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Ho v. Toyota Motor Corp.

United States District Court, N.D. California

March 14, 2013

MUI HO, SHELDA ANGLIN, and TED FLORY, individually, and on behalf of other members of the general public similarly situated, Plaintiffs,
v.
TOYOTA MOTOR CORPORATION and TOYOTA MOTOR SALES, U.S.A., INC., Defendants

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[Copyrighted Material Omitted]

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For Mui Ho, Shelda Anglin, Ted Flory, individually, and on behalf of other members of the general public similarly situated, Plaintiffs: Neda Roshanian, LEAD ATTORNEY, Mark Yablonovich, Law Offices of Mark Yablonovich, Los Angeles, CA; Christopher E Swanson, Strategic Legal Practices, Los Angeles, CA; Dara Tabesh, EcoTech Law Group, P.C., San Francisco, CA; David Lishian Cheng, Jordan L. Lurie, Capstone Law APC, Los Angeles, CA; Payam Shahian, Strategic Legal Practices, APC, Los Angeles, CA.

For Toyota Motor Sales, U.S.A., Inc., Defendant: Michael Lawrence Mallow, LEAD ATTORNEY, Darlene Mi-Hyung Cho, Denise A. Smith-Mars, Loeb & Loeb LLP, Los Angeles, CA.

For Toyota Motor Corporation, Defendant: Darlene Mi-Hyung Cho, Loeb & Loeb LLP, Los Angeles, CA.

OPINION

SAMUEL CONTI, UNITED STATES DISTRICT JUDGE.

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ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

I. INTRODUCTION

Now before the Court is Defendants Toyota Motor Sales, U.S.A., Inc. (" TMS" ) and Toyota Motor Corporation's (collectively " Defendants" ) motion to dismiss Plaintiffs Mui Ho, Shelda Anglin, and Ted Flory's (" Plaintiffs" ) First Amended Class Action Complaint. ECF No. 27 (" MTD" ); ECF No. 21 (" FAC" ). The motion is fully briefed, ECF Nos. 32 (" Opp'n" ), [1] 34 (" Reply" ),

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and suitable for decision without oral argument, Civ. L.R. 7-1(b). For the reasons explained below, the Court GRANTS in part and DENIES in part Defendants' motion.

II. BACKGROUND

The named Plaintiffs are three purchasers of Defendants' Lexus RX vehicles produced between the years of 2004 and 2009 (the " Class Vehicles" ). FAC ¶ 1. They bring this putative class action on their own behalf and that of all other purchasers or lessees of the Class Vehicles. Id. ¶ ¶ 1, 80-89. Plaintiffs claim that the Class Vehicles' headlamp assemblies are defective because they are prone to condensation and moisture retention. Id. ¶ ¶ 3-4. These problems eventually cause the headlamps to become dangerously dim or to fail completely, posing safety hazards and creating expense for the Class Vehicles' owners. Id. ¶ ¶ 5-7. Plaintiffs allege harms based on these hazards and expenses. Id. ¶ 17-19.

Plaintiffs claim that they had no way to discover the alleged defects until the headlamps began to pose problems. See id. ¶ ¶ 48-49. However, they claim that Defendants were aware of the Class Vehicles' headlamp problems as early as 2004, due to Defendants' exclusive knowledge of and access to facts like " pre-release testing data, early consumer complaints . .., testing, and other internal investigation conducted in response to those complaints." Id. ¶ ¶ 48-49. Despite this alleged knowledge, Defendants never publicly disclosed any defects or issued a recall. Id. ¶ ¶ 11-19, 57-58. According to Plaintiffs, Defendants chose instead to provide haphazard " temporary fixes" that provided stopgap relief to consumers until the problem inevitably manifested again after the Class Vehicles' express warranty periods. Id. ¶ ¶ 11-19. As further proof of Defendants' knowledge of the alleged defect and failure to disclose it, Plaintiffs point to Defendants' issuance of two technical service informational bulletins (" TSIB(s)" ) to their dealers in 2007 and 2010. Id. Both TSIBs addressed the alleged headlamp defect. Id. The 2007 TSIB stated that dealers could provide new headlamps to replace the old ones, and the 2010 TSIB informed dealers that " improved headlamp housings" were available to replace the old headlamps. Id. ¶ ¶ 8-12. Plaintiffs allege that all of these repair parts were defective too. Id.

Plaintiffs Ho and Flory bought used Class Vehicles in 2007 and 2011, respectively. Id. ¶ ¶ 20, 30. Plaintiff Anglin bought a new Class Vehicle from an authorized dealer in 2006. Id. ¶ 35. Plaintiff Ho complained about her passenger side headlamp's moisture problems three times, in January 2008, January 2010, and January 2012. Id. ¶ ¶ 20-28. Each time she had it replaced at one of Defendants' dealerships. Id. Her 2008 repair was covered under her warranty, but Plaintiff Ho paid $1,000 and $155.88, respectively, for the latter two repairs. Id. ¶ ¶ 24, 28. Plaintiff Anglin complained about a similar problem in March 2008 and again in either December 2008 or January 2009. Id. ¶ ¶ 32-33. On her first visit, Defendants' dealer verified her complaint but refused to repair it, contending that such moisture issues were normal and not repairable. Id. ¶ 32. On the second visit, the dealer again verified her problems and refused repair, stating that water intrusion and oxidation were not covered under her warranty. Id. ¶ 33. Plaintiff Flory first complained about his headlamp in January 2012, bringing it to a dealer per Defendants' instructions in February 2012. Id. ¶ ¶ 37-38. There he was

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told that Toyota would repair the headlamp for $185. Id. He refused the repair and the charges, choosing instead to attempt to remedy his headlamp's moisture problems on his own. Id. ¶ 38.

Based on the facts described above, Plaintiffs initially asserted six causes of action against Defendants: (1) violation of California's Consumer Legal Remedies Act (" CLRA" ), Cal. Civ. Code § § 1750 et seq.; (2) violation of California's Unfair Competition Law (" UCL" ), Cal. Bus & Prof. Code § § 17200 et seq., pursuant to California's Secret Warranty Law, Cal. Civ. Code § § 1795.90 et seq.; (3) violation of the UCL on grounds other than violation of California's Secret Warranty Law; (4) fraud by omission; (5) breach of implied warranty pursuant to the Song-Beverly Consumer Warranty Act, Cal. Civ. Code § § 1792 and 1791.1 et seq.; and (6) breach of express warranty under California Commercial Code section 2313, exclusively asserted against Defendant TMS. In their opposition brief, Plaintiffs withdrew their UCL claim based on the California Secret Warranty Law. Opp'n at 24 n.23. Defendants' motion to dismiss asserts that Plaintiffs fail to state claims under any of the remaining five causes of action. See MTD at 1-2.

III. LEGAL STANDARD

A. Motions to Dismiss

A motion to dismiss under Federal Rule of Civil Procedure 12(b) (6) " tests the legal sufficiency of a claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). " Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). " When 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." Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). However, " the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). The court's review is generally " limited to the complaint, materials incorporated into the complaint by reference, and matters of which the court may take judicial notice." Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1061 (9th Cir. 2008) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007)).

B. Rule 9(b)

Claims sounding in fraud are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b), which requires that a plaintiff alleging fraud " must state with particularity the circumstances constituting fraud." See Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009). " To satisfy Rule 9(b), a pleading must identify the who, what, when, where, and how of the misconduct charged, as well as what is false or misleading about [the purportedly fraudulent] statement, and why it is false." United States ex rel Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (internal quotation marks and citations omitted).

IV. DISCUSSION

A. Warranty Claims

i. Breach of Implied Warranty

The Song-Beverly Consumer Warranty Act, Cal. Civ. Code § 1792 (" Song-Beverly" ), provides that " every sale of consumer

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goods that are sold at retail in [California] shall be accompanied by the manufacturer's and the retail seller's implied warranty that the goods are merchantable." " Consumer goods" means " any new product or part thereof that is used, bought, or leased for use primarily for personal, family, or household purposes, except for clothing and consumables." Id. § 1791(a).

Defendants argue that Plaintiffs' claims under Song-Beverly fail as to Plaintiffs Ho and Flory, because they purchased used Class Vehicles. MTD at 5. Defendants apparently concede that Plaintiff Anglin has a valid claim under this cause of action, since they do not argue otherwise. See id.; Opp'n at 23 n.20. Plaintiffs respond as to Plaintiff Ho that Song-Beverly applies to used goods notwithstanding section 1791 if an express warranty was given during the used goods' sale. They claim that she may plead an implied warranty claim under Song-Beverly, because there is no dispute that she was given an express warranty when she bought her used Class Vehicle, and because a defendant can be held to have breached an implied warranty by selling a product with a latent defect. Opp'n at 23 (citing Cal. Civ. Code § 1795.5(c); Mexia v. Rinker Boat Co., 174 Cal.App.4th 1297, 1304-05, 95 Cal.Rptr.3d 285 (Cal. Ct. App. 2009)). Plaintiffs concede that they have no claim as to Plaintiff Flory under Song-Beverly, because his express warranty had expired by the time he purchased his Class Vehicle. Id. at 24.

The Court finds that Plaintiffs have not pled a breach of implied warranty as to Plaintiff Ho. Song-Beverly provides that the duration of the implied warranty for used goods extends only up to three months after purchase from a distributor or retail seller. Plaintiffs did not plead exactly when or from whom Plaintiff Ho purchased her Class Vehicle in 2007, and the Court cannot assume, without facts, that Plaintiff Ho's purchase of her Class Vehicle fell within ...


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