Cleveland v. Whirlpool Corporation

Background

Elisabeth Cleveland brought a proposed class action against Whirlpool Corporation concerning more than 900 dishwasher models. Cleveland alleged that the dishwashers contained a pump motor diverter shaft seal that was incorrectly oriented. According to Cleveland, the seal therefore degraded more quickly, eventually failed, and allowed water to leak onto the floor. She alleged that her dishwasher developed a leak in 2020 and that the leak damaged her tile grout.

Cleveland alleged that she relied on Whirlpool’s statements that its dishwashers required fewer repairs than other brands, as well as Whirlpool’s reputation and her belief that she was buying a high-quality product. She asserted nine counts: breach of express warranty, breach of implied warranty, breach of contract, unjust enrichment, violations of the Minnesota Consumer Fraud Act, Minnesota Uniform Deceptive Trade Practices Act, and Minnesota Unlawful Trade Practices Act, negligence, and fraudulent concealment. She sought injunctive relief and damages.

Whirlpool moved to dismiss all claims under Rule 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. Whirlpool also argued that the fraudulent-concealment claim failed to satisfy Rule 9(b), which requires fraud to be pleaded with particular detail.

Express and Implied Warranties

The court denied dismissal of Count I, Cleveland’s breach-of-express-warranty claim. Whirlpool’s written warranty covered defects in materials or workmanship for one year from purchase. Cleveland did not report problems until nearly four years after purchasing her dishwasher. She argued, however, that the warranty’s time limit was unconscionable, meaning unfairly one-sided or unreasonable when the contract was made, because Whirlpool allegedly knew about the hidden defect and limited the warranty to exclude it.

The court held that Cleveland had alleged enough facts about the alleged defect, Whirlpool’s knowledge, and the warranty limitation to proceed past the motion-to-dismiss stage. The court stated that deciding whether the warranty limitation was unconscionable was premature because the parties needed an opportunity to present evidence about the limitation’s commercial setting, purpose, and effect.

The court also denied dismissal of Count II, the breach-of-implied-warranty claim. Cleveland did not dispute that Whirlpool’s disclaimer of implied warranties was conspicuous. She alleged, however, that Whirlpool’s one-year limitation on implied warranties was unconscionable because Whirlpool knowingly sold a product with a hidden defect. The court found those allegations sufficient at this stage.

Contract and Unjust Enrichment

The court granted Whirlpool’s motion as to Count III, the breach-of-contract claim. Cleveland pleaded that claim in the alternative, but she did not explain how it differed from her warranty claims. The court concluded that the contract claim duplicated the warranty claims.

The court also granted Whirlpool’s motion as to Count IV, the unjust-enrichment claim. Although alternative claims may generally be pleaded, unjust enrichment is unavailable when an adequate legal remedy exists. The court concluded that Cleveland had not shown a legal or factual basis for finding that the express warranty failed to provide an adequate legal remedy.

The order states that Counts III and IV were dismissed without prejudice.

Negligence and Products Liability

The court denied dismissal of Count VIII, Cleveland’s negligence claim. Whirlpool argued that the economic-loss rule barred the claim, that Cleveland had not alleged proximate cause, and that she had not alleged that the dishwasher was unreasonably dangerous.

The court explained that Minnesota law may permit recovery for damage to property other than the defective product. Cleveland alleged that water from the dishwasher damaged her tile grout. Because the extent of the tile damage was uncertain, the court found it premature to decide whether the damage was merely incidental compared with damage to the dishwasher itself.

The court also rejected dismissal based on Whirlpool’s argument that Cleveland’s failure to address the leak earlier was a superseding cause. Whirlpool had not explained how that conduct met all four requirements for a superseding cause. Finally, the court found that Cleveland plausibly alleged that the leaking dishwasher was defective and unreasonably dangerous for its intended use, an issue ordinarily decided as a factual matter.

Minnesota Consumer-Protection Claims

The court denied dismissal of Counts V and VII, Cleveland’s claims under the Minnesota Consumer Fraud Act and Minnesota Unlawful Trade Practices Act. Cleveland identified three statements that she alleged were false or misleading: that Whirlpool dishwashers required fewer repairs than dishwashers from any other manufacturer; that replacement dishwashers or parts would remedy the problem; and that reported problems were not caused by a defect.

The court found that Cleveland adequately alleged who made the statements, when they were made, and where they appeared. Her allegations identified Whirlpool as the source and referred to the purchase period, her September 4, 2020 warranty call, Whirlpool’s website, marketing materials, warranties, manuals, packaging, employees, and authorized retailers.

The court also found that Cleveland plausibly alleged that Whirlpool had special knowledge of the defect and therefore may have had a duty to disclose it. Cleveland alleged that Whirlpool knew about the defect before marketing the dishwashers and disregarded the seal manufacturer’s installation instructions. The court further found that she plausibly alleged a causal connection between Whirlpool’s conduct and her claimed dishwasher failure and flooring damage.

Because Cleveland sought injunctive relief, alleged that the representations appeared in advertising and on Whirlpool’s website, and alleged that Whirlpool continued to sell the dishwashers and had not recalled them, the court found that she plausibly alleged the required public benefit under Minnesota’s private-attorney-general statute.

The court denied dismissal of Count VI, Cleveland’s claim under the Minnesota Uniform Deceptive Trade Practices Act. That statute provides injunctive relief, and Cleveland needed to allege an irreparable injury or threat of future harm. The court found that her allegations that the dishwasher would need repair or replacement, that available replacements might contain the same defective seal, and that she could not reasonably continue using the dishwasher as the leak worsened were sufficient. The court also rejected Whirlpool’s argument that Cleveland had to allege she would buy another Whirlpool dishwasher.

Fraudulent Concealment

The court denied dismissal of Count IX, the fraudulent-concealment claim. Under Rule 9(b), a fraud claim must provide enough detail about who made the alleged misrepresentation, what was said or withheld, when and where it occurred, and how it was misleading.

Cleveland alleged that on September 4, 2020, a Whirlpool representative told her by telephone that Whirlpool had not received complaints about seal-related problems like hers. The court found that the complaint identified the representative as the speaker, the substance of the statement, the date, and the method of communication. The court also concluded that the alleged statement went beyond Whirlpool’s warranty obligations because it allegedly misled Cleveland into believing that the seal was not defective.

Disposition

Judge Wilhelmina M. Wright ordered that Whirlpool’s motion to dismiss was granted in part and denied in part. The motion was granted as to Counts III and IV, which were dismissed without prejudice. The motion was denied as to Counts I, II, V, VI, VII, VIII, and IX.