## Facts

- 119 named plaintiffs, owners of 1975–1979 Volkswagen Rabbits, sued Volkswagen of America, Inc. alleging a defective valve-stem seal material that hardened and broke over time.
- Plaintiffs claimed the defect caused excessive oil consumption and engine damage.
- Plaintiffs brought federal warranty claims under the Magnuson-Moss Warranty Act, asserting breach of written (express) warranties and state-law implied warranties (including merchantability) incorporated through the Act.
- Magnuson-Moss federal jurisdiction for a class action required at least 100 named plaintiffs and an aggregate amount in controversy of at least $50,000.
- The district court evaluated “viability” of each named plaintiff’s claim, concluded fewer than 100 had viable claims, and dismissed for lack of subject-matter jurisdiction.
- The district court also dismissed remaining individual claims, ruling they failed Rule 20(a) permissive joinder and thus could not be aggregated to meet the $50,000 threshold.

## Issues

1. Whether the district court improperly resolved merits questions when determining if at least 100 named plaintiffs existed for Magnuson-Moss jurisdiction.
2. Whether Magnuson-Moss implied-warranty claims are subject to state-law privity requirements.
3. Whether a time-limited express warranty covers a latent defect that existed during the warranty term but manifested after expiration.
4. Whether joint owners of a single vehicle count as more than one “named plaintiff” toward the 100-plaintiff jurisdictional requirement.
5. Whether the district court erred in denying permissive joinder under Rule 20(a) for plaintiffs alleging the same design defect.

## Decision

- Affirmed that state-law privity rules apply to implied-warranty claims brought under Magnuson-Moss.
- Affirmed that a limited-duration express warranty does not cover defects that first manifest after the warranty period ends.
- Affirmed that joint owners of a single vehicle count as one named plaintiff for Magnuson-Moss’s 100-named-plaintiff requirement.
- Reversed the district court’s jurisdictional dismissal to the extent it depended on adjudicating the merits of individual claims to decide whether the 100-named-plaintiff requirement was satisfied.
- Reversed the denial of permissive joinder under Rule 20(a), holding the claims were sufficiently related because they centered on the same alleged defect.
- Remanded for further proceedings.

## Legal Principles

- A court may not dismiss for lack of subject-matter jurisdiction by deciding merits questions unless the federal claim is wholly insubstantial or frivolous; jurisdictional screening cannot substitute for adjudication on the merits.
- Magnuson-Moss creates a federal cause of action for breach of warranty but relies on state law to define implied warranties, including any privity prerequisites.
- A written warranty limited by time or mileage generally covers only nonconformities that manifest within the warranty period; the existence of a latent defect during the warranty term does not extend coverage past expiration.
- For Magnuson-Moss’s 100-named-plaintiff jurisdictional minimum, joint ownership of a single product supports one plaintiff-count because it corresponds to a single transaction and injury.
- Rule 20(a) permissive joinder is satisfied where plaintiffs’ claims arise from a common alleged product defect and share common questions of law or fact, even if failures occur at different times and with varying symptoms.

## Conclusion

The Second Circuit confined implied warranties under Magnuson-Moss to state-law requirements (including privity), enforced time limits in express warranties by requiring manifestation within the warranty period, rejected inflating jurisdictional counts through joint ownership, and required a proper jurisdictional inquiry while permitting joinder of similarly situated defect claims.


Abraham v. Volkswagen of Am., Inc., 795 F.2d 238 (2d Cir. 1986)