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From Products Liability Law Daily, April 19, 2013

DESIGN AND MANUFACTURING DEFECTS—MOTOR VEHICLES—WDArk: Lack of Causation Dooms Used Car-Owner’s Defective Product Suit Against Automaker

By Georgia D. Koutouzos, J.D.

The purchaser of two used Volkswagen New Beetles could not maintain design and/or manufacturing defect claims against the automaker because she failed to plead sufficient facts establishing causation or negating the other possible causes of her vehicles’ failure, a federal court in Arkansas ruled (Perez v. Volkswagen Group of America, Inc., April 17, 2013, Holmes, P.). In addition, because that purchaser was the only member of a putative class of similar plaintiffs over whom jurisdiction was proper in Arkansas, once she was dismissed from the suit, venue for the remaining plaintiffs’ claims was inappropriate in Arkansas.

Background. Diana Perez—one of several individual members of a purported class of owners of New Beetle automobiles manufactured by Volkswagen Group of America, Inc. (VW)—brought an action against VW alleging that model year 2003—2007 New Beetles contained design and/or manufacturing defects. According to Perez and the other plaintiffs, the alleged defects caused "hard-shifting" during normal driving that, over time, necessitated the repair or replacement of the vehicles’ transmissions. The owners also contended that VW was aware of the defect at the time that the vehicles were first sold, but failed to disclose it to the purchasers. The court analyzed Perez’s individual claims because she was the only member of the putative class who resided in Arkansas and who alleged circumstances that had occurred in that state.

The parties’ contentions. Perez bought two 2004 New Beetles, one in September 2010 and the second in early 2012, and was neither car’s original owner. The latter vehicle allegedly began experiencing transmission issues soon after its purchase, so Perez took it to her mechanic, who told her that the car had a defective valve body and needed a new transmission at a quoted cost of $4,000. Perez also alleged that her other New Beetle began experiencing hard shifting, gear slipping, and bucking issues, after which she had garaged the vehicle rather than risk driving it in an unsafe condition. Perez’s complaint against VW alleged that both of her New Beetles had a latent defect which caused their transmission systems to fail and require replacement prematurely.

Causation issues. In order to demonstrate strict liability on the basis of circumstantial evidence in Arkansas, a plaintiff must negate the other possible causes of the product’s failure for which the defendant would not be responsible in order to raise a reasonable inference that the dangerous condition existed while the product was in the defendant’s control. Here, the complaint stated generally that the plaintiffs had adhered to the scheduled maintenance on their respective New Beetles during the time they owned those vehicles, but no information about the actions taken with regard to maintenance by the cars’ prior owners was provided.

As for Perez’s two vehicles specifically, VW cited to public records showing that the New Beetle she purchased in 2010 had been sold to her with a salvaged title after having been involved in two accidents. At best, Perez could only speculate as to how her vehicles had been driven, maintained, repaired, or modified during the many years prior to the time she bought them, the court said, adding that she pled no facts supporting the conclusion that either of her two cars was in a defective condition at the time it left the hands of the particular seller.

Moreover, the court found that Perez had failed to prove proximate causation because she did not even attempt to trace the chain of custody and ownership of her vehicles back to VW. This was significant because the transmission systems in both vehicles had malfunctioned after more than 100,000 miles of driving by multiple previous owners. Thus, there were any number of plausible causes for the transmission failures in Perez’s two cars, the court said, dismissing her strict liability claim against VW.

Negligence. The failure to have established proximate cause also was fatal to Perez’s negligence claim against VW, the court instructed, pointing to the absence of facts in the complaint regarding the use, maintenance, or repair of her vehicles during the years before she purchased them. She made no statement as to other possible causes for the damage to her New Beetles prior to the time that she became their owner, which was after the expiration of the manufacturer’s warranty. Therefore, Perez’s negligence claim against VW was dismissed as well.

Venue. Because all of her claims were dismissed, Perez lacked standing to pursue claims on behalf of the putative class members, the court found. As such, the court was left with the claims of the remaining plaintiffs, who neither resided in Arkansas nor alleged events that had occurred in Arkansas. Accordingly, all of the remaining, out-of-state plaintiffs’ claims were dismissed for lack of venue.

The case number is 2:12-CV-02289.

Attorneys: Roy Arie Katriel (The Katriel Law Firm) for Perez; Gail Ponder Gaines (Barber, McCaskill, Jones & Hale, P.A.) and Jeffrey L. Chase (Herzfeld Rubin P.C.) for Volkswagen Group of America, Inc.

Companies: Volkswagen Group of America, Inc.

Cases: CourtDecisions DesignManufacturingNews MotorVehiclesNews ArkansasNews

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