The Eighth Circuit Court of Appeals unanimously reversed a Missouri federal trial court’s decision that dismissed a class-action lawsuit against General Motors
The U.S. District Court for the Eastern District of Missouri had dismissed the complaint for failing to state a claim however the federal appellate court remanded the litigation.
Underlying the proceeding is the allegation that GM misrepresented how much oil some of its automobiles use.
Plaintiffs Michael Tucker and Robert Riddell witnessed their odometers reach about 75,000 miles and 25,000 miles in their GM cars, respectively, and they allege that the oil consumption defect is primarily caused by piston rings that fail to keep oil in the crankcase.
“We conclude that Plaintiffs plausibly stated claims that GM violated the MMPA when it failed to disclose a material fact -- the oil consumption defect -- when selling each of them an affected vehicle,” the appellate court's decision states. “Accordingly, we reverse the district court’s dismissal of these MMPA claims. We address no other issue.”
The Missouri Merchandising Practices Act is a consumer protection law that aims to shield shoppers from deceptive, unethical, or illegal business transactions.
“It's a pretty narrow ruling that doesn't really advance anything on that particular class action,” said Ted Frank, senior attorney, and director of litigation with the Hamilton Lincoln Law Institute. “There's still going to be litigation over whether those claims can be dismissed.”
The panel of three appellate judges included Morris S. Arnold, James B. Loken, and Jonathan A. Kobes.
“Because the alleged oil consumption defect concerned the inner workings of a complex machine that the average consumer would be unlikely to know or be able to research, we conclude these allegations are sufficient to plausibly plead this element of Plaintiffs’ MMPA omission claims,” Loken wrote in the Jan. 19 ruling.
GM argued that the law only barred the car company from making an affirmatively false statement but the plaintiff disagreed and the court concurred.
“It set a precedent for the aspect of whether you have a puffery defense at the pleading stage or whether it's a question of fact for the jury,” Frank told the St. Louis Record. “They still have to satisfy the Rule 9 pleading standard, which hasn't been decided yet by any court.”
Rule 9 requires pleading a claim with specificity when alleging fraud.
"The plaintiffs have multiple hurdles and they're over one hurdle, and they have to continue going over other hurdles," Frank added. “They have to prove that GM violated the MMPA and beyond that, they have to demonstrate that they've stated their claims with specificity enough to satisfy Rule 9, which the district court never resolved."