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Deborah Osness, Individually and On Behalf of All Others Similarly v. Lasko Products

April 10, 2012

DEBORAH OSNESS, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
LASKO PRODUCTS, INC., DEFENDANT.



The opinion of the court was delivered by: Yohn, J.

MEMORANDUM

Plaintiff, Deborah Osness, filed this putative class-action lawsuit individually and on behalf of all others similarly situated who purchased certain box fans manufactured by defendant, Lasko Products, Inc. ("Lasko"). The fans at issue were subject to voluntary recalls announced by the U.S. Consumer Product Safety Commission, after Lasko had received reports of fires allegedly caused by electrical failures in the fans' motors. Plaintiff does not allege that her fan caused a fire or that this defect has otherwise manifested itself in her fan. But, alleging that Lasko knew of the defect and failed to disclose it to consumers, she asserts claims under state consumer-fraud statutes as well as for breach of express warranty, breach of the implied warranty of merchantability, and unjust enrichment. Currently before me is Lasko's motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, I will grant Lasko's motion.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY*fn1

On February 8, 2006, after reports of fires allegedly caused by electrical failures in the motors of Lasko fans, the Consumer Product Safety Commission announced a voluntary recall of several models of Lasko fans. (Compl. ¶ 14, Press Release, U.S. Consumer Product Safety Commission, Lasko Recalls Box and Pivoting Floor Fans Posing Fire Hazard (Feb. 8, 2006) ("2006 Recall Notice").*fn2 ) The recall covered approximately 5.6 million fans manufactured by Lasko between January 1999 and July 2001 and sold to consumers between September 2000 and February 2004 for $10 to $25. (2006 Recall Notice.)

According to plaintiff, Lasko's continued manufacturing of defective fans led to further incidents of fires involving Lasko fans. (Compl. ¶ 23.) As a result, on March 24, 2011, the Consumer Product Safety Commission again announced a voluntary recall of Lasko fans. (Id.; Press Release, U.S. Consumer Product Safety Commission, Lasko Recalls Box Fans Due to Fire Hazard (Mar. 24, 2011) ("2011 Recall Notice").*fn3 ) This second recall covered approximately 4.8 million fans manufactured by Lasko between 2002 and 2004 and sold to consumers between July 2002 and December 2005 for $12 to $25. (2011 Recall Notice.) Plaintiff alleges that the defect in the fans that were recalled in 2011 is the same as or is similar to the defect in the fans that were recalled in 2006. She specifies that the fans, "due to a design defect, can in normal use, overheat, smoke, and catch fire." (Compl. ¶ 1.)

The fans that were recalled in 2006 and 2011 were covered by a two-year express warranty.*fn4 (Id. ¶ 29.) But, apparently because the recalls were announced after this two-year warranty had expired, Lasko has allegedly refused to refund the purchase price of the fans or to replace the defective fans. (Id.) Plaintiff alleges that "Lasko had received reports of the fires and other facts supporting the mandated recall," but "did not act to remediate in any manner the defect in the fans prior to the mandated recall," delaying notice of the defect to avoid its obligations under its two-year warranty. (Id. ¶¶ 17--18; see also id. ¶ 27.) Instead of repairing or replacing the allegedly defective fans, Lasko has provided a "fan protection cord adapter" that eliminates the risk of fire but, according to plaintiff, does not eliminate the underlying defect in the fans. (Id. ¶ 30.) Plaintiff describes the adapter as a "short extension cord with a wall plug on one end and a locking receptacle on the other with a safety fuse installed between the two." (Id.) Plaintiff alleges that the underlying defect in the fans can "blow[] the fuse" in the adapter. (Id. ¶ 31.) Because the adapter cannot be removed once it is installed and the adapter's safety fuse cannot be replaced, such a blown fuse permanently disables the fan. (Id.) Plaintiff alleges that "Lasko will not replace or repair even those fans that are permanently disabled because the fuse within the 'fan protection cord adapter' is blown." (Id. ¶ 32.)

Plaintiff alleges that she purchased a Lasko fan that was recalled (id. ¶ 7), although she does not state when or where she purchased it, and does not specify the model number of the fan or whether it was subject to the 2006 recall or to the 2011 recall. Nor does plaintiff allege that the defect has manifested itself in her fan or caused any injury or damage, or that her fan has otherwise failed to perform properly.

Nonetheless, on June 13, 2011, plaintiff filed this putative class-action lawsuit against Lasko, asserting five counts individually and on behalf of all others similarly situated. She alleges that Lasko knew of the defect in the fans (although she does not say when) and fraudulently concealed the presence of the defect from consumers, in violation of state consumer-fraud statutes (count I). She also alleges that Lasko breached the implied warranty of merchantability (count II) and that Lasko breached its express two-year warranty by refusing either to repair the defect in the fans or to replace the defective fans (count IV). Contending that Lasko knew of the defect when it warranted the fans at the time of sale and that Lasko delayed announcing the recalls and the existence of the defect to avoid its obligations under its two-year warranty, plaintiff seeks a declaration that the two-year limitation on the warranty is unenforceable (count III). Finally, plaintiff asserts a claim for unjust enrichment, alleging that Lasko's retention of certain amounts that consumers paid for the fans is unjust under the circumstances (count V).

Lasko has now filed a motion to dismiss the complaint under Rule 12(b)(6).

II. STANDARD OF REVIEW

"To survive a motion to dismiss [under Rule 12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 129 S. Ct. at 1949 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Factual allegations "that are 'merely consistent with' a defendant's liability," or that permit the court to infer no more than "the mere possibility of misconduct" are not enough. Id. at 1949--50 (quoting Twombly, 550 U.S. at 557). Rather, the plaintiff must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 1949. When a court evaluates a motion to dismiss, "the factual and legal elements of a claim should be separated." Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). The court "must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions." Id. at 210--11; see also Iqbal, 129 S. Ct. at 1950 (asserting that a court should assume the veracity of well-pleaded factual allegations, but legal conclusions "are not entitled to the assumption of truth"). And the court must draw all reasonable inferences in favor of the plaintiff. See McTernan v. City of York, 577 F.3d 521, 526 (3d Cir. 2009).

III. DISCUSSION

Before turning to the merits of plaintiff's claims, I must address the choice-of-law issue presented by this case. Plaintiff is a resident of Illinois; Lasko is a Pennsylvania corporation with its headquarters also in Pennsylvania. Thus the question is whether Pennsylvania law or Illinois law governs plaintiff's claims.

A federal court exercising diversity jurisdiction must apply the choice-of-law rules of the forum state, in this case, Pennsylvania. See Kruzits v. Okuma Mach. Tool, Inc., 40 F.3d 52, 55 (3d Cir. 1994) (citing Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 497 (1941)). Pennsylvania has adopted a flexible choice-of-law rule, under which "courts are to apply the law of the forum with the 'most interest in the problem.'" Hammersmith v. TIG Ins. Co., 480 F.3d 220, 227 (3d Cir. 2007) (quoting Griffith v. United Air Lines, Inc., 203 A.2d 796, 806 (Pa. 1964)). The first step of the analysis is to determine whether "an actual or real conflict [exists] between the potentially applicable laws." Id. at 230. If an actual conflict exists, that is, if there are relevant differences between the laws, then the court should examine the governmental policies underlying each law and classify the conflict as true where application of either state's law would impair the other state's policy, or as false where only one state's policy would be impaired by application of the other's law. Id. at 230. A deeper choice-of-law analysis is required only when there is a true conflict. Id. Because choice-of-law analysis "is issue-specific, different states' laws may apply to different issues in a single case, a principle known as 'depecage.'" Berg Chilling Sys., Inc. v. Hull Corp., 435 F.3d 455, 462 (3d Cir. 2006).

Plaintiff's first claim alleges violations of the consumer-fraud statutes of all the states in which members of the putative class reside. Only plaintiff's individual claim is at issue here, however. The parties agree that, because plaintiff is an Illinois resident, she may pursue a claim under the Illinois Consumer Fraud and Deceptive Business Practices Act (the "Illinois Consumer Fraud Act"), 815 Ill. Comp. Stat. 505/1 et seq. In addition, plaintiff contends that she may also seek relief under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (the "UTPCPL"), 73 Pa. Stat. Ann. ยง 201-1 et seq., and asserts that there are no conflicts that require a choice-of-law analysis at this stage of the proceedings, although she has suggested that it would be more appropriate to apply the ...


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