6th Cir: Misrepresentation Claims Plausible and Not Preempted

Because the facts were capable of two different interpretations, the Sixth Circuit held that misrepresentation claims were “plausible” and the plaintiff was entitled to discovery to prove his version of the facts.  The court further held that the state law claims were not preempted by the substantive safety standard in the National Traffic and Motor Vehicle Safety Act (Safety Act).  Fabian v. Fulmer Helmets, Inc., __ F.3d __, 2010 WL 5185851 (6th Cir. Dec. 23, 2010).  The decision was written by Judge Sutton (Bush II) and joined by Judge Moore (Clinton) and Judge Friedman of the Federal Circuit, sitting by designation (Carter).

Robert Fabian filed suit in state court claiming that, under Tennessee law, Fulmer Helmets fraudulently and negligently misrepresented that the Department of Transportation (DOT) approved the helmets.  The suit was removed to federal court based on diversity jurisdiction.  In 2000, large size helmets passed a government-sponsored test, but in 2002, small size helmets failed the test.  Fabian had purchased the large size.  The district court held that Fabian had failed to state a claim, because the helmet he purchased was not similar in all respects to the helmet which failed the test, and that test formed the basis of his claims.  The district court rejected Fulmer Helmets’ argument that the claim was preempted.  Fabian appealed the former ruling, and Fulmer Helmets appealed the latter.

The Sixth Circuit reversed on the failure to state a claim and affirmed on the preemption issue.  The court noted that there were two possible interpretations of the test results.  One interpretation is that only the small helmets had a defect.  The other interpretation is that size was irrelevant, and the company’s helmets, regardless of size, met DOT standards in 2000 but not in 2002.  Quoting Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009), for the proposition that the court should use “common sense” in evaluating the claim, the Sixth Circuit stated that there was a reasonable inference that “a mass-manufactured consumer product, whether it is shoes, pants or helmets, may utilize the same design (and carry the same flaw) regardless of its size.”  Again quoting Iqbal, the court stated that the plaintiff had “nudged his claims … across the line from conceivable to plausible,” and therefore, the court concluded, “he deserves a shot at additional factual development” via discovery.

Regarding preemption, Fulmer Helmets argued that because there is no private right of action in the federal Safety Act, Fabian could not pursue misrepresentation claims in state court.  The court summarily rejected that argument, stating that for a claim of misrepresentation under Tennessee law, no private right of action was needed in a federal statute.

The court found that there was no express preemption, based on a savings clause in the federal law, and then looked carefully at the issue of obstacle preemption.  The court noted that the Safety Act set safety standards for the helmets.  But the misrepresentation claims did not address the validity of the standards, only whether Fulmer Helmets misrepresented that DOT had approved the helmets.  The court cited Supreme Court precedent for the proposition that the duty not to deceive does not conflict with federal standards.

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