A federal court has denied Whirlpool Corp.’s motion to dismiss in a proposed class action arising over allegedly defective ice chutes in the company’s side-by-side refrigerator models. Nessle v. Whirlpool Corp., No.1:07-cv-03009 (July 25, 2008 N.D. Ohio). See here.

Judge Christopher Boyko denied the motion, finding plaintiff had sufficiently pled the key elements required to allege a claim under the Ohio Consumer Sales Practices Act. MassTortDefense has posted before on the growing impact of state-law based consumer fraud class actions.

Nessle purchased a Whirlpool-manufactured side-by-side refrigerator in May, 2006. The refrigerator came with a one-year limited warranty. It was sold under Whirlpool’s “Gold” label, which Nessle alleges she took to mean that the product was special and worth purchasing at a premium, or at a minimum would work properly, according to the opinion. Within a few weeks of purchasing the refrigerator, Nessle claimed, she began experiencing problems with the ice dispensing function of the refrigerator’s ice maker, including clogs in the ice chute. A service technician was dispatched to service the ice maker on several occasions, the complaint claimed. But plaintiff alleged that the ice chute would allegedly jam up and freeze again.

The lawsuit, filed in October, 2007, claims Whirlpool was aware of an alleged design defect in the refrigerators and failed to disclose the defect. It seeks to represent a statewide class consisting of all current and former Ohio residents who have, since 2000, purchased a side-by-side Whirlpool refrigerator with a purportedly defective ice chute. The complaint seeks an order requiring Whirlpool to repair or replace the defective ice chutes, as well as monetary relief.

Whirlpool argued that plaintiff failed to plead any act or omission by the company that would constitute an unfair or deceptive act under the OCSPA. Second, plaintiff had failed to adequately plead the element of proximate cause.

The court gave a narrow reading to the Supreme Court guidance in Bell Atlantic v. Twombly, 127 S.Ct. 1955 (2007), as requiring only enough facts to state a claim that is plausible on its face. Of course, the Court also has stated that, “Factual allegations must be enough to raise a right to relief above the speculative level.” Id. at 1965.

On the conduct element, and the use of the term “Gold,” the court relied on the purpose of the Act to compensate consumers and the need to “liberally construe” such legislation.  One would presume that beyond the motion to dismiss stage a serious challenge exists to plaintiff’s alleged interpretation of the term “Gold.”

On the causation issue, defendant stressed that plaintiff did not contend the “Gold” label affected her decision to buy her refrigerator, and that Plaintiff did not read, hear, or see any statements of fact by Whirlpool prior to purchasing the refrigerator. Defendant’s argument, the court said, is “largely unpersuasive” because there is no provision in the statute itself requiring Plaintiff to show reliance on any statement of fact or omission. While proximate cause is an essential element of an OCSPA claim, the court relied on dicta from the Sixth Circuit that “a showing of subjective reliance is probably not necessary to prove a violation of the OCSPA.” Butler v. Sterling, Inc., No. 98-3223, 2000 WL 353502 at *4 (6th Cir. Mar. 31, 2000).

The court also relied on an intermediate appeals level state court opinion, which the court read to suggest  that individual reliance is not necessary with regard to class action suits under the state consumer fraud act. Amato v. General Motors Corp., 11 Ohio App. 3d 124, 126 (1982). In Amato, the court specifically noted: “[C]onsumer claims would amount to little if acceptance of the representations made for the product could be manifested only by one-on-one proof of individual exposure.”   MassTortDefense notes that that 25 year-old opinion actually held that proof of reliance may be sufficiently established by inference or presumption from circumstantial evidence to warrant submission to a jury without direct testimony from each member of the class. That does not mean that reliance is not relevant to the causation element. And how one proves causation in an alleged fraud case without showing reliance of some sort is an issue many state courts have refused to clarify in their desire to have the reliance element not defeat consumer class actions (as a dominant individual issue).

Judge Boyko also let stand Nessle’s claim for breach of implied warranty of merchantability, and unjust enrichment, but dismissed the claim for breach of express warranty. “The written warranty contains no language pertaining to the reliability or performance of the ice maker, and provides only for repair or replacement of any defective parts during the one-year limited warranty period.”