the New Jersey Consumer Fraud Act (“NJCFA”) (N.J. Stat.
Ann. §56:8-2); (5) fraudulent concealment; and (6) unjust enrichment. Cooper sought to
represent a nationwide class comprising all persons in the U.S. who had purchased
Samsung “1080p” televisions that were incapable of accepting a 1080p signal via HDMI.
Samsung moved to dismiss the complaint, and on September 29, 2008, the District
4
Court granted Samsung’s motion to dismiss with respect to all his claims except the
consumer fraud claim brought under the NJCFA. The District Court concluded that
Arizona law applied, and therefore sua sponte construed the consumer fraud claim as if it
had been brought under Arizona’s consumer fraud statute, (Ariz. Rev. Stat. Ann. §§44-
1521 et seq.) (“AZCFA”). The District Court then denied Samsung’s motion to dismiss
with respect to the AZCFA claim.
Cooper subsequently voluntarily agreed to a dismissal of his AZCFA claim with
prejudice for the sole purpose of appealing the District Court’s application of Arizona
(rather than New Jersey) law to his consumer fraud claim, and on November 13, 2008, the
District Court entered judgment in favor of Samsung. Cooper timely appealed: (1) the
dismissal of his breach of express warranty claim; (2) the dismissal of his Magnuson-
Moss act claim; (3) the District Court’s application of Arizona law to his consumer fraud
claim; and (4) the dismissal of his fraudulent concealment claim. We will affirm the
District Court’s rulings on all of these issues.
II. Discussion
The District Court had subject matter jurisdiction pursuant to the Class Action
Fairness Act of 2005, 28 U.S.C. §1332(c). We have appellate jurisdiction pursuant to 28
U.S.C. §1291.
A. Breach of Express Warranty Claim
We exercise plenary review over a district court’s dismissal of a claim pursuant to
5
12(b)(6). Grammar v. John J. Kane Regional Centers–Glen Hazel, 570 F.3d 520, 523 (3d
Cir. 2009).
To establish a breach of express warranty claim under New Jersey law 2 , a plaintiff
“must allege (1) a contract between the parties; (2) a breach of that contract; (3) damages
flowing therefrom; and (4) that the party stating the claim performed its own contractual
obligations.” Frederico v. Home Depot, 507 F.3d 188, 203 (3d Cir. 2007). Cooper’s
claim fails as a matter of law because he has failed to properly allege a breach of contract.
The contract upon which Cooper’s claim is premised—i.e., the Warranty3 —states,
in pertinent part:
This SAMSUNG brand product, as supplied and distributed by SAMSUNG
and delivered new, in the original carton to the original consumer
purchaser, is warranted by SAMSUNG against manufacturing defects in
materials and workmanship for a limited warranty period of: [...] LCD
TV: One (1) Year Parts and Labor, including Display Panels. [...] This
limited warranty begins on the original date of purchase, and is valid only
on products purchased and used in the United States. To receive warranty
service, the purchaser must contact SAMSUNG for a problem
2
We generally apply the law of the forum state—here, New Jersey—to state law
claims unless there is an objection by any of the parties, and since there is no objection by
either party, we apply New Jersey law to Cooper’s breach of express warranty claim.
3
In general, when ruling on a motion to dismiss pursuant to 12(b)(6), a court may
only consider the contents of the pleadings. Pryor v. Nat’l Collegiate Athletic Ass’n, 288
F.3d 548, 560 (3d Cir. 2002) (quoting 62 Fed. Proc. L.Ed. §62:508). However,
“[d]ocuments that the defendant attaches to the motion to dismiss are considered part of
the pleadings if they are referred to in the plaintiff’s complaint and are central to the
claim....” Id. In this case, while Cooper’s complaint did not contain the Warranty, it was
clearly referenced in the context of Cooper’s breach of express warranty claim, and was
central to that claim. Thus, since Samsung attached the Warranty to its motion to dismiss,
we can properly consider the Warranty in the course of our 12(b)(6) analysis.
6
determination and service procedures.
J.A. 244 (emphases added).
Since, in the instant case, it is undisputed that Cooper failed to provide the
requisite notice to Samsung within one year of the date of his purchase of the 1080p
television, Samsung is not obligated to perform under the Warranty. Moreover, the plain
language of the Warranty covers only “manufacturing defects in materials and
workmanship encountered in normal . . . noncommercial use of this product.” Cooper
does not allege a manufacturing defect; indeed, he agrees his TV was manufactured as
designed. His complaint is that the design deviated from Samsung’s advertisements and
packaging. This is not a “manufacturing defect” that would be covered by this warranty.
Given the foregoing, Cooper cannot prevail under the Warranty.
B. Fraudulent Concealment Claim
We agree with the District Court’s dismissal of Cooper’s fraudulent concealment
claim because the amended class action complaint failed to plead fraud with adequate
specificity under Federal Rule of Civil Procedure 9(b).
C. Magnuson-Moss Warranty Act Claim
The District Court dismissed Cooper’s claim under the Magnuson-Moss Warranty
Act, 15 U.S.C. §2301 et seq., concluding that it failed as a matter of law pursuant to
12(b)(6) because Cooper failed to state any viable underlying state claims. We exercise
plenary review over a dismissal pursuant to 12(b)(6). Grammar, 570 F.3d at 523.
7
In the instant case, Cooper’s Magnuson-Moss claim is based upon his state law
claims of breach of express and implied warranties. Since the District Court correctly
dismissed both of those claims, Cooper’s Magnuson-Moss claim was also properly
dismissed.
D. Consumer Fraud Claim
Cooper appeals the District Court’s conclusion that Arizona law applies to his
consumer fraud claim. We exercise plenary review over a district court’s choice-of-law
conclusions. Shuder v. McDonald’s Corp., 859 F.2d 266, 269 (3d Cir. 1988).
We apply the choice-of-law rules of the forum state—New Jersey—to determine
what law governs Cooper’s consumer fraud claim. Klaxon Co. v. Stentor Elec. Mfg. Co.,
313 U.S. 487, 496, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941); Thabault v. Chait, 541 F.3d
512, 535 (3d Cir. 2008). Under New Jersey law, choice-of-law determinations involve a
two-step inquiry. In the first step, a determination is made as to whether or not an actual
conflict exists between the substance of the laws of each respective potential forum.
Lebegern v. Forman, 471 F.3d 424, 430 (3d Cir. 2006). If no actual conflict is found to
exist, “the inquiry is over and, because New Jersey would apply its own law in such a
case, a federal court sitting in diversity must do the same.” Id. at 428. If, however, an
actual conflict is found to exist, the inquiry proceeds to the second step.
At the time of the District Court’s decision, New Jersey used the “governmental
interest” analysis for tort claims. In November 2008, the New Jersey Supreme Court
8
adopted the “most significant relationship” test, as found in the Restatement (Second) of
Conflict of Laws. P.V. v. Camp Jaycee, 962 A.2d 453 (N.J. 2008).4 This test “embodies
all of the elements of the governmental interest test plus a series of other factors deemed
worthy of consideration.” Id. at 459 n.4.
Under the first step of the analysis, the court must determine whether an actual
conflict exists between the laws of the two states. There is no dispute there is an actual
conflict between the consumer protection statutes of New Jersey and Arizona. The
second step is to weigh the factors in the Restatement corresponding to the plaintiff’s
cause of action.
Under the Camp Jaycee analysis, our point of departure for the second step of the
choice-of-law inquiry is the Restatement (Second) of Conflict of Laws § 148, which
addresses fraud and misrepresentation. Fraud and misrepresentation torts are covered in §
148 of the Restatement. Under subsection (1), when the plaintiff’s action in reliance on
the defendant’s false representations takes place in the same state where the false
representations were made and received, there is a presumption the law of that state
applies. Here, though, Samsung’s representations were alleged to have been made in a
different state (New Jersey) than they were received and relied upon (Arizona). Thus,
4
P.V. v. Camp Jaycee, which announced a new choice-of-law analysis in New
Jersey, had not been filed when the District Court decided its choice-of-law analysis in
favor of Arizona. However, in light of the Restatement § 148, we are satisfied that the
District Court’s choice-of-law analysis was correct despite the fact that it did not have the
benefit of Camp Jaycee.
9
this case is governed by subsection (2), under which the following contacts must be
weighed:
(a) the place, or places, where the plaintiff acted in reliance upon the
defendant’s representations,
(b) the place where the plaintiff received the representations,
(c) the place where the defendant made the representations,
(d) the domicil, residence, nationality, place of incorporation and place of
business of the parties,
(e) the place where a tangible thing which is the subject of the transaction
between the parties was situated at the time, and
(f) the place where the plaintiff is to render performance under a contract
which he has been induced to enter by the false representations of the
defendant.
Restatement (Second) of the Conflict of Laws § 148(2).
Cooper, who purchased the television in his home state of Arizona, is not entitled
to sue under the New Jersey consumer fraud statute. The transaction in question bears no
relationship to New Jersey other than the location of Samsung’s headquarters. Cooper’s
claim bears the most significant relationship with Arizona, the state in which the
television was marketed, purchased, and used.5
III. Conclusion
The District Court did not err in granting Samsung’s motion to dismiss. For the
reasons set forth above, we will affirm the judgment of the District Court.
5
We reject Cooper’s argument that the District Court erred in resolving the choice-
of-law determination as to his statutory consumer fraud act claim at the motion to dismiss
stage, rather than wait until the class certification stage.
10
AMBRO, Circuit Judge, dissenting in part
I join my colleagues in all but Part II.D. Because the District Court did not have
the benefit of the Camp Jaycee decision and thus did not conduct the “most significant
relationship” analysis, I would vacate and remand for that Court to conduct the choice-of-
law analysis in the first instance. Moreover, I do not view the answer to the choice-of-
law question presented here to be as easy to discern as my colleagues perceive it.
First, New Jersey has a strong interest in deterring fraudulent conduct occurring
within its state borders by domestic businesses. See In re Mercedes-Benz Tele Aid
Contract Litig., 257 F.R.D. 46, 67 (D.N.J. 2009) (“Given the fact that all of the conduct
underlying Plaintiffs’ consumer fraud claim took place in [New Jersey], consideration of
the place where the defendant made the representations[] strongly supports applying the
[New Jersey Consumer Fraud Act] to Plaintiffs’ claims.”) (internal quotation marks and
citation omitted). This is an important consideration under the Restatement (Second) of
Conflict of Laws (“Restatement”), but one the District Court and the majority do not
consider. See Restatement § 148(2)(c) (including as a relevant factor “the place where
the defendant made the representations”); id. § 148 cmt. c (“The place where the
defendant made his false representations . . . is as important a contact in the selection of
the law governing actions for fraud and misrepresentation as is the place of the
defendant’s conduct in the case of injuries to persons or to tangible things.”). According
to Cooper, Samsung conceived of and created the alleged misrepresentations in New
Jersey and orchestrated the alleged fraud from New Jersey. That the plaintiff is from
Arizona, rather than any other state in which these Samsung televisions were sold, is
happenstance from Samsung’s perspective. Cf. P.V. v. Camp Jaycee, 962 A.2d 453, 466
(N.J. 2008) (noting that the court has “continuously deferred to the rights of other
jurisdictions to regulate conduct within their borders,” particularly “when the conduct is
ongoing and directed towards residents and non-residents alike”).
The Restatement also directs courts to put “emphasis upon the purpose sought to
be achieved by the relevant tort rules of the potentially interested states, the particular
issue and the tort involved.” Restatement § 148 cmt. e; see also id. § 6(2) (including as
relevant factors “the relevant policies of the forum” and “other interested states” and the
“basic policies underlying the particular field of law”); id. § 6 cmt. h (“[T]here is good
reason for the court to apply the local law of that state which will best achieve the basic
policy, or policies, underlying the particular field of law involved.”). While one purpose
of the New Jersey Consumer Fraud Act is to compensate defrauded consumers, it “serves
as a deterrent” by awarding successful plaintiffs “treble damages, attorneys’ fees, filing
fees, and costs.” Cox v. Sears Roebuck & Co., 647 A.2d 454, 463 (N.J. 1994). “That
deterrent effect would be compromised” if Samsung could “avail itself of the law of
states which limit recovery in consumer fraud actions to compensatory damages simply
because its alleged wrongful activity, which took place within New Jersey, had
nationwide effects.” In re Mercedes-Benz, 257 F.R.D. at 68. As for the interest in
2
compensating fraud victims, because New Jersey’s law is recognized as one of the
strongest in the country,1 those residing in other states usually will receive no less—and
perhaps more—protection than their own states would provide. Accordingly, application
of New Jersey’s law often will not frustrate other states’ interests in compensation for
their residents. Under the Restatement, “[i]f the purposes sought to be achieved by a
local statute or common law rule would be furthered by its application to out-of-state
facts, this is a weighty reason why such application should be made.” Restatement § 6
cmt. e.
Legislative intent is also relevant, as the Restatement instructs courts to “give a
local statute the range of application intended by the legislature when these intentions can
be ascertained and can constitutionally be given effect.” Id. § 6 cmt. b. “If the legislature
intended that the statute should be applied to the out-of-state facts involved, the court
should so apply it unless constitutional considerations forbid.” Id. Here, the Act permits
recovery to “[a]ny person who suffers any ascertainable loss,” N.J. Stat. Ann. § 56:8-19,
and one court has observed that there is “little doubt that the New Jersey Legislature
intended its Consumer Fraud statute to apply to sales made by New Jersey sellers even if
the buyer is an out-of-state resident and some aspect of the transaction took place outside
1
Indeed, New Jersey courts have concluded the state legislature intended the Act
to “be one of the strongest consumer protection laws in the nation.” Huffmaster v.
Robinson, 534 A.2d 435, 437 (N.J. Super. Ct. Law Div. 1986) (internal quotation marks
and citation omitted).
3
New Jersey.” Boyes v. Greenwich Boat Works, Inc., 27 F. Supp. 2d 543, 547 (D.N.J.
1998). This is an important consideration for the choice-of-law determination in this
case.
I am troubled that the majority conducts a fact-intensive, six-factor inquiry in two
sentences, as there are good arguments on both sides. I would remand for the District
Court to conduct the choice-of-law analysis under the “most significant relationship” test,
and thus respectfully dissent in part.
4