Consumer claims alleging Nissan deliberately marketed defective transmissions can move forward now that a federal judge has largely denied a motion to dismiss.
U.S. District Judge Joseph Irenas said that the plaintiffs in Nelson v. Nissan North America Inc., 11-cv-5712, sufficiently pleaded allegations that Nissan concealed defects in a transmission installed in Maxima, Altima and Quest models in recent years, allegedly resulting in issues ranging from irregular shifting to complete equipment failure.
Irenas upheld the majority of the counts — including those lodged under the New Jersey Consumer Fraud Act and other states’ consumer-protection statutes — primarily based on the plaintiffs’ contentions that Nissan long knew of the faulty transmission and continued to fit vehicles with it.
The suit was filed a year ago by three named plaintiffs and amended in December to add a fourth and fifth.
The transmission is prone to delayed shift patterns, excessive heat buildup, slippage, harshness, metal debris, and premature wear and failure, the plaintiffs allege.
The defect was created principally by matching the 22A transmission, a five-speed automatic unit made by Aisin Seiki Co., with an engine too powerful for it, according to the complaint. The transmission was paired with Nissan’s 3.5-liter V-6 engine in the 2004 through 2006 Maxima, 2005 and 2006 Altima, and 2004 through 2007 Quest.
The costly-to-repair defect also poses a safety risk by causing delayed acceleration, unpredictable vehicle response and sometimes a “sudden and unexpected transmission failure whereby the vehicle will not accelerate and/or move under its own power,” the complaint says.
Each named plaintiff claims a transmission failure — sometimes while the vehicle was still under warranty — that required repairs ranging in cost from $1,200 to $3,347. One, Karim Abdullah, bought a Nissan Maxima at a Turnersville, N.J., dealership in 2004. Others purchased their vehicles in California, Pennsylvania, Illinois and Ohio.
At least one plaintiff said he had brought his vehicle to Nissan dealerships when they began acting up, but were told there was no problem.
The suit seeks subclass certification for all current and former owners and lessees of the affected model-year vehicles in several states.
Nissan moved to dismiss the matter last January under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.
In a September 7 opinion, Irenas, sitting in Camden, denied Nissan’s motion as to the majority of the claims.
Irenas upheld some plaintiffs’ breach-of-express-warranty claims — even as to those who did not seek repairs during their warranty periods — because they began experiencing problems before the warranty periods ended and alleged that Nissan knew of the defect at the time of sale.
The allegations “indicate that the defect was not latent because the symptoms … manifested prior to expiration of the express warranty,” Irenas wrote.
Allegations that the defect began showing during the warranty period, even if the repairs were put off until after, also is enough to sustain breach-of-implied-warranty of merchantability claims under New Jersey and Pennsylvania law, Irenas said, noting equitable tolling doctrines based on fraudulent concealment available in both states.
The plaintiffs’ claims under state consumer-fraud statutes satisfy Federal Rule of Civil Procedure 9(b), which requires assertions of fraud to “state with particularity the circumstances constituting fraud or mistake,” Irenas said, again pointing to Nissan’s alleged prior knowledge of the defect.
Irenas let stand the CFA count, holding that the plaintiffs sufficiently alleged a dangerous condition — the “delayed and unpredictable acceleration response.”
Also surviving were counts lodged under CFA counterparts: California’s Consumer Legal Remedies Act and Unfair Competition Law, Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, the Illinois Consumer Fraud Act, and the Ohio Consumer Sales Practices Act and Ohio Deceptive Trade Practices Act.
Nissan argued that the Ohio plaintiff lacks standing under the latter statute (ODTPA) as an individual consumer, but Irenas said in “the absence of clear guidance from the Ohio Supreme Court and in light of the conflicting case law on the issue and the plain statutory language, this Court will decline to dismiss [the] ODTPA claim on the basis of standing at this time.”
Irenas also upheld unjust-enrichment claims under the laws of each state except New Jersey; the plaintiffs did not oppose dismissal of that count.
The judge dismissed claims that the warranty itself is unconscionable because there “is nothing substantively unconscionable or unreasonable about a 5-year/60,000 mile warranty” and the alleged knowledge of the defect isn’t a basis on which to invalidate its terms.
Irenas also dismissed breach-of-implied-warranty claims under Illinois, California and Ohio law — claims the plaintiffs had abandoned.
Martin Healy of Sedgwick in Newark, Nissan’s counsel, declines comment.
Joseph Sauder of Chimicles & Tikellis in Haverford, Pa., who argued for the plaintiffs, did not return a call Monday. Neither did the plaintiffs’ co-counsel, Cory Fein of Caddell & Chapman in Houston.
Fein previously told the Law Journal: “There’s a lot of people who have contacted us about this problem” and “a huge number of unhappy customers who’ve dealt with this transmission problem and can’t get a straight answer from Nissan.”