Frederick Briehl v. General Motors , 172 F.3d 623 ( 1999 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 97-3506
___________
FREDERICK R. BRIEHL; GARY *
ENDRES; STEPHANIE ENDRES; *
STEPHEN L. HUBBARD; SYLVIA M. *
MALON; ALEX H. OPAL; DAVID *
ROBERTS; RENEE ROBERTS; *
PAUL D. HILLMAN; BARBARA *
GREEN; BRUCE LAIRD; STEPHEN *
D. FARRINGTON; PATRICIA *
FARRINGTON; ERIC D. ICENOGLE; *
STACY L. LARSEN; VICKIE *
HOLZER; MARCIA WILSON; *
LAWRENCE E. WILSON; VERNON *
YOUNG; ELIZABETH YOUNG; *
GEORGE WERTHWEIN; GERALD *
BRADBERRY; CAMILLE B. *
KLAMECKI; TOMMIE D. ERVIN; *
SHARON N. NAYLOR; MARY GILL; *
JUANITA WELLS; BARRY ROSS, *
*
Plaintiffs/Appellants, * Appeal from the United States
* District Court for the Eastern
v. * District of Missouri
*
GENERAL MOTORS *
CORPORATION; KELSEY-HAYES *
COMPANY, *
*
Defendants/Appellees. *
*
____________________ *
*
PRODUCT LIABILITY *
ADVISORY COUNCIL, INC., *
*
AMICUS CURIAE *
___________
Submitted: May 11, 1998
Filed: April 14, 1999
____________
Before BEAM and MURPHY, Circuit Judges, and MELLOY,1 Chief
District Judge.
___________
Melloy, Chief District Judge.
The Plaintiffs, a purported class of General Motors car, truck, and sport
utility vehicle (SUV) owners, brought a class action against General Motors (GM)
and Kelsey Hayes (KH). GM manufactures the vehicles and KH manufactures one
of the vehicles’ component parts, the anti-lock braking systems (ABS). The
Plaintiffs advanced six claims in the District Court, five against both GM and KH,
and one solely against GM. The Plaintiffs raised claims against both GM and KH
for (1) fraudulent misrepresentation, (2) fraudulent concealment, (3) breach of
implied warranty, (4) violation of state consumer protection statutes, and on behalf
1
The Honorable Michael J. Melloy, Chief Judge, United States District
Court for the Northern District of Iowa, sitting by designation.
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of a subclass,2 (5) breach of implied warranty. The Plaintiffs also raised claims for
breach of express warranty and/or breach of contract solely against GM. The
District Court3 granted GM’s and KH’s motion to dismiss for failure to state a
claim under Fed. R. Civ. P. 12(b)(6). In re Gen. Motors Anti-Lock Brake Prod.
Liab. Litig., 966 F.Supp. 1525, 1537 (E.D. Mo. 1997). Following the dismissal,
the Plaintiffs filed a motion to amend the judgment under Rule 59 along with an
amended complaint designed to address the deficiencies identified by the District
Court. The District Court denied the Rule 59 motion. In re Gen. Motors Anti-
Lock Brake Prod. Liab. Litig., 174 F.R.D. 444, 448 (E.D. Mo. 1997). Both rulings
were appealed. We affirm.
I. BACKGROUND
On October 8, 1996, the Judicial Panel on Multidistrict Litigation (MDL
Panel) transferred six actions4 to the Eastern District of Missouri for coordinated
or consolidated pretrial proceedings pursuant to 28 U.S.C. § 1407 (1998).5
2
The purported subclass is defined as “[a]ll class members who own or lease
a model year 1992 to 1994 [Chevrolet] Suburban vehicle.”
3
The Honorable John F. Nangle, Senior District Judge, Eastern District of
Missouri.
4
The original actions commenced in the Southern District of Florida, the
Central District of Illinois, the Southern District of Mississippi, the Eastern
District of Missouri, the Southern District of New York, and the Southern District
of Texas.
5
Section 1407 states, in pertinent part: “When civil actions involving one or
more common questions of fact are pending in different districts, such actions may
3
Several “tag-along” actions followed the initial six. After the MDL Panel
transferred the cases to Missouri, the Plaintiffs filed a Consolidated and Amended
Class Action Complaint (“Original Complaint”)6 which alleged that GM and KH
jointly designed a dangerously defective ABS system, knew that the brakes were
defective, concealed this information from the public, and promoted the ABS as a
highly effective safety device.
The Plaintiffs maintain that the ABS system is defective because it
“performs in a manner completely counter-intuitive to how an average driver is
conditioned to respond when a hard braking maneuver is attempted.” The
Plaintiffs assert that when the driver applies pressure on the brakes in an effort to
slow or stop the vehicle during an emergency, the brake pedal will “fall rapidly
and without warning to the floor of the vehicle.” The Plaintiffs have labeled this
occurrence “the pedal-to-the-floor” phenomenon.
It is not necessary to disassemble the ABS in order to ascertain the nature of
the alleged defect. A reasonable inspection of the driving characteristics of an
ABS-equipped vehicle will reveal the tendencies of ABS braking. The Plaintiffs
be transferred to any district for coordinated or consolidated pretrial proceedings.
Such transfers shall be made by the judicial panel on multidistrict litigation
authorized by this section upon its determination that transfers for such
proceedings will be for the convenience of parties and witnesses and will promote
the just and efficient conduct of such actions.” 28 U.S.C. § 1407(a).
6
Plaintiffs defined the purported class to include: “All persons or entities
residing in the United States who own or lease a model-year 1989-1996 GM
vehicle equipped with an ABS system fabricated by Kelsey-Hayes, excluding
defendants and their parents, subsidiaries, affiliates and authorized dealers.”
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insist that the “pedal-to-the-floor” phenomenon causes the average driver to
perceive an actual brake failure and misapply the brakes during emergencies
where braking is required. The Plaintiffs do not allege that the ABS is incapable
of stopping the vehicles or that ABS has violated any national safety standards.
The Plaintiffs claim that the “pedal-to-the-floor” phenomenon constitutes a defect
because the performance of the brakes causes drivers to react a certain way, and
since GM and KH failed to inform GM vehicle owners of the allegedly unsafe
condition, GM and KH have damaged the Plaintiffs.
The Original Complaint explicitly disclaimed any intent to seek recovery for
personal injuries or property damage suffered, or which may be suffered, by any
class member. The Original Complaint alleged that because the ABS was
defective, the Plaintiffs' vehicles experienced decreased resale value and were
worth less than the Plaintiffs had paid. Thus, the Plaintiffs claim damages solely
for (1) lost resale value and (2) overpayment for the vehicles at the time of
purchase.
GM and KH each moved to dismiss the Original Complaint. On June 11,
1997, the District Court dismissed the Original Complaint pursuant to Fed. R. Civ.
P. 12(b)(6) for failure to allege manifestation of a defect and for failure to
adequately allege damages. In the Order, the District Court also described
additional reasons why each claim was legally deficient.
On June 25, 1997, the Plaintiffs filed a timely motion to amend the
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judgment and sought leave to file an amended complaint under Fed. R. Civ. P. 59.7
The Plaintiffs argued that the proposed amended Second Complaint (“Second
Complaint”) adequately addressed the deficiencies of the Original Complaint. GM
and KH objected to the Plaintiffs' motion and argued that the Plaintiffs failed to
show that the judgment should be altered. GM and KH also argued that the
Second Complaint was futile because it still contained the fundamental flaws of
the Original Complaint. The District Court agreed with GM and KH, and on
August 1, 1997, the District Court denied the motion to amend.
The District Court stated that since the Plaintiffs failed to show manifest
errors of law or fact and failed to present newly discovered evidence, the Rule 59
motion was without merit. Nonetheless, the District Court examined the
substantive changes in the Second Complaint. The District Court found that the
Plaintiffs’ Rule 59 motion was moot because the Second Complaint failed to cure
the deficiencies of the Original Complaint. Finally, the District Court noted that
the Plaintiffs failed to proffer any good reason for delaying their request to amend
the pleadings until after the dismissal. The Plaintiffs have appealed the District
Court’s Order on all points to this Court.
II. ANALYSIS
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Rule 59(a) states that “[a] new trial may be granted to all or any of the
parties and on all or part of the issues (1) in an action in which new trials have
heretofore been granted in actions at law in the courts of the United States . . .”
Fed. R. Civ. P. 59.
6
The Court of Appeals reviews de novo the District Court's dismissal of an
action for failure to state a claim under Rule 12(b)(6). Four T's, Inc. v. Little Rock
Mun. Airport Comm'n, 108 F.3d 909, 912 (8th Cir. 1997). Allegations should be
construed in favor of the pleader. County of St. Charles, Mo. v. Mo. Family
Health Council, 107 F.3d 682, 684 (8th Cir. 1997). A court may dismiss a
complaint for failure to state a claim only if it is clear that no relief could be
granted under any set of facts that could be proved consistent with the allegations
of the complaint. Hishon v. King & Spalding, 467 U.S. 69, 71 (1984). At the very
least, however, the complaint must contain facts which state a claim as a matter of
law and must not be conclusory. Frey v. City of Herculaneum, 44 F.3d 667, 671
(8th Cir. 1995).
A. Failure to Plead Damages
The District Court dismissed the Plaintiffs’ Original Complaint because the
Plaintiffs did not adequately plead damages. Since the Plaintiffs failed to allege
that any defect had actually manifested itself in their vehicles, the Plaintiffs’
allegations of damages failed to meet the pleading requirements for defective
products. The District Court concluded that the Plaintiffs’ statement that their
vehicles “suffer from defects” constituted an insufficient allegation of damages.
The Court held that the defect must manifest itself in the Plaintiffs’ vehicles before
the Plaintiffs could recover from GM or KH.
Courts have been particularly vigilant in requiring allegations of injury or
damages in products liability cases. Lee v. General Motors Corp., 950 F.Supp.
170, 171-74 (S.D. Miss. 1996) (dismissing plaintiff's claims of inherently
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defective detachable fiberglass roofs for failure to plead sufficient damages); Yost
v. General Motors Corp., 651 F.Supp. 656, 657-58 (D. N.J. 1986) (holding that
complaint alleging design defect “likely to cause” damage failed to state a claim);
Feinstein v. Firestone Tire & Rubber Co., 535 F.Supp. 595, 603 (S.D.N.Y. 1982)
(holding no cause of action for defect which never manifests itself); Pfizer v.
Farsian, 682 So.2d 405, 407 (Ala. 1996) (holding that a plaintiff’s belief that a
product could fail in the future is not, without more, a legal injury sufficient to
support plaintiff’s claim); Khan v. Shiley Inc., 217 Cal.App.3d 848, 857 (1990)
(holding plaintiff with inherently defective heart valve failed to state a claim
unless the valve malfunctioned); Zamora v. Shell Oil Co., 55 Cal.App.4th 204,
208 (1997) (holding that, in the absence of a product malfunction, a plaintiff
cannot establish that a defendant breached any duty owed); Verb v. Motorola, Inc.,
672 N.E.2d 1287, 1295 (Ill. App. 1996) (dismissing claims against cellular
telephone manufacturers alleging potential safety defects because “plaintiffs’
future personal injury and damages claims constitute conjecture and speculation”).
As one court has stated, “[l]iability does not exist in a vacuum; there must be a
showing of some damage . . . .” Feinstein, 535 F.Supp. at 602. “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.” Weaver v. Chrysler Corp., 172 F.R.D. 96, 99 (S.D.N.Y.
1997); see also Martin v. Ford Motor Co., 914 F.Supp. 1449, 1453 (S.D. Tex.
1996) (stating that where plaintiffs admittedly have not sustained any personal
injuries relating to the seat belt restraint system in a vehicle, plaintiffs cannot
succeed on any of their claims); Yost, 651 F.Supp. at 657-58 (“The basic problem
in this case is that plaintiff Yost has not alleged that he has suffered any damages.
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He has not stated that the engine in his vehicle is defective in any way.”).
In this case, the Plaintiffs have not alleged that their ABS brakes have
malfunctioned or failed. In fact, the Plaintiffs affirmatively state that their
purported class excludes any claim for personal injury or property damage caused
by brake failure. The Plaintiffs’ ABS brakes have functioned satisfactorily and at
no time have the brakes exhibited a defect. Under each of the theories the
Plaintiffs invoke in the Original Complaint, damages constitutes an essential
element of the cause of action. Weaver, 172 F.R.D. at 99-100 (claims for breach
of warranty, fraud, and violation of state consumer protection statute dismissed for
failure to plead damages); Martin, 914 F.Supp. at 1455 (same); Carlson v.
General Motors Corporation, 883 F.2d 287, 296 (4th Cir. 1989), cert denied, 495
U.S. 910 (1990) (claim for breach of implied warranty of merchantability
dismissed for failure to plead damages). 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.8
8
The Plaintiffs refer to several cases where various courts certified a class of
plaintiffs pursuant to Fed. R. Civ. P. 23. In each case, the court refused to actually
decide the sufficiency of the lost resale value claims. As the Fourth Circuit stated
in Carlson, the “class certification decisions” are “singularly unhelpful” since
none of the cases addressed the substantive question of whether a plaintiff
claiming only lost resale value damages states a valid claim. Carlson, 883 F.2d at
297. Most of the courts explicitly reserved the question for a decision outside the
context of a Rule 23 motion to certify a class. Id.The Plaintiffs cite to Alberti v. General Motors Corp., 600 F.Supp. 10269
While the Plaintiffs affirmatively state that they do not seek damages as a
result of actual injury or property damage, they do allege that they have suffered
economic harm in the form of lost resale value. The Plaintiffs insist that they have
suffered damage because the ABS systems installed in their vehicles have
diminished the vehicles’ resale value. However, the Plaintiffs do not allege in the
Original Complaint that any member of the purported class has actually sold a
vehicle at a reduced value. The Plaintiffs also fail to state the amount of their
damages. Apparently, the Plaintiffs seek to set their damages as the difference
between a vehicle with the ABS system that they expected and the system that is
actually installed in each of their vehicles.
The Plaintiffs’ conclusory assertions that they, as a class, have experienced
damages (and the method the Plaintiffs use to calculate the damages) are simply
(D.D.C. 1985) as the “most renowned analysis in auto defect class cases.” Alberti,
another class certification decision, was later decided on the merits. The district
court dismissed the case for failure to state a claim. See Barbarin v. General
Motors Corp., 1993 WL 765821, at *1, 3-4 (D.D.C. 1993) (unpublished) (“This
action was commenced in March, 1984, by a plaintiff named Alberti.”). Alberti’s
status as a class certification decision coupled with the fact that the case was later
dismissed on the merits bears out the fact that the Plaintiffs' polestar case provides
little support for the proposition that a plaintiff states a viable claim when no
defect has manifested itself.
The Plaintiffs have failed to address adequately the “defect manifestation”
line of cases. The Plaintiffs' attempts to distinguish the cases that the District
Court, GM, and KH have cited are insufficient and the District Court was correct
when it dismissed the Plaintiffs’ Original Complaint.
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too speculative to allow this case to go forward. 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. Even construing all allegations in
favor of the Plaintiffs, we find that the District Court was correct when it
dismissed the Plaintiffs’ Original Complaint for failure to state a claim.
B. Denial of Rule 59 Motion to Amend
We review the District Court's decision refusing to amend a judgment
pursuant to Rule 59 under an abuse of discretion standard. Concordia College
Corp. v. W.R. Grace & Co., 999 F.2d 326, 330 (8th Cir. 1994). “A District Court
has broad discretion in determining whether to alter or amend judgment, and this
court will not reverse absent a clear abuse of discretion.” Innovative Home Health
Care v. P.T.-O.T. Associates, 141 F.3d 1284, 1286 (8th Cir. 1998) (quoting Global
Network Techs., Inc. v. Regional Airport Auth., 122 F.3d 661, 665 (8th Cir. 1997)).
Although leave to amend a complaint should be granted liberally when the motion
is made pretrial, different considerations apply to motions filed after dismissal.
Dorn v. State Bank of Stella, 767 F.2d 442, 443 (8th Cir. 1985). A district court
does not abuse its discretion in denying a plaintiff leave to amend the pleadings to
change the theory of their case after the complaint has been dismissed under Rule
12(b)(6). Parnes v. Gateway 2000, Inc., 122 F.3d 539, 550 (8th Cir. 1997);
Humphrey's v. Roche Biomedical Lab, Inc., 990 F.2d 1078, 1082 (8th Cir. 1983).
The plaintiff must bear the consequences of waiting to address the court's rulings
post-judgment. First Nat’l Bank of Louisiville v. Continental Illinois Nat’l Bank &
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Trust Co., 933 F.2d 466, 468 (7th Cir. 1991).
Following the District Court's dismissal of all claims against GM and KH on
June 11, 1997, the Plaintiffs moved to amend the judgment and file an amended
complaint on June 25, 1997. The District Court held that the motion to amend the
judgment was moot in view of the Plaintiffs' failure to offer proof that the court
had committed any manifest error of law or fact. Additionally, the Plaintiffs also
failed to offer any newly discovered evidence. The District Court found the
proposed amended complaint (Second Complaint) also failed to cure the flaws in
the Original Complaint.
GM and KH assert that the Plaintiffs' decision to amend the pleadings post-
judgment constitute a strategic “wait and see” approach. In the earlier stages of
this litigation, before the case was transferred to the MDL Panel, Judge Schwartz
denied a motion by the Plaintiffs to replead the claims. Hubbard, 1996 WL at
274018, at *7 (“The Court denies the plaintiff leave to replead [the original]
claims for relief. “The underlying facts and circumstances relied upon by plaintiff
are not a proper subject for [a Rule 59 motion]; therefore, an amended complaint
asserting these claims would be without merit and futile.”). Nonetheless, the
Plaintiffs propose exactly these kind of changes in the Second Complaint.
The Plaintiffs' Second Complaint merely adds conclusory statements that
allege that some of the Plaintiffs have suffered an accident and traded in their
vehicles at a loss. Yet, the Plaintiffs continue their attempt to maintain a claim for
an unmanifested vehicle defect on behalf of a nationwide class of car, truck, and
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SUV owners. The Plaintiffs cannot advance a new theory of the case at this late
stage, and certainly cannot continue as a purported nation-wide class of vehicle
owners. An overwhelming majority of courts have dismissed these unmanifested
defect claims and rejected the idea that the Plaintiffs can sue manufacturers for
speculative damage. Consequently, the Second Complaint fails to state a claim.
III. Conclusion
For the foregoing reasons, we affirm the District Court’s decision to dismiss
the Plaintiffs' Original Complaint. The Plaintiffs’ claims for implied and express
warranty, fraudulent misrepresentation, fraudulent concealment, and fraud in
violation of state statutes are deficient because the Plaintiffs have failed to plead
damages, an essential element of each claim. Consequently, the Plaintiffs’
Original Complaint fails to state a claim upon which relief can be granted.
Additionally, we find that the District Court did not abuse its discretion when it
denied the Plaintiffs’ motion to amend judgment and file an amended complaint
pursuant to Rule 59. The Second Complaint merely included perfunctory
substantive and cosmetic changes. The judgment of the District Court is affirmed.
A true copy.
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Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT
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