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Callaghan v. BMW of North America, LLC

United States District Court, N.D. California

November 21, 2014

MICHAEL CALLAGHAN, et al., Plaintiffs,
BMW OF NORTH AMERICA, LLC, et al., Defendants

For Michael Callaghan, Matthew Caldwell, Rodney Pena, individually, and on behalf of other members of the general public similarly situated, Plaintiffs: Mark Philip Pifko, LEAD ATTORNEY, Roland K. Tellis, Baron Budd, P.C., Encino, CA; Michael Isaac Miller, Natasha Ketan Mehta, Baron Budd, Encino, CA.

For Jeanne Dose-Alderson, Steve Mueller, Plaintiffs: Michael Isaac Miller, Baron Budd, Encino, CA; Mark Philip Pifko, Baron Budd, P.C., Encino, CA.

For BMW of North America, LLC, a New Jersey limited liability company, Bayerische Motoren Werke AG, a corporation organized under the laws of the Federal Republic of Germany, Defendants: Troy Masami Yoshino, LEAD ATTORNEY, Aengus Hartley Carr, Carroll, Burdick & McDonough LLP, San Francisco, CA.


JAMES DONATO, United States District Judge.

This is a consumer class action brought by five named plaintiffs, each of whom owns a Mini Cooper " S model" vehicle. The defendants are BMW of North America, LLC (" BMW NA") and its ultimate parent corporation in Germany, Bayerische Motoren Werke AG (" BMW AG"). The operative version of plaintiffs' complaint centers on defendants' alleged failure to disclose to consumers that the automatic transmissions in the S model vehicles are " prone to premature failure." Pending before the Court are defendants' motions to dismiss the complaint. The Court grants the motion brought by BMW NA with leave to amend, and denies BMW AG's motion as moot.


The current iteration of plaintiffs' complaint -- the second amended complaint -- represents plaintiffs' third attempt to state a claim. Plaintiff amended once as of right, and the Court previously granted defendants' motions to dismiss plaintiffs' first amended complaint with leave to amend. Dkt. No. 33. The main allegation in plaintiffs' first amended complaint was that defendants failed to disclose that " the automatic transmission fluid would need to be replaced at some point during the lifetime of the vehicles." Id. at 1. Plaintiffs alleged that they were led by defendants " to believe their vehicles were equipped with 'lifetime' automatic transmission fluid that need never be changed." Id. at 2. The Court dismissed that complaint primarily for lack of standing. The Court found, among other things, that the complaint " does not make clear the nature of plaintiffs' injury" or directly allege " a causal link between the alleged misrepresentations and omissions by the BMW group and the named plaintiffs' transmission failures." Id. at 5.

Somewhat surprisingly, the second amended complaint completely shifts gears. In the prior dismissal order, the Court noted that " [w]hile plaintiffs make passing reference to the notion that the transmissions in plaintiffs' vehicles failed prematurely, the gravamen of their complaint is that they failed to perform necessary maintenance to the transmissions as a result of misstatements and omissions in the vehicles' marketing and maintenance program." Dkt. No. 33 at 11. But in the second amended complaint, the prior claims about the vehicles' marketing and maintenance program have been dropped completely, and what used to be a " passing reference" to the premature failure of the transmissions has now been brought front and center. Indeed, the first substantive allegation in the second amended complaint is that " BMW Group fails to disclose to consumers that the automatic transmissions in the Class Vehicles are prone to premature failure." Dkt. No. 43 ¶ 3. See also id . ¶ 6 (" This case concerns BMW Group's failure to disclose a material problem and safety issues concerning the Class Vehicles' Automatic Transmissions. The Automatic Transmissions in the Class Vehicles are prone to premature failure, before the end of the useful life of the Class Vehicles, and well before consumers reasonably expect any such failure to occur."). Plaintiffs allege that they " would not have bought the Class Vehicles had they known that the Automatic Transmissions installed were prone to unavoidable and dangerous premature failure." Id. ¶ 10.

Against this pleading backdrop, plaintiffs assert eight claims for relief on behalf of themselves and the putative nationwide class (as well as California, New York, Washington and Alabama subclasses): (1) violation of the Consumer Legal Remedies Act, Cal. Civ. Code § 1750 et seq.; (2) violation of the Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq.; (3) violation of the New York Deceptive Practice Act, N.Y. Gen. Bus. Law § 349; (4) violation of the New Jersey Consumer Fraud Act, N.J. Stat. § 56:8-1 et seq.; (5) violation of the Washington Consumer Protection Act, Revised Code of Washington § 19.86 et seq.; (6) suppression of material fact, Code of Alabama § 6-5-102; (7) fraud; and (8) unjust enrichment. See Dkt. No. 43 at 30-44.

Defendant BMW NA moves to dismiss under FRCP 12(b)(1), for lack of standing to sue, and under FRCP 12(b)(6), for failure to state a claim. Dkt. No. 50. BMW AG joins BMW NA's motion to dismiss, but also separately moves to dismiss on the ground that plaintiffs " impermissibly resort to group pleading to mask the absence of any facts supporting a plausible claim against BMW AG." Dkt. No. 51.



As stated in the Court's prior dismissal order, a motion to dismiss under FRCP 12(b)(1) challenges the court's subject matter jurisdiction over the asserted claims. A jurisdictional challenge under Rule 12(b)(1) may be made either on the face of the pleadings or by presenting extrinsic evidence. See Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003). A district court accepts all allegations of fact in the complaint as true and construes them in the light most favorable to the plaintiff. See id . (citing Zimmerman v. City of Oakland, 255 F.3d 734, 737 (9th Cir. 2001)).

Dismissal under FRCP 12(b)(6), the other rule invoked by defendants, " 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. 1990) (citation omitted). To avoid dismissal, a complaint must allege " enough facts to state a claim to relief that is plausible on its face." Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). " A claim has facial plausibility when the pleaded factual content 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly at 556). " [F]or a complaint to survive a motion to dismiss, the non-conclusory 'factual content, ' and reasonable inferences from ...

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