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From Products Liability Law Daily, June 20, 2014

Putative class action against BMW relating to water damage to electrical components in trunk dismissed

By John W. Scanlan, J.D.

A putative class action brought against BMW by two BMW owners claiming that their vehicles were defective because critical electronic components were located at the bottom of the trunks where they could be damaged by water was dismissed by the U.S. District Court for the Northern District of California for failure to state a claim (Sharma v. BMW of North America, LLC, June 19, 2014, Chesney, M.).

Background. In 2008, Monita Sharma bought a 2008 BMW X5. According to Sharma, in 2012 she was unable to open the rear hatch of her vehicle, and a local BMW dealer found moisture around electrical components in the trunk. In 2013, while driving on the freeway, her vehicle allegedly lost all power at highway speeds; the dealer determined that clogged rear sunroof drains caused a trunk flood that resulted in a catastrophic electrical malfunction when water accumulated around the electrical components in the trunk. BMW refused her request to cover the cost of draining her trunk and replacing the corroded wiring.

In 2010, Eric Anderson bought a certified used 2007 BMW E60 530I. He alleged that in 2012, he experienced problems with electrical components that caused the vehicle not to start after rain entered the trunk instead of draining off the roof through the rear sunroof drains. A BMW dealer permanently sealed two of the four sunroof drain tubes, moved the electronic components higher in the vehicle using “Velcro and wire ties,” and drilled drainage holes in the trunk’s floor pan. Anderson also asserted that BMW refused to cover the cost of his repairs.

Sharma and Anderson filed a putative class action on behalf of all persons in California who currently owned or leased one of 1999-2008 BMW X5 series vehicles, 2003-2010 X3 series vehicles, or 2004-2010 5 series vehicles. BMW moved to dismiss, arguing that Sharma did not have standing to seek injunctive relief and that the consumers generally had not stated a claim upon which relief could be granted.

Breach of express warranty. The consumers’ claim that BMW breached express warranties by failing to cover the costs of repairing their vehicles was dismissed. Both vehicles were alleged to have been covered by warranties against defects in materials or workmanship. Under California law, warranties against defects in materials or workmanship do not cover design defects. The consumers argued that it was premature at the pleading stage to determine whether the defect alleged was a design or manufacturing defect; however, repeatedly throughout their complaint they referred to the alleged defect as one of design, specifically that critical modules and electrical components were located at the lowest point of the trunk where they were prone to damage due to water exposure from water entering the trunk through normal use and through sunroof drain clogs. Furthermore, the consumers did not allege any facts to support a theory that BMW had not made the vehicles in accordance with BMW’s specifications.

Negligence. The consumers’ claims that BMW violated its duty to disclose the safety risks posed by vehicles in the class, as well as its duty either not to put class vehicles on the market or to recall them, were dismissed under the economic loss rule. They asserted that they incurred repair costs as a result of an allegedly defective design for their vehicles; however, they did not allege any physical injury or damage to property other than to their vehicles. Therefore, they had not alleged sufficient facts to support claims for negligence.

Injunctive/declaratory relief. One of the consumers had standing to seek injunctive relief, the court said. She had asked the court to order BMW to notify, recall, and repair vehicles in the class or to establish a fund to repair them. Relying upon notes taken by dealership service advisors, BMW asserted that she could not establish that her vehicle stopped operating while she was driving it or that there was any problem in her vehicle resulting from a design defect rather than her failure to maintain the sunroof drains. The court found that BMW’s arguments went to the merits of her claims rather than her standing to bring them; therefore, BMW had not shown that she lacked standing to pursue injunctive relief. However, the court dismissed the claim for injunctive relief because injunctive relief is a remedy, not a claim.

Because it dismissed the breach-of-warranty claims, the court also dismissed the consumers’ request for a declaration regarding the existence of defects and whether the alleged defects were covered under their respective warranties. Furthermore, because the request for declaratory relief identified no controversy other than the consumers’ substantive claims for relief, declaratory relief would have been duplicative.

The case number is C-13-2274 MMC.

Attorneys: Stuart C. Talley (Kershaw Cutter & Ratinoff LLP) for Monita Sharma. Troy Masami Yoshino (Carroll, Burdick & McDonough LLP) for BMW of North America LLC.

Companies: BMW of North America, LLC

MainStory: TopStory DesignManufacturingNews MotorVehiclesNews CaliforniaNews

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