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Class Action Defense Cases–Clemens v. DaimlerChrysler: Ninth Circuit Affirms Judgment In Favor Of Defense In Products Liability Class Action Holding Post-Warranty Problems Were Not Actionable And Fraud Claims Were Time-Barred

Class Action Alleging Breach of Warranty and Fraud for Defective Head Gaskets Failed because Class Action Plaintiff did not Experience Problems with Head Gaskets Until After Warranty Expired and Delayed Filing Class Action Complaint Until After Statute of Limitations had Expired on Fraud Claim Ninth Circuit Holds

Plaintiff filed a products liability class action against DaimlerChrysler alleging that the Dodge Neon were built with defective head gaskets; the class action complaint alleged breach of express and implied warranties, and fraud. Clemens v. DaimlerChrysler Corp., ___ F.3d ___ (9th Cir. July 24, 2008) [Slip Opn., at 9127-28]. Defense attorneys moved to dismiss the class action’s warranty claims under Rule 12(b)(6). Id., at 9128. Specifically, the defense argued plaintiff purchased the car in 1998 and that the warranty was expressly limited to the earlier of 36 months or 36,000 miles, but the class action plaintiff did not notice any problem with his vehicle until 2002, more than 3 years after he purchased the vehicle, at which time it had about 50,000 miles on it. Id., at 9128-29. The district court granted the defense motion on the ground that plaintiff’s vehicle was no longer under warranty when it began experiencing problems, id., at 9129. Defense attorneys also moved for summary judgment on the class action’s fraud claim on the ground that the statute of limitations had run as the class action complaint had not been filed until December 2005; the district court agreed and granted the motion for summary judgment. Id. The Ninth Circuit affirmed.

The Circuit Court easily rejected plaintiff’s arguments with respect to the class action complaint’s express warranty claim because “[t]he head gasket functioned throughout the 36,000 miles of three years for which it was warranted.” Clemens, at 9130. Plaintiff’s claim that the warranty covered “any defective item” and that the head gasket was defective when installed proved unavailing. As the Ninth Circuit explained, “Every manufactured item is defective at the time of sale in the sense that it will not last forever; the flip-side of this original sin is the product’s useful life.” Id., at 9131. In affirming dismissal of the class action complaint, the Ninth Circuit joined the Second Circuit and California state appellate courts in rejecting Alberti v. General Motors Corp., 600 F.Supp. 1026 (D.D.C. 1985), which “held that a breach-of-warranty claim for post-warranty component problems could proceed after the warranty period if the defendant knew of the defects at the time of sale.” Clemens, at 9131 (citation omitted). The class action’s implied warranty claim failed because, under California law, plaintiff was not in “vertical contractual privity with the defendant.” Id., at 9132.

With respect to the class action’s fraud claim, the Ninth Circuit affirmed that the statute of limitations had expired before plaintiff filed suit. The “delayed discovery” rule did not save plaintiff’s claim because he admitted that he performed Internet research and learned of the problem with head gaskets more than three years before filing suit, id., at 9133-34. The Court also rejected plaintiff’s plea for “cross-jurisdictional tolling” – based on a nationwide class action filed in Illinois – because California has not adopted such a rule. Id., at 9134-35. Moreover, the Ninth Circuit affirmed the district court’s holding that, even if the complaint had been filed timely, defendant was entitled to summary judgment on the class action’s fraud claim on the merits. See id., at 9135-38. Thus, the Court affirmed the district court’s rulings in their entirety. Id., at 9138.

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