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Clark v. LG Electronics U.S.A., Inc.

United States District Court, Ninth Circuit

October 29, 2013

JEANETTE CLARK, individually and on behalf of those similarly situated, Plaintiff,
v.
LG ELECTRONICS U.S.A., INC. and DOES 1 through 25, inclusive, Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS; DENYING DEFENDANT'S MOTION TO STRIKE Dkt. No. 20

JEFFREY T. MILLER, District Judge.

Plaintiff Jeanette Clark ("Plaintiff") filed a complaint in California state court on December 10, 2012 against LG Electronics U.S.A., Inc. ("LG"), which was later dismissed. Plaintiff filed a first amended complaint ("FAC") in California state court on January 14, 2013. On February 28, 2013, LG removed this matter to federal court. On June 7, 2013, the court granted LG's motion to dismiss Plaintiff's first amended complaint and granted Plaintiff leave to file a second amended complaint ("SAC"). On July 8, 2013, Plaintiff filed her SAC, and subsequently LG filed a motion to dismiss under Federal Rule of Civil Procedure ("Rule") 12(b)(6) and a motion to strike under Rule 12(f) on August 5, 2013. For the reasons explained below, LG's motion to dismiss is GRANTED IN PART and DENIED IN PART. Additionally, LG's motion to strike is DENIED.

BACKGROUND

In or about October 2011, Plaintiff purchased a LG refrigerator, Model No. LFX31925ST, for approximately $3, 000. SAC ¶ 9. She used her LG refrigerator in a manner consistent with its intended use. Id . The refrigerator allegedly had a Smart Cooling Plus system ("SCP system") "to keep your food fresh" and came with an express warranty for workmanship and materials. Id . ¶ 11. The refrigerator also had a LG Slim SpacePlus™ Ice System ("Ice System") located in the interior portion of the door of the refrigerator, which allegedly gives it more storage capacity than other refrigerators. Id . ¶ 10.

Within one month of owning and operating the refrigerator, Plaintiff claims the refrigerator began to have problems. Id . ¶ 12. Plaintiff alleges the Ice System would repeatedly clog and become non-operational. Id . When Plaintiff contacted LG about the problem with the Ice System, Plaintiff alleges LG informed her that she would have to empty the ice tray every day in order to prevent the Ice System from clogging. Id . When the Ice System clogged, Plaintiff alleges it sometimes caused the motor to burn out, and the refrigerator to become non-operational. Id . ¶ 63.

Additionally, Plaintiff claims the refrigerator would display various error messages and simply stop working at times. Id . When Plaintiff contacted LG about this problem, Plaintiff alleges LG instructed her to unplug the refrigerator for at least 15 minutes and then plug it back in to reboot the refrigerator's control board. Id . On occasion, plaintiff alleges this process would have to be performed multiple times in order to reboot the control board. Id . In order to reach the plug on the back of the refrigerator, Plaintiff states she had to move it out from the cupboard space and away from the wall every time she had to reboot the control board. Id . ¶ 13. When the refrigerator stopped working and when it was unplugged to reboot the control board, the refrigerator was not being cooled by the SCP system. Id . ¶ 12. This resulted in food spoiling and water from the melted ice leaking onto the floor. Id.

Plaintiff further alleges that LG was aware of these problems. Plaintiff cites several complaints from the internet, which purportedly should have put LG on notice regarding the SCP system's defects. See, e.g., id. ¶¶ 47, 57, 61, 75. Plaintiff provides complaints made on several websites, including LG's website, consumer affairs, amazon.com, and complaintsboard.com. Id . Plaintiff contends LG was aware of the problems with the Ice System because there were three complaints regarding the Ice System posted to LG's website prior to Plaintiff's purchase of the refrigerator. Id . ¶ 57. Plaintiff suggests the complaints posted on other websites evidence the repeated calls made by customers to LG's customer service line and LG's refusal or inability to repair the reported problems with this model of refrigerator. Id . ¶¶ 47, 61, 75.

Plaintiff claims LG never disclosed the extraordinary measures a consumer would need to take to keep the SCP system, the Ice System, and the refrigerator itself operational. Plaintiff contends LG's failure to disclose this information resulted in Plaintiff and the proposed class purchasing LG refrigerators that they would not have purchased otherwise, overpaying for the refrigerators, and/or incurring additional operating expenses. Plaintiff further alleges the water that leaked onto the floor when the frozen items melted caused a safety hazard and damage to the floor. Plaintiff also contends the refrigerator's operating problems required Plaintiff to throw out a significant amount of food that had spoiled, which caused Plaintiff monetary loss. Plaintiff contends other class members may have suffered from these types of injuries as well.

In this action, Plaintiff seeks to represent several classes of purchasers. Specifically, Plaintiff identifies the following state and national classes:

a. All persons in California who purchased an LG refrigerator for home use with the LG Smart Cooling Plus System (California SCP Class).
b. All persons in California who purchased an LG refrigerator for home use with the LG Slim SpacePlus™ Ice System (California Ice System Class).
c. All persons in California who purchased an LG refrigerator Model No. LFX31925ST (California Model Class).
d. All persons in the United States who purchased an LG refrigerator for home use with the LG Smart Cooling Plus System (Nationwide SCP Class).
e. All persons in the United States who purchased an LG refrigerator for home use with the LG Slim SpacePlus™ Ice System (Nationwide Ice System Class).
f. All persons in the United States who purchased an LG refrigerator Model No. LFX31925ST (Nationwide Model Class).

Plaintiff asserts six claims against LG on behalf of herself and the California Classes: (1) violation of Consumer Legal Remedies Act ("CLRA"); (2) violation of the California Business & Professions Code § 17200 et seq. ("UCL"); (3) violation of California Business & Professions Code § 17500 et seq. for false and misleading advertising ("FAL"); (4) breach of express warranty; (5) breach of implied warranty; and (6) violation of the Magnuson-Moss Warranty Act ("MMWA") (15 U.S.C. § 2301 et seq. ). The sixth claim alleging violation of the MMWA is the only claim asserted on behalf of the nationwide classes.

MOTION TO DISMISS

I. Legal Standard

For a plaintiff to overcome a Rule 12(b)(6) motion, the complaint must contain "enough facts to state a claim to relief that is plausible on its face." Bell Atl. v. Twombly , 550 U.S. 544, 570 (2007). "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." Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009). Factual pleadings merely consistent with a defendant's liability are insufficient to survive a motion to dismiss because they only establish that the allegations are possible rather than plausible. See id. at 678-79. The court should grant 12(b)(6) relief only if the complaint lacks either a "cognizable legal theory" or facts sufficient to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1990).

In addition, Rule 9(b) requires that the complaint "state with particularity the circumstances constituting fraud." The Ninth Circuit has explained that "[a]verments of fraud must be accompanied by the who, what, when, where, and how' of the misconduct charged." Vess v. Ciba-Geigy Corp. USA , 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Cooper v. Pickett , 137 F.3d 616, 627 (9th Cir. 1997)).

II. Discussion

A. Plaintiff's Standing to Sue on Behalf of the General Public

LG argues Plaintiff has improperly alleged each of her claims on behalf of "the general public." Specifically, LG contends private citizens may not bring UCL and FAL claims on behalf of the general public. See Branick v. Downey Sav. and Loan Ass'n , 39 Cal.4th 235, 240-41 (2006)(noting private persons may no longer sue under the UCL and FAL on behalf of the general public following Proposition 64). LG further asserts Plaintiff may not bring a CLRA claim on behalf of the general public because only consumers, meaning direct purchasers, fall within the parameters of consumer remedies available under the CLRA. See Schauer v. Mandarin Gems of Cal., Inc. , 125 Cal.App.4th 949, 960 (2005). Lastly, LG contends Plaintiff may not bring warranty claims on behalf of the general public because not all members of the general public are purchasers or consumers of LG products. See Burr v. Sherwin Williams Co. , 42 Cal.2d 682, 695-96 (1954). For these reasons, LG asks the court to dismiss Plaintiff's claims brought on behalf of the "general public" with prejudice. Alternatively, LG asks the court to strike the "general public" allegations pursuant to Federal Rule of Civil Procedure 12(f) as they are immaterial to Plaintiff's claims as she does not seek relief on the general public's behalf.

Plaintiff contends LG's objection is premature as the SAC expressly describes each claim as brought on behalf of Plaintiff individually and specifically-named classes as indicated directly underneath the heading of each cause of action. With regard to the UCL, Plaintiff contends she is not trying to bring an action as a private attorney general under the UCL, and alleges that representative actions remain available under the UCL subject to class action pleading. Plaintiff further contends the injunctive relief sought through her UCL claim benefits the general public because it stops a public harm. As to the CLRA, Plaintiff contends she may seek injunctive relief as a private attorney general to enjoin future deceptive practices on behalf of the general public. See Broughton v. Cigna Healthplans of Cal. , 21 Cal.4th 1066, 1080 (1999) abrogated on other grounds by AT&T Mobility LLC v. Concepcion , 131 S.Ct. 1740 (2011). However, Plaintiff makes no argument regarding her ability to bring breach of warranty claims, either express or implied, on behalf of the general public.

While Plaintiff may pursue a representative claim on behalf of a particular class under the UCL and FAL, California's Proposition 64 eliminated UCL and FAL suits on behalf of the general public unless they are brought by the Attorney General or other public authority. See Branick , 39 Cal.4th at 240-41; Friedman v. 24 Hour Fitness USA, Inc. , 580 F.Supp.2d 985, 994 (C.D. Cal. 2008) (citing Cal. Bus. & Prof. Code § 17203); see also In re Tobacco II Cases , 46 Cal.4th 298, 317 (2009). As a result, Plaintiff's UCL and FAL claims may only be brought individually and on behalf of the identified classes. The court therefore dismisses Plaintiff's UCL and FAL claims insofar as they are brought on behalf of the "general public" with prejudice and without leave to amend.

In contrast to the UCL and FAL, the CLRA allows plaintiffs to enjoin a corporation's deceptive or unlawful business practices throughout California on behalf of the general public. Meyer v. Sprint Spectrum L.P. , 45 Cal.4th 634, 645 (2009); see also Friedman , 580 F.Supp.2d at 994-95 (noting California case law suggests "there is nothing defective about pleading a claim for injunctive relief under the CLRA on behalf of the general public'")(citing Broughton , 21 Cal.4th at 1080). As Plaintiff's CLRA claim seeks injunctive relief, it may be brought on behalf of the general public.

As for Plaintiff's implied and express warranty claims, Plaintiff has not provided any legal authority for allowing a purchaser of a product to bring breach of warranty claims on behalf of the general public, many of whom have not purchased or used the product at issue. Plaintiff's warranty claims do not seek injunctive relief on behalf of consumers generally, but rather seek relief in the form of actual damages and rescission, relief which would be unrecoverable by non-purchasers. Thus, having no basis for finding Plaintiff able to bring breach of warranty claims on behalf of the general public, the court dismisses Plaintiff's breach of warranty claims brought on behalf of the general public with prejudice and without leave to amend.

B. Fraud by Omission Claims

LG alleges that Plaintiff's CLRA, [1] UCL, [2] and FAL[3] claims should be dismissed for failure to meet Rule 9(b)'s heightened pleading requirements because these fraud based claims were not pled with the requisite specificity. Plaintiff suggests the Rule 9(b) standards for pleading a fraud through omission claim "are more relaxed." However, as noted by the court in its previous order granting LG's motion to dismiss, Plaintiff's CLRA, UCL, and FAL claims are premised on fraud regardless of whether the claims allege affirmative misrepresentation or fraud through omission; therefore, Plaintiff's claims must meet Rule 9(b)'s heightened pleading requirement.[4]

Previously, the court dismissed Plaintiff's fraud through omission claims as alleged in the FAC because Plaintiff had failed to adequately define her class. MTD Order at 8-9. While the FAC indicated that the class was based on the type of technology in her refrigerator, the FAC did not explicitly define her class as such. Accordingly, the court determined Plaintiff might have a valid claim if she could appropriately define the class in the SAC.

Whereas the FAC broadly defined the classes as all persons who purchased LG refrigerators in either the United States or California, the SAC provides six distinct classes based upon the model of the refrigerator, the SSP System, the Ice System, and the purchasers' location. FAC ¶¶ 19-21; SAC ¶ 16. Unlike the FAC's overly broad class definition, the class definitions in the SAC clearly link Plaintiff's specific complaints regarding the technology used by LG to the classes of individuals she seeks to represent. In light of these more explicit class definitions, the SAC remedies the Rule 9(b) problem previously identified by the court.[5] While LG does ...


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