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IN RE SONY GRAND WEGA KDF-E

November 30, 2010

IN RE SONY GRAND WEGA KDF-E A10/A20 SERIES REAR PROJECTION LEAD HDTV TELEVISION LITIGATION


The opinion of the court was delivered by: Irma E. Gonzalez, Chief JudgeUnited States District Court

MEMBER CASE NOS:

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS PLAINTIFFS FIRST AMENDED CONSOLIDATED COMPLAINT [Doc. No. 52]

Presently before the Court is Defendants' motion to dismiss Plaintiffs' First Amended Consolidated Complaint ("FACC") pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 9(b), brought by Defendants Sony Corporation of America ("SCA"), Sony Electronics Inc. ("SEI"), and Sony Corporation ("SC," and collectively, "Sony" or "Defendants"). Doc. No. 52. Plaintiffs have opposed the motion, Doc. No. 55, and Defendants have replied to that opposition. Doc. No. 56. Both parties appeared before the Court for oral argument on November 8, 2010. For the reasons stated herein, the Court GRANTS WITH PREJUDICE Defendants' motion to dismiss.

FACTUAL BACKGROUND

This case is a putative class action. Plaintiffs are a group of individuals who purchased and used Sony Grand WEGA KDF-E A10 and A20 Series televisions that were manufactured by Defendants and offered for sale beginning in the second half of 2005 ("2005 Models" or "televisions"). Sony marketed the televisions as offering superior picture quality to that of standard televisions and being capable of taking full advantage of High-Definition Television ("HDTV") programming.*fn1

Plaintiffs paid $2,500 or more for the televisions.

Sony expressly warranted the televisions for one year. The express, limited warranty ("Express" or "Limited Warranty") provided that, at the conclusion of the one-year Express Warranty period, all express and implied warranties would be waived.*fn2

At sometime after the Express Warranty period ended, the televisions began to display anomalies, including bright blue, yellow, and green spots, stains, and haze. Those anomalies were allegedly caused by a defect inherent in the LCD rear-projection technology utilized in the televisions' "optical block"-the component part of the televisions that causes the video signal to be displayed as a picture on the viewing screen. Replacing an optical block in the 2005 Model televisions costs approximately $1,500, including labor. Plaintiffs claim they requested that Sony, free of charge, repair the optical blocks in the malfunctioning televisions. However, because the alleged defect did not manifest itself until after the warranty expired, Sony refused to repair the problem at no cost.

PROCEDURAL HISTORY

Nearly two years and four complaints after its inception, this matter lingers in the pleading *fn3 Plaintiffs filed the original complaint on December 8, 2008, which was initially assigned to Judge Whelan. Sony moved to dismiss the original complaint. Docket No. 4. The parties thereafter agreed that if Defendants withdrew that motion then Plaintiffs would file an amended complaint. Doc. No. 7. Plaintiffs filed their First Amended Complaint on February 18, 2009, Doc. No. 8, and Sony filed a second motion to dismiss on March 20, 2009. Doc. No. 12. Plaintiffs' counsel filed two other related actions in this court: (1) Bolton et al. v. Sony Corp. of America, Inc., et al., No. 09-CV-0620, on March 25, 2009, and (2) Bashore, et al. v. Sony Corp. of America, Inc., et al., No. 09-CV-0736, on April 10, 2009. Soon thereafter, Plaintiffs moved to consolidate all three actions. Doc. No. 17. On July 30, 2009, the Court granted Plaintiffs motion to consolidate and denied Sony's then-pending motion to dismiss as moot. Doc. No. 25.

On August 14, 2009, Plaintiffs filed a Consolidated Complaint alleging eight causes of action against Defendants. Doc. No. 26. In short, Plaintiffs allege that Sony knew about the defect in the optical block at the time the televisions were sold, making the televisions defective upon delivery. Defendants responded by filing a motion to dismiss on September 3, 2009. Doc. No. 27.

Judge Whelan stayed the case on October 28, 2010, pending the outcome of a referral to the Judicial Panel on Multidistrict Litigation. Doc. Nos. 32 & 37. Judge Whelan lifted the stay on November 17, 2010, Doc. No. 37. On February 2, 2010, Plaintiffs moved to consolidate a third related case filed in this Court-Mayer v. Sony Corp. of America, Inc., et al., No. 09-CV-2703- with the previously consolidated cases and to appoint interim counsel. Doc. No. 38. Judge Whelan granted those motions. Doc. No. 48.

The parties later filed a joint motion to strike three paragraphs of the complaint regarding confidential sources at Sony, which Judge Whelan granted. Doc. Nos. 40 & 41.

On August 6, 2010, the Court granted-in-part and denied-in-part Defendants' motion to dismiss, and dismissed, with leave to amend, seven of Plaintiffs' eight causes of action. Judge Whelan denied the motion to dismiss the claim for breach of Express Warranty.

On August 12, 2010, the case was reassigned to Chief Judge Gonzalez.

Plaintiffs filed the FACC on August 30, 2010, which sets forth the same eight causes of action included in the first consolidated complaint: (1) Unlawful and Unfair Business Acts and Practices in Violation of California's Unfair Competition Law ("UCL"), CAL. BUS. & PROF. CODE §§ 17200- 17210; (2) Untrue and Misleading Advertising in Violation of California's False Advertising Law ("FAL") CAL. BUS. & PROF. CODE §§ 17500-17509; (3) Unlawful Practice in Sale of Consumer Goods in Violation of California Consumers Legal Remedies Act ("CLRA"), CAL. CIV. CODE § 1750-1784; (4) Unfair and Deceptive Acts and Practices Under the Various State Laws in Which Class Members Reside; (5) Violations of California Song-Beverly Consumer Warranty Act ("Song-Beverly Act" or "SBA"), CAL. CIV. CODE §§ 1790-1795.8; (6) Violations of the Magnuson-Moss Warranty Act ("Magnuson-Moss Act" or "MMWA"), 15 U.S.C. §§ 2301-2312; (7) Breach of Express Warranty; and (8) Breach of Implied Warranty. Defendants filed the current motion to dismiss all eight of the FACC's claims on September 9, 2010.*fn4 Doc. No. 52. Plaintiffs timely filed an opposition to the motion, Doc. No. 55, to which Defendants timely replied. Doc. No. 56.

Plaintiffs' FACC added two named plaintiffs. One of them is a California resident, bringing the number of named plaintiffs from California to two. Doc. No. 51. Plaintiffs also attempted to strengthen their allegations that Sony was aware of the defect based on (1) certain patent applications filed by Sony and (2) Sony's experience with earlier-model televisions that Sony began selling in 2003 ("Predecessor Models" or "2003 Models"), which "utilize[d] the same core technology in the design of their Optical Blocks" and experienced problems due to the same defect. Id. ¶¶ 64-66. The remainder of the FACC is identical to the First Consolidated Complaint.

DISCUSSION

Legal Standard

A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a) (2009). A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R. Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court must accept all factual allegations pleaded in the complaint as true, and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir.1996). The Court is not bound, however, to accept "legal conclusions" as true. Ashcroft v. Iqbal, -- U.S. --, 129 S. Ct. 1937, 1949-50 (2009).

To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations; rather, it must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). However, "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555 (citation omitted). "Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. (citation omitted). In spite of the deference the court is bound to pay to the plaintiff's allegations, it is not proper for the court to assume that "the [plaintiff] can prove facts that [he or she] has not alleged or that defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

But "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. at 1950. A claim has "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 1949 (citing Twombly, 550 U.S. at 556). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. "Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.'" Id. (quoting Twombly, 550 U.S. at 557).

Complaints alleging fraud must satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Rule 9(b) requires that in all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally. A pleading is sufficient under Rule 9(b) if it "state[s] the time, place and specific content of the false representations as well as the identities of the parties to the misrepresentation." Misc. Serv. Workers, Drivers & Helpers v. Philco-Ford Corp., 661 F.2d 776, 782 (9th Cir.1981) (citations omitted); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Cooper v. Picket, 137 F.3d 616, 627 (9th Cir. 1997)) ("Averments of fraud must be accompanied by 'the who, what, when, where, and how' of the misconduct charged."). Additionally, "the plaintiff must plead facts explaining why the statement was false when it was made." Smith v. Allstate Ins. Co., 160 F. Supp. 2d 1150, 1152 (S.D. Cal. 2001) (citation omitted); see In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1549 (9th Cir. 1994) (en banc) (superseded by statute on other grounds).

Regardless of the title given to a particular claim, allegations grounded in fraud are subject to Rule 9(b)'s pleading requirements. See Vess, 317 F.3d at 1103-04. Even where fraud is not an essential element of a consumer protection claim, Rule 9(b) applies where a complaint "rel[ies] entirely on [a fraudulent course of conduct] as the bases of that claim . . . the claim is said to be 'grounded in fraud' or to 'sound in fraud,' and the pleading . . . as a whole must satisfy the particularity requirement of Rule 9(b)." Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009) (quoting , 317 F.3d at 1103-04); Brothers v. Hewlett-Packard Co., No. C-06-02254 RMW, 2006 WL 3093685, at *7 (N.D. Cal. 2006).

Analysis

The Court addresses the sufficiency of each of Plaintiffs' eight claims below, largely in the order that they were pleaded in the FACC. Because Plaintiffs' first four causes of action arise under various consumer protection statutes with similar pleading requirements-California's UCL, FAL, and CLRA, as well as alternative claims under various other states' consumer protection statutes-the Court will first address the issues common to those four claims, and will next discuss issues specific to each individual claim. The Court then addresses Plaintiffs' fifth through eighth causes of action in the order they were pleaded, except that the court addresses Plaintiffs' sixth cause action, for violations of the Magnuson-Moss Act, last.

For the reasons stated below, the Court GRANTS Defendants' motion to dismiss each of Plaintiffs' eight causes of action under Federal Rules of Civil Procedure 12(b)(6) and 9(b).*fn5 Because it appears to the Court that Plaintiffs cannot amend their complaint to sufficiently state any of their claims, the Court DISMISSES Plaintiffs' claims WITH PREJUDICE.

A.Plaintiffs' First Four Causes of Action: Claims Under Various Consumer Protection Statutes.

Plaintiffs' first four causes of action arise under three California consumer protection statues- the UCL, the FAL, and the CLRA-as well as consumer protection statutes from approximately forty other states ("Consumer Protection Statutes"). Plaintiffs' claims under each of those statutes stem from the same basic allegations: (1) at the time Plaintiffs purchased the televisions, Sony was aware that the televisions' optical block suffered from a latent defect that would negatively affect the quality of the images displayed by the televisions; (2) despite its awareness of the defect, Sony, in advertisements and other marketing materials, misrepresented the quality of the televisions by claiming they were of "high," "superior," and "excellent" quality; that the televisions offered a picture quality far superior to that offered by standard televisions; and that the televisions were able to take full advantage of HDTV programming and to reproduce video programs with a clear picture and accurate color reproduction; (3) Sony omitted any mention of the defect to consumers; (4) Sony's claims about the televisions' quality induced consumers to pay $2,500 or more for the televisions; and (5) rather than function as Sony advertised, the televisions eventually displayed colorful spots and other blemishes that interfered with the picture. Such claims are rooted in theories of fraudulent concealment and fraudulent misrepresentation and therefore must satisfy Rule 9(b)'s heightened pleading requirements. See Meinhold v. Sprint Spectrum, 2007 WL 1456141, at *6 (E.D. Cal. 2007) (California consumer protection claims that manufacturer knowingly made false statements concerning products were subject to Rule 9(b)); Brothers, 2006 WL 3093685, at *6-7 (applying Rule 9(b) where allegations that manufacturer was aware of defect and made misrepresentations about products); see Meserole v. Sony Corp. of Am., Inc., No. 08 Cv. 8987 (RPP), 2009 WL 1403933, at *3 (S.D.N.Y. May 19, 2009) (finding, in a nearly identical case involving the Plaintiffs' counsel and the same Defendants as in this matter, that Rule 9(b) applies because "the crux of Plaintiffs' claim is that Sony was aware of the design defect inherent in the Optical Block but intentionally failed to disclose its existence to consumers").

Plaintiffs have failed to plead their Consumer Protection claims with sufficient particularity to satisfy Rule 9(b). First, in addition to failures particular to each of the specific statutes, the claims under the Consumer Protection Statutes fail because the alleged misrepresentations are nothing more than mere puffery. "Generalized, vague, and unspecified assertions constitute 'mere puffery' upon which a reasonable consumer could not rely, and hence are not actionable." Oestreicher v. Alienware , 544 F. Supp. 2d 964, 973 (N.D. Cal. 2008) (internal quotation marks and citations omitted), aff'd by 322 Fed. Appx. 489 (9th Cir. Apr. 2, 2009). Vague or highly subjective claims about product superiority amount to non-actionable puffery; only "misdescriptions of specific or absolute characteristics of a product are actionable." Id. (quoting Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1145 (9th Cir. 1997)). Thus, "generalized and vague statements of product superiority such as 'superb, uncompromising quality' . . . are non-actionable puffery." Id. (citations omitted).

Plaintiffs in this case have not alleged that Sony made any misstatements about absolute characteristics of the televisions. Instead, Plaintiffs rest their claims on alleged representations that the televisions were of "high" or "superior" quality. See FACC ¶¶ 56-58, 71, 74. Such statements are mere puffery and cannot support a claim under the UCL, FAL, or CLRA. See Oestreicher, 544 F. Supp. 2d at 973-74 (dismissing UCL and FAL claims based on "generalized and vague statements of product superiority"); Tietsworth v. Sears, --F. Supp. 2d--, 2010 WL 1268093, at *10-12 (N.D. Cal. Mar. 31, 2010) (dismissing UCL and CLRA claims because the defendant's representations "that the [product in question was] 'designed, manufactured and tested for years of dependable operations' . . . are mere puffery, . . . and they as a matter of law could not deceive a reasonable consumer"); see also Anunziato v. eMachines, Inc., 402 F. Supp. 2d 1133, 1139-41 (C.D. Cal. 2005) (finding representations that a notebook computer was of "high quality," was "reliable," offered "high performance," and employed the "latest technology" amounted to non-actionable puffery, while representations that the computers included "brand-name components" and were subject to the "most stringent quality control test" were actionable because they were specific factual allegations which could be proved or disproved through discovery).

Second, even to the extent that one might construe any of Sony's representations as relating to absolute characteristics, Plaintiffs have not sufficiently alleged that those representations were untrue or misleading at the time they were made. Plaintiffs have only alleged that the televisions stopped rendering a quality image after some unspecified period of time-but, in any event, not until after the warranty period expired. A manufacturer's failure to disclose a fact that it has no affirmative duty to disclose cannot be "likely to deceive" reasonable consumers. See Daugherty v. Am. Honda Motor Co., , 144 Cal. App. 4th 824, 833-38 (2006) (discussing the UCL and the CLRA). For a statement to be deceptive or misleading, consumers must have held expectations about the matter in question. Id. Where a manufacturer has expressly warranted a product, consumers can only expect that product to function properly for the length of the manufacturer's express warranty. See id. Plaintiffs have not alleged that the televisions failed to live up to Sony's representations ...


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