Court Dismisses Peeling Paint Class Action Against Hyundai, But Grants Third Opportunity To Amend

On April 13, 2017, United States District Judge Beverly Reid O'Connell for the Central District of California granted a motion to dismiss a class action complaint alleging that Hyundai sold cars with an alleged latent paint defect that caused the "self-healing" paint to bubble, peel, and flake. Resnick et al. v. Hyundai Motor Am., Inc. et al., No. 8:16-cv-00593-BRO (PJWx), Dkt. No. 80. The court dismissed plaintiffs' warranty, negligent misrepresentation, fraudulent concealment, and state consumer protection claims without prejudice, with the exception of a Massachusetts Unfair and Deceptive Trade Practice Act claim, which was dismissed with prejudice.

Consumers Challenge Alleged Paint Defect Under State Consumer Protection Laws.

In March 2016, 15 individuals from 10 different states sued defendants Hyundai Motor America, Inc. and Hyundai Motor Co., Ltd. Plaintiffs are current owners of 2006-2016 Hyundai Santa Fe, Sonata, and Elantra automobiles manufactured in the United States that have an alleged paint defect that manifests itself over time and causes the paint to bubble, peel, and flake. Plaintiffs claim that Hyundai fraudulently concealed the alleged paint defect when plaintiffs purchased their vehicles and refused to offer plaintiffs or the putative class any relief.

In November 2016, the court granted defendants' motion to dismiss plaintiffs' First Amended Complaint. (Dkt. No. 57.) Plaintiffs filed a Second Amended Complaint in November 2016, and stipulated to consolidate two cases against defendants in January 2017. In February 2017, plaintiffs filed a Consolidated Class Action Complaint, alleging fourteen causes of action, including for breach of warranty, negligent misrepresentation, fraudulent concealment, and violations of various state consumer protection laws.

Court Dismisses Express and Implied Warranty Claims.

For the majority of plaintiffs, the court dismissed without prejudice the breach of express warranty claims because the alleged defect occurred outside Hyundai's warranty period. The court rejected plaintiffs' argument that an exception should apply to hold Hyundai liable for latent defects outside the warranty period. The court also dismissed plaintiffs' warranty claims based on representations on Hyundai's corporate website and advertising campaigns regarding the quality of the paint as outside the warranty period, which the court limited to the express warranty period. The court granted leave to amend for two...