Case 2:19-cv-00967-MPK Document 68 Filed 02/09/21 Page 1 of 20
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF PENNSYLVANIA
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`Plaintiff,
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`v.
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`Defendants.
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`Civil Action No. 19-967
`Magistrate Judge Maureen P. Kelly
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`Re: ECF No. 58
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`OPINION
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`DOUGLAS BIEDA,
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`CNH INDUSTRIAL AMERICA LLC, and
`LAMB & WEBSTER, INC.,
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`Plaintiff Douglas Bieda (“Bieda”) initiated this action against Defendant CNH Industrial
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`America LLC (“CNH”) and Lamb & Webster, Inc., (“L&W”), alleging claims arising out of his
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`purchase of a defective CNH crop planter.1
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`Presently before the Court is a Motion for Summary Judgment filed on behalf of CNH,
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`ECF No. 58, seeking judgment in its favor as to Bieda’s claim for breach of the implied warranty
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`of merchantability. For the following reasons, the Motion for Summary Judgment will be denied.2
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`I.
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`FACTUAL AND PROCEDURAL BACKGROUND
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`Resolution of the CNH’s Motion for Summary Judgment and consideration of the
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`arguments of the parties requires review of the evidence of record. The following material facts
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`are undisputed unless otherwise noted.3
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`1 Bieda initially filed this action against L&W and Case New Holland Industrial, Inc. ECF No. 1-1. The parties
`subsequently stipulated that CNH Industrial America LLC is the proper manufacturer-defendant. ECF Nos. 19-20.
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` In accordance with the provisions of 28 U.S.C. § 636(c)(1), the parties voluntarily consented to a United States
`Magistrate Judge conducting all proceedings in this case, including the entry of a final judgment. ECF Nos. 11, 12.
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` 3
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` The facts are taken from the evidence of record that is either undisputed as indicated by the parties in the Joint
`Statement of Undisputed Facts, ECF No. 55, or not fairly disputed on the record.
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` 2
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`Case 2:19-cv-00967-MPK Document 68 Filed 02/09/21 Page 2 of 20
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`Bieda and his wife own and operate Lonestar Farms in Indiana County, Pennsylvania. ECF
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`No. 55-2 at 8-9. In January 2018, Bieda purchased a CNH 2018 Case IH 2150 12 Row 30 Planter
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`(the “Planter”) with optional attachments, including a hydraulic down force attachment, a
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`hydraulic wing down force attachment, and a 22 gpm PTO pump. These items were purchased
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`from L&W, a CNH dealer, for $168,000. ECF Nos. 55 ¶ 1, 55-1. Bieda chose the CNH Planter to
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`use with a CNH tractor already in his possession. The Planter was delivered to Bieda’s farm on
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`April 17, 2018, and it did not appear to be missing any readily identifiable items that had been
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`ordered.
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`Bieda set up the Planter himself. On May 7 and 9, 2018, an L&W technician visited
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`Bieda’s farm to confirm the set up was proper and to calibrate the Planter, as agreed in the sales
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`contract. At the time of sale and when this work was performed, L&W’s technician was not aware
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`that in 2016, CNH determined that the 22 gpm PTO Pump could not provide sufficient hydraulic
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`pressure to operate the Planter correctly. To remedy this defect, CNH developed a PTO Auxiliary
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`Hydraulic Completing Kit (the “Hydraulic Completing Kit”) to plumb the DeltaForce system
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`directly to the tractor’s hydraulics. Id. at 3-4; and see ECF Nos. 63-2, 63-3. It is undisputed that
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`CNH did not incorporate or supply this required additional equipment with Bieda’s Planter at the
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`time of delivery.
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`After calibration was completed on May 9, L&W’s representative left Bieda’s farm.
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`Shortly thereafter, Bieda attempted to operate the Planter, but received an error code indicating the
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`Planter’s attachments were not receiving necessary hydraulic pressure. Id. Bieda contacted L&W
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`several times and was instructed to take various steps to resolve the issue, but each failed. On
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`May 30, L&W’s technician returned to the farm to diagnose the malfunction. Id., and see ECF No.
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`55-2 at 198-99. The technician located a Knowledge Article that CNH published in its dealer
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`2
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`Case 2:19-cv-00967-MPK Document 68 Filed 02/09/21 Page 3 of 20
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`database on January 31, 2018. The article explained the defect with the hydraulic system and the
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`need for the Hydraulic Completing Kit to permit proper operation. The evidence is undisputed
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`that CNH failed to take steps to separately advise dealers (or purchasers) of the malfunction or the
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`need to add a Hydraulic Completing Kit with each Planter sale. ECF No. 1 ¶ 17-18.
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`L&W ordered the Hydraulic Completing Kit on May 31, 2018. However, Bieda did not
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`receive the kit until July 2. By that time, Bieda’s 2018 planting season had been completed. ECF
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`No. 55 at 4. Bieda alleges that because of the inoperable Planter, his 2018 corn crop was not
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`planted at a sufficient depth. He estimates that he suffered $250,000 in crop yield losses. ECF
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`No. 1-1 ¶¶ 15-19.
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`By letter dated January 4, 2019, Bieda’s counsel notified L&W and CNH of his crop loss
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`claim as well as implied warranty claims related to the CNH’s sale and delivery of a
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`malfunctioning Planter. ECF No. 55-10. Prior to sending this letter, Bieda concedes he did not
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`contact CNH directly to submit a warranty claim or to report the malfunction, choosing instead to
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`communicate with L&W as CNH’s authorized dealer. ECF No. 55 at 5. Because the 2018 planting
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`season was over, L&W’s technician installed the Hydraulic Completing Kit on January 22, 2019
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`in preparation for the 2019 season. Following installation, Bieda did not experience any further
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`issues with the Planter’s hydraulic pressure or DeltaForce system. Id.
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`At the beginning of the 2019 crop season and after planting 186 acres of corn, Bieda noticed
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`that the fourth row of the Planter was dragging in the field and not operating properly. Id. at 5-6.
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`Bieda identified the cause of the dragging as a bad bearing on the seed disk, which he replaced.
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`Bieda also discovered that some parts to the control linkage of the fourth row of the planter were
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`missing. Bieda replaced the missing parts and continued his planting for the 2019 season. Id.
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`3
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`Case 2:19-cv-00967-MPK Document 68 Filed 02/09/21 Page 4 of 20
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`Bieda alleges that these missing parts resulted in partial planting at an insufficient depth, and
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`additional crop yield losses. ECF No. 1-1 ¶¶ 22-24.
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`Bieda commenced this action in the Court of Common Pleas of Indiana County,
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`Pennsylvania, asserting claims for breach of implied warranties of merchantability and fitness for
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`a particular purpose, and for breach of contract. ECF No. 1-1. CNH removed the lawsuit to this
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`Court pursuant to 28 U.S.C. § 1441(b), based on diversity jurisdiction. ECF No. 1 ¶¶ 7-9. L&W
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`filed a Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, raising
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`disclaimers for breach of implied warranty claims set forth in the relevant sales documents. ECF
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`No. 7 at 6. The Court agreed that as to L&W, the disclaimers were valid and so dismissed Bieda’s
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`implied warranty claims against L&W. ECF No. 16. L&W and Bieda subsequently resolved
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`Bieda’s breach of contract claim against L&W. ECF Nos. 65-66.
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`Bieda’s remaining claim is asserted against CNH for breach of the implied warranty of
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`merchantability (Count I). ECF No. 1-1 at 8. CNH contends that it is entitled to summary
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`judgment in its favor as a matter of law for two reasons: first, because under applicable
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`Pennsylvania law, CNH validly and conspicuously disclaimed all implied warranties in its sales
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`documents and, second, because Bieda failed to provide notice to CNH of his “issues with the
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`equipment” as required by 13 Pa. C.S. § 2607(c)(1). ECF Nos. 59, 60.
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`In his Brief in Opposition, Bieda responds that CNH misrepresented the condition of the
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`Planter at the time of sale and knowingly sold defective equipment. Bieda contends that this
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`conduct renders any disclaimer of implied warranties unconscionable and void. ECF No. 63.
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`Bieda also argues that his complaints to L&W satisfy any statutory notice requirement, based on
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`L&W’s status as CNH’s authorized sales agent. Id.
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`Case 2:19-cv-00967-MPK Document 68 Filed 02/09/21 Page 5 of 20
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`In reply, CNH contends that any claim for negligent misrepresentation by CNH regarding
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`the condition of the Planter is barred by the parol evidence rule and the applicable statute of
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`limitations and is otherwise irrelevant given the clear exclusion of implied warranties. CNH
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`further responds that notice to L&W is not sufficient to provide notice to CNH, given the
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`disclaimer of an agency relationship in the relevant CNH-L&W dealer agreement. ECF No. 64.
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`The Motion for Summary Judgment is now ripe for consideration.
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`II.
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`STANDARD OF REVIEW
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`Rule 56 of the Federal Rules of Civil Procedure provides that: “[t]he court shall
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`grant summary judgment if the movant shows that there is no genuine dispute as to any material
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`fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). An issue of
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`material fact is in genuine dispute if the evidence is such that a reasonable jury could return a
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`verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
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`(1986); see also Doe v. Abington Friends Sch., 480 F.3d 252, 256 (3d Cir. 2007) (“A genuine issue
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`is present when a reasonable trier of fact, viewing all of the record evidence, could rationally find
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`in favor of the non-moving party in light of his burden of proof”). Thus, summary judgment is
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`warranted where, “after adequate time for discovery and upon motion ... a party ... fails to make a
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`showing sufficient to establish the existence of an element essential to that party’s case, and on
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`which that party will bear the burden of proof at trial.” Marten v. Godwin, 499 F.3d 290, 295 (3d
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`Cir. 2007) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)).
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`The moving party bears the initial burden of demonstrating to the court that there is an
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`absence of evidence to support the non-moving party’s case.
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` Celotex, 477 U.S. at
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`322; see also Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 140 (3d Cir. 2004). “[W]hen
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`the moving party has carried its burden under Rule 56(c), its opponent must do more than simply
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`Case 2:19-cv-00967-MPK Document 68 Filed 02/09/21 Page 6 of 20
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`show that there is some metaphysical doubt as to the material facts.... Where the record taken as a
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`whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine
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`issue for trial.” Scott v. Harris, 550 U.S. 372, 380 (2007) (quoting Matsushita Elec. Indus. Co. v.
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`Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)) (internal quotations omitted).
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`In deciding a summary judgment motion, a court must view the facts in the light most
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`favorable to the nonmoving party and must draw all reasonable inferences and resolve all doubts
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`in favor of the nonmoving party. Matreale v. N.J. Dep’t of Military & Veterans Affairs, 487 F.3d
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`150, 152 (3d Cir. 2007); Woodside v. Sch. Dist. of Phila. Bd. of Educ., 248 F.3d 129, 130 (3d Cir.
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`2001).
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`III. DISCUSSION
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`1. Unconscionability of Disclaimer of Implied Warranties
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`The parties agree that Pennsylvania law applies to Bieda’s breach of warranty claims. The
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`Pennsylvania Uniform Commercial Code defines “implied warranty of merchantability” as “a
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`warranty that the goods shall … “pass without objection in the trade,” … and “are fit for the
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`ordinary purpose for which such goods are used.” 13 Pa. C.S. § 2314. As such, Pennsylvania law
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`implies a warranty of merchantability “to protect buyers from loss where the goods purchased are
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`below commercial standards or are unfit for the buyer’s purpose.” Altronics of Bethlehem, Inc. v.
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`Repco, Inc., 957 F.2d 1102, 1105 (3d Cir. 1992).
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`To establish a breach of an implied warranty of merchantability, Bieda must prove that “(1)
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`that the product malfunctioned; (2) [he] used the product as intended or reasonably expected by
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`the manufacturer; and (3) the absence of other reasonable secondary causes.” Id. at 1105. Pursuant
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`to Section 2316, implied warranties may be excluded from the relevant sale as follows:
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`(b) Implied warranties of merchantability and fitness. — Subject to subsection (c),
`to exclude or modify the implied warranty of merchantability or any part of it the
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`language must mention merchantability and in case of a writing must be
`conspicuous, and to exclude or modify any implied warranty of fitness the
`exclusion must be by a writing and conspicuous. Language to exclude all implied
`warranties of fitness is sufficient if it states, for example, that “There are no
`warranties which extend beyond the description on the face hereof.”
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`(c) Implied warranties in general. — Notwithstanding subsection (b):
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`(1) Unless the circumstances indicate otherwise, all implied warranties are
`excluded by expressions like “as is,” “with all faults” or other language which
`in common understanding calls the attention of the buyer to the exclusion of
`warranties and makes plain that there is no implied warranty.
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`(2) When the buyer before entering into the contract has examined the goods or
`the sample or model as fully as he desired or has refused to examine the goods
`there is no implied warranty with regard to defects which an examination ought
`in the circumstances to have revealed to him.
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`(3) An implied warranty can also be excluded or modified by course of dealing or
`course of performance or usage of trade.
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`13 Pa. C.S. § 2316. CNH points to disclaimers appearing on the L&W Purchase Order and the
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`CNH Retail Installment Sale Contract and contends that this Court’s prior determination as to their
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`validity is the law of the case and precludes Bieda’s claim against it for breach of implied warranty
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`of merchantability.
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`The L&W Purchase Order states the Planter is sold new “with Case IH New manufacturer
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`warranty” and,
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`OTHER THAN THE WARRANTY OR MANUFACTURER’S WARRANTY
`REFERRED TO ABOVE, IF EITHER IS APPLICABLE, THERE ARE NO
`OTHER WARRANTIES MADE BY DEALERS OR ITS REPRESENTATIVE,
`EXPRESS OR IMPLIED, OR TO MERCHANTABILITY OR FITNESS FOR A
`PARTICULAR PURPOSE….
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`ECF No. 6-1 at 1.
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`The accompanying CNH Retail Installment Sale Contract, also executed by Bieda at the
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`time of sale, provides in bold upper-case letters at paragraph one as follows:
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`NO WARRANTY. THE EQUIPMENT IS SOLD AS IS AND WITH ALL
`FAULTS, SUBJECT TO ANY APPLICABLE MANUFACTURER’S EXPRESS,
`WRITTEN WARRANTY. NEITHER SELLER NOR MANUFACTURER MAKE
`ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
`AND SPECIFICALLY DISCLAIM THE IMPLIED WARRANTIES OF
`MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
`NEITHER SELLER NOR MANUFACTURER WILL BE LIABLE FOR ANY
`SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING
`FROM A BREACH OF THE EXPRESS WARRANTY OR ANY IMPLIED
`WARRANTY IMPOSED BY LAW.
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`ECF No. 6-2 at 2.
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`As indicated, this Court previously determined that Bieda received both disclaimers at the
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`time of purchase, that each is conspicuous and, as to L&W, that the disclaimers precluded breach
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`of implied warranty claims. See Bieda v. Case New Holland Indus., Inc., No. CV 19-967, 2019
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`WL 4888895, at *5 (W.D. Pa. Oct. 3, 2019) (citing Axalta Coating Systems, LLC v. Midwest II,
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`Inc., 217 F. Supp. 3d 813, 819 & n. 45 (E.D. Pa. 2016) (conspicuous disclaimers of implied
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`warranties of merchantability and fitness for a particular purpose are enforceable under
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`Pennsylvania law); Allen-Myland, Inc. v. Garmin Intern., Inc. 140 A.3d 677, 684-688 (Pa. Super.
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`Ct. 2016) (issue of fact is presented as to whether disclaimer is part of the parties’ bargain when
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`disclaimer is not provided to purchaser until subsequent delivery of product); Borden, Inc. v.
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`Advent Ink Co., 701 A.2d 255, 259 (Pa. Super. Ct. 1997) (where exclusion of warranties of
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`merchantability or fitness for a particular purpose appear in writing, the question to be resolved is
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`whether the exclusion is conspicuous)).
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`Bieda argues that pursuant to 13 Pa. C.S. § 2302(a), the disclaimer does not bar his implied
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`warranty claim because CNH, as the manufacturer of the Planter, knowingly placed a defective
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`product into the stream of commerce and such conduct renders the disclaimers void as
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`unconscionable.
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`Under Pennsylvania law, a court may decline to enforce a contract clause “[i]f the
`court as a matter of law finds” that the clause was “unconscionable at the time it
`was made.” To prove a contract clause was unconscionable, a plaintiff must show
`that the clause was both procedurally and substantively unconscionable. “In
`examining these two prongs, the Pennsylvania Supreme Court has indicated that it
`might be appropriate to use a ‘sliding-scale approach’ so that ‘where the procedural
`unconscionability is very high, a lesser degree of substantive unconscionability
`may be required’ and presumably, vice-versa.”
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`Harbison v. Louisiana-Pacific Corp., 602 F. App’x 884, 886-87 (3d Cir. 2015) (citing 13 Pa. C.S.
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`§ 2302(a); Quilloin v. Tenet HealthSystem Phila., Inc., 673 F.3d 221, 230 (3d Cir. 2012); and
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`citing Salley v. Option One Mortg. Corp., 925 A.2d 115, 125 n. 12 (Pa. 2007)).
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`The United States Court of Appeals for the Third Circuit has explained that “[p]rocedural
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`unconscionability pertains to the process by which an agreement is reached and the form of an
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`agreement, including the use therein of fine print and convoluted or unclear language.” Harris v.
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`Green Tree Financial Corp., 183 F. 3d 173, 181 (3d Cir. 1999). “This type of unconscionability
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`involves, for example, ‘material, risk-shifting’ contractual terms which ‘are not typically expected
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`by the party who is being asked to assent to them’ and ‘often appear [] in the boilerplate of a printed
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`form.’” Id. (quoting Germantown Mfg. Co. v. Rawlinson, 491 A.2d 138, 145-46 (Pa. Super. Ct.
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`1985)).
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`“Substantive unconscionability refers to contractual terms that are unreasonably or grossly
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`favorable to one side and to which the disfavored party does not assent. Thus, ‘[u]nconscionability
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`requires a two-fold determination: that the contractual terms are unreasonably favorable to the
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`drafter and there is no meaningful choice on the part of the other party regarding acceptance of the
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`provisions.’” Harris, 183 F. 3d at 181(internal citations omitted).
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`“The burden of proof generally concerning both elements has been allocated to the party
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`challenging the agreement, and the ultimate determination of unconscionability is for the courts.”
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`Salley v. Option One Mortg. Corp., 925 A.2d at 119–20 (citing Bishop v. Washington, 480 A.2d
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`1088, 1094 (Pa. Super. Ct. 1984), and citing, 13 Pa. C.S. § 2302).
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`a. Procedural Unconscionability
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`Bieda argues that CNH’s failure to disclose “the known incompatibility with the
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`Equipment” prevented him from an “equitable evaluation of risk evaluation,” and requires a
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`finding that the disclaimer suffers procedural unconscionability. ECF No. 63 at 9. Upon a review
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`of the evidence of record and the factors upon which meaningful choice is measured, the Court
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`agrees.
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`Contracts of adhesion, such as the warranty included with CNH’s Planter, “are generally
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`considered to satisfy the procedural unconscionability requirement,” Harbison, 602 F. App’x at
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`886–87, but are not presumptively unconscionable or unenforceable. Salley, 925 A.2d at 127.
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`Rather, “[a] more searching inquiry of the parties’ respective bargaining positions, level of
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`sophisticiation [sic], and opportunity to review an [] agreement are all relevant considerations in
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`determining whether the process was unfair.” Bush v. Comcast Cable Commc’s Mgmt., LLC, No.
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`2:19-CV-01004, 2020 WL 4199077, at *7-8 (W.D. Pa. July 22, 2020) (citing Seus v. John Nuveen
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`& Co., 146 F.3d 175, 184 (3d Cir. 1998) (overruled on other grounds, Green Tree Financial Corp.-
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`Alabama v. Randolph, 531 U.S. 79 (2000)) (where an arbitration agreement does not impose an
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`undue burden or limit statutory rights, “[u]nequal bargaining power is not alone enough to make
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`an agreement to arbitrate a contract of adhesion.”)).
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`In this case, the prescribed inquiry reveals several factors favoring a finding of fairness;
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`however, these factors fail to overcome the inherent and substantial disparity in bargaining position
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`resulting from CNH’s knowledge at the time of sale that its Planter was defective and would not
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`function as intended and reasonably expected by any purchaser.
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`Evidence in favor of fairness includes the obvious disclaimer set forth in the CNH Retail
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`Installment Sale Contract in bold upper-case letters at paragraph one of the “Agreement
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`Provisions.” Bieda is a relatively experienced businessman and had an opportunity to review the
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`agreement before the sale. He operates a commercial farm, is a part-owner in a small real estate
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`and recycling business, and for some time served as a farm equipment dealer for a different
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`manufacturer. ECF No. 55-2 at 10-16, 60-62. In this role, Bieda processed and resolved warranty
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`claims. Id. Bieda’s understanding of contracts and warranties therefore lessens the likelihood of
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`surprise as to meaning of the disclaimer.
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`In addition, there is no evidence that CNH was the only planter manufacturer, or that Bieda
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`was prevented from considering comparable planters with different warranties, or even that he
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`sought to negotiate CNH’s disclaimer in the financing process. See, e.g., Jordan v. Four Winds
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`Int’l, Inc., No. 1:08-cv-129, 2010 WL 1337691, at *13 (W.D. Pa. Mar. 31, 2010)(disclaimer of
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`implied warranties in sale of Recreational Vehicle to unsophisticated purchaser not unconscionable
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`because term was sufficiently conspicuous, is typical in vehicle sales, plaintiff participated in
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`purchase of other vehicles, and there was no evidence as to the lack of meaningful choice in
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`supplier); Vullings v. Bryant Heating & Cooling Sys., No. 18-cv-3317, 2019 WL 687881 *4 (E.D.
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`Pa. Feb. 19, 2019) (citing Quilloin, 673 F.3d at 235, district court granted motion to dismiss where
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`plaintiff failed to allege facts regarding lack of meaningful choice in home furnace supplier or
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`conduct preventing comparison of comparable products with different warranties); cf. Al’s Auto
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`Inc. v. Hollander Inc., No. 08-cv-31, 2010 WL 3855251, at *6 (E.D. Pa. Oct. 1, 2010) (plaintiff
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`alleged that it had no choice but to upgrade to a newer version of the defendant’s software because
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`its business was dependent on the prior version which it had used for nearly twenty years and
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`which the defendant ceased supporting after new version was released).
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`Case 2:19-cv-00967-MPK Document 68 Filed 02/09/21 Page 12 of 20
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`That said, in limited circumstances, courts have recognized that a manufacturer’s
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`knowledge of an inherent defect at the time of sale gives rise to a substantial disparity in bargaining
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`power sufficient to render limiting contract terms unconscionable.
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`In Carlson v. Gen. Motors Corp., 883 F.2d 287 (4th Cir. 1989), cert. denied, 495 U.S. 904
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`(1990), plaintiff automobile buyers brought an action against the seller asserting breach of implied
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`warranty claims and alleging that the breach constituted a violation of the Magnuson–Moss
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`Warranty Act (“MMWA”), 15 U.S.C. § 2301, et seq. The court’s analysis of the implied warranty
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`claim, while applied to the MMWA’s consumer protection claim, was conducted pursuant to
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`traditional Uniform Commercial Code provisions and is instructive here.
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`In the complaint, plaintiffs alleged that prior to the sales at issue, GM knew of inherent
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`defects in its diesel engine but failed to warn its customers of the likelihood of “catastrophic
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`failures.” GM raised a durational disclaimer of implied warranties in its form sales contract and
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`argued that “knowledge” of various defects has no bearing on the “reasonableness” of its warranty
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`disclaimers. The United States Court of Appeals for the Fourth Circuit agreed that if the measure
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`for unconscionability rests solely upon “reasonableness,” then a durational limitation to implied
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`warranties would not be invalidated by a manufacturer’s knowledge that a part may fail at some
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`future point because a customer should reasonably expect a diesel engine supplied by any
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`manufacturer to operate “without incident” for a given period of time. Id. at 295. However, the
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`Fourth Circuit found that unconscionability will implicate the fundamental fairness of the
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`bargaining process.
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`[W]hen presented with a claim that the inclusion of certain contractual terms
`constituted unconscionable “overreaching,” courts typically look to the parties’
`relative “bargaining power,” “sophistication,” “knowledge” and “expertise”—all
`of which constitute relevant evidence of whether their ultimate transaction was
`indeed tainted by an “absence of meaningful choice.” Surveying the cases, one
`noted treatise observes that “judicial finding[s] of lack of ‘meaningful choice’ ...
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`Case 2:19-cv-00967-MPK Document 68 Filed 02/09/21 Page 13 of 20
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`[are] usually founded upon a recipe consisting of one or more parts of assumed
`consumer ignorance and several parts of seller’s guile”; and it is at this level that
`courts have necessarily cast “unconscionability” in largely subjective terms. J.
`White & R. Summers, Uniform Commercial Code § 4–3, at 187 (3d ed.1988).
`Relevant in any such case are specific allegations that a seller abused his “superior
`knowledge” and the buyer’s relative ignorance, or that the seller’s actions were in
`some other way akin to “fraud or duress in contract formation”—the claim of course
`being that such behavior implicates the seller’s subjective good faith, the
`“evenhandedness” of the bargaining process, and thus the “conscionability” of
`challenged contractual language. See id. at 186.
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`Id. at 295–96 (internal case citations omitted). Therefore, unconscionability includes “the
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`procedural abuse of unfair surprise, usually manifested as a concealment of important facts.” Id.
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`at 296.
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`
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`The Fourth Circuit concluded that “proof that GM knew of and failed to disclose major,
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`inherent product defects would obviously suggest that its imposition of the challenged ‘durational
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`limitations’ on implied warranties constituted ‘overreaching,’ and that the disclaimers themselves
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`were therefore ‘unconscionable.’” Id. In such instances, “‘there is perforce a substantial disparity
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`in the parties’ relative bargaining power,’ giving rise to a presumption that the buyer’s acceptance
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`of any warranty disclaimers ‘was neither ‘“knowing’” nor “‘voluntary’”; thereby rendering such
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`limitations unconscionable and ineffective.” Id. (quoting Martin v. Joseph Harris Co.,767 F.2d
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`296, 301-02 (6th Cir. 1985) (overruled on other grounds as recognized in Andersons, Inc. v. Horton
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`Farms, Inc., 166 F.3d 308, 324 n.26 (6th Cir. 1998) (“In [Martin], we held unconscionable a
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`disclaimer of warranty and limitation of liability clause in a sales contract between a farmer and a
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`national seed producer…. Therein, we relied in part on the disparity in relative strength and the
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`national producer’s failure to inform the farmer that the clause altered significant statutory rights.
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`However, in addition to giving ‘considerable weight’ to the district court’s opinion that Michigan
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`law would not permit the disclaimer to be enforced (something which we no longer do, see In re
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`Grand Jury (Doe) v. United States, 932 F.2d 481, 487 (6th Cir.1991)), we made clear that we were
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`relying on the unique facts of the case: the producer discontinued a seed treatment procedure that
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`it had been using for 26 years to prevent a crop disease called ‘black leg.’ The sole notice of the
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`change was provided in the corner of one page in a catalog. A significant portion of the farmer’s
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`crop was destroyed by the disease. In reaching our decision, we noted that the defect was latent,
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`that the seed producer could have prevented it, and that the farmers had no control over it.”)
`
`
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`The district court in Osness v. Lasko Prods., Inc., 868 F. Supp. 2d 402, 411-12 (E.D. Pa.
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`2012), applied Carlson and “assum[ed] (without deciding)” that presale knowledge of a defect
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`alone is sufficient to state a claim of unconscionability. However, upon review of the plaintiff’s
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`complaint, the district court granted the defendant’s motion to dismiss based upon a durational
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`warranty limit because the plaintiff failed to plead facts establishing unconscionability. “[P]laintiff
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`has not sufficiently pleaded that Lasko knew of the alleged defect when it sold the fan at issue
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`here. Plaintiff’s complaint does not specify when or how Lasko allegedly learned of the defect;
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`nor does it specify when she purchased a fan. In short, beyond her conclusory allegation that
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`Lasko knew of the defect when it sold the fans, plaintiff has alleged no facts that would support an
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`inference that Lasko knew of the defect when she purchased her fan.” Id.
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`
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`In the instant case, the parties do not dispute that prior to Bieda’s purchase, CNH knew of
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`a fundamental flaw in the Planter’s hydraulic system that would prevent it from operating as
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`intended. Despite this knowledge, CNH failed to incorporate the parts necessary for the Planter to
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`be used as intended and as marketed at the time of sale and, more importantly, failed to disclose
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`that information to the dealer and the ultimate purchaser. These circumstances contrast with those
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`where courts employed an analysis similar to Carlson but rejected claims of unconscionability due
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`to the absence of evidence or factual allegations regarding the timing of a manufacturer’s
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`knowledge of a defect. See, e.g. Vullings, 2019 WL 687881, at *3 (durational limit on warranty
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`was not unconscionable where plaintiff alleged unspecified complaints from customers and
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`contractors but did not allege that the complaints were made before she purchased furnace); Axalta
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`Coating Sys., LLC. v. Midwest II, Inc., 217 F. Supp. 3d at 819-20 (unsupported allegations of
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`manufacturer’s knowledge that its products were defective were not enough to render a
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`straightforward disclaimer unconscionable); but cf., Al’s Auto, 2010 WL 3855251, at *7 (software
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`developer’s motion for summary judgment raising disclaimer of implied warranties was denied
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`where there were genuine issues of fact as to defendant’s knowledge that its product was defective
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`prior to sale, and whether such knowledge was sufficient to find disclaimer unconscionable as a
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`matter of law).
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`
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`Given undisputed evidence that CNH knew its Planter was defective and not merchantable
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`for its intended purpose in 2016, over two years prior to Bieda’s purchase of the Planter in 2018,
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`and the absence of any remedy at law if the disclaimer at issue is given effect, the evidence permits
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`a finding that the disclaimer, as applied to the subject transaction, is procedurally unconscionable
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`as a matter of law.
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`b.
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`Substantive Unconscionability
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`
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`As to substantive unconscionability, Bieda argues that “blanket disclaimers … meet the
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`standard of being grossly favorable to CNH in this matter.” ECF No. 63 at 9-10. The Court finds
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`merit in this argument in light of CNH’s presale knowledge of the defective Planter and the absence
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`of a remedy. Al’s Auto, 2010 WL 3855251, at *7 (contract terms unreasonably favor software
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`supplier where Beta testing revealed significant problems that were not corrected before sale); and
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`see, WEL Companies, Inc. v. Haldex Brake Products Co., 467 F. Supp. 3d 545, 565-568 (S.D.
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`Ohio 2020) (district court held that under Ohio law, defendant’s presale knowledge of brake
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`defects in defendant’s control rendered disclaimer and limitation of damages substantively and
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`Case 2:19-cv-0096