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Alam v. BMW of North America, LLC

United States District Court, W.D. Texas, Austin Division

November 7, 2019

MOHAMMED ALAM, ROGER BURAIMOH, FREDERICO ORNELAS, DANIEL CASEY, PATRICIA BENSON, DERIC JONES, WILLIAM KENT MYATT, JAMES LOUGHLIN
v.
BMW OF NORTH AMERICA, LLC

          HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE

          REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

          ANDREW W. AUSTIN UNITED STATES MAGISTRATE JUDGE

         Before the Court are Defendant's Motion to Dismiss First Amended Complaint or, In the Alternative, to Sever Plaintiffs' Claims (Dkt. No. 10), Plaintiffs' Response (Dkt. No. 9), and Defendant's Reply (Dkt. No. 13). The District Court referred the above motion to the undersigned Magistrate Judge for report and recommendation pursuant to 28 U.S.C. §636(b)(1)(A), Fed.R.Civ.P. 72, and Rule 1(c) of Appendix C of the Local Rules.

         I. GENERAL BACKGROUND

         Plaintiffs allege that their BMW vehicles consume an excessive amount of engine oil and that BMW has failed to honor the terms of their warranties. Am. Compl., Dkt. 8. Plaintiffs Mohammed Alam, Roger Buraimoh, Frederico Ornelas, Daniel Casey, Patricia Benson, Deric Jones, William Kent Myatt, James Loughlin (together, “Plaintiffs”) filed this suit against BMW of North America, LLC (“BMW”) on January 8, 2019. Dkt. No. 1. Each alleges that they purchased vehicles with an “N63” engine, which BMW used in certain vehicles for the 2009 to 2014 model years. Id. ¶ 79. They allege that when they purchased the vehicles at BMW dealerships, they relied on material representations by BMW agents regarding BMW's New Vehicle Limited Warranty, including the representation that BMW would repair their vehicles' engines. Id. ¶ 71. Under its New Vehicle Limited Warranty, BMW promised to repair or replace components found to be defective in material or workmanship during the 4-year / 50, 000-mile period following vehicle delivery to the consumer. Id. ¶ 72. After purchasing their vehicles, Plaintiffs discovered that their engines contain an alleged manufacturing defect that causes the vehicles to consume engine oil at an extremely rapid rate. Id. ¶ 77. Plaintiffs had to add additional oil between the recommended oil change intervals to prevent their engines from failing, and contend they suffered related damage. Id. ¶ 78. For example, Plaintiff Ornelas alleges that within a few months of purchase, his vehicle required adding a quart of oil every 300 to 500 miles, well before BMW's recommended oil change intervals. Id. ¶¶ 28, 99.

         Plaintiffs allege that the N63 is now “widely known” as defective in the automotive industry for consuming excessive oil and requiring frequent repairs compared with similar vehicles. Id. ¶ 82; see also ¶¶ 83-91, 93-102. Plaintiffs also allege that BMW knew about the increased oil consumption but failed to disclose it to consumers at the time of sale. Id. ¶¶ 88, 92, 111. After “thousands of customer complaints” about the defect, BMW introduced an “N63 Customer Care Package” offering free inspections and parts replacements. Id. ¶ 102-03. Plaintiffs allege that these “mask, but do not correct, the serious design and/or manufacturing defects.” Id. ¶ 102. BMW also offered discounts for replacement BMW vehicles. Id. ¶ 105.

         Plaintiffs allege that the defect has caused them to incur costs for additional service and maintenance, and for BMW-approved engine oil. They are discouraged from traveling long distances. They contend they will also “suffer significant loss” when they sell their vehicles “because the reputation of these vehicles has been impaired by now-public research establishing that these vehicles suffer from the oil consumption defect.” Id. ¶ 113.

         Plaintiffs assert four causes of action: breach of express warranty under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq., (hereinafter “the MMWA”); breach of an implied warranty of merchantability under the MMWA and Tex. Bus. & Com. Code § 2.314; breach of express warranties pursuant to Tex. Bus. & Com. Code § 2.313; and deceptive trade practices pursuant to Tex. Bus. & Com. Code § 17.41, et seq. Id. ¶¶ 134-57. Plaintiffs ask this Court to award damages, including a refund of all payments made by Plaintiffs on the subject contracts, equitable relief in the form of replacement or repair of the vehicles, and punitive damages for BMW's alleged intentional concealment of the defect. Id. at 30-31.

         BMW moves to dismiss Plaintiffs' claims under Rule 12(b)(1) and Rule 12(b)(6), asserting that: (1) Plaintiffs' claims do not meet the amount in controversy requirement of $50, 000 under the MMWA or $75, 000 under 28 U.S.C. §1332(a); (2) the statute of limitations bars Plaintiffs' claims; and (3) even if this Court has subject matter jurisdiction and their claims are not time-barred, Plaintiffs fail to allege essential elements of their claims. Dkt. No. 10. In the alternative, BMW moves to sever Plaintiffs' claims because they do not arise from the same transaction or occurrence and each Plaintiff will raise different questions of law and fact. Id. at 20. The Court will address the motion to sever first.

         II. THE MOTION TO SEVER

         A. Legal Standard

         Under the Federal Rules of Civil Procedure, persons may join in a single action if: “(A) they assert any right to relief jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and (B) any question of law or fact common to all plaintiffs will arise in the action.” Fed.R.Civ.P. 20 (a)(1). “Misjoinder of parties is not a ground for dismissing an action. On motion or on its own, the court may at any time, on just terms, add or drop a party. The court may also sever any claim against a party.” Fed.R.Civ.P. 21.

         “Since Rule 21 does not provide any standards by which district courts can determine if parties are misjoined, courts have looked to Rule 20 for guidance.” Stein v. Navient Sols., LLC, 2018 WL 2124108, at *2 (W.D. Tex. May 7, 2018) (quoting Acevedo v. Allsup's Convenience Stores, Inc., 600 F.3d 516, 521 (5th Cir. 2010)). “Courts have described Rule 20 as creating a two-prong test, allowing joinder of plaintiffs when (1) their claims arise out of the ‘same transaction, occurrence, or series of transactions or occurrences' and when (2) there is at least one common question of law or fact linking all claims.” Id. If both prongs are met, “permissive joinder of plaintiffs . . . is at the option of the plaintiffs.” Id. (quoting Applewhite v. Reichhold Chems., 67 F.3d 571, 574 (5th Cir. 1995)). “However, even if this test is satisfied, district courts have the discretion to refuse joinder in the interest of avoiding prejudice and delay, ensuring judicial economy, or safeguarding principles of fundamental fairness.” Acevedo, 600 F.3d at 521 (internal citations omitted). “[A] trial court has broad discretion to sever.” Anderson v. Red River Waterway Comm'n, 231 F.3d 211, 214 (5th Cir. 2000). Where a court grants severance, the appropriate relief is to sever or “dismiss the claims of any misjoined parties, ” not to dismiss the entire action. Acevedo, 600 F.3d at 522 (citing Fed.R.Civ.P. 21).

         B. ...


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