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Taylor v. Scott Motors, Inc.

United States District Court, D. Rhode Island

March 15, 2016




The plaintiff in this case, Catherine Taylor (“Taylor”), seeks to rescind her sales contract (the “Contract”) with the Defendant, Scott Motors, Inc. (“Scott Motors”), after learning that the VW diesel automobile she purchased from Scott Motors is equipped with emissions masking software. Amended Complaint (the “Complaint”) ¶ 7. The matter is before the Court on (1) Taylor’s emergency motion to remand the case to the Rhode Island state court (Dkt. No. 4), and (2) Scott Motors’ motion to stay the case pending transfer by the Judicial Panel on Multidistrict Litigation (“JPML”) as one of a number of multidistrict litigation (“MDL”) cases related to VW emissions testing software (Dkt. No. 7).

I. Factual Summary and Procedural Posture

In November 2012, Taylor purchased a 2013 Volkswagen Jetta TDI diesel station wagon (the “VW Diesel”) from Scott Motors. Complaint ¶ 5. According to Taylor, she was induced to purchase the VW Diesel upon Scott Motors’ representation that the car offered fuel efficiency and sport wagon performance while complying with all emissions requirements.

In September 20, 2015, the manufacturer (“Volkswagen”) of the VW Diesel disclosed that the VW Diesel was equipped with emissions masking software. Complaint ¶ 7. Volkswagen generally admitted that diesel cars sold in the United States were programmed to sense when emissions were tested and that they contained equipment that reduced such emissions, or that “the cars had better fuel economy and performance, but produced as much as 40 times the allowed amount of nitrogen oxide, a pollutant that can contribute to respiratory problems including asthma, bronchitis and emphysema.” Complaint ¶ 8.

On October 1, 2015, Taylor filed a complaint in Rhode Island state court (Dkt. No 1-2), seeking (Count I) rescission of the Contract on the grounds of material misrepresentation; and (Count II) revocation of her acceptance after discovering the emissions testing issue. In support of the factual contentions in her complaint, Taylor attached (1) the Contract at issue (Ex. A, Dkt. No. 1-2 at Page 10 of 34); (2) a September 21, 2015 article from The New York Times, titled Volkswagen Stock Falls as Automaker Tries to Contain Fallout, Ex. B, id. at 12-16; and (3) a September 22, 2015 article from the same publication, titled Volkswagen Says 11 Million Cars Worldwide Are Affected in Diesel Deception, Ex. C, id. at 18-21.

On December 22, 2015, Taylor filed an amended complaint in state court, adding (Count III) a claim pursuant to the Rhode Island Motor Vehicle Dealers Business Practices Act, R.I. Gen. Laws § 31-5.1. The parties then engaged in, at times, contentious motion practice. On the afternoon of February 22, 2016, the day before scheduled arguments on Scott Motors’ motion to dismiss the Complaint, Scott Motors filed a notice of removal (Dkt. No. 1) in this Court. In support of its 10-page notice of removal, Scott Motors attached more than 300 pages of exhibits, including most, if not all, of the parties’ filings in state court (Dkt. Nos. 1-2, 3, 3-1, 3-2).

The removal is based on Scott Motors’ assertion that in Taylor’s February 5, 2016 Reply to Scott Motors’ Second Supplemental Memorandum in support of its objection to Taylor’s motion to strike and for sanctions (filed in state court), Taylor is “now seeking recovery for Plaintiff’s contribution to pollution caused by Defendant’s alleged violation of federal clean air standards.” Notice of Removal at Page 4 of 10 (Dkt. No. 1). In that February 5, 2016 Reply, Taylor states that “in addition to her financial loss from owning a defective car, she has suffered the injury of being an involuntary and unwilling emitter of three years of illegal diesel pollution.” Reply at 2 (Dkt. No. 3-2). In addition, Taylor states that “[t]here is no readily ascertainable value for clean air, or other measure by which to compensate Plaintiff for her unwanted role in polluting the environment to generate greater profits for Volkswagen and Scott.” Id.

Within the hour of the filing of Scott Motors’ Notice of Removal, Taylor filed an emergency[1] motion to remand the case to state court, reaffirming that she is not seeking damages from Scott Motors or anyone else for the “value of her unwilling contribution to allegedly illegal diesel pollution, ” but that she only seeks the equitable remedy of rescission from the state court on the grounds that she has no adequate remedy at law. Mem. Mot. Remand at 2 (Dkt. No. 4-1). The following day, Taylor filed a supplemental memorandum (Dkt. No. 5) in support of her motion to remand, in which she notes that Scott previously acknowledged in state court that a claim for compensation for Taylor’s unwanted role in polluting the environment “is neither sought in her amended complaint nor shown to be available under any pled cause of action.” Scott Motors’ Reply to Taylor’s February 5th, 2016 Reply (Dkt. No. 5-1).

On February 25, 2016, counsel for Volkswagen Group of America, Inc. (“VWGoA”) filed a Notice of Potential Tag Along Actions with the JPML. (Dkt. No. 9-5). Taylor asserts, and Scott Motors has not disputed, that of the eighteen lawsuits included in this transfer, only Taylor’s action did not involve claims against Volkswagen. Taylor’s Response at 3-4 (Dkt. No. 9).

On February 26, Scott Motors filed a motion to stay the case pending transfer by the JPML or, in the alternative, an objection to Taylor’s motion to remand (Dkt. Nos. 7, 8). In its motion, Scott Motors asserts that Taylor’s “minimalist pleadings sounding in contract initially obscured the federal question that is the gravamen of her suit.” Mot. Stay at 1 (Dkt. No. 7. Although Scott Motors concedes that Taylor did not name VWGoA as a party, it further suggests that “all of her claims arise out of, and are based upon, allegations that Scott Motors...through VWGoA, violated the Clean Air Act and EPA regulations.” Id.

On March 3, 2016, Taylor filed a response to Scott Motors’ motion for stay and objection to remand (Dkt. No. 9), to which she attached numerous pleadings submitted by the parties in the state court action (Ex. A-H, Dkt. Nos. 9-1 through 9-8). In her response, Taylor reiterates that she makes no claims that Scott Motors violated the Clean Air Act. Id. at 1. Taylor also points out that, as early as November 20, 2015, Scott Motors argued in state court pleadings that the case was related to cases “based on allegations concerning the Environmental Protection Agency’s notice of violation, ” and that its notice of removal based on the purported sudden discovery of a federal claim, filed three months after such assertion, was untimely. Id. at 3.

On March 4, 2016, this Court received notice from Judge Sarah S. Vance, the Chair of JPML, that a notice of opposition to a conditional transfer had been filed in this case, MDL No. 2672 IN RE: Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation, 3:15-md-2672 (the “VW Clean Diesel MDL”) . The notice also advised that this Court retains jurisdiction over pending motions, including motions for remand to state court, unless and until transfer to the MDL becomes effective. At the time this case was included in a group of cases that were conditionally transferred by the JPML, Taylor’s motion to remand was already pending in this Court. Accordingly, the Court will proceed to determine whether there is federal jurisdiction over this case.

On March 14, 2016, Scott Motors filed a reply in support of its motion to stay proceedings pending transfer to the MDL (Dkt. No. 10), in which it maintains that the removal determination should be made by United States District Court for the Northern District of California to which the case has been conditionally transferred as part of the VW Clean Diesel MDL. Scott Reply at 1. In light of the extensive briefings already submitted in this ...

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