Lack of Standing and Choice-of-Law Rules Doom Nationwide Consumer Fraud Class Action Against BMW

On October 31, 2011, in Nirmul v. BMW, the District Court for the District of New Jersey dismissed a nationwide class action against BMW asserting claims under the New Jersey Consumer Fraud Act (“NJ CFA”), concluding, essentially, that none of the three plaintiffs had a standing to sue. The complaint alleged that the high pressure fuel pump in BMW’s N54 turbo engines had a known defect and that BMW failed to disclose this fact to purchasers throughout the country.

BMW moved to dismiss the claim of the sole New Jersey plaintiff on the ground that he lacked standing, pursuant to Article III of the United States Constitution, because the high pressure fuel pump in his N54 turbo engine never, in fact, failed. Thus, he suffered no injury-in-fact — an essential requirement of Article III standing. See Lujan v. Defenders of Wild-Life. BMW made “a factual challenge” to this plaintiff’s standing by submitting evidence in the form of a declaration from a service manager, who attested that although this person’s vehicle had been serviced during the lease term, there was no record indicating that the high pressure fuel pump had failed or had been repaired or replaced. The plaintiff “failed to factually counter BMW’s factual jurisdictional attack and satisfy his burden regarding establishing jurisdiction.” Thus, without a product failure, there was no injury-in-fact.

The Nirmul court also dismissed the NJ CFA claims of the two remaining out-of-state plaintiffs, essentially finding no standing to assert claims under the NJ CFA. Because both out-of-state plaintiffs bought their cars outside New Jersey, a choice-of-law question was presented as to whether the NJ CFA applied to their claims. Following guidance from the Third Circuit Court of Appeals in Cooper v. Samsung Elecs. Am., Inc., the Nirmul court conducted a choice-of-law analysis under Section 148 of the Restatement and concluded that the home state of each named plaintiff, where the vehicles were purchased, should be applied. Therefore, neither out of state plaintiff was “entitled to sue under NJ CFA,” and their claims were dismissed.

The choice of law ruling in Nirmul is consistent with the overwhelming weight of analogous authority in the District of New Jersey. See e.g., Agostino v. Quest Diagnostics Inc., 256 F.R.D. 437 (D.N.J. 2009); Agostino v. Quest Diagnostics, Inc., Case No. 04-4362 (SRC), 2010 U.S. Dist. LEXIS 135310 (D.N.J. Dec. 22, 2010); Crete v. Resort Condos. Int’l, LLC, No. 09-05665 (PGS) (ES), 2011 U.S. Dist. LEXIS 14719 (D.N.J. Feb. 14, 2011); Knox v. Samsung Elecs. Am., Inc., No. 08-4308 (JLL), 2009 U.S. Dist. LEXIS 53685 (D.N.J. June 25, 2009); Laney v. Am. Std. Cos., No. 07-3991 (PGS), 2010 U.S. Dist. LEXIS 100129 (D.N.J. Sept. 23, 2010); Nafar v. Hollywood Tanning Sys., 339 Fed. Appx. 216 (3d Cir. 2009); Nikolin v. Samsung Elecs. Am., Inc., No. 10-1456 (GEB), 2010 U.S. Dist. LEXIS 110942 (D.N.J. Oct. 18, 2010); Payne v. FujiFilm U.S.A., Inc., No. 07-385 (GEB), 2010 U.S. Dist. LEXIS 52808 (D.N.J. May 28, 2010).

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