An Oklahoma federal judge dismissed all but one of the claims in a proposed class action seeking to blame FTE Automotive and other car parts companies for allegedly defective clutches sold to a pre-bankruptcy Chrysler and used in more than one million Dodge trucks and other vehicles. U.S. District Judge Stephen P. Friot did allow the claim of contractual indemnity against Stoneridge Inc. to survive. The group of drivers’ remaining four warranty, product liability and tort claims, which amounted to all of the claims against FTE Automotive USA Inc., were dismissed. The judge ruled that those claims were either time-barred – and not effectively tolled under state law – or failed under the economic loss doctrine.

Judge Friot rejected Stoneridge’s arguments against contractual indemnity, however, finding that a purchase contract for the clutches between it and FTE was broad enough to hold Stoneridge liable in a case of this sort. The judge wrote:

As an initial matter, the court notes that the indemnity clause at issue here contains some extraordinarily inclusive language. The parties do not dispute that Michigan law also applies to the claim [and] under Michigan law, a third party must be an intended beneficiary of a contract in order to enforce it.

Judge Friot went on to say that an “objective review” of the indemnification provision in the contract clearly shows Stoneridge agreed to indemnify users of goods, in this case clutches for a manual transmission, from “all damages” related to the goods. The order makes clear that Plaintiffs are intended third-party beneficiaries of the contract.

Judge Friot refused to give the Plaintiffs leave to amend their dismissed claims. Plaintiffs filed their complaint against the companies in late 2014, led by Plaintiff Rickey Royal, over their roles in a vertical chain of manufacture of the clutches at issue. Royal claimed he was forced to partially pay for repairs to his 2006 Dodge Ram’s clutch safety interlock switch after his vehicle rolled forward without the clutch being pressed.

Reportedly, Arrow manufactured wire compression springs purchased by Stoneridge for use in the manufacture of clutch switches, which were sold to FTE. FTE then sold the clutch switches to various U.S. automakers, including Chrysler. Other drivers included in the action, all owners of Dodge Rams equipped with CSIS parts manufactured and sold to Chrysler from the mid-1990s through 2014, have experienced no actual trouble with their clutches, but asserted claims on future economic loss.

Plaintiffs also claim owners of vehicles with the purportedly defective part had complained as early as 1999, and that the Defendants met in January 2000 to discuss increasing the part’s durability, but did nothing. In 2003, it is alleged that Arrow sought permission to change the design of the springs in the clutch switch, but the changes were not implemented until 2007.

The National Highway Traffic Safety Administration (NHTSA) began an investigation into the allegedly defective clutches in 2014 after a child was killed when another child started a Dodge Ram without pressing the clutch. A subsequent nationwide recall was ordered, with Chrysler agreeing to either replace the CSIS for free or reimburse drivers who have incurred costs of repair related to the issue.

Royal is represented by R. Chris Cowan of the Cowan Law Firm, Simone G. Fulmer of Fulmer Group PLLC, Jeffrey T. Embry and George Cowden IV of Hossley & Embry LLP and Benjamin L. Barnes. The case is in the U.S. District Court for the Western District of Oklahoma.

Source: Law360.com

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