Blank Rome Secures Federal District Court Dismissal of Claims for Carvana LLC
A Blank Rome team representing Carvana LLC procured a federal district court dismissal of fraud, negligent misrepresentation, Unfair Trade Practices and Consumer Protection Law, and Pennsylvania Board of Vehicles Act claims.
The court dismissed the tort claims under the “gist of the action” and “economic loss” doctrines and ultimately found that Pennsylvania auto regulations do not reach Carvana sales even where Carvana has a dealer’s license and one of its signature auto “vending machines” for vehicle pickup located in the state. After dismissing Carvana’s General Counsel on personal jurisdiction grounds, Judge Beetlestone, U.S. District Court of the Eastern District of Pennsylvania, wrote:
“…, the transaction took place online, because as Carvana’s website and Annual Reports explain, it is an online-only business and consumers ‘execut[e] their purchases’ digitally. While Plaintiff describes these stipulations [to Georgia as the location of the transaction] and the online-only business model as a sham, the Court need not accept such conclusory labels … Okulski has offered no authority compelling extension of the BVA’s reach to an online transaction that stipulated the Vehicle was being sold by a Georgia dealer.”
The decision represents one of the first rulings on Carvana’s unique online-only vehicle sales models, which will set important precedent throughout the country for the extraterritorial reach of state regulations in the industry and beyond to e-commerce transactions. To learn more, please read the full Opinion.