Consumer protection class action allowed to proceed in federal court

A Charlottesville couple’s class action suit against car manufacturer BMW can proceed, the U.S. District Court for the Western District of Virginia has determined.

In the court’s Aug. 29 opinion in Berl v. BMW of North America LLC (VLW 025-3-348), Judge Norman K. Moon determined that despite Virginia jurisprudence typically not recognizing class actions, the Virginia Consumer Protection Act does not specifically address a “class action ban.”

“The lack of an express ban in its terms detracts from the concern that federal class enforcement will improperly enlarge or modify Virginia’s substantive rights,” Moon wrote. “Instead, federal class enforcement of the VCPA merely provides an additional forum and procedural scheme that Virginia need not provide in its state courts.”

Counsel for the plaintiff and a spokesperson for BMW of North America did not immediately respond to requests for comment.

“The VCPA is one of the most powerful pieces of remedial legislation in the country aimed at protecting consumers from false, misleading or deceptive business practices,” said Roanoke attorney Christopher E. Collins.

Fairfax attorney Robert Stoney echoed that sentiment.

He said the case “demonstrates the important role the VCPA can play in encouraging corporations to focus on product safety. We live in a relatively safe world because corporate America has taken a strong interest in product safety,” Stoney said. “The civil justice system is the most effective way to bring safety to the bottom line.”

‘Rollaway defect’

The plaintiffs, Laura and Seth Berl, are a married couple who experienced a “rollaway defect” in a newly purchased BMW X1, according to court filings.

The Berls purchased the vehicle from a BMW dealer in Charlottesville, where a sales employee and sales manager informed the couple of the car’s features, including its safety features. The vehicle’s purchase was finalized in September 2023, after the couple “repeatedly received assurances about the industry leading safety capabilities of” the vehicle, according to court documents.

The VCPA is one of the most powerful pieces of remedial legislation in the country.

— Christopher E. Collins, Roanoke

But three days after taking delivery of the new vehicle, the Berls experienced the rollaway defect for the first time, which the plaintiffs described as “a ‘common design and/or manufacturing defect in BMW powertrains’” that creates a “pronounced delay in acceleration.” That delay, the Berls claimed, “severely impairs the driver’s ability to control the vehicle’s acceleration, speed, and responsiveness.” The plaintiffs claimed the defect further manifests with random rolling and with a tendency for the vehicle to “jerk forward unexpectedly.”

The Berls returned the vehicle to the dealer for service after putting just 30 miles on the odometer. Repairs rendered by the service department were unsuccessful, as were two subsequent visits for maintenance, with the Berls stating they experienced rollaway defect episodes “at a rate of about 2-3 times per week.”

The Berls returned the car to the dealer, expressing intent to no longer retain possession of the vehicle. At the time of the complaint’s filing, the plaintiffs claimed the vehicle was still at the dealership.

The Berls filed suit against BMW of North America, alleging a breach of express warranty, a breach of implied warranty of merchantability, violation of the VCPA and violation of the Virginia Motor Vehicle Warranty Enforcement Act, with the first three claims brought as class actions with the alleged defect “common to potentially hundreds of similarly situated consumers who have purchased or leased a BMW X1 in the Commonwealth of Virginia.”

BMW filed a motion to dismiss, claiming insufficient pleading and that VCPA claims cannot proceed as class actions as a matter of law.

Class action

In its motion to dismiss, BMW argued that the plaintiffs’ class claims should be struck because VCPA claims cannot proceed as class actions and that even if they could, the claims in this case are too individualized under Federal Rule of Civil Procedure 23.

“Determination of the first issue raises a complicated question of law regarding whether allowing VCPA class actions in federal court under Rule 23 would ‘enlarge or modify any substantive right’ in violation of Virginia law and the Rules Enabling Act,” Moon wrote.

Moon referenced the 2010 U.S. Supreme Court decision in Shady Grove Orthopedic Associates P.A. v. Allstate Insurance Co. in his analysis, where the country’s high court determined that “a federal rule . . . cannot govern a particular case in which the rule would displace a state law that is procedural in the ordinary use of the term but is so intertwined with a state right or remedy that it functions to define the scope of the state-created right.”

In this case, BMW argued that a conflict existed between Federal Rule of Civil Procedure 23 and the VCPA, as well as Virginia’s non-recognition of class actions as a matter of general jurisprudence.

“The VCPA does not explicitly address whether class enforcement of its terms is available, though the statute’s civil enforcement provision is titled ‘[i]ndividual action for damages or penalty,’” Moon wrote.

Meanwhile, Rule 23 provides that class actions can be maintained for any civil action, provided certain prescribed preconditions are satisfied.

This issue has created “a split of authority” across the district courts, Moon wrote, with the majority allowing VCPA claims to proceed as class claims with varied grounds for their conclusions.

“As a whole, the thrust of these decisions is that the availability of class adjudication under the VCPA is a procedural question in the Commonwealth, not a substantive one, since no term within Virginia’s code expressly prohibits class litigation,” Moon wrote.

Moon added that the courts that rejected VCPA class claims “inordinately and inappropriately rel[ied] on the fact that the VCPA’s enforcement provision is titled ‘[i]ndividual action for damages.’”

“Titles are not part of the statutory code and do not have the force of law,” Moon wrote. “Thus, it is incorrect to state that the VCPA contains a ‘statutory class-action bar’ based solely on the language of the title.”

Thus, Moon found that the conflict between Rule 23 and the VCPA “is scarcely a conflict at all.”

“We must focus on ‘the nature of the state law that is being displaced by a federal rule,’” Moon wrote, quoting Shady Grove. “But the state law that is being ‘displaced’ here is the absence of a state law.”

Ultimately, Moon held that Virginia’s non-provision of class actions “tends more toward a procedural and policy judgment ‘about how state courts ought to operate.’”

[The] plaintiffs do not allege that BMW or its agents made an affirmative misrepresentation, i.e. a statement that turned out to be false. But omissions count as misrepresentations too.

— Judge Norman K. Moon

Moon rejected BMW’s argument that the VCPA claims could not proceed on those grounds.

Collins told Virginia Lawyers Weekly that “the most interesting issue presented” was the interplay between the VCPA and Rule 23.

“The court here correctly applied the Shady Grove analysis and held that they can [proceed],” Collins said. “The state rule at issue here is procedural, not substantive. While Virginia state courts do not permit class action lawsuits, state causes of action can be asserted as class actions in federal courts under Rule 23.”

Stoney lauded the benefits of class action claims in cases like Berl.

“Certifying a class for claims of a serious safety defect in thousands of automobiles will save lives,” Stoney said.

VCPA

BMW also argued that the plaintiffs failed to sufficiently plead certain statutory elements under the VCPA, where a plaintiff must allege fraud by a supplier in a consumer transaction.

Moon held that the complaint sufficiently pleaded facts to satisfy the elements of a VCPA claim.

Specifically, the judge determined that the Berls plausibly alleged pre-sale knowledge of the rollaway defect by BMW via internal communications within BMW.

The Berls also alleged that none of that prior knowledge was conveyed to them in their conversations with BMW about the safety features on their vehicle prior to purchase.

Moon determined that these allegations taken in tandem show the plaintiffs pled sufficient facts to show that BMW was aware of the potential defect at the time of purchase and that its agents did not disclose this defect despite direct inquiries on the vehicle’s safety record and features.

“The Berls do not allege that BMW or its agents consciously concealed the defect… but at the motion to dismiss stage, it is sufficient that Plaintiffs have pled facts which plausibly support their claim for relief,” Moon wrote. “Plaintiffs do not allege that BMW or its agents made an affirmative misrepresentation, i.e. a statement that turned out to be false,” Moon concluded. “But omissions count as misrepresentations too.”

The court denied BMW’s motion to dismiss and allowed the case to proceed.