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Luong v. Subaru of America, Inc.

United States District Court, N.D. California

May 2, 2018

Lucia Luong, et al., Plaintiffs,
v.
Subaru of America, Inc., Defendant.

          ORDER DENYING MOTION TO DISMISS FIRST AMENDED COMPLAINT RE: DKT., 28, 42

          Yvonne Gonzalez Rogers, United States District Court Judge.

         Plaintiffs Lucia Luong and Brian Mann bring this putative consumer class action against defendant Subaru of America, Inc. (“Subaru”) alleging claims for: (1) violation of California Consumers Legal Remedies Act (Cal. Civ. Code § 1750); (2) violation of California Unfair Competition Law (Cal. Bus. & Prof. Code 17200); (3) breach of implied warranty pursuant to California Song-Beverly Consumer Warranty Act (Cal. Civ. Code §§ 1792 and 1791.1, et seq.) and Cal. Comm. Code § 2314; (4) Breach of Express Warranty (Cal. Com. Code § 2313); (5) violations of the Magnuson-Moss Warranty Act (15 U.S.C. § 2301, et seq.).; and (6) fraudulent omission. The original complaint was filed June 1, 2017. Subaru moved to dismiss and plaintiffs elected to file a First Amended Complaint on September 8, 2017. (Dkt. No. 27 [“FAC”].) Subaru moves to dismiss the FAC pursuant to Rules 9(b), 12(b)(1), 12(b)(6), and 12(f), on the grounds that plaintiffs lack standing to bring certain claims, that claims sounding in fraud are not stated with sufficient particularity, and that certain forms of relief are not available for the claims alleged. (Dkt. No. 28.)

         Having carefully considered the papers submitted in support of[1] and in opposition to the motion, and the pleadings in this action, and for the reasons set forth below, the Court the [2] Denies motion to dismiss.

         I. Background

         Plaintiffs bring this action on behalf of themselves and all persons who purchased or leased any 2015 through 2016 Subaru Outback or Legacy vehicles in the State of California (“Class Vehicles”). (FAC ¶ 49.) They allege that the Class Vehicles suffer from one or more design and/or manufacturing defects that can cause the windshield to crack, chip, and/or fracture (“Windshield Defect”). (Id. ¶ 2.) Plaintiffs allege that scores of Class Vehicle owners reported their windshields cracking for no reason at all, and many others reported windshield failure as the result of circumstances that would not cause a non-defective windshield to crack, such as a very slight impact. (Id. ¶ 3.) They contend that the Windshield Defect constitutes an unreasonable safety hazard which was known to Subaru, and that Subaru failed to disclose the defect to class members despite having a duty to do so.

         Plaintiffs support these allegations with consumer complaints, including complaints to the National Highway Traffic Safety Administration (“NHTSA”). (Id. ¶ 38.) Plaintiffs allege that, as early as 2014, Subaru was aware of the Windshield Defect through sources including pre-production testing, pre-production design failure mode and analysis data, production design failure mode and analysis data, early consumer complaints made exclusively to Subaru's network of dealers and directly to Subaru, aggregate warranty data compiled from Subaru's network of dealers, testing conducted by Subaru in response to consumer complaints, and repair order and parts data received by Subaru from Subaru's network of dealers. (Id. ¶¶ 33-37.) In the summer of 2015, Subaru made a production change to introduce an allegedly “enhanced” windshield. (Id. ¶ 25 and n.2.)

         Plaintiffs allege that, in October of 2015, Subaru admitted the existence of a defect but, in doing so, fraudulently misrepresented the nature and scope of the actual Windshield Defect. Subaru purported to extend the original New Vehicle Limited Warranty (“NVLW”) of three (3) years/36, 000 miles to five (5) years/unlimited miles for front windshield failure pursuant to a Technical Service Bulletin (“TSB”). (Id. ¶ 25.) However the warranty extension was limited to vehicles with a windshield deicer feature that had damage to the lower deicer area of the windshield. (Id.) Plaintiffs allege that Subaru denied their and others' valid warranty claims, and when Subaru replaced defective windshields, it merely replaced them with similarly defective windshields. (Id. ¶ 3.)

         Plaintiff Luong purchased a new 2015 Subaru Outback in February of 2015. In March of 2017, within the period of her vehicle's three year/36, 000 mile warranty period, Luong noticed a crack that had appeared spontaneously on her windshield from the center base upward. At no time prior to noticing this crack did Luong witness the windshield sustain an impact. Luong had her vehicle inspected by a local Subaru dealer and was denied warranty coverage. (Id. ¶ 12.)

         Plaintiff Mann purchased a new Subaru Outback in April of 2016. His vehicle post-dates the VIN range included in Subaru's warranty extension program, and thus was equipped with an “enhanced” windshield. In February of 2017, within the period of his warranty, Mann was driving and noticed a small crack on the lower right passenger side of his windshield about four to five inches above the bottom portion of the windshield. He did not see anything impact the windshield. Within ten minutes of driving a foot-long crack had formed; within 24 hours the crack grew to approximately two feet. Mann had his vehicle inspected by a local Subaru dealer and was denied warranty coverage, so he had a new windshield installed and paid out-of-pocket. (Id. at ¶¶ 14-15.)

         Although some putative class members received notice of the defect and warranty extension, thousands of others did not, including plaintiff Luong. (Id. ¶ 26.) Plaintiffs further contend that the warranty extension notice was inadequate because the entire windshield is defective, as is the “enhanced” windshield in the later-manufactured Class Vehicles. (Id. at ¶¶ 28, 31.) The “enhanced” windshields have also been the subject of numerous consumer complaints. (Id. at ¶ 31.) Plaintiffs further allege that Subaru's dealers are engaged in systematic denial of valid coverage claims under the extended warranty, orchestrated by Subaru to minimize the cost of warranty claims. (Id. at ¶ 30.) Plaintiffs allege that, in addition to dangers arising from a cracked or shattered windshield in terms of obstructing the view or distracting the driver, the windshield is an important part of the vehicle's safety restraint system, and includes supports for airbag deployment and structural integrity in case of an accident. (Id. at ¶¶ 4-6.)

         II. Applicable Standards

         A. Motion to Dismiss Under FRCP 12(b)(1)

         A motion to dismiss under Rule 12(b)(1) tests the subject matter jurisdiction of the Court. See Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039-40 (9th Cir. 2003), cert. denied, 541 U.S. 1009 (2004). A motion to dismiss for lack of subject matter jurisdiction will be granted if the complaint fails to allege facts sufficient to establish subject matter jurisdiction, or if any evidence offered, such as affidavits and testimony, establish lack of jurisdiction. Id. The Court may consider evidence outside the complaint, and resolve factual disputes, in determining the existence of subject matter jurisdiction. McCarthy v. United States, 850 F.2d 558, 560 (9th Cir.1988). Further, the existence of disputed material facts will not preclude a trial court from evaluating for itself the merits of jurisdictional claims, except where the jurisdictional and substantive issues are so intertwined that the question of jurisdiction is dependent on the resolution of factual issues going to the merits. Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir. 1983) (citing Thornhill Publ'g Co. v. Gen. Tel. Corp., 594 F.2d 730, 733-35 (9th Cir. 1979)). Plaintiffs invoke this Court's jurisdiction and consequently bear the burden of establishing subject matter jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 376-78 (1994); Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir.2010).

         B. Motion to Dismiss Under FRCP 12(b)(6)

         Pursuant to Rule 12(b)(6), a complaint may be dismissed for failure to state a claim upon which relief may be granted. Dismissal for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) is proper if there is a “lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (citing Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988)). In ruling on a motion to dismiss, “the court must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the nonmoving party.” Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 984 (9th Cir. 2000). However, “a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986) (internal brackets and quotation marks omitted)). The complaint must plead “enough facts to state a claim [for] relief that is plausible on its face.” Id. at 570. “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). If the facts alleged do not support a reasonable inference of liability, stronger than a mere possibility, the claim must be dismissed. Id. at 678-79.

         Additionally, claims sounding in fraud are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-04 (9th Cir. 2003). “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.” Fed. R. Civ. Proc. 9(b).

         C. Motion to Strike Under FRCP 12(f)

         Rule 12(f) provides that the court “may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). “The function of a [Rule] 12(f) motion to strike is to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial[.]” Whittlestone Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010) (citing Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993)). Motions to strike are generally disfavored and are not granted unless it is clear that the matter sought to be stricken could have no possible bearing on the subject matter of the litigation. See Colaprico v. Sun Microsystem, Inc., 758 F.Supp. 1335, 1339 (N.D. Cal. 1991)); LeDuc v. Kentucky Cent. Life Ins. Co.,814 F.Supp. 820, 830 (N.D. Cal. 1992). Consequently, when a court considers a motion to strike, it “must view the pleading in a light most favorable to the pleading party.” In re 2TheMart.com, Inc. Sec Lit., 114 F.Supp.2d 955, 965 (C.D. Cal. 2010). A motion to strike should be denied if there is any doubt whether the ...


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