In Re Toyota Rav4 Hybrid Fuel Tank Litigation, No. 3:2020cv00337 - Document 123 (N.D. Cal. 2021)

Court Description: AMENDED ORDER Granting in Part and Denying in Part 110 Defendant's Motion to Dismiss First Amended Complaint. Signed by Judge Edward M. Chen on 12/10/2021. (emcsec, COURT STAFF) (Filed on 12/10/2021)

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In Re Toyota Rav4 Hybrid Fuel Tank Litigation Doc. 123 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 8 IN RE TOYOTA RAV4 HYBRID FUEL TANK LITIGATION. 10 AMENDED ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 11 Docket No. 110 9 United States District Court Northern District of California Case No. 20-cv-00337-EMC 12 13 14 This putative consumer class action is brought by thirty-nine plaintiffs (“Plaintiffs”) from 15 twenty-nine states on behalf of a nationwide class of “of purchasers and lessees of 2019 Toyota 16 RAV4 Hybrid vehicles, 2020 Toyota RAV4 Hybrid vehicles, 2021 Toyota RAV4 Hybrid vehicles, 17 and 2021 Toyota RAV4 Prime vehicles” (the “Vehicles”). See Docket No. 103 (“First Amended 18 Complaint” or “FAC”) at 1–2. Plaintiffs allege that Defendant Toyota Motor Sales, U.S.A., Inc. 19 (“Toyota” or “TMS”) falsely represented in marketing and ownership materials that the Vehicles’ 20 fuel tank capacity is 14.5 gallons when it is actually 8–11 gallons, thus significantly reducing the 21 Vehicles’ mileage range on a single tank of gas. Plaintiffs bring ninety-four state-law claims 22 against Toyota for breach of express warranty, breach of the implied warranty of merchantability, 23 violations of various consumer protection and unfair competition statutes, and unjust enrichment. 24 Plaintiffs seek damages as well as injunctive and declaratory relief. 25 Pending before the Court is Toyota’s motion to dismiss Plaintiffs’ First Amended 26 Complaint on the grounds that they re-allege previously dismissed claims and fail to state claims 27 for relief under Rule 12(b)(6). For the reasons given below, Toyota’s motion to dismiss is 28 GRANTED in part and DENIED in part. Dockets.Justia.com 1 2 FACTUAL AND PROCEDURAL BACKGROUND A detailed factual background of this case can be found in the Court’s prior order (“MTD 3 Order”) granting in part and denying in part Toyota’s motion to dismiss the consolidated class 4 action complaint (“Complaint”). Docket No. 100 at 2–5. For the purposes of this motion, the 5 following additional facts are relevant. Plaintiffs allege that, 6 7 8 9 10 11 United States District Court Northern District of California I. “According to hundreds of complaints filed with the National Highway Traffic Safety Administration [“NHTSA”] (beginning as early as June 24, 2019), reports to Toyota’s Customer Experience Center (as early as April 19, 2019), reports by technicians at Toyota’s dealerships that contacted Technical Service and Field Technical Specialists for advice (as early as May 24, 2019), a June 6, 2019 report by a Toyota Vice President, and Toyota’s own technical bulletins, the RAV4 Hybrid’s fuel tank could only fill to between 8-11 gallons—significantly less than the advertised 14.5-gallon capacity.” 12 Docket No. 116 (“Opp.”) at 3 (citing FAC ¶¶ 71–114). This defect resulted in a reduced mileage 13 range of 330–470 miles, which is much less than the estimated 580-mileage range. Id. ¶ 73. 14 Plaintiffs also allege that Toyota attempted to but seemingly failed to fix the problem by 15 replacing the RAV4 Hybrid’s fuel tank. FAC ¶ 107. Beginning in late May and early June 2020, 16 Toyota began notifying dealers and customers that it was working on a repair for the RAV4’s 17 defective fuel tanks. Id. ¶¶ 109–10. Then, in late October 2020, Toyota launched its Customer 18 Support Program (“CSP”) and began notifying owners and lessees that a “repair” was available. 19 Id. ¶ 112. It explained that it has “received customer reports of certain 2019-2020 model year 20 RAV4 HV vehicle fuel gauges displaying less than full and/or total fuel dispensed is less than 21 expected, when the fuel nozzle automatically clicks off when refueling” as well as reports that 22 have noted “the ‘Distance to Empty’ shown on the multi-information display is less than 23 expected.” Docket No. 110-2 (“Landis Decl.”) at 234. It further explained that based on its 24 investigation it “believes these conditions to be primarily related to a variation of fuel tank shape 25 and the potential for the fuel sender gauge to become inclined. These conditions can cause the 26 fuel level to be read incorrectly and may cause the low fuel light to illuminate with more fuel in 27 the tank than usual.” Id. Under the CSP, a vehicle with the verified condition—i.e., the alleged 28 fuel tank defect—would be repaired with a new fuel tank and fuel sender gauge, free of charge. 2 1 Id. at 227. According to the Plaintiffs, however, the “repair” is insufficient because Toyota’s CSP 2 notices state that, “If the refueling amount is less than 9.8 gallons, the condition [i.e., the alleged 3 defect] may be present. If the refueling amount is 9.8 gallons or more, the vehicle’s condition is 4 normal.” Id. ¶ 113. But according to the RAV4’s user manual, when the vehicles low fuel light 5 illuminates, 2.2 gallons or less remain in the tank. Id. ¶ 114. Therefore, Plaintiffs assert that the 6 CSP repair does not work because “Toyota’s CSP program only applies to RAV4s that will accept 7 12 gallons or less, despite the fact that Toyota advertises the tank has 14.5 gallon capacity. 8 Toyota’s CSP program offers no remedy for RAV4s that accept between 12 to 14.5 gallons of 9 fuel.” Id. United States District Court Northern District of California 10 Plaintiffs filed a class action complaint on January 15, 2020. Docket No. 1. After several 11 cases were related to and consolidated with the instant case, Plaintiffs filed their 198-page 12 consolidated class action complaint on September 14, 2020. See Docket No. 55 (“Compl.”). 13 Toyota’s motion to dismiss followed on October 14, 2020. See Docket No. 66-1. On April 9, 14 2021, the Court issued an order granting in part and denying in part Toyota’s motion to dismiss. 15 Docket No. 96. Then on April 16, 2021, the Court issued an amended order. MTD Order. 16 Plaintiffs filed their 234-page first amended complaint (“FAC”) on June 9, 2021. Docket No. 103. 17 On August 6, 2021, Toyota filed the present motion to dismiss the FAC. Docket No. 110 18 (“Mot.”). The motion hearing (“Hearing”) took place on October 28, 2021. II. 19 LEGAL STANDARD 20 Rule 12(b)(6) 21 Federal Rule of Civil Procedure 8(a)(2) requires a complaint to include “a short and plain 22 statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A 23 complaint that fails to meet this standard may be dismissed pursuant to Rule 12(b)(6). See Fed. R. 24 Civ. P. 12(b)(6). 25 To overcome a Rule 12(b)(6) motion to dismiss after the Supreme Court's decisions in 26 Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), 27 a plaintiff's “factual allegations [in the complaint] must . . . suggest that the claim has at least a 28 plausible chance of success.” Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014) (internal 3 United States District Court Northern District of California 1 quotation marks omitted). The court “accept[s] factual allegations in the complaint as true and 2 construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. 3 Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But “allegations in a 4 complaint . . . may not simply recite the elements of a cause of action [and] must contain sufficient 5 allegations of underlying facts to give fair notice and to enable the opposing party to defend itself 6 effectively.” Levitt, 765 F.3d at 1135 (quoting Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 7 2011)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the 8 court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” 9 Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a ‘probability requirement,’ but it 10 asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting 11 Twombly, 550 U.S. at 556). 12 Rule 9(b) 13 Claims sounding in fraud or mistake are subject to the heightened pleading requirements of 14 Federal Rule of Civil Procedure 9(b), which requires that a plaintiff bringing such a claim “state 15 with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). To clear 16 the heightened standard of Rule 9(b), a plaintiff must identify the “who, what, when, where, and 17 how” of the alleged misconduct and explain how the statement or omission complained of was 18 false or misleading. Vess v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003); see 19 also Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (holding that nondisclosure 20 claims sound in fraud and are subject to Rule 9(b)). The purpose of Rule 9(b) is to require that a 21 plaintiff’s allegations be “specific enough to give defendants notice of the particular misconduct 22 which is alleged . . . so that they can defend against the charge and not just deny that they have 23 done anything wrong.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007). Rule 9(b) 24 allows, however, that “[m]alice, intent, knowledge, and other conditions of a person’s mind may 25 be alleged generally.” Fed. R. Civ. P. 9(b). Notably, “a fraud by omission claim can succeed 26 without the same level of specificity required by a normal fraud claim” since plaintiffs in such 27 cases “will not be able to specify the time, place, and specific content of an omission as precisely 28 as would a plaintiff” in an affirmative misrepresentation case. Falk v. Gen. Motors Corp., 496 F. 4 United States District Court Northern District of California 1 Supp. 2d 1088, 1098–99 (N.D. Cal. 2007); see also Sciacca v. Apple, Inc., 362 F. Supp. 3d 787, 2 799–800 (N.D. Cal. 2019) (applying the pleading standard of Rule 8 to an omission-based 3 consumer protection claim). 4 Leave to Amend 5 If the court dismisses a complaint, it “should grant leave to amend even if no request to 6 amend the pleading was made, unless it determines that the pleading could not possibly be cured 7 by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). 8 Judicial Notice 9 Under Federal Rule of Evidence 201, a court “may judicially notice a fact that is not 10 subject to reasonable dispute because it: (1) is generally known within the trial court’s territorial 11 jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot 12 reasonably be questioned.” Fed. R. Evid. 201(b). Courts generally “may not consider material 13 outside the pleadings when assessing the sufficiency of a complaint under Rule 12(b)(6),” but a 14 defendant “may seek to incorporate a document into the complaint if the plaintiff refers 15 extensively to the document or the document forms the basis of the plaintiff’s claim.” Khoja v. 16 Orexigen Therapeutics, Inc., 899 F.3d 988, 998, 1002 (9th Cir. 2018). 17 18 III. DISCUSSION Toyota’s motion to dismiss is divided into six main parts. First, Toyota argues that 19 Plaintiffs’ re-alleged claim that had been dismissed without leave to amend by the MTD Order 20 should be dismissed once again. Mot. at 8–9. Second, new express warranty claims based on the 21 New Vehicle Limited Warranty (“NVLW”) fail for the same reasons the prior NVLW express 22 warranty claims were dismissed without leave to amend in the MTD Order. Id. at 9–11. Third, 23 certain Plaintiffs’ express warranty claims based on Toyota’s marketing and information materials 24 fail because they do not contain statements by Toyota related to fuel tank capacity. Id. at 11–13. 25 Fourth, Plaintiffs’ claims based on active concealment fail because they are unsupported by the 26 factual allegations. Id. at 15–17. Fifth, certain Plaintiffs’ consumer protection claims for 27 additional reasons. Id. at 18–29. And sixth, Plaintiffs fail to allege injury entitling them to relief 28 because nearly all of the Plaintiffs did not participate in Toyota’s remedy program, the Customer 5 1 2 Re-Allegation of Dismissed Claims 3 First, the parties dispute whether it is appropriate for Plaintiffs to reassert the same claims 4 in the FAC that the Court had dismissed without leave to amend: the breach of express warranty 5 claims based on the NVLW, breach of implied warranty of merchantability claims, unjust 6 enrichment claims on behalf of non-California plaintiffs, and claims for violation of the Ohio 7 Deceptive Trade Practices Act, Nebraska Consumer Protection Act, and Oklahoma Consumer 8 Protection Act. See MTD Order at 50, 60, 71–72. Although Plaintiffs do not seek reconsideration 9 of the Court’s dismissal of these claims,2 they re-allege these claims to preserve them for appeal. 10 United States District Court Northern District of California Support Program (“CSP”). Id. at 29–30. The Court addresses each of these arguments in turn.1 Docket No. 116 (“Opp.”) at 5. 11 Plaintiffs’ re-alleging previously dismissed claims is unnecessary. The Ninth Circuit has 12 held that “[f]or claims dismissed with prejudice and without leave to amend, we will not require 13 that they be repled in a subsequent amended complaint to preserve them for appeal. But for any 14 claims voluntarily dismissed, we will consider those claims to be waived if not repled.” Lacey v. 15 Maricopa Cty., 693 F.3d 896, 928 (9th Cir. 2012). Plaintiffs explain that they re-allege the 16 dismissed claims “in an abundance of caution” because the MTD Order dismissed the claims 17 “without leave to amend” but did not expressly dismiss them “without prejudice.” Opp. at 6. But 18 19 20 21 22 23 24 25 26 27 28 1 Toyota also filed a request for judicial notice along with its motion to dismiss. See Docket No. 110-4 (“RJN”). Toyota asks the Court to take notice of Exhibits 1–3, which are representative copies of the 2019 RAV4 Hybrid Warranty & Maintenance Guide, 2021 RAV4 Hybrid Warranty & Maintenance Guide, and 2021 RAV4 Prime Warranty & Maintenance Guide. Id. It also requests the Court to take notice of Exhibit 4, which consists of documents related to the CSP implemented by Toyota to address the alleged fuel tank defect. See Docket No. 110 at 212–84. Plaintiffs do not oppose the first three exhibits, but they oppose the fourth. Docket No. 115 (“RJN Opp.”). Because the complaint extensively refers to the CSP and Plaintiffs’ claims rely on the contents of the documents, e.g., the efficacy of the CSP, and because the authenticity of the documents is not disputed, Toyota’s request is GRANTED. See FAC ¶¶ 14, 20, 108–14; Docket No. 118-1 (“RJN Reply”) at 3; see also Abrego v. Dow Chem. Co., 443 F.3d 676, 681–82 (9th Cir. 2006). 2 Plaintiffs do not oppose dismissal so long as the Court will later consider a motion to amend their New Vehicle Limited Warranty (“NVLW”) express warranty claims based on the outcome of discovery. Opp. at 6. As the MTD Order explains, “if discovery produces something that sheds a different light on the fuel tank defect, then [the Court] would entertain a motion to amend Plaintiffs’ express warranty claims pursuant to Federal Rule of Civil Procedure 15(a).” MTD Order at 16. 6 United States District Court Northern District of California 1 as Toyota points out, this is a “distinction without difference” and under Lacey, only claims that 2 are “voluntarily dismissed” will be waived if not repled.3 Docket No. 118 (“Reply”) at 3 n.2. 3 Toyota’s motion to dismiss these claims without leave to amend is GRANTED. 4 Perry, Mulcahy, Kafeyan, and Gentile’s NVLW Express Warranty and Implied Warranty 5 Claims 6 Plaintiffs re-allege similar NVLW express warranty and implied warranty claims that the 7 Court had dismissed without leave to amend for its new plaintiffs, Perry, Mulcahy, Kafeyan, and 8 Gentile. See FAC ¶¶ 186–96, 1113–23. Toyota contends that Plaintiffs have not asserted any new 9 allegations even after nearly a year of substantive discovery and therefore their claims should be 10 dismissed with prejudice. Reply at 4. Again, Plaintiffs do not seek reconsideration of the Court’s 11 dismissal, but they assert that a dismissal “with prejudice” at this stage is inappropriate because 12 they intend to seek further amendment under Rule 15(a) at the appropriate time. Opp. at 7. They 13 argue that through the ongoing discovery, they have “obtained information corroborating their 14 view that the RAV4 suffers from a manufacturing defect covered by the NVLW (or at a minimum, 15 a combined manufacturing and design defect).” Id. For the reasons previously stated, Toyota’s 16 motion to dismiss these claims is GRANTED without leave to amend at this time.4 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiffs’ reliance on Stemmelin v. Matterport, Inc., No. 20-CV-04168-WHA, 2021 WL 411366 (N.D. Cal. Feb. 4, 2021) in support of its argument is misplaced. In Stemmelin, the court had initially dismissed the plaintiff’s complaint with leave to amend. Stemmelin, 2020 WL 6544456, at *5. When plaintiff re-alleged his multistate claims “so as not to waive them for appeal” “because the prior order did not expressly dismiss the claims with prejudice,” the court found this to be a “fair point.” Id. at *2. It then clarified that the plaintiff’s claims that did not arise out of Illinois law “were and are dismissed with prejudice as to plaintiff himself and are preserved for appeal.” Id. In contrast, the Court in this case clearly explained which claims were dismissed without leave to amend. 3 4 Plaintiffs assert that because they do not oppose dismissal of these claims, the Court does not need to resolve Toyota’s fallback arguments: (1) “that Mulcahy, Kafeyan, and Gentile’s express warranty claims also fail because they did not present their cars for repair”; and (2) “that Perry, Mulcahy, Kafeyan, and Gentile’s implied warranty claims also fail because they lack privity with Toyota.” Opp. at 7. But to avoid waiver, they argue that they are excused from presenting their Vehicles to Toyota because doing so would be futile and that Gentile and Kafeyan reported their fuel tank problems to their Toyota dealerships. Id. The Court has, however, rejected Plaintiffs’ futility arguments and held that their “allegations likely fail to plead futility given the high bar that this requirement establishes.” MTD Order at 16 n.9. Plaintiffs also assert that “there is no privity requirement for the Song-Beverly Consumer Warranty Act claim (Count 8), they satisfy California’s third-party beneficiary privity exception for the U.C.C.-based claim (Count 7),” and “that Rhode Island no longer requires privity.” Opp. at 8. For the reasons stated, the Court need 7 1 Klinkhammer, Colabraro, Birchfield, McPhie, Ramaeker, and Wagner’s Express Warranty 2 Claims 3 The parties dispute whether Klinkhammer, Colabraro, Birchfield, and McPhie sufficiently 4 plead express warranty claims premised on statements in Toyota’s marketing and informational 5 material. Plaintiffs concede that Wagner and Ramaeker’s express warranty claims are not 6 sufficiently pleaded and do not object to the dismissal of these claims. Opp. at 10. United States District Court Northern District of California 7 To bring “express warranty claims founded on statements in marketing materials and 8 elsewhere outside an express written warranty (e.g., the NVLW) [Plaintiffs] must allege that they 9 at least heard, read, or were otherwise aware of the statements.” MTD Order at 20. The Court 10 found that the original “complaint contains only the boilerplate assertion that ‘Plaintiffs believed 11 and relied on statements made by Toyota regarding the RAV4’s fuel tank capacity’” and held that 12 “[i]n the absence of more detailed allegations concerning Plaintiffs’ awareness of the statements 13 made in the Vehicles’ marketing materials and owner’s manuals, Plaintiffs express warranty 14 claims based on such statements cannot proceed.” Id. at 20–21. 15 As a result, Birchfield and McPhie now allege that they “relied on and [were] aware of 16 RAV4’s mileage range and MPG ratings” based on the Monroney Sticker on a Vehicle at a 17 dealership. FAC ¶¶ 21, 27. McPhie adds that while on a Toyota dealer’s website, he “saw and 18 relied upon Toyota’s representations that the RAV4’s mileage estimate was 41 MPG for city 19 driving and 38 MPG for highway driving.” Id. ¶ 27. McPhie does not allege he saw any 20 representation regarding fuel tank size. Toyota contends that these statements are insufficient 21 because they do not relate to the Vehicle’s fuel tank capacity but instead relate to its mileage range 22 and MPG ratings. 23 Reliance on representations about mileage range is sufficient to state a claim here because 24 Plaintiff could infer from stated mileage range and MPG ratings the fuel tank capacity (i.e., by 25 dividing the mileage range with the average MPG rating). But Birchfield and McPhie do not 26 allege with specificity where they saw or heard about the mileage range. Instead, they only allege 27 28 not address these issues. 8 United States District Court Northern District of California 1 facts about the MPG rating, which alone is not enough to suggest a representation about the 2 Vehicle’s fuel tank capacity. Plaintiffs admitted during the Hearing that the Monroney sticker 3 only depicts the MPG rating and not the mileage range; as a result, contrary to Birchfield and 4 McPhie’s allegations, they could not have been aware of the Vehicle’s mileage range based on the 5 Monroney Sticker. Birchfield and McPhie’s express warranty claims are therefore insufficient. 6 As for Klinkhammer and Colabraro, Toyota contends that they do not plead any specific 7 allegations of being aware of representations directly from Toyota. Mot. at 12. Klinkhammer 8 alleges that he “believed and relied upon representations on certain Internet websites, including 9 reviews and videos on Youtube, Kelley Blue Book, and other car websites with reviews about the 10 RAV4 vehicles” and that the representations he “saw” “stat[ed] that the RAV4’s fuel tank capacity 11 was 14.5 gallons.” FAC ¶ 22. Similarly, Colabraro alleges that he “believed and relied upon 12 representations on YouTube by individuals independently reviewing the RAV4 vehicle” that the 13 “Rav4’s fuel tank capacity was 14.5 gallons, that the RAV4’s mileage estimate was 41 MPG for 14 city driving and 38 MPG for highway driving, for a combined 40 MPG rating, and that therefore 15 the RAV4 had a mileage range of approximately 580 miles.” Id. ¶ 29. Colabraro also alleges that 16 he “saw and relied on similar representations on his paperwork” at the dealership. Id. Both claim 17 that they are “informed and believe[]” that the representations were “based on information 18 published or otherwise provided by Toyota.” Id. ¶¶ 22, 29. 19 Toyota contends that such claims are insufficient because Plaintiffs “must allege that a 20 promise regarding the Vehicles’ fuel tank’s capacity was made to them by Toyota, not by people 21 on YouTube or other third-parties on unaffiliated Internet websites.” Mot. at 12. Plaintiffs 22 respond that because the source of information for car review websites and YouTube stems from 23 Toyota’s own fuel tank representations, Klinkhammer and Colabraro’s express warranty claims 24 are sufficient. Opp. at 9. 25 Plaintiffs are correct. Under New Jersey and Minnesota state laws, “[o]ne who makes a 26 fraudulent misrepresentation is subject to liability to the persons or class of persons whom he 27 intends or has reason to expect to act or to refrain from action in reliance upon the 28 misrepresentation, for pecuniary loss suffered by them through their justifiable reliance in the type 9 United States District Court Northern District of California 1 of transaction in which he intends or has reason to expect their conduct to be influenced.” 2 Restatement (Second) of Torts § 531 (emphasis added). Thus, for instance, in Vikse v. Flaby, 316 3 N.W.2d 276, 283–84 (Minn. 1982), the court held that the appellants were liable even though 4 there was no direct contact between the respondents and appellants because “in making the 5 representations to [an independent contractor]” the appellants “knew and intended that [the 6 independent contractor] would be passing on his information to potential investors.”). Similarly, 7 in Kaufman v. i-Stat Corp., 165 N.J. 94, 101 (2000) (“Indirect reliance has also been adopted by 8 the Restatement (Second) of Torts for situations involving reliance by party B on a false 9 representation initially made to party A who the maker knew or had reason to expect would 10 communicate the information to party B such that the information would influence party B's 11 conduct in a transaction.” Notably, these cases are in accord with those in other states. 12 Plaintiffs also rely on similar cases as California law. For instance, in Sotelo v. Rawlings 13 Sporting Goods Co., Inc., 2019 WL 4392528 (C.D. Cal. May 8, 2019), the court held that the 14 plaintiff had sufficiently alleged actual reliance on the defendant’s misrepresentations based on 15 statements from a third-party website because the plaintiff had “specifically allege[d] in the FAC 16 that the displayed information was provided to the online retailer by [the defendant].” Sotelo, 17 2019 WL 4392528, at *14–*15. Cf. Beyer v. Symantec Corp., 333 F. Supp. 3d 966, 975 (N.D. 18 Cal. 2018) (in the absence of an allegation that a statement on Best Buy’s website was attributable 19 to the defendant, “no claim against [the defendant] is stated.”). 20 In this case, there is no dispute that car review websites such as Kelley Blue Book publish 21 information directly from manufacturers like Toyota and therefore Klinkhammer’s claim prevails. 22 Opp. at 9 n.5; see What are Kelley Blue Book Values?, KELLEY BLUE BOOK (March 7, 2019), 23 https://www.kbb.com/car-advice/what-are-kelley-blue-book-values/ (Kelley Blue Book “begin[s] 24 with the basic new vehicle information from the manufacturer” to establish car valuations). 25 Colabraro specifically alleges that the information from the third parties on YouTube were “based 26 on information published or otherwise provided by Toyota.” Id. ¶ 29. 27 28 It is therefore plausible that Toyota, by making the allegedly false representations on its website and/or marketing materials, intended or had reason to expect that third parties would 10 1 disseminate that information and reach consumers such as Colabraro. Moreover, Colabraro also 2 alleges that he “saw and relied on similar representations on his paperwork” at his Toyota 3 dealership, although it is unclear whether the representations related to only the MPG ratings or 4 also included the fuel tank capacity. Id. ¶ 29. United States District Court Northern District of California 5 Accordingly, the Court GRANTS Toyota’s motion to dismiss Wagner, Ramaeker, 6 Birchfield, and McPhie’s express warranty claims without leave to amend. Toyota’s motion to 7 dismiss Klinkhammer and Colabraro’s claims, however, is DENIED. 8 Active Concealment Theory 9 Toyota contends that Plaintiffs’ consumer protection claims based on active concealment 10 are unsupported and should be dismissed with prejudice. Mot. at 15. In the MTD Order, the 11 Court dismissed Plaintiffs’ omission-based consumer protection claims insofar as they require a 12 showing of active concealment. MTD Order at 34. It had found that “While the complaint repeats 13 the language of each state’s consumer protection statute in stating, for example, that Toyota 14 ‘engaged in unlawful trade practices by employing deception, deceptive acts or practices, fraud, 15 misrepresentations, or concealment, [or] suppression or omission of any material fact with intent 16 that others rely upon such concealment,’ Compl. ¶ 98, it fails to allege facts that would plausibly 17 support such boilerplate assertions.” Id. at 33–34. 18 The FAC alleges that Toyota knew about the fuel tank defect from at least as early as April 19 19, 2019 (i.e., before any of the Plaintiffs purchased their vehicles) and failed to warn purchasers 20 and lessees. FAC ¶¶ 96–98; see also FAC ¶ 304 (“Toyota knew about the RAV4’s fuel tank 21 capacity and mileage range at the time of sale and lease” and “acquired additional information 22 concerning the RAV4’s fuel tank capacity and mileage range after the RAV4s were sold and 23 leased, but continued to conceal information until the defect was revealed by RAV4 purchasers 24 and lessees.”). 25 However, the FAC also alleges that by July 2019, Toyota began to inform customers that 26 the fuel tank concern was being investigated. FAC ¶ 99. According to Toyota, Plaintiffs fail to 27 adequately allege active concealment. Mot. at 16. The FAC alleges that “soon after TMS 28 received customer reports of certain 2019 and 2020 RAV4 Hybrid vehicle fuel gauges displaying 11 1 less than full and/or the total fuel dispensed is less than expected when the fuel nozzle 2 automatically clicks off, Toyota began investigating the issue and informing customers and Toyota 3 service providers of that investigation.” Id. at 16–17 (citing FAC ¶¶ 99, 100, 103, 106, 107). 4 5 concealment: that Toyota misrepresented the efficacy of the CSP and gave the false impression to 6 RAV4 purchasers and lessees that the “fix” worked because the “fix” left them unable to fill their 7 fuel tanks up to the advertised 14.5-gallon capacity or achieve the expected 580-mile range. Opp. 8 at 29. Plaintiffs cite to a line of cases where the court upheld active concealment claims because 9 the defendant had implemented a “fix” that it knew was not effective. Id. 10 United States District Court Northern District of California In its opposition to the current motion to dismiss, Plaintiffs assert a new theory of active For example, in Falk v. Gen. Motors Corp., 496 F. Supp. 2d 1088 (N.D. Cal. 2007), the 11 court found that plaintiffs had provided sufficient facts to support their active concealment claim 12 where the defendant, General Motors (“GM”), “replaced the Trucks’ speedometers pursuant to 13 warranty provisions” and “utilized equally defective speedometers and speedometer mechanisms 14 such that the defect was not corrected even though GM informed consumers that it was.” Falk, 15 496 F. Supp. at 1095. The claim suggested that “GM tried to gloss over the problems with its 16 speedometers by replacing broken ones with the exact same model of speedometer, thereby giving 17 the impression that any defects were unique cases.” Id. Similarly in In re MyFord Touch 18 Consumer Litig., 46 F. Supp. 3d 936 (N.D. Cal. 2014), this Court held that the plaintiffs had 19 adequately alleged active concealment where, “[i]f, as Plaintiffs allege, Ford pretended to fix the 20 problems with [the alleged defect] instead of actually admitting that the problems could not be 21 fixed.” MyFord Touch, 46 F. Supp. at 962. And in Goldstein v. Gen. Motors LLC, 517 F. Supp. 22 3d 1076 (S.D. Cal. 2021), the plaintiffs adequately pleaded active concealment where they alleged 23 that the defendant implemented “a practice of ‘replacing a defective part with an equally defective 24 part.’” Goldstein, 517 F. Supp. at 1091. 25 Relying on these cases, Plaintiffs assert that Toyota actively concealed the alleged fuel 26 tank capacity defect because “the purchasers and lessees were incapable of receiving a defect-free 27 RAV4 that will accept the advertised 14.5 gallons.” Opp. at 30. In October 2020, Toyota 28 launched the repair portion of the CSP, where a vehicle with the verified condition—i.e., the 12 United States District Court Northern District of California 1 alleged fuel defect—would be repaired with a new fuel tank and fuel sender gauge, free of charge. 2 Landis Decl. at 227. According to Plaintiffs, the CSP, Toyota’s attempted remedy, is ineffective 3 because Toyota does not explain what is different about the new fuel tank and it does not 4 guarantee that the replacements will work. Opp. at 4. Toyota argues that Plaintiffs do not 5 sufficiently allege active concealment because there are no allegations that Toyota lied about 6 resolving the alleged defect or took affirmative steps to conceal the alleged defect. In its CSP 7 notice to customers, Toyota explains that if the RAV4 accepts at least 9.8 gallons of fuel when the 8 low fuel light is on, then their “vehicle’s condition is normal.” Id. ¶ 113. Plaintiffs allege that 9 because the low-level fuel light turns on when 2.2 gallons remain the tank, Toyota in effect 10 represented that the vehicle’s condition is “normal” even though the RAV4 can only refill to 12 11 gallons, i.e., 2.5 gallons less than the advertised 14.5-gallon capacity. A screenshot of the CSP 12 notice contained the following: 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 1 See Landis Decl. at 235, 242, 256, 263, 276, 282. 2 Plaintiffs assert that two plaintiffs, Perry and Tran, and thirty other class members attested 3 under oath that the fix did not work because their tanks did not achieve the 14.5 gallons.5 Id. ¶¶ 9, 4 14, 21; see also Pulkrabek v. Toyota Motor Sales, USA, Inc., No. 20-CV-00036, Docket No. 85- 5 3–85-32 (E.D. Tex.) (a related case). Plaintiffs therefore assert that they adequately plead active 6 concealment. Toyota, however, did not lie about the efficacy of the remedy. The CSP notice indicates United States District Court Northern District of California 7 8 that “normal” refueling capacity is 12 gallons. See also infra Part III.G. Specifically, the CSP 9 states that “the refueling amount is less than the total tank capacity of 14.5 gallons listed in the 10 Owner’s Manual.” See, e.g., Landis Decl. at 235. It explains that the “refueling amount from low 11 fuel light [i.e., 2.2 gallons remaining the tank] to autostop [from the fuel pump nozzle] depends on 12 a number of factors including normal fuel tank production variation, temperature, gas station 13 pump variations, distance travelled since low level light illumination and other factors.” Id. 14 Toyota did not claim the CSP delivered a useable fuel tank capacity of 14.5 gallons.6 Because Toyota did not make a representation about the efficacy of the CSP, any 15 16 amendment regarding active concealment would be futile and therefore Toyota’s motion to 17 dismiss Plaintiffs’ claims based on active concealment is GRANTED without leave to amend. 18 Plaintiffs’ Additional Consumer Protection Claims 19 1. 20 Toyota asserts that Kahn and Ferraguto fail to plead the necessary elements to allege a Kahn and Ferraguto’s Chapter 93A Claim Under Massachusetts Law (Count 31) 21 Chapter 93A claim under Massachusetts law, which prohibits “unfair or deceptive acts or practices 22 in the conduct of any trade or commerce.” Mass. Gen. Laws Ch. 93A § 2. In the FAC, Kahn and 23 Ferraguto allege that Toyota’s “unfair or deceptive acts” are the following: 24 25 26 27 28 5 Toyota initially asserted that there were three Plaintiffs who had participated in the CSP, Perry, Tran, and Birchfield. Mot. at 30. But it clarified during the Hearing that Birchfield did not participate in the CSP because he received a replacement tank in January 2020, four to five months before the implementation of the CSP. FAC ¶ 21. See FAC ¶ 14 (Tran’s vehicle initially accepted 11 gallons with a mileage range of 450 miles and after the replacement it accepted 13 gallons when the tank was “nearly empty,” and the mileage range was 450–460 miles). 14 6 1 2 3 4 5 6 7 8 9 10 United States District Court Northern District of California 11 “In the course of its business, Toyota concealed and suppressed material facts concerning the RAV4, Toyota misrepresented that the RAV4’s fuel tank capacity was 14.5 gallons and that the RAV4s mileage range was 580 miles and otherwise engaged in activities with a tendency or capacity to deceive. Toyota also engaged in unlawful trade practices by employing deception, deceptive acts or practices, fraud, misrepresentations, or concealment, suppression or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale and lease of RAV4s. Toyota knew about the RAV4’s fuel tank capacity and mileage range at the time of sale and lease. Toyota acquired additional information concerning the RAV4’s fuel tank capacity and mileage range after the RAV4s were sold and leased but continued to conceal information until the defect was revealed by RAV4 purchasers and lessees.” FAC ¶¶ 476–77. First, the parties disagree over the appropriate legal standard. Toyota argues that to sustain 12 a Chapter 93A claim, the conduct at issue must be sufficient to rise to the level of “coercive” or 13 “extortionate” and that Plaintiffs’ claims fail because they do not rise to the level of violating 14 public policy. Mot. at 17 (quoting Wagner v. Fed. Home Loan Mortg. Corp., 494 F. Supp. 3d 80, 15 88 (D. Mass. 2020), appeal dismissed, 2020 WL 9599636 (1st Cir. Dec. 21, 2020)). Plaintiffs 16 correctly point out, however, that the standard only applies to breach of contract claims and not 17 misleading advertising claims at issue here. Opp. at 12; see Zurich Am. Ins. Co. v. Watts Regul. 18 Co., 796 F. Supp. 2d 240, 244–45 (D. Mass. 2011) (holding that “[i]t is well settled that the mere 19 breach of a contract, without more, does not amount to a [Chapter] 93A violation” and that “to 20 prove a violation of Chapter 93A” the plaintiff must show that defendants’ conduct “fell within the 21 penumbra of some established concept of unfairness or was immoral, unethical, oppressive or 22 unscrupulous.”) (internal quotation marks omitted). The cases on which Toyota relies in support 23 of its higher standard are thus distinguishable because they are breach of contract cases. See 24 Wagner, 494 F. Supp. at 88 (allegations relate to conduct “in disregard of known contractual 25 arrangements”); Mechanics Nat. Bank of Worcester v. Killeen, 377 Mass. 100, 105, 384 N.E.2d 26 1231, 1235 (1979) (same). Thus, the proper standard for false advertising claims under Chapter 27 93A is whether the false advertising is “unfair or deceptive” as explained below. 28 15 United States District Court Northern District of California 1 Second, Plaintiffs contend that the Chapter 93A claims may properly be based on Kahn 2 and Ferraguto’s express warranty claims. Id. at 10. But Plaintiffs cannot rely on the holding of 3 one Massachusetts district court decision which held that “[b]reaches of express and implied 4 warranties constitute a virtual per se violation” of Chapter 93A. See Glyptal Inc. v. Engelhard 5 Corp., 801 F. Supp. 887, 899 (D. Mass. 1992). The First Circuit has rejected this per se argument 6 and has held that “[w]hile it is true that ‘[g]enerally, a breach of warranty constitutes a violation of 7 [chapter 93A],’ neither the Massachusetts legislature nor the Supreme Judicial Court has gone so 8 far as to find that all breaches of warranties are inherently deceptive or unfair.” Sharp v. Hylas 9 Yachts, LLC, 872 F.3d 31, 52 (1st Cir. 2017) (internal citations omitted).7 Instead, only breaches 10 of warranty that are “unfair or deceptive” constitute a violation of Chapter 93A. See Mass. Gen. 11 Laws Ch. 93A § 2. 12 The question then is whether the alleged conduct by Toyota is “unfair or deceptive” under 13 Chapter 93A. “Massachusetts courts have not set out a precise test for determining when conduct 14 becomes ‘unfair or deceptive.’” In re Gen. Motors LLC Ignition Switch Litig., 257 F. Supp. 3d 15 372, 417 (S.D.N.Y. 2017), modified on reconsideration, 2017 WL 3443623 (S.D.N.Y. Aug. 9, 16 2017). But Massachusetts courts have looked to factors such as whether the “defendant's actions 17 fell ‘within at least the penumbra of some common-law, statutory, or other established concept of 18 unfairness,’ or were ‘immoral, unethical, oppressive or unscrupulous,’ and resulted in ‘substantial 19 injury . . . to competitors or other business[persons].’” Boyle v. Int'l Truck And Engine Corp., 369 20 F.3d 9, 15 (1st Cir. 2004). “[A]n advertisement is deceptive when it has the capacity to mislead 21 consumers, acting reasonably under the circumstances, to act differently from the way they 22 otherwise would have acted (i.e., to entice a reasonable consumer to purchase the product).” 23 Aspinall v. Philip Morris Companies, Inc., 442 Mass. 381, 396, 813 N.E.2d 476, 488 (2004). Plaintiffs contend that Toyota’s false representation that the Vehicles are capable of 24 25 holding 14.5 gallons of fuel despite knowledge to the contrary constitutes “unfair or deceptive” 26 27 28 7 Toyota also points out that even if it were the case that breaches of warranty were a per se violation, which it is not, Plaintiffs do not allege a breach of warranty in Count 31 for violation of Chapter 93A. Reply at 9. 16 1 conduct. Opp. at 11. Toyota argues Plaintiffs have failed to allege an identifiable separate harm 2 from the violation itself and thus their claims fail. Reply at 9. The First Circuit has held that “the 3 violation of the legal right that has created the unfair or deceptive act or practice must cause the 4 consumer some kind of separate, identifiable harm arising from the violation itself.” Shaulis v. 5 Nordstrom, Inc., 865 F.3d 1, 8 (1st Cir. 2017). “[A] claim that alleges only a ‘per se’ injury—that 6 is, a claim resting only on a deceptive practice, regulatory noncompliance, or the ‘impairment of 7 an abstract right without economic loss’—is insufficient to state a Chapter 93A claim.” Id. at 10. 8 Plaintiffs allege that “they suffered actual damages in the form of the diminished value of United States District Court Northern District of California 9 the RAV4s and would not have purchased these cars (or would have paid substantially less for 10 them) had Toyota disclosed the defect prior to sale.” Opp. at 12 (citing FAC ¶¶ 19–20). Plaintiffs 11 rely on In re Gen. Motors LLC Ignition Switch Litig., where the court found that the plaintiffs had 12 “sufficiently allege[d] ‘deceptive’ conduct to trigger Chapter 93A’s protections” because they 13 allege that they “would [not] have paid as much for, or potentially purchased, their vehicles had 14 they known of the defects.” In re Gen. Motors LLC Ignition Switch Litig., 257 F. Supp. at 418. 15 Toyota contends that the case is distinguishable because the plaintiffs had “alleged a separate and 16 identifiable harm arising from the alleged violation,” i.e., safety malfunctions associated with the 17 alleged defect in the cars. Reply at 9. According to Toyota, Plaintiffs fail to identify a separate 18 harm other than loss of economic value in this case. 19 Toyota is incorrect. As the First Circuit explained, overpayment alone can be a separate 20 and identifiable harm, so long as the allegations were not “hypothetical or speculative.” Shaulis, 21 865 F.3d at 9 (acknowledging decisions where the Massachusetts Supreme Judicial Court held that 22 plaintiffs “suffered an economic injury because . . . the defendants’ products did not deliver the 23 full anticipated and advertised benefits, and therefore were worth less, as used or owned, than 24 what the plaintiffs had paid”). 25 In this case, Plaintiffs allege that they had overpaid for the Vehicles. FAC ¶¶ 19–20. 26 Accepting Plaintiffs’ allegations as true, they adequately plead a separate, identifiable harm that is 27 sufficient to trigger the protections of Chapter 93A. Toyota’s motion to dismiss Kahn and 28 Ferraguto’s Chapter 93A claims is DENIED. 17 United States District Court Northern District of California Gentile’s Claim Under the Rhode Island Deceptive Trade Practices Act (Count 82) 1 2. 2 The RIDTPA prohibits “unfair or deceptive acts or practices in the conduct of any trade or 3 commerce” including: “(v) [r]epresenting that goods or services have sponsorship, approval, 4 characteristics, ingredients, uses, benefits, or quantities that they do not have”; “(vii) 5 [r]epresenting that goods or services are of a particular standard, quality, or grade . . . if they are of 6 another”; “(ix) [a]dvertising goods or services with intent not to sell them as advertised”; “(xiii) 7 [u]sing any other methods, acts or practices which mislead or deceive members of the public in a 8 material respect.” R.I. Gen. Laws § 6-13.1-1(6). Toyota asserts that Gentile’s claim under the 9 Rhode Island Deceptive Trade Practices Act (“RIDTPA”) fails because (1) the alleged conduct at 10 issue—the advertising of motor vehicles—is regulated by federal and state regulatory bodies and 11 therefore is “exempt” conduct that cannot form the basis of a RIDTPA claim; (2) Plaintiffs fail to 12 plead causation; and (3) Plaintiffs fail to plead unfair or deceptive conduct by Toyota. Mot. at 18– 13 21. 14 As for Toyota’s contention that the alleged conduct is exempt conduct that cannot form the 15 basis of a RIDTPA claim, Mot. at 18–19, the RIDTPA exemption applies “to actions or 16 transactions permitted under laws administered by the department of business regulation or other 17 regulatory body or officer acting under statutory authority of this state or the United States.” R.I. 18 Gen. Laws § 6-13.1-4. The Supreme Court of Rhode Island has held that the provision exempts 19 from the RIDTPA’s coverage “all those activities and businesses which are subject to monitoring 20 by state or federal regulatory bodies or officers.” State v. Piedmont Funding Corp., 382 A.2d 819, 21 822 (R.I. 1978). As a specific basis for exemption, R.I. Gen. Laws §§ 31–5.1–1 to –21, Toyota 22 points to “Regulation of Business Practices among Motor Vehicle Manufacturers, Distributors, 23 and Dealers,” that regulates motor vehicle manufacturers, distributors, and dealers as the source 24 for exemption. The statute forbids manufacturers from engaging in “any false or misleading 25 advertisement,” § 31–5.1–4(c)(5), and is enforced by the Rhode Island Department of 26 Administration enforces the statute. See In re New Motor Veh. Canadian Exp. Antitrust Litig., 350 27 F. Supp. 2d 160, 201–02 (D. Me. 2004). Toyota argues that because the statute regulates the 28 advertising of motor vehicles by licensees such as Toyota, the conduct at issue is exempt from the 18 1 United States District Court Northern District of California 2 purview of the RIDTPA. Mot. at 19. Plaintiffs contend that the statute only applies to disputes between manufacturers and 3 dealers and does not regulate conduct between manufacturers and purchasers, the issue in this 4 case. Opp. at 13. In Chen v. Subaru of America, 2008 WL 4176777 (R.I. Super. Aug. 25, 2008), a 5 Rhode Island superior court rejected the RIDTPA exemption argument under the statute that 6 Toyota cites here. The case concerned allegations by a purchaser that the defendant, Subaru, did 7 not disclose that it had used interchangeable replacement parts during repairs. Chen, 2008 WL 8 4176777. The court rejected Subaru’s argument that it was separately regulated under the same 9 statute at issue here because the code “is only intended to prohibit certain activities by a 10 manufacturer with respect to its dealers” and therefore the alleged deceptive conduct was “not in 11 any way controlled by” the statute. Id. The court distinguished the case upon which Toyota 12 relies, In re New Motor Vehicles Canadian Exp. Antitrust Litg., 350 F. Supp. 2d 160 (D. Me. 13 2004). There, the district court applied the exemption even though the plaintiffs were purchasers 14 because the plaintiffs had pleaded a conspiracy between the car manufacturers and their dealers, 15 conduct which was subject to the statute. In re New Motor Vehicles, 350 F. Supp. at 201–02. 16 Toyota responds that the statute was amended on November 9, 2009, after the Chen case 17 was decided. Reply at 10–11. According to Toyota, the amendment added “new provisions that a 18 manufacturer could violate the law by making false or misleading advertisements in connection 19 with its business as a manufacturer.” Id. But the 2009 amendment did not appear to render any 20 such change. See H.B. No. 6111, Ch. 228 (R.I. Nov. 9, 2008). The same language related to false 21 or misleading advertisements has been a part of the statute since 2000. See R.I. Gen. Laws §§ 31– 22 5.1–4(c)(3) (2000) (“To resort to or use any false or misleading advertisement in connection with 23 his or her business as a manufacturer, an officer, agent, or other representative thereof.”). Toyota 24 cites no authority that applied this statute to disputes between manufacturers and consumers. 25 Accordingly, Toyota’s conduct is not exempt from the RIDTPA. 26 Toyota also argues that Gentile’s claim should be dismissed because he fails to plead 27 causation. Mot. at 20. In the MTD Order, the Court ordered dismissal of consumer protection 28 claims brought under Arizona, Illinois, Minnesota, Missouri, New Jersey, Nevada, Texas, and 19 1 Wisconsin laws “insofar as these statutes equate loss causation with reliance.” MTD Order at 2 50–51. The Court had found Toyota’s argument persuasive—that Plaintiffs never alleged that 3 they had seen advertisements with affirmative misrepresentations. Id. at 29. United States District Court Northern District of California 4 Plaintiffs contend that it is unclear whether the RIDTPA equates loss causation with 5 reliance, but that even if it did, Gentile sufficiently pleads causation. Opp. at 14–15. The 6 RIDTPA provides relief for persons who suffer losses “as a result of the use or employment by 7 another person of [an unfair or deceptive act or practice].” R.I. Gen. Laws § 6-13.1-5.2(a). 8 Toyota argues that Gentile fails to plead causation because his alleged loss is the “diminished 9 value” of his vehicle and therefore the “cause” of this alleged loss “is not deceptive or unfair 10 conduct based on alleged misrepresentations or omissions, but rather the alleged defect itself.” 11 Mot. at 20. In the FAC, however, Gentile pleads that had he “known the actual fuel tank capacity 12 and mileage range prior to his purchase, he would either not have purchased the RAV4 or would 13 have paid less for it.” FAC ¶¶ 39, 1109. The alleged loss, overpayment, is a result of the alleged 14 misrepresentations. Unlike the dismissed claims in the MTD Order, Gentile adequately pleads 15 reliance; he alleges that he “believed and relied upon Toyota’s representations on Toyota’s 16 website (www.toyota.com) under the Specifications section of the 2019 Toyota RAV4 Hybrid 17 webpage. Specifically, on Toyota’s specifications webpage, Plaintiff Gentile saw and relied upon 18 Toyota’s representations that the RAV4’s fuel tank capacity is 14.5 gallons.” FAC ¶ 39. Gentile 19 sufficiently pleads causation. 20 Finally, Toyota argues that Gentile fails to plead any “unfair” or “deceptive” trade 21 practices by Toyota sufficient to meet Rule 9(b). Mot. at 21. To determine whether a practice is 22 “unfair,” courts consider: 23 24 25 26 27 28 “(1) [w]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise—whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; [and] (3) whether it causes substantial injury to consumers (or competitors or other businessmen).” Ames v. Oceanside Welding & Towing Co., 767 A.2d 677, 681 (R.I. 2001). To establish a 20 1 “deceptive” trade practice, a plaintiff must plead: (1) a representation, omission, or practice, that 2 (2) is likely to mislead consumers acting reasonably under the circumstances and (3) is material to 3 a consumer’s choices or conduct. Laccinole v. Assad, 2016 WL 868511, at *8 (D.R.I. Mar. 7, 4 2016). At the very least, accepting Plaintiffs’ allegations as true, they adequately plead 5 “deceptive” trade practices by Toyota. Gentile alleges that the false representations on which he 6 relied at the time of sale with specificity as well as reliance thereon as discussed above. These 7 representations were likely to mislead consumers like Gentile, thus causing the injury in the form 8 of overpayment. Toyota’s motion to dismiss Gentile’s RIDTPA claim is DENIED. United States District Court Northern District of California 9 3. Kafeyan’s CLRA, FAL, and UCL Claims (Counts 4 and 9) 10 Toyota asserts that Kafeyan’s Consumer Legal Remedies Act (“CLRA”), False 11 Advertising Laws (“FAL”), and Unfair Competition Law (“UCL”) claims fail to satisfy Rule 12 9(b)’s heightened pleading standard. The CLRA prohibits “unfair methods of competition and 13 unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or 14 which results in the sale or lease of goods or services to any consumer.” Cal. Civ. Code § 1770. 15 The FAL prohibits the use of “untrue or misleading” statements in advertising. Cal. Bus & Prof 16 Code § 17500. The UCL prohibits any “unlawful, unfair or fraudulent business act or practice and 17 unfair, deceptive, untrue or misleading advertising.” Id. § 17200. Kafeyan’s claims relate to the 18 2021 RAV4 Prime, a different vehicle from the RAV4 Hybrid, to which the other Plaintiffs’ 19 claims relate. FAC ¶ 11. Toyota asserts that (1) there is no actionable misrepresentation 20 regarding the RAV4 Prime; and (2) Kafeyan fails to plead fraudulent omission or concealment. 21 Mot. at 23–25. It also argues that Kafeyan’s UCL claim fails for additional reasons. Id. at 26. 22 First, Toyota argues that Kafeyan does not identify with sufficient specificity any 23 particular advertisement or untruthful representation by Toyota that he relied on regarding fuel 24 tank capacity. Id. at 23. Kafeyan alleges that he relied on Toyota’s website, owner’s manual, and 25 representations on third-party websites unaffiliated with Toyota, which state that the fuel tank 26 capacity of the RAV4 Prime is 14.5 gallons. FAC ¶ 11. Toyota points out that this statement is 27 true because the RAV4 Prime does come equipped with a 14.5-gallon fuel tank. Mot. at 23. 28 Further, it asserts that although Kafeyan alleges that his vehicle “will only accept approximately 21 1 10 gallons of fuel when the tank is nearly empty,” he does not specify what “nearly empty” means 2 or “how much fuel is left in the tank when he chooses to refuel his vehicle (i.e., is it when the low 3 fuel level warning light goes on or when he has a quarter tank left?).” Id. (citing FAC ¶ 11). United States District Court Northern District of California 4 Kafeyan sufficiently alleges with specificity the “who, what, when, where, and how of the 5 misconduct charged.” Opp. at 24; see Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 6 2003). He pleads with specificity the places that Toyota made the allegedly false and misleading 7 statements, the reasons why the statements were false and misleading (e.g., he has alleged that his 8 tank holds less than 14.5 gallons), that the statements were made at the time of sale and continue 9 to be made today, and that these statements falsely represented the fuel tank capacity and failed to 10 disclose a defect. See FAC ¶ 11. Such allegations are enough to give notice to Toyota about “the 11 particular misconduct which is alleged to constitute the fraud charged so that [it] can defend 12 against the charge and not just deny that [it has] done anything wrong.” Swartz v. KPMG LLP, 13 476 F.3d 756, 764 (9th Cir. 2007). 14 Toyota asserts that Kafeyan’s consumer protection claims, which are premised on a theory 15 of fraudulent omission and/or concealment, fail because his allegations of pre-sale exclusive 16 knowledge by Toyota and active concealment by Toyota are completely unsupported by factual 17 allegations. Mot. at 24. As established above, Plaintiffs’ claims related to active concealment are 18 insufficient. See supra Part V.D. As for pre-sale knowledge, Toyota points out that there is no 19 allegation that Toyota had pre-sale knowledge about the RAV4 Prime; all relevant allegations 20 relate only to the RAV4 Hybrid. Mot. at 24. It acknowledges that there is one complaint posted 21 on the NHTSA’s website, but one complaint made two months after Kafeyan had purchased the 22 vehicle is insufficient to plausibly allege Toyota’s pre-sale knowledge of the alleged defect. Id. at 23 25 (citing FAC ¶ 81). Plaintiffs appear to concede that the allegations are insufficiently pleaded. 24 Opp. at 25. They admit that the allegations “could be more detailed” and request leave to amend 25 to add specific facts related to the RAV4 Prime, e.g., “communications with Toyota where Toyota 26 admitted it was aware of a fuel tank problem with RAV4 Prime” and “supplemental NHTSA 27 complaints.” Id. n.14. Kafeyan insufficiently pleads in the FAC pre-sale exclusive knowledge 28 and active concealment by Toyota. 22 United States District Court Northern District of California 1 Furthermore, Toyota asserts that Kafeyan’s theories of fraudulent omission and/or 2 concealment fail because he does not plead a duty to disclose. Mot. at 25. Toyota argues that 3 Kafeyan’s theories fail under three tests of liability, but Plaintiffs only respond to one of the tests, 4 the LiMandri test. Opp. at 26. Under the test outlined in LiMandri v. Judkins, 52 Cal. App. 4th 5 326, 336 (1997), a duty to disclose may arise when “(1) when the defendant is in a fiduciary 6 relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts 7 not known to the plaintiff; (3) when the defendant actively conceals a material fact from the 8 plaintiff; and (4) when the defendant makes partial representations but also suppresses some 9 material facts.” Plaintiffs argue that Kafeyan adequately pleads facts under the fourth scenario 10 because Toyota had made partial representations and misrepresented the fuel tank capacity of the 11 RAV4 Prime. Mot. at 26. Lack of pre-sale knowledge, however, “precludes any plausible 12 supposition that TMS could have ‘suppressed’ material facts regarding fuel tank capacity.” Reply 13 at 13. Kafeyan’s theories of fraudulent omission and/or concealment therefore fail. 14 Finally, Toyota argues that Kafeyan’s UCL claim fails because he does not allege an 15 underlying violation of laws as required by the “unlawful” prong of the UCL and no allegation 16 about misrepresentation or omission could constitute “unfair” practice. Mot. at 22. To plead a 17 claim under the “unlawful” prong of the UCL, a plaintiff must adequately plead a predicate legal 18 violation. See Lopez v. Wash. Mut. Bank, F.A., 302 F.3d 900, 906-07 (9th Cir. 2002). Under the 19 ”unlawful” prong, Plaintiffs allege that Toyota’s actions “constitute a ‘fraudulent’ practice” 20 because its misrepresentations and concealment about the fuel tank capacity and the mileage range 21 likely deceived consumers. FAC ¶ 222. They also allege that its “failure to disclose these facts 22 constitutes a material omission in violation of the UCL.” Id. Plaintiffs argue that the “unlawful” 23 prong is satisfied because Kafeyan alleges violations of the FAL, CLRA, and the Song-Beverly 24 Consumer Warranty Act. Opp. at 26. But Plaintiffs do not oppose the dismissal of Kafeyan’s 25 express warranty and implied warranty claims under the Song-Beverly Consumer Warranty Act. 26 Opp. at 7. And to the extent that Plaintiffs’ FAL and CLRA claims rely on theories of fraudulent 27 omission and/or concealment, those claims also fail to satisfy the “unlawful” prong for the reasons 28 stated above. 23 United States District Court Northern District of California 1 As for the “unfair” prong, Plaintiffs contend that they sufficiently plead facts in support of 2 this prong because they allege that Toyota’s conduct offends established public policy and is 3 “immoral, unethical, oppressive, unscrupulous, and substantially injurious to Toyota’s customers.” 4 See FAC ¶ 223. Similar to their claim under the “unlawful” prong of the UCL, they contend that 5 “Toyota could and should have chosen one of many reasonable available alternatives” to its unfair 6 conduct “including disclosing the actual fuel tank capacity and mileage range of the RAV4s to 7 prospective purchasers and lessees.” Id.; Opp. at 26. But this “failure to disclose” argument 8 depends on the fact that Toyota had pre-sale knowledge, which Plaintiffs do not sufficiently allege 9 for the RAV4 Prime. See Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1145 n.5 (9th Cir. 2012) 10 (“the failure to disclose a fact that a manufacturer does not have a duty to disclose, i.e., a defect of 11 which it is not aware, does not constitute an unfair or fraudulent practice” under the UCL). 12 Plaintiffs also contend, without explanation, that Kafeyan’s claims should be plausibly 13 interpreted as “unfair” under the “tethering” test and “balancing” test in Drum v. San Fernando 14 Valley Bar Assn., 182 Cal. App. 4th 247, 257 (2010). Id. Under the “tethering” test, “the public 15 policy which is a predicate to a consumer unfair competition action under the ‘unfair’ prong of the 16 UCL must be tethered to specific constitutional, statutory, or regulatory provisions.” Id. Like in 17 Drum, Kafeyan’s claim fails because he fails to sufficiently allege any violation of a statutory or 18 regulatory provision, to the extent that it depends on theories of fraudulent omission and/or 19 concealment. See id. The “balancing” test asks whether the alleged business practice “is immoral, 20 unethical, oppressive, unscrupulous or substantially injurious to consumers and requires the court 21 to weigh the utility of the defendant’s conduct against the gravity of the harm to the alleged 22 victim.” Id. 23 Although the “balancing” test does not require “scienter,” Plaintiffs’ claim under the 24 “unfair” prong is that Toyota failed to disclose the actual fuel tank capacity and mileage range of 25 the RAV4s to prospective purchasers and lessees and therefore pre-sale knowledge is required for 26 their claim to survive. See Backhaut v. Apple, Inc., 74 F. Supp. 3d 1033, 1051 (N.D. Cal. 2014) 27 (rejecting plaintiffs’ claim under the “balancing” test that the defendant intended to mislead 28 California consumers because plaintiffs’ arguments “rely on Defendant’s alleged ‘unified course 24 1 of fraudulent conduct’ as the basis of their claim, and as such, the pleading must satisfy the 2 heightened standard of Rule 9(b)” but the plaintiffs failed to satisfy Rule 9(b)). Because Plaintiffs 3 have failed to adequately plead that Toyota had pre-sale knowledge of the alleged defect they have 4 failed to plead an adequate claim under the “unfair” prong framed by the FAC. See Burdt v. 5 Whirlpool Corp., No. 15-CV-01563-JSW, 2015 WL 4647929, at *8 (N.D. Cal. Aug. 5, 2015) 6 (holding that the plaintiff was not able to state a claim under the “unfair business practices” prong 7 of the UCL because the plaintiff failed to explain how the “sale of defective products would 8 constitute unfair business practices in the absence of [d]efendant’s knowledge of the alleged defect 9 at the time of sale.”) (citing Wilson, 668 F.3d at 1145 n.5). 10 United States District Court Northern District of California 11 Toyota’s motion to dismiss Kafeyan’s CLRA, FAL, and UCL claims to the extent that they rely on fraudulent omissions and/or concealment is GRANTED with leave to amend. Birchfield’s Claim Under the Michigan Consumer Protection Act (Count 34) 12 4. 13 Similar to the arguments about the RIDTPA, Toyota asserts that the conduct at issue—the 14 advertising of motor vehicles—is exempt from the Michigan Consumer Protection Act 15 (“MCPA”). The MCPA does not apply to “a transaction or conduct specifically authorized under 16 laws administered by a regulatory board or officer acting under statutory authority of” Michigan or 17 the United States. Mich. Comp. Laws § 445.904(1)(a). A transaction is “specifically authorized” 18 where it is “explicitly sanctioned” by law regardless of “whether the specific misconduct alleged is 19 prohibited.” Liss v. Lewiston-Richards, Inc., 732 N.W.2d 514, 519–20 (Mich. 2007). In the MTD 20 Order, the Court held that Toyota had failed to identify any specific law or statutory authority to 21 exempt its conduct from the MCPA. MTD Order at 49–50. 22 Here, Toyota points to a separate statute, under which the Secretary of State oversees the 23 licensing and enforcement of motor vehicles. See generally Mich. Comp. Laws §§ 257.249, 24 257.250. It highlights three sections of the statute to assert that the statute regulates the conduct at 25 issue. See id. §§ 257.248h(2)(e); 257.249(b)(d). All three sections begin with the following: 26 “The secretary of state may deny the application of a person for a license as a dealer and refuse to 27 issue the person a license as a dealer, or may suspend or revoke a license already issued, if the 28 secretary of state finds that 1 or more of the following apply.” Id. The first section recites, “(e) 25 1 Engaged in a method, act, or practice that is unfair or deceptive, including the making of an untrue 2 statement of a material fact.” Id. § 257.248h(2)(e). The second states, “(b) The applicant or 3 licensee has not complied with the provisions of this chapter or a rule promulgated under this 4 chapter.” Id. § 257.249(b). And the third recites, “(d) The applicant or licensee has been guilty of 5 a fraudulent act in connection with selling, leasing, or otherwise dealing in vehicles of a type 6 required to be registered under this act.” Id. § 257.249(d). United States District Court Northern District of California 7 Plaintiffs assert that these sections do not “specifically authorize” advertising of motor 8 vehicles and therefore Toyota cannot claim an exemption from the MCPA. Opp. at 18. “An 9 analysis of whether claims are barred by the exemption requires the identification and careful 10 consideration of the specific statute that purports to authorize the transaction at issue.” In re Gen. 11 Motors Air Conditioning Mktg. & Sales Pracs. Litig., 406 F. Supp. 3d 618, 642–43 (E.D. Mich. 12 2019), reconsideration denied, 2019 WL 5696697 (E.D. Mich. Nov. 4, 2019). Toyota responds 13 that the Michigan Supreme Court “construes this exemption broadly.” Reply at 15. In Liss, the 14 Michigan Supreme Court reviewed decisions by the Court of Appeals to conclude that “the 15 relevant inquiry [to find an exemption to the MCPA] is whether the general transaction is 16 specifically authorized by law, regardless of whether the specific misconduct alleged is 17 prohibited.” Liss, 732 N.W.2d at 519–20 (internal quotation marks omitted). 18 For example, in Kraft v. Detroit Ent., L.L.C., the court held that the general conduct 19 involved the operation of slot machines and that it was specifically authorized by the Michigan 20 Gaming Control Board (“MGCB”) under the Michigan Gaming Control and Revenue Act 21 (“MGCRA”). See Kraft v. Detroit Ent., L.L.C., 261 Mich. App. 534, 542 (2004). The court found 22 that the MGCRA gave “the MGCB the authority to adopt standards for licensing electronic 23 gambling devices.” Id. In Newton v. West, the court held that “residential mortgage loan 24 transactions” were exempt from the MCPA because those activities were authorized by the 25 Michigan Savings Bank Act. Newton v. West, 262 Mich. App. 434, 438, 686 N.W.2d 491, 493 26 (2004). The Michigan Savings Bank Act provides that “a savings bank may ‘make, sell, purchase, 27 arrange, participate in, invest in, or otherwise deal in loans or extensions of credit for consumer 28 purposes,’ including secured liens in real estate.” Id. 26 1 In this case, the parties do not dispute that the general conduct at issue is advertising of 2 motor vehicles. The statute on which Toyota relies does not mention advertising. The conduct it 3 regulates, “criteria for the Michigan Secretary of State to consider in denying, suspending, or 4 revoking a dealer’s license.” Reply at 19. The statute does not “specifically authorize” Toyota’s 5 conduct here. Therefore, the representation made to consumers at issue here are not exempted 6 from the MCPA. Toyota’s motion to dismiss Birchfield’s claim under the MCPA is DENIED. 7 5. and 56) 8 United States District Court Northern District of California 9 Colabraro and Klinkhammer’s Alleged Failure to Plead Loss Causation (Counts 38 The parties dispute whether Colabraro and Klinkhammer fail to allege loss causation under 10 the New Jersey Consumer Fraud Act (“NJCFA”) and the Minnesota Uniform Deceptive Trade 11 Practices Act (“MUDTPA”) respectively. In the MTD Order, the Court dismissed these claims 12 because they failed “to allege, with adequate specificity, that Plaintiffs were aware of, and relied 13 on, Toyota’s alleged misrepresentations about fuel tank capacity in the company’s marketing 14 materials.” MTD Order at 51. As explained above, Klinkhammer and Colabraro sufficiently 15 allege awareness and reliance on Toyota’s alleged misrepresentations. See supra Part V.C. 16 Toyota’s motion to dismiss Klinkhammer’s MUDTPA claim and Colabraro’s NJCFA claim is 17 therefore DENIED. 18 19 20 6. Klinkhammer’s Claim Under the Minnesota Uniform Deceptive Trade Practices Act (Count 38) Toyota asserts that Klinkhammer does not plead a permissible basis for relief under the 21 Minnesota Uniform Deceptive Trade Practices Act (“MUDTPA”). Mot. at 29. In the MTD 22 Order, the Court granted Toyota’s motion to dismiss this claim because Klinkhammer sought 23 damages and under the MUDTPA, “the sole statutory remedy for deceptive trade practices is 24 injunctive relief.” Superior Edge, Inc. v. Monsanto Co., 964 F. Supp. 2d 1017, 1041 (D. Minn. 25 2013). MTD Order at 53. It held that to the extent Klinkhammer sought other relief, such as 26 injunctive relief, he lacked standing under the MUDTPA because Plaintiffs failed “to allege that 27 they either plan or are likely to purchase another Vehicle.” Id. at 68. 28 27 United States District Court Northern District of California 1 Toyota asserts that because Klinkhammer only seeks damages again, his claim should be 2 dismissed. Plaintiffs contend that seeking damages under the MUDTPA is proper because 3 damages are available pursuant to Minnesota’s private attorney general statute, Minn. Stat. § 8.31. 4 Opp. at 24. Courts have allowed claims seeking damages under the MUDTPA pursuant to 5 Minnesota’s private attorney general statute, so long as the cause of action benefits the public. See 6 e.g., Miami Prod. & Chem. Co. v. Olin Corp., 2021 WL 2588090, at *9 (W.D.N.Y. June 24, 2021) 7 (holding that “an individual may seek damages under the MUDTPA pursuant to Minnesota's 8 private attorney general statute, Minn. Stat. § 8.31, so long as the ‘cause of action benefits the 9 public.’”); Weller v. Accredited Home Lenders, Inc., 2009 WL 928522, at *4 (D. Minn. Mar. 31, 10 2009) (same). Accepting Plaintiffs’ allegations as true, there is a plausible inference of benefit to 11 the public because false advertising and unfair business practices can harm the public. Opp. at 24 12 (citing FAC ¶¶ 6–42, 119, 569); see, e.g., Kinetic Co. v. Medtronic, Inc., 672 F. Supp. 2d 933, 946 13 (D. Minn. 2009) (holding that “the ‘public benefit’ requirement is not onerous” and that “there is a 14 public benefit in eliminating false or misleading advertising” where “if, but for plaintiff’s lawsuit, 15 other ‘potential consumers might have been injured in the same manner”); Olivares v. PNC Bank, 16 2011 WL 4860167, at *8 (D. Minn. Oct. 13, 2011) (holding that “claims benefit the public when 17 misleading statements or deceptive trade practice are directed to the ‘public at large[]’” and that 18 “courts examine both the form of the alleged misrepresentation and the relief sought by the 19 plaintiff to determine what public interests are at stake.”); but see Buetow v. A.L.S. Enterprises, 20 Inc., 888 F. Supp. 2d 956, 960 (D. Minn. 2012) (rejecting the plaintiffs’ argument that the 21 defendants’ “allegedly misleading advertisements were distributed to the public at large” and 22 therefore they satisfy the public-benefit test because the plaintiffs were not seeking injunctive 23 relief and the action “devolved into a series of small claims for nominal damages” which would 24 not “deter ‘potential future violators’”). Plaintiffs may amend the FAC and add a claim for 25 Klinkhammer to seek damages under Minnesota’s private attorney general statute. 26 Toyota also asserts that Klinkhammer’s injunctive relief claim under the MUDTPA would 27 fail even if he had requested it and that he did not request such relief. In the FAC, however, 28 Klinkhammer seeks “actual damages, attorneys’ fees, and any other just and proper relieve [sic] 28 1 available” under the MUDTPA, as well as punitive damages. FAC ¶¶ 571–72. Because 2 Klinkhammer seeks any just and proper relief under the MUDTPA and injunctive relief is the sole 3 statutory remedy under the MUDTPA, he has properly requested injunctive relief. United States District Court Northern District of California 4 The question then is whether Klinkhammer has standing to assert the injunctive relief 5 claim. Toyota contends that because “Klinkhammer is already aware of the alleged defect, he is 6 unlikely to be ‘damaged’ by supposedly misleading advertising regarding fuel tank capacity” and 7 therefore he cannot allege threat of future harm. Mot. at 29. As the Court explained in the MTD 8 Order, however, the Ninth Circuit has held “that a previously deceived consumer may have 9 standing to seek an injunction against false advertising or labeling, even though the consumer now 10 knows or suspects that the advertising was false at the time of the original purchase.” Davidson v. 11 Kimberly-Clark Corp., 889 F.3d 956, 969 (9th Cir. 2018). Consumers can plead a cognizable 12 threat of future harm where they allege, for example, “that [they] will be unable to rely on the 13 product’s advertising or labeling in the future, and so will not purchase the product although [they] 14 would like to do so,” or “that [they] might purchase the product in the future, despite the fact it 15 was once marred by false advertising or labeling, as [they] may reasonably, but incorrectly, 16 assume the product was improved.” Id. at 970. The Court acknowledged that Plaintiffs would 17 likely have standing to seek an injunction against false advertising, if they alleged that they either 18 “plan or are likely to purchase another vehicle.” MTD Order at 68. 19 Here, Klinkhammer alleges that he “remains interested in being a Toyota customer and 20 would consider purchasing or leasing a RAV4 in the future if Toyota provided a vehicle that met 21 its advertised fuel tank capacity and mileage range.” FAC ¶ 22. Toyota contends that 22 Klinkhammer’s allegation does not claim a threat of future harm because he only “remains 23 interested” in purchasing a RAV4 and “would consider” buying one again. Mot. at 29. It argues 24 that Davidson is distinguishable because there the plaintiff alleged that she “continues to desire to 25 purchase” the products and “would purchase” them again “if it were possible.” Davidson, 889 F. 26 3d at 970 (emphasis added). The Davidson court recognized that the sufficiency of the plaintiff’s 27 allegation to support standing “is a close question” but held that because it is required to construe 28 all of the allegations in the plaintiff’s favor, the plaintiff had “adequately alleged that she faces an 29 1 imminent or actual threat of future harm due to [the defendant’s] false advertising.” Id. at 971. In 2 this case, Klinkhammer’s allegations are less affirmative than the plaintiff’s allegations in 3 Davidson and therefore the question of plausibility is an even closer one. That Klinkhammer 4 would consider purchasing the vehicle again is not the same as alleging that he plans, desires or is 5 likely to. It is not sufficiently affirmative. Klinkhammer thus does not have standing because he 6 cannot allege that he faces an actual threat of future harm due to Toyota’s false advertising. United States District Court Northern District of California 7 Toyota’s motion to dismiss Klinkhammer’s MUDTPA claim is GRANTED as to the 8 claim for injunctive relief against false advertising without leave to amend. Its motion to dismiss 9 Klinkhammer’s MUDTPA claim as to damages is also GRANTED but with leave to amend. 10 Standing for Injunctive and Declaratory Relief 11 During the Hearing, Toyota also challenged all of the Plaintiffs’ standing for injunctive 12 and declaratory relief against false advertising. Plaintiffs responded that Toyota had not asserted 13 this argument in its Motion. That said, the Court had previously granted Plaintiffs the opportunity 14 to amend their injunctive and declaratory relief allegations against false advertising, which would 15 require Toyota to cease and desist from representing that the Vehicles have a fuel-tank capacity of 16 14.5 gallons. MTD Order at 68. Like Klinkhammer, all of the Plaintiffs assert that they “remain[] 17 interested in being a Toyota customer and would consider purchasing or leasing a RAV4 in the 18 future.” FAC ¶¶ 6–42. For the same reasons as Klinkhammer, these allegations fail to assert 19 standing for injunctive relief against false advertising. Because Plaintiffs have once again failed 20 “to allege that they either plan or are likely to purchase another Vehicle, they do not presently 21 have Article III standing to pursue injunctive and declaratory relief as sought in the complaint.” 22 Id. Plaintiffs’ injunctive and declaratory relief claims requiring Toyota to stop making 23 representations about the Vehicles’ fuel tank capacity are DISMISSED with leave to amend. 24 Plaintiffs also assert, however, that they have standing to pursue injunctive relief for 25 purposes of seeking to repair their Vehicles. Opp. at 23. The Court declined to rule on this issue 26 in the MTD Order but tentatively agreed that they would likely have standing to pursue an 27 injunction seeking to repair the Vehicles if Toyota’s ongoing repair efforts prove unsatisfactory. 28 See MTD Order at 68. It distinguished the issue of injunctive relief against an allegedly faulty 30 United States District Court Northern District of California 1 CSP from the injunctive relief claims against false advertising about the vehicle generally. Id. 2 Plaintiffs request an opportunity to amend the FAC to request additional injunctive relief 3 contingent on the results of the CSP. Opp. at 23. Because Plaintiffs have failed to adequately 4 allege that the CSP is ineffective, see infra Part VII, the Court DISMISSES this claim but with 5 leave to amend. 6 Mootness 7 Finally, Toyota asserts that all of the Plaintiffs’ claims are mooted by the CSP because 8 Plaintiffs have failed to allege an injury entitling them to relief. Mot. at 29–30; Reply at 18. It 9 argues that Plaintiffs cannot allege a plausible injury when nearly all of them do not allege that 10 they availed themselves of the countermeasures, i.e., the CSP, it has developed. Mot. at 3. And 11 for the two Plaintiffs who have participated in the CSP, Toyota asserts that Plaintiffs fail to 12 sufficiently allege that the CSP is ineffective. 13 The parties dispute whether the CSP provides the full remedy that plaintiffs seek. Toyota 14 argues that Plaintiffs seek the diminished value of their Vehicles due to the alleged fuel tank defect 15 and the CSP would remedy this relief sought because it would provide Plaintiffs with a new fuel 16 tank without the alleged defect, thus mooting the issue of diminished value. Reply at 18. 17 Plaintiffs respond that they not only seek diminished value of their Vehicles but also 18 compensation for their overpayment of the Vehicles. Opp. at 27. They contend that a remedy that 19 does not provide all of the relief they seek cannot moot their claims. Id. Because the CSP offers 20 no monetary compensation, they contend that it would not address their claims for damages of 21 overpayment. Id. 22 The cases on which Plaintiffs rely, however, are distinguishable because here, an effective 23 CSP would offer a full remedy including for their claims of overpayment. In Edwards v. Ford 24 Motor Co., 603 F. App'x 538 (9th Cir. 2015), the Ninth Circuit held that the appeal was not moot 25 even though the defendant, Ford, had implemented a repair and reimbursement program, extended 26 the warranty, and offered a refund for owner-paid repairs because the plaintiff sought “relief 27 beyond that provided by the program including reimbursement of the money consumers spent” on 28 the products or on extended warranties. Edwards, 603 F. App’x at 539–40. Similarly, in In re 31 1 MacBook Keyboard Litigation, Apple argued that the plaintiffs could not establish standing 2 because its “Keyboard Service Program addresses and remediates the alleged keyboard defect on 3 which all of their claims depend.” In re MacBook Keyboard Litig., No. 18-CV-02813-EJD, 2019 4 WL 6465285, at *6 (N.D. Cal. Dec. 2, 2019). The court held that the program did not moot the 5 plaintiffs’ claims because the plaintiffs sought “relief beyond what the Program offers, including 6 monetary damages and injunctive relief.” Id. Further, the court held that the Plaintiffs’ allegations 7 that Apple’s repair program was ineffective were plausible because they were based on “Apple’s 8 internal documents allegedly acknowledging a design defect and Apple’s multiple failed attempts 9 to repair their allegedly defective keyboards in the past.” Id. at *9. United States District Court Northern District of California 10 Unlike the plaintiffs in Edwards, if Plaintiffs did not spend any money to fix the alleged 11 defect before participating in the CSP, the CSP would be a sufficient remedy because any 12 overpayment initially paid for Vehicles with alleged defects or diminished value would be 13 compensated by fixing the defect, Plaintiffs have not sufficiently alleged otherwise. And unlike 14 the plaintiffs in In re MacBook Keyboard Litigation, the Plaintiffs do not have standing to assert 15 injunctive relief against false advertising and have not alleged any other form of injunctive relief. 16 The only other asserted “ascertainable loss[es]” are “more frequent fueling” and “anticipated 17 future repairs.” See, e.g., FAC ¶ 6. But if the CSP is effective, there would be no need for future 18 repairs. And as the Court previously recognized, “more frequent fueling” is not sufficient to assert 19 a plausible claim. See MTD Order at 23 (citing Troup v. Toyota Motor Corp., 545 Fed. Appx. 20 668, 669 (9th Cir. 2013) (affirming the district court’s dismissal of an implied warranty claim 21 where “the alleged defect did not compromise the vehicle’s safety, render it inoperable, or 22 drastically reduce its mileage range” but merely “required [plaintiffs] to refuel more often”). 23 Since the claim is not about fuel efficiency (MPG), Plaintiffs do not contend that they incurred 24 higher overall fueling costs. 25 Furthermore, unlike the plaintiffs in In re MacBook Keyboard Litigation, Plaintiffs’ 26 allegations that the CSP is ineffective is implausible because they have not made sufficient 27 allegations as to is ineffectiveness. For example, one of the two plaintiffs who participated in the 28 CSP, Tran, received a replacement tank that “accept[ed] approximately 13 gallons when nearly 32 1 empty.” FAC ¶ 14. The other plaintiff, Perry, received a replacement fuel tank that “accept[ed] 2 approximately 10 gallons of fuel when the tank is nearly empty.” FAC ¶ 9. Although it is unclear 3 what Plaintiffs mean by “when the tank is nearly empty,” Plaintiffs allege that the low fuel level 4 warning light turns on at approximately 2.2 gallons. FAC ¶ 53. Plaintiffs have not sufficiently 5 alleged that the CSP is ineffective because Tran’s vehicle accepted approximately the full 14.5 6 gallons and Perry’s vehicle accepted approximately 12.2 gallons after the remedy. United States District Court Northern District of California 7 Plaintiffs respond that at least twelve plaintiffs have undertaken the CSP as of the Hearing 8 date and that the fix from the CSP is insufficient because receiving at maximum 12.2 gallons is 9 materially short of the 14.5 gallons represented by Toyota. Even assuming 12.2 gallons is 10 materially short of the 14.5 gallons promised by Toyota, only one out of thirty-nine Plaintiffs, 11 Perry, adequately pleads that the CSP is ineffective. Tran alleges that his vehicle accepted 12 approximately the full 14.5 gallons after the CSP repair and the thirty-seven other Plaintiffs did 13 not participate in the CSP and therefore cannot allege whether or not the CSP is effective. This is 14 insufficient to allege a plausible injury. But because Plaintiffs contend that there are twelve 15 plaintiffs who have also participated in the CSP to date, the Court will allow Plaintiffs to amend 16 their FAC to include these plaintiffs as well as any others who have participated in the CSP. 17 Toyota’s motion to dismiss the claims based on failure to allege a plausible injury is GRANTED 18 except as to Perry with leave to amend. The Court will then determine which, if any, of the other 19 Plaintiffs’ claim are mooted by the CSP. 20 Administrative Motion to Seal 21 Plaintiffs filed an administrative motion to seal portions of its opposition to Toyota’s 22 motion to dismiss. Docket No. 114. On September 13, 2021, the Court granted the motion 23 without hearing from Toyota. Docket No. 117. On October 28, 2021, after reviewing the motion 24 to seal a second time, the Court ordered Toyota to show cause as to why the information sought to 25 be redacted in Plaintiffs’ opposition should stay sealed. Docket No. 119. Toyota does not oppose 26 the un-sealing of the Opposition. Docket No. 120. Plaintiffs’ motion, Docket No. 114, is 27 therefore DENIED and the Clerk shall UNSEAL Docket No. 114-4. 28 33 IV. 1 2 For the reasons above, Toyota’s motion to dismiss Plaintiffs’ FAC is: 3 • GRANTED as to Plaintiffs’ re-alleged claims (without leave to amend). 4 • GRANTED as to Perry, Mulcahy, Kafeyan, and Gentile’s NVLW express warranty and implied warranty claims (without leave to amend). 5 • 6 GRANTED in part and DENIED in part as to certain Plaintiffs’ express warranty claims. 7 o GRANTED as to Wagner, Ramaeker, Birchfield, and McPhie’s express 8 warranty claims (with leave to amend for Birchfield and McPhie). 9 o DENIED as to Klinkhammer and Colabraro’s express warranty claims. 10 • 11 United States District Court Northern District of California CONCLUSION GRANTED as to Plaintiffs’ claims based on active concealment (without leave to amend). 12 • 13 GRANTED in part and DENIED in part as to Plaintiffs’ claims under certain state consumer protection statutes. 14 o DENIED as to Kahn and Ferraguto’s Chapter 93A claims, Gentile’s RIDTPA 15 claim, Birchfield’s MCPA claim, and Colabraro’s NJCFA claim. 16 17 o GRANTED as to Kafeyan’s CLRA, FAL, and UCL claims to the extent that 18 they rely on fraudulent omissions and/or concealment theories (with leave to 19 amend). o GRANTED in part and DENIED in part as to Klinkhammer’s MUDTPA 20 claim (with leave and without leave to amend). 21 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 34 1 • false advertising (with leave to amend). 2 3 GRANTED as to Plaintiffs’ standing to assert injunctive and declaratory relief against • GRANTED as to mootness (with leave to amend), except as to Plaintiff Perry. 4 5 This order disposes of Docket No. 110. 6 7 IT IS SO ORDERED. 8 9 10 United States District Court Northern District of California 11 Dated: December 10, 2021 ______________________________________ EDWARD M. CHEN United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 35

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