MEMORANDUM AND ORDER RE: MOTION TO DISMISS
Plaintiffs Thomas Jackson, Edna Jackson, and TJ Auto Body Services, Inc., dba TJ Enterprises, brought suit against defendants Farmers Insurance Exchange ("Farmers"), Truck Insurance ("Truck"), Bruce H. Bailey, James Gillis, and Steven Eason for discrimination and contract causes of action arising from plaintiffs' Circle of Dependability ("COD") designation and Garage Keepers insurance policy. Currently before the court is defendants' motion to dismiss the First Amended Complaint ("FAC") in its entirety for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).
I. Relevant Facts and Procedural History Plaintiffs Thomas and Emma Jackson are a married
African American couple. They have owned and operated TJ Enterprises, a automobile repair shop, for more than twenty years. (FAC (Docket No. 14) ¶ 3.) Since 1983, TJ Enterprises has been a COD repair facility with Farmers Insurance Exchange. (Id.) The benefits of being a COD repair facility include priority repair assignments from Farmers and prompt payments. (Id. ¶ 4.) Bruce Bailey, James Gillis, and Steven Eason are Caucasian Farmers employees associated with the COD program. In addition to the COD designation, plaintiffs had a Garage Keepers insurance policy, which, though marketed by Farmers, was purchased from and operated by Truck Insurance Exchange. (Id. ¶ 4a.)
In April 2011, plaintiffs performed a repair for a Farmers customer named "Aube." (Id. ¶ 10.) Farmers authorized, approved, and paid for the repair. (Id.) After the repair, Aube complained to plaintiffs about a dent in the hood and, later, about peeling paint. (Id.) The next time plaintiffs heard about the status of the vehicle, the vehicle was at American Body and Frame, another repair shop, and had been "taken apart." (Id.) Plaintiffs were told that the vehicle would be sold as salvaged. (Id. ¶ 11.) Plaintiffs claim that there was no independent inspection of the vehicle and that they were "denied the right of inspection." (Id.)
Farmers employees Eason and Gills told plaintiffs that their claim for $9,675 would be covered by the Garage Keepers Policy issued by Truck, but Truck refused to cover the claim. (Id.) Farmers employees required plaintiffs to pay the $9,675 as a condition of staying in the COD program. (Id.)
The next event*fn1 that occurred between plaintiffs and Farmers involved a Toyota 4-Runner vehicle. (Id. ¶ 12.) Plaintiffs repaired the Toyota 4-Runner in 1991, painting over the hood and fenders. (Id.) They performed all work in a "well-executed manner." (Id.) Twenty years later, in 2011, the paint ostensibly began to come off of the hood but not the fenders, despite the fact that the fenders and hood were painted with the same paint. (Id.) Plaintiffs investigated and discovered that the customer parked under a tree. (Id.) Plaintiffs allege that sap caused the paint job to fail and that there was no defect in the workmanship, material, or repair. (Id.)
On January 26, 2012, Farmers employees notified many of the referring State Farm agents that plaintiffs "will be leaving" the COD program. (Id. ¶ 13.) The same email referred customers to a competitor. (Id.) On the same day, Farmers sent a letter to plaintiffs formally terminating plaintiffs from the COD program effective February 27, 2012. (Id.)
Plaintiffs allege that the two incidents involving repair work were "pretextual" reasons for terminating plaintiffs from the COD program. (Id. ¶ 10, 12.) Defendants knew at the time that plaintiffs are African-American. (Id. ¶¶ 13-14.)
Plaintiffs filed their Complaint on April 18, 2012, bringing seven causes of action against defendants based on discrimination, breach of contract, and misrepresentation in marketing under California state law. (Compl. (Docket No. 1) ¶¶ 24-62.) Defendants moved to dismiss all causes of action. (Defs.' First Mot. to Dismiss (Docket No. 10).)
Plaintiffs filed the FAC two months later, before the court ruled on the motion to dismiss, and defendants voluntarily withdrew their motion to dismiss the Complaint. (Withdrawal of Mot. to Dismiss Compl. (Docket No. 18).)
The FAC alleges seven causes of action against defendants: (1) violation of U.S.C. § 1981; (2) breach of contractual duty (against all defendants); (3) breach of the implied obligation of good faith and fair dealing; (4) negligence; (5) breach of fiduciary duty; (6) breach of contract (against Farmers and Truck); and (7) violation of 42 U.S.C. § 1985(3). (FAC ¶¶ 24-62.) Defendants filed a motion to dismiss the FAC, (Defs.' Second Mot. to Dismiss (Docket No. 19)), which is currently before the court.
To survive a motion to dismiss, a plaintiff must plead "only 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). This "plausibility standard," however, "asks for more than a sheer possibility that a defendant has acted unlawfully," Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and "[w]here 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). In deciding whether a plaintiff has stated a claim, the court must accept the allegations in the complaint as true and draw all reasonable ...