In re Nexus 6P Products Liability Litigation, No. 5:2017cv02185 - Document 115 (N.D. Cal. 2018)

Court Description: ORDER GRANTING IN PART AND DENYING IN PART 38 HUAWEI'S MOTION TO DISMISS; GRANTING IN PART AND DENYING IN PART 39 GOOGLE'S MOTION TO DISMISS. Signed by Judge Beth Labson Freeman on 3/5/2018. (blflc2S, COURT STAFF) (Filed on 3/5/2018)
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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 8 Case No. 17-cv-02185-BLF 15 ORDER GRANTING WITH LEAVE TO AMEND IN PART AND WITHOUT LEAVE TO AMEND IN PART AND DENYING IN PART HUAWEI’S MOTION TO DISMISS CONSOLIDATED AMENDED COMPLAINT AND TO STRIKE CLASS ALLEGATIONS; GRANTING WITH LEAVE TO AMEND IN PART AND WITHOUT LEAVE TO AMEND IN PART AND DENYING IN PART GOOGLE’S MOTION TO DISMISS CONSOLIDATED AMENDED COMPLAINT 16 [Re: ECF 38, 39] 9 10 11 United States District Court Northern District of California IN RE NEXUS 6P PRODUCTS LIABILITY LITIGATION 12 13 14 17 In this putative consumer class action, Plaintiffs Roy Berry, Jonathan Makcharoenwoodhi, 18 Alex Gorbatchev, Brian Christensen, Anthony Martorello, Khanh Tran, Edward Beheler, Yuriy 19 Davydov, Rebecca Harrison, Zachary Himes, Taylor Jones, Paul Servodio, Justin Leone, James 20 Poore, Jr., and Kenneth Johnston (collectively, “Plaintiffs”) allege severe defects in their Nexus 6P 21 smartphones. Plaintiffs sued the companies that developed the phone—Huawei Device USA, Inc. 22 (“Huawei”) and Google LLC (“Google”)—for breach of warranty, fraud, and unjust enrichment. 23 Their twenty-three causes of action span a litany of state laws and one federal statute. 24 25 26 27 28 Presently before the Court are Huawei’s Motion to Dismiss the Consolidated Amended Complaint and to Strike Class Allegations (“Huawei’s Motion to Dismiss”), Huawei Mot., ECF 38; and Google’s Motion to Dismiss Consolidated Amended Complaint (“Google’s Motion to Dismiss”), Google Mot., ECF 39. In a previous order, the Court granted with leave to amend 1 Huawei’s Motion to Dismiss on the ground that the Court lacks personal jurisdiction over Huawei. 2 ECF 113. Here, the Court dives into the merits of Huawei’s and Google’s Motions to Dismiss, 3 which assert that Plaintiffs have failed to state a claim on which relief can be granted and that 4 Plaintiffs’ class allegations should be stricken. The Court held a hearing on these motions on January 18, 2018. The Court has considered 5 6 the arguments presented at oral argument and in the briefing, as well as the submitted evidence 7 and applicable law. For the reasons that follow, the Court hereby GRANTS WITH LEAVE TO 8 AMEND IN PART, GRANTS WITHOUT LEAVE TO AMEND IN PART, AND DENIES IN 9 PART Huawei’s and Google’s Motions to Dismiss. The Court DENIES Huawei’s and Google’s motions to strike Plaintiffs’ class allegations. 11 United States District Court Northern District of California 10 I. 12 BACKGROUND The following facts are drawn from the Consolidated Amended Complaint (“CAC”), ECF 13 28. In September 2015, Google unveiled the Nexus 6P, the newest version of its Nexus 6 14 smartphone. CAC ¶ 165. Google and Huawei created the Nexus 6P together, with Google 15 handling software development and Huawei handling device manufacture. Id. At the launch 16 event and in advertising, Google touted many of the superior features of the phone. See id. ¶¶ 7, 17 169, 171. 18 Unfortunately, according to the CAC, the Nexus 6P suffers from two defects. First, some 19 phones unexpectedly turn off and, upon turning back on, experience an endless bootloop cycle (the 20 “Bootloop Defect”). Id. ¶ 174. When the Bootloop Defect manifests, the phone becomes 21 nonoperational and all unsaved data is lost because the phone cannot proceed beyond the start-up 22 screen. Id. ¶ 175. Second, some phones prematurely shut off despite showing a battery charge of 23 anywhere from 15–90% (the “Battery Drain Defect”). Id. ¶ 177. When the Battery Drain Defect 24 manifests, the phone remains dead until the user reconnects it to power. Id. ¶ 178. After some 25 charging, the battery shows the same or similar charge as indicated before the premature shut-off. 26 Id.; see also id. ¶ 61. Complaints about the Bootloop and Battery Drain Defects began cropping 27 up online as early as September and October 2016. Id. ¶¶ 175, 184, 187–88. 28 This putative class action was commenced on April 19, 2017. ECF 1. Plaintiffs filed the 2 1 operative complaint—the CAC—on May 23, 2017. Plaintiffs seek to represent a nationwide class 2 of customers who purchased or own a Nexus 6P. CAC ¶¶ 1, 205. They also propose twelve 3 statewide subclasses, which cover all persons or entities in the states of California, Florida, 4 Illinois, Indiana, Michigan, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Texas, 5 and Washington who purchased or own at least one Nexus 6P. Id. ¶ 205. Plaintiffs bring twenty-three causes of action against both Huawei and Google under a 6 7 spattering of state laws and one federal law. At the high level, their claims fall into three buckets: 8 (1) warranty claims, (2) fraud claims, and (3) unjust enrichment claims. Their warranty claims 9 consist of claims for (1) breach of express warranty on behalf of the nationwide class or each statewide subclass, (2) breach of the implied warranty of merchantability on behalf of the 11 United States District Court Northern District of California 10 nationwide class or each statewide subclass, (3) violation of the California Song–Beverly 12 Consumer Warranty Act on behalf of the California subclass, and (4) violation of the federal 13 Magnuson–Moss Warranty Act presumably on behalf of the nationwide class. Id. ¶¶ 213–67, 14 284–96. Their fraud claims consist of (1) a common-law claim for deceit and fraudulent 15 concealment on behalf of each statewide subclass and (2) claims for violations of state consumer 16 protection statutes on behalf of the relevant statewide subclass.1 Id. ¶¶ 268–77, 297–535. Finally, 17 their unjust enrichment claims are asserted on behalf of the nationwide class based on the 18 universal principles of equity. Id. ¶¶ 278–83. In June 2017, Huawei and Google filed their Motions to Dismiss. Huawei’s argument 19 20 regarding lack of personal jurisdiction was addressed in a prior order. See ECF 113. Here, the 21 Court focuses on the sufficiency of the CAC. Specifically, both Huawei’s and Google’s Motions 22 to Dismiss assert that Plaintiffs have failed to allege sufficient facts entitling them to relief on their 23 24 25 26 27 28 1 Specifically, the state consumer protection statutes are: the California Unfair Competition Law, the California Consumer Legal Remedies Act, the California False Advertising Law, the Florida Deceptive and Unfair Trade Practices Act, the Illinois Consumer Fraud and Deceptive Business Practices Act, the Illinois Uniform Deceptive Trade Practices Act, the Indiana Deceptive Consumer Sales Act, the Michigan Consumer Protection Act, New York General Business Law §§ 349–350, the North Carolina Unfair and Deceptive Trade Practices Act, the North Dakota Consumer Fraud Act, the Ohio Deceptive Trade Practices Act, the Ohio Consumer Sales Practices Act, the Pennsylvania Unfair Trade Practices and Consumer Protection Law, the Texas Deceptive Trade Practices Act, and the Washington Consumer Protection Act. 3 1 claims. Huawei Mot. 9–28; Google Mot. 3–29. Huawei and Google also request that the Court 2 strike Plaintiffs’ class allegations. Huawei Mot. 26–28; Google Mot. 29. 3 II. LEGAL STANDARD 4 A. Rule 12(b)(6) 5 “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a 6 claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’” Conservation 7 Force v. Salazar, 646 F.3d 1240, 1241–42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 8 729, 732 (9th Cir. 2001)). When determining whether a claim has been stated, the Court accepts 9 as true all well-pled factual allegations and construes them in the light most favorable to the 10 plaintiff. Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). United States District Court Northern District of California 11 However, the Court need not “accept as true allegations that contradict matters properly 12 subject to judicial notice” or “allegations that are merely conclusory, unwarranted deductions of 13 fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 14 2008) (quoting Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001)). While a 15 complaint need not contain detailed factual allegations, it “must contain sufficient factual matter, 16 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 17 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is 18 facially plausible when the alleged facts “allow[] the court to draw the reasonable inference that 19 the defendant is liable for the misconduct alleged.” Id. 20 B. Rule 12(f) 21 Federal Rule of Civil Procedure 12(f) permits a court to “strike from a pleading an 22 insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” The 23 function of a motion made under this rule is “to avoid the expenditure of time and money that 24 must arise from litigating spurious issues by dispensing with those issues prior to trial.” 25 Whittlestone, Inc. v. Handi–Craft Co., 618 F.3d 970, 973 (9th Cir. 2010) (quoting Fantasy, Inc. v. 26 Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev’d on other grounds by Fogerty v. Fantasy, Inc., 27 510 U.S. 517 (1994)). “While a Rule 12(f) motion provides the means to excise improper 28 materials from pleadings, such motions are generally disfavored because the motions may be used 4 1 as delaying tactics and because of the strong policy favoring resolution on the merits.” Barnes v. 2 AT & T Pension Ben. Plan–Nonbargained Program, 718 F. Supp. 2d 1167, 1170 (N.D. Cal. 3 2010). The decision to strike a portion of a party’s pleading is within the sound discretion of the 4 5 court. Nurse v. United States, 226 F.3d 996, 1000 (9th Cir. 2000). If allegations are stricken, 6 leave to amend should be freely given when doing so would not cause prejudice to the opposing 7 party. See Wyshak v. City Nat’l Bank, 607 F.2d 824, 826 (9th Cir. 1979) (per curiam). 8 9 III. DISCUSSION Both Huawei and Google contend that Plaintiffs have failed to allege sufficient facts entitling them to relief on their claims. Before turning to the merits of those arguments, the Court 11 United States District Court Northern District of California 10 addresses Google’s request for judicial notice. 12 A. Request for Judicial Notice 13 In connection with its Motion to Dismiss, Google seeks judicial notice of two documents: 14 Google’s U.S. Terms of Sale and the Nexus 6P webpage. ECF 57. Portions of the documents are 15 referenced in the CAC, and both are capable of accurate and ready determination because they are 16 publicly available online. These documents are properly subject to judicial notice. See Fed. R. 17 Evid. 201(b); Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). Plaintiffs did not formally 18 object to Google’s request. Accordingly, Google’s request for judicial notice is GRANTED. 19 B. Motions to Dismiss for Failure to State a Claim 20 Huawei and Google contend that Plaintiffs’ CAC provides insufficient allegations to 21 properly plead their causes of action. The Court begins by making some general observations 22 about changes that should be made to any amended pleading. The Court then addresses the 23 sufficiency of an allegation important to many of Plaintiffs’ claims—namely, whether Huawei and 24 Google had knowledge of the defects at the time of sale. Finally, the Court proceeds to analyze 25 separately the claims asserted against Huawei and the claims asserted against Google. 26 27 28 1. General Observations The Court starts with a couple general observations about the pleadings. First, in their twenty-three causes of actions, Plaintiffs often lump Huawei and Google together, alleging 5 1 conduct by “Defendants” without distinguishing what Huawei did from what Google did. See, 2 e.g., CAC ¶¶ 230 (“Defendants received timely notice of the breaches experienced by Plaintiffs 3 and Class members. Defendants were provided notice of the Defects by complaints lodged by 4 consumers before or within a reasonable amount of time after the allegations of the Defects 5 became public.”), 241 (“Defendants breached the implied warranty of merchantability because the 6 Phones they sold are not of a merchantable quality, but instead contain a Bootloop Defect and a 7 Battery Drain Defect.”), 270 (“Defendants concealed and suppressed material facts concerning the 8 performance and quality of the Phones, and the quality of the Huawei, Google, and Nexus brands. 9 Specifically, Defendants knew (or in the exercise of reasonable diligence should have known) of the Defects, but failed to disclose them prior to or at the time they marketed Phones and sold them 11 United States District Court Northern District of California 10 to consumers.”). As discussed in more detail below with respect to particular causes of action, this 12 setup obfuscates what roles Huawei and Google independently played in the alleged harm and 13 whether either is liable for its own conduct. See Adobe Sys. Inc. v. Blue Source Grp., Inc., 125 F. 14 Supp. 3d 945, 964 (N.D. Cal. 2015). In an amended pleading, Plaintiffs “must identify what 15 action each Defendant took that caused Plaintiffs’ harm, without resort to generalized allegations 16 against Defendants as a whole.” In re iPhone Application Litig., No. 11-MD-02250-LHK, 2011 17 WL 4403963, at *8 (N.D. Cal. Sept. 20, 2011). Second, Plaintiffs assert claims for breach of express warranty, breach of implied warranty, 18 19 and unjust enrichment on behalf of a nationwide class but do not specify what law governs.2 As 20 discussed in more detail below with respect to these individual causes of action, the failure to 21 identify the relevant law makes it difficult, if not impossible, for the Court to provide a thorough 22 analysis of Plaintiffs’ claims. Throughout this order, the Court often uses the law that the parties 23 apply in their briefing without elaborating on other potentially applicable state laws.3 In any 24 2 25 26 27 28 For the breach of express warranty and breach of implied warranty claims, Plaintiffs alternatively assert that the claims may proceed under the applicable state law as to each of the twelve statewide subclasses. CAC ¶¶ 215, 236. 3 The parties are advised that in future briefing, to the extent they ask the Court to decide matters on the basis of several states’ laws, they should be mindful of, and squarely address, whether there are material variations in state law. Cf. In re Hyundai and Kia Fuel Economy Litig., 881 F.3d 679, 702 (9th Cir. 2018) (holding that district court abused its discretion in certifying a settlement class “by failing to acknowledge . . . that the laws in various states were materially different than those 6 1 amended version of the pleadings, Plaintiffs should clarify what law governs each cause of action. 2 Additionally, causes of action should not group together multiple sources of law; rather, Plaintiffs 3 should plead separate causes of actions for each source of law, whether federal or state. 4 5 2. Huawei’s and Google’s Knowledge of Defects at the Time of Sale Whether Huawei and Google had knowledge of the defects at the time that Plaintiffs 6 purchased their phones is a common thread through many of the Plaintiffs’ claims. Indeed, many 7 of Plaintiffs’ causes of action either start from the premise or entirely depend on the fact that 8 Huawei and Google knew, or reasonably should have had known, of the defects at the time of sale. 9 Therefore, the Court begins by examining the sufficiency of the Plaintiffs’ allegations on that 10 United States District Court Northern District of California 11 score, as the answer colors the analysis of many of the Plaintiffs’ claims. At multiple points in the CAC, Plaintiffs allege that “Defendants knew (or exercising due 12 diligence should have known) that the Phones were defective at the time of sale.” CAC ¶ 246; see 13 also, e.g., id. ¶¶ 6, 186, 226, 270, 281, 318, 322, 335, 359. However, that statement is conclusory, 14 and the CAC does not contain sufficient factual matter to make that inference plausible. 15 The key issue here is timing. The Nexus 6P was released in September 2015. Id. ¶ 165. 16 In the CAC, Plaintiffs provide multiple examples of consumers posting online about the Bootloop 17 and Battery Drain Defects, but do not provide specific dates for any of those postings. Id. ¶ 184. 18 Plaintiffs do not allege that Huawei ever saw or responded to these online complaints, let alone 19 that Huawei knew about them before Plaintiffs purchased their phones. See Wilson v. Hewlett- 20 Packard Co., 668 F.3d 1136, 1147 (9th Cir. 2012) (“[C]ourts have rejected undated customer 21 complaints offered as a factual basis for a manufacturer’s knowledge of a defect because they 22 provide no indication whether the manufacturer was aware of the defect at the time of sale.”). 23 Although Plaintiffs allege particular dates for Google’s online responses to the postings, 24 those responses postdate Plaintiffs’ purchases. Specifically, Plaintiffs allege that a Google 25 representative responded to customer complaints about the Bootloop Defect in September 2016, 26 27 28 in California, and that these variations prevented the court from applying only California law” and “failing to make a final ruling as to whether the material variations in state law defeated predominance under Rule 23(b)(3)”). 7 1 stating: “We understand that a very small number of users are experiencing a bootloop issue on 2 your device. We are continuing to investigate the situation, but can confirm that this is strictly a 3 hardware related issue.” CAC ¶ 187. Nevertheless, all Plaintiffs who allege that their phones 4 manifested the Bootloop Defect purchased their phones before September 2016. See id. ¶¶ 19 5 (Gorbatchev: Oct. 2015), 28 (Christensen: Nov. 2015), 38 (Martorello: May 2016), 52 (Tran: Jan. 6 2016), 70 (Berry: Nov. 2015), 119 (Servodio: Mar. 2016). 7 Similarly, Plaintiffs allege that a Google representative responded to customer complaints 8 about the Battery Drain Defect in October 2016, stating: “Just want to let you all know that [the 9 Battery Drain Defect] is something we have been keeping track of, and our team is investigating. . . . [M]any of you are reporting that you have been experiencing abnormal battery drain for 11 United States District Court Northern District of California 10 multiple days now.” Id. ¶ 188. Again, no Plaintiffs who allege that their phones manifested the 12 Battery Drain Defect purchased their phones after the October 2016 statement by Google’s 13 representative. See id. ¶¶ 12 (Makcharoenwoodhi: Apr. 2016), 28 (Christensen: Nov. 2015), 38 14 (Martorello: May 2016), 58 (Beheler: July 2016), 70 (Berry: Nov. 2015), 79 (Davydov: Dec. 15 2015), 91 (Harrison: Apr. 2016), 99 (Himes: Mar. 2016), 111 (Jones: Jan. 2016), 130 (Leone: Oct. 16 2015), 142 (Poore: Feb. 2016), 153 (Johnston: Oct. 2016). 17 Without that crucial temporal element, Plaintiffs have not adequately alleged that Huawei 18 or Google knew (or reasonably should have known) of the defects when Plaintiffs purchased their 19 phones. This factual gap is not filled by allegations that some Plaintiffs contacted Huawei and 20 Google about the defects, as most of those conversations took place after October 2016 or are not 21 alleged to have taken place on a specific date. See id. ¶¶ 15, 23, 30–31, 33, 54, 63–64, 67, 72–73, 22 83–85, 94, 113, 133, 147, 155. The two Plaintiffs who contacted Huawei and Google before 23 September 2016 are not enough, see id. ¶¶ 41–43, 102, because a handful of complaints do not, by 24 themselves, plausibly show that Huawei or Google had knowledge of the defects and concealed 25 the defects from customers. See Berenblat v. Apple, Inc., No. 08-CV-04969-JF, 2010 WL 26 1460297, at *9 (N.D. Cal. Apr. 9, 2010) (reaching the same conclusion and explaining that 27 allegations about “complaints posted on Apple’s consumer website merely establish the fact that 28 some consumers were complaining”); see also Baba v. Hewlett-Packard Co., No. 09-CV-059468 1 RS, 2011 WL 317650, at *3 (N.D. Cal. Jan. 28, 2011) (“Awareness of a few customer complaints, 2 however, does not establish knowledge of an alleged defect.”). 3 Perhaps sensing this deficiency, Plaintiffs shift gears in their opposition, positing that 4 “[t]he Nexus 6P phones contain core component flaws that basic product testing would have 5 disclosed at or near the time of manufacture.” Opp’n 42. Whatever the viability of that theory, it 6 finds no basis in the CAC. Contrary to Plaintiffs’ suggestion, the allegation that “Defendants had 7 superior knowledge and access to the relevant facts,” CAC ¶ 272, does not equate to an allegation 8 that straightforward testing would have revealed the defects. 9 Plaintiffs have not adequately alleged that Huawei or Google had knowledge of the defects at the time that Plaintiffs purchased their phones. Plaintiffs may amend the CAC to allege further 11 United States District Court Northern District of California 10 facts in support of knowledge. With that conclusion in mind, the Court turns first to the claims 12 asserted against Huawei and then to the claims asserted against Google. 3. 13 14 Claims Asserted Against Huawei In broad strokes, the CAC asserts three categories of claims against Huawei—warranty 15 claims, fraud claims, and unjust enrichment claims. The Court addresses each of these categories 16 one at a time. 17 18 a. Warranty Claims Plaintiffs assert four sets of warranty claims: (1) breach of express warranty, (2) breach of 19 the implied warranty of merchantability, (3) violation of the California Song–Beverly Consumer 20 Warranty Act, and (4) violation of the federal Magnuson–Moss Warranty Act. Huawei moves to 21 dismiss all four causes of action. The Court addresses each in turn. 22 23 i. Breach of Express Warranty Plaintiffs bring their first cause of action for breach of express warranty on behalf of a 24 putative nationwide class but do not specify which law governs the claim. CAC ¶ 214. 25 Alternatively, they assert claims for breach of express warranty on behalf of the putative statewide 26 subclasses under the laws of the respective states. Id. ¶ 215. 27 28 Huawei provides a written Limited Warranty for phones, tablets, wearables, PCs, and accessories. Huawei Mot., Ex. A. The Limited Warranty provides: “Huawei Device USA Inc., 9 1 (‘Huawei’) represents and warrants to the original purchaser (‘Purchaser’) that Huawei’s phones 2 and accessories (‘Product’) are free from material defects, including improper or inferior 3 workmanship, materials, and design, during the designated warranty period . . . when used 4 normally and in accordance with all operating instructions.” Id., Preamble. For phones, the 5 “designated warranty period” is “12 months from the date of purchase.” Id. ¶ 1. 6 Under the terms of the Limited Warranty, Huawei agrees to “repair or replace at Huawei’s sole option, any parts of the Product that are defective or malfunctioning during normal usage.” 8 Id. ¶ 4. However, “Huawei does not warrant that the operation of [the phone] will be 9 uninterrupted or error-free.” Id. ¶ 8. Moreover, the Limited Warranty becomes “null and void” if 10 the Purchaser does not notify Huawei “of the alleged defect or malfunction of the Product during 11 United States District Court Northern District of California 7 the applicable warranty period.” Id. ¶ 9. 12 Huawei moves to dismiss Plaintiffs’ express warranty claims. Huawei first contends that, 13 for a handful of Plaintiffs, there are insufficient allegations to establish that Huawei breached the 14 Limited Warranty. Huawei Mot. 10–11. Huawei then asserts a number of inadequacies applicable 15 to different groupings of Plaintiffs. Specifically, Huawei contends that certain Plaintiffs have not 16 adequately alleged that they provided Huawei notice and an opportunity to cure, that they relied on 17 Huawei’s Limited Warranty, or that they were in privity with Huawei. Id. at 11–12. The Court 18 trudges through each of these various grounds for dismissal. 19 20 (1) Breach and Unconscionability Huawei contends that it did not breach the Limited Warranty for those Plaintiffs whose 21 phones manifested the defects outside the one-year warranty period and those Plaintiffs who did 22 not notify Huawei of defects during the one-year warranty period. Huawei Mot. 10. Specifically, 23 Plaintiffs Gorbatchev, Christensen, and Tran allege that their phones failed more than a year after 24 purchase. CAC ¶¶ 19, 21 (Gorbatchev), 28–29 (Christensen), 52–53 (Tran). Plaintiffs Berry, 25 Jones, and Leone do not allege that they notified Huawei of any defect before the expiration of one 26 year. Id. ¶¶ 70–78 (Berry), 111–18 (Jones), 128–41 (Leone). Plaintiffs do not dispute that these 27 Plaintiffs fall outside the Limited Warranty but instead argue that the one-year warranty limitation 28 10 1 is unconscionable.4 Because Plaintiffs and Huawei address the unconscionability issue under California law 2 3 and identify no material differences in other state laws, the Court uses California law as the basis 4 for its analysis. Under California law, a contract provision is “unconscionable, and therefore 5 unenforceable, only if it is both procedurally and substantively unconscionable.” In re iPhone, 6 2011 WL 4403963, at *7 (citing Armendariz v. Found. Health Psychcare Servs., Inc., 6 P.3d 669, 7 690 (Cal. 2000)); see also Pokorny v. Quixtar, Inc., 601 F.3d 987, 996 (9th Cir. 2010) (explaining 8 that, under California law, “both procedural and substantive unconscionability must be present for 9 the contract to be declared unenforceable”). “The procedural element of unconscionability focuses on two factors: oppression and surprise.” Aron v. U-Haul Co. of Cal., 49 Cal. Rptr. 3d 11 United States District Court Northern District of California 10 555, 564 (Ct. App. 2006). “The substantive element of unconscionability focuses on the actual 12 terms of the agreement and evaluates whether they create ‘overly harsh’ or ‘one-sided’ results as 13 to ‘shock the conscience.’” Id. (citation omitted). 14 At most, Plaintiffs have made a weak showing that the Limited Warranty’s one-year 15 duration provision is procedurally unconscionable. Plaintiffs contend that the Limited Warranty is 16 unconscionable because Huawei and its customers are in an unequal bargaining position, where 17 customers cannot negotiate warranty terms. CAC ¶¶ 226, 246. The bargaining positions of 18 Huawei and its customers are not as imbalanced as Plaintiffs suggest because Plaintiffs have not 19 adequately alleged that Huawei knew of and concealed the defects at the time of sale. See In re 20 Sony Grand Wega KDF-E A10/A20 Series Rear Projection HDTV Television Litig., 758 F. Supp. 21 2d 1077, 1101 (S.D. Cal. 2010) (rejecting argument that defendant had superior bargaining power 22 where plaintiffs had not sufficiently alleged that the defendant knew of the defect before the point 23 of sale). Even if the terms of the Limited Warranty are non-negotiable, Plaintiffs do not plead that 24 they had no meaningful alternatives; they could have purchased other phones or obtained 25 additional warranty protections from Huawei. Davidson v. Apple, Inc., No. 16-CV-04942-LHK, 26 27 28 4 The Court finds it unnecessary at this stage to address Plaintiffs’ contention that Huawei’s Limited Warranty fails of its essential purpose, Opp’n 19–21, because that does not appear to be a ground on which Huawei argues for dismissal of Plaintiffs’ express warranty claims. 11 1 2017 WL 976048, at *12 (N.D. Cal. Mar. 14, 2017). Moreover, the CAC does not allege that 2 Plaintiffs were “surprised” by the Limited Warranty’s terms or that they could not or did not 3 access Huawei’s Limited Warranty online at the time of purchase. See id. Plaintiffs make no allegations relevant to substantive unconscionability. Courts have 5 rejected substantive unconscionability arguments where, as here, the duration of the express 6 warranty “corresponds to the maximum limit permitted under [state] law” for implied warranties. 7 Marchante v. Sony Corp. of Am., 801 F. Supp. 2d 1013, 1023 (S.D. Cal. 2011); see also Bros. v. 8 Hewlett-Packard Co., No. 06-CV-02254-RMW, 2006 WL 3093685, at *8 (N.D. Cal. Oct. 31, 9 2006) (explaining that, in general, “a time limitation, by itself, is not unconscionable”). Plaintiffs’ 10 allegations do not show that the one-year duration “create[s] overly harsh or one-sided results as to 11 United States District Court Northern District of California 4 shock the conscience,” and thus Plaintiffs have not established substantive unconscionability. 12 Aron, 49 Cal. Rptr. 3d at 564 (internal quotation marks and citation omitted). 13 Based on the allegations in the CAC, Huawei’s one-year Limited Warranty is not 14 unconscionable, and the Limited Warranty is enforceable. Accordingly, Plaintiffs have not stated 15 a claim for breach of express warranty for Plaintiffs Gorbatchev, Christensen, and Tran whose 16 phone defect manifested after the one-year Limited Warranty expired or for Plaintiffs Berry, 17 Jones, and Leone who did not notify Huawei of a defect within the one-year Limited Warranty 18 period. The Court GRANTS Huawei’s Motion to Dismiss the express warranty claim of Plaintiffs 19 Gorbatchev, Christensen, Tran, Berry, Jones, and Leone with leave to amend to allege further facts 20 in support of Plaintiffs’ unconscionability argument. 21 22 (2) Notice and Opportunity to Cure For many of those same Plaintiffs, Huawei relatedly argues that the failure to give Huawei 23 notice or an opportunity to cure is fatal to their claims. Huawei Mot. 11–12. In particular, 24 Plaintiffs Gorbatchev, Tran, Berry, and Leone do not allege that they contacted Huawei to seek 25 repairs. Id. at 12. Additionally, Plaintiff Beheler does not allege that he allowed Huawei to act on 26 its offer to repair or replace his phone. Id. Due to the variations in state law on this issue, the 27 Court proceeds through each Plaintiff’s state-law claim individually. 28 12 (a) 1 California Beyond California Plaintiff Gorbatchev’s falling outside the terms of Huawei’s Limited 2 3 Warranty, California law does not supply an independent notice-related bar to his express 4 warranty claim. As a general matter, a “buyer must, within a reasonable time after he or she 5 discovers or should have discovered any breach, notify the seller of breach or be barred from any 6 remedy.” Cal. Com. Code § 2607(3)(A). And it is true that Plaintiff Gorbatchev does not allege 7 that he contacted Huawei to seek repairs. CAC ¶¶ 19–27. But notice is not required in an action 8 by consumers “against manufacturers with whom they have not dealt.” Greenman v. Yuba Power 9 Prods., Inc., 377 P.2d 897, 900 (Cal. 1963). Other district courts have applied this exception to the specific notice provision at issue here, § 2607(3)(A). See, e.g., In re Toyota Motor Corp. 11 United States District Court Northern District of California 10 Unintended Acceleration Mktg., Sales Practices, & Prod. Liab. Litig., 754 F. Supp. 2d 1145, 1180 12 (C.D. Cal. 2010) (denying motion to dismiss for failure to provide § 2607(3)(A) notice); Aaronson 13 v. Vital Pharm., Inc., No. 09-CV-01333-W, 2010 WL 625337, at *5 (S.D. Cal. Feb. 17, 2010) 14 (same). 15 Here, Plaintiff Gorbatchev asserts his express warranty claim against Huawei. The 16 allegations in the CAC support that Huawei is a manufacturer with whom Plaintiff Gorbatchev has 17 never dealt. Plaintiff Gorbatchev did not purchase his Nexus 6P phone from Huawei; instead, he 18 purchased his phone through the Google Store. CAC ¶ 19. After his phone began exhibiting the 19 Bootloop Defect, he interacted solely with Google in an unsuccessful attempt to secure a new 20 phone under the warranty. Id. ¶¶ 23–24. Because Plaintiff Gorbatchev is not required to provide 21 notice to manufacturer Huawei, his claim cannot be dismissed on this ground. 22 (b) Illinois 23 Under Illinois law, notice is an “essential element” of a breach of warranty claim. 24 Maldonado v. Creative Woodworking Concepts, Inc., 694 N.E.2d 1021, 1025 (Ill. App. Ct. 1998). 25 Thus, “failure to allege sufficient notice may be a fatal defect in a complaint alleging breach of 26 warranty.” Id. A manufacturer’s general awareness of problems is insufficient; to fulfill the 27 notice obligation, the buyer normally must contact the manufacturer directly and inform the 28 manufacturer of the defect in the particular product he purchased. Connick v. Suzuki Motor Co., 13 1 675 N.E.2d 584, 589 (Ill. 1996). The Illinois Supreme Court has enumerated two exceptions: 2 direct notice is unnecessary (1) when the seller has actual knowledge of the defect of the particular 3 product and (2) when a buyer files a complaint claiming personal injuries. Id. at 590. The allegations of Illinois Plaintiff Tran do not withstand scrutiny under these standards. 5 As noted above, Plaintiff Tran is not alleged to have informed Huawei of the Bootloop Defect in 6 his phone. Indeed, there is no allegation that he contacted Huawei at all. CAC ¶¶ 52–57. Nor can 7 Plaintiff Tran rely on the first notice exception because the CAC does not aver that other 8 circumstances put Huawei on notice that there was an issue with Plaintiff Tran’s phone. Under the 9 cases, Huawei’s alleged general awareness of the defects in Nexus 6P phones is insufficient. See 10 Connick, 675 N.E.2d at 590 (“[G]eneralized knowledge about the safety concerns of third parties 11 United States District Court Northern District of California 4 is insufficient to fulfill plaintiffs’ UCL notice requirement.”). The second exception also is 12 inapplicable in this consumer defect suit where none of the Plaintiffs, let alone Plaintiff Tran, 13 assert that he or she suffered any personal injury. Accordingly, the Court GRANTS Huawei’s 14 Motion to Dismiss Plaintiff Tran’s express warranty claim with leave to amend to allege further 15 facts about Huawei’s awareness of the defects in Plaintiff Tran’s phone, either through direct 16 notice from Plaintiff Tran or other circumstances. 17 (c) Indiana 18 Indiana law, too, requires that the buyer give notice to the seller before bringing suit for 19 breach of warranty. Ind. Code Ann. § 26-1-2-607(3)(a). But unlike similar provisions in other 20 states, Indiana’s notification law “is satisfied if the seller has ‘actual knowledge’ that the goods are 21 nonconforming.” Anderson v. Gulf Stream Coach, Inc., 662 F.3d 775, 782 (7th Cir. 2011); see 22 also Agrarian Grain Co. v. Meeker, 526 N.E.2d 1189, 1193 (Ind. Ct. App. 1988) (“[T]he notice 23 required by [the Indiana statute] is satisfied by the [seller’s] actual knowledge there are some 24 problems with the goods.”). Here, the allegations demonstrate that Huawei knew that Indiana 25 Plaintiff Beheler’s Nexus 6P phone manifested the Battery Drain Defect and that he was 26 dissatisfied with the phone. See CAC ¶ 64 (alleging that Plaintiff Beheler “called Huawei’s 27 customer support” and “[a] Huawei representative agreed that the Phone was defective”). That 28 Huawei offered to repair or replace the phone and Plaintiff Beheler apparently never responded, 14 1 id., does not change the analysis, as the Limited Warranty does not explicitly require Plaintiff 2 Beheler to give Huawei a reasonable opportunity to cure. See Anderson, 662 F.3d at 782 (“[T]he 3 only Indiana court to have squarely addressed this issue has concluded that the buyer only has to 4 give the seller a reasonable opportunity to cure if the terms of the warranty impose that 5 requirement.”). Accordingly, Plaintiff Beheler’s express warranty claim cannot be dismissed for 6 failure to allege notice and an opportunity to cure. (d) 7 8 Michigan Under Michigan law, it appears that “[t]he buyer must provide reasonable notice in order to recover for a breach of warranty.” Eaton Corp. v. Magnavox Co., 581 F. Supp. 1514, 1531 10 (E.D. Mich. 1984). Plaintiffs do not cite any contrary authority. The CAC does not allege that 11 United States District Court Northern District of California 9 Michigan Plaintiff Berry provided any notice to Huawei. CAC ¶¶ 70–78. Accordingly, the Court 12 GRANTS Huawei’s Motion to Dismiss Plaintiff Berry’s express warranty claim with leave to 13 amend to allege further facts about Plaintiff Berry’s notice to Huawei. (e) 14 Pennsylvania 15 The Court rejects Huawei’s notice argument as to Pennsylvania Plaintiff Leone. The 16 Pennsylvania statute says that “the buyer must within a reasonable time after he discovers or 17 should have discovered any breach notify the seller of breach.” 13 Pa. Stat. and Cons. Stat. Ann. 18 § 2607(c)(1). However, while many states require pre-suit notice, Pennsylvania appears not to 19 have the same limitation. Pennsylvania state courts have held that the filing of a complaint may 20 satisfy the notice requirement for a breach of warranty claim. See Precision Towers, Inc. v. Nat- 21 Com, Inc., No. 2143, 2002 WL 31247992, at *5 (Pa. Com. Pl. Sept. 23, 2002) (“The filing of a 22 complaint has been held to satisfy the notice requirement for a breach of warranty claim.”); cf. 23 Yates v. Clifford Motors, Inc., 423 A.2d 1262, 1270 (Pa. Super. Ct. 1980) (holding that the filing 24 of the complaint constituted adequate notice that the plaintiff consumer was rejecting the truck at 25 issue). While the timeliness of the notice is a factual issue better resolved at a later stage of the 26 litigation, the filing of this action is sufficient to preclude dismissal of Plaintiff Leone’s express 27 warranty claim for failure to provide notice. See In re MyFord Touch Consumer Litig., 46 F. 28 Supp. 3d 936, 978 (N.D. Cal. 2014). 15 1 In sum, the Court GRANTS WITH LEAVE TO AMEND Huawei’s Motion to Dismiss the 2 express warranty claim of Plaintiffs Tran and Berry—but not Plaintiffs Gorbatchev, Beheler, or 3 Leone—for failure to adequately plead notice and an opportunity to cure. (3) 4 5 Basis of the Bargain and Reliance Huawei next contends that the Court should dismiss the express warranty claims of certain 6 Plaintiffs who do not plead that they saw or relied on Huawei’s warranty. Huawei Mot. 11. 7 Huawei’s argument covers Plaintiffs from California (Makcharoenwoodhi, Gorbatchev, and 8 Christensen), Florida (Martorello), Illinois (Tran), New York (Davydov), North Carolina 9 (Harrison and Himes), Ohio (Servodio), Pennsylvania (Leone), Texas (Poore), and Washington 10 (Johnston). Id. United States District Court Northern District of California 11 In all of the relevant states, an express warranty is created only when an “affirmation of 12 fact or promise” or a “description of the goods” is part of the “basis of the bargain.” Cal. Com. 13 Code § 2313(1)(a)–(b); Fla. Stat. Ann. § 672.313(1)(a)–(b); 810 Ill. Comp. Stat. Ann. 5/2- 14 313(1)(a)–(b); N.Y. U.C.C. Law § 2-313(1)(a)–(b); N.C. Gen. Stat. Ann. § 25-2-313(1)(a)–(b); 15 Ohio Rev. Code Ann. § 1302.26(A)(1)–(2); 13 Pa. Stat. and Cons. Stat. Ann. § 2-313(a)(1)–(2); 16 Tex. Bus. & Com. Code Ann. § 2.313(a)(1)–(2); Wash. Rev. Code Ann. § 62A.2-313(1)(a)–(b). 17 The relevant question is whether Plaintiffs must show reliance on the statement or representation 18 for it to be considered part of the “basis of the bargain.” Because states are split on the question 19 whether reliance is necessary, the Court analyzes the relevant state laws in turn. 20 21 (a) California In adopting the Uniform Commercial Code (“UCC”), California has shifted its view of 22 whether a plaintiff must allege reliance on specific promises to sustain express warranty claims. 23 Comment 3 to the analogous UCC provision, UCC § 2-313, provides: 24 25 26 27 28 The present section deals with affirmations of fact by the seller, descriptions of the goods or exhibitions of samples, exactly as any other part of a negotiation which ends in a contract is dealt with. No specific intention to make a warranty is necessary if any of these factors is made part of the basis of the bargain. In actual practice affirmations of fact made by the seller about the goods during a bargain are regarded as part of the description of those goods; hence no particular reliance on such statements need be shown in order to weave them into the fabric of the agreement. Rather, any fact which is to take such affirmations, once made, 16 1 out of the agreement requires clear affirmative proof. The issue normally is one of fact. 2 UCC § 2-313, cmt. 3 (emphasis added). While pre-UCC California law required proof of reliance 3 on specific promises, comment 3 to UCC § 2-313 expressly signals a departure from that 4 requirement. See Keith v. Buchanan, 220 Cal. Rptr. 392, 397–98 (Ct. App. 1985) (explaining that, 5 under the UCC, “the concept of reliance has been purposefully abandoned”). Because California’s 6 express warranty statute conforms to the UCC, the California Court of Appeal has held that a 7 buyer need not show reliance because the California statute “creates a presumption that the seller’s 8 affirmations go to the basis of the bargain.” Weinstat v. Dentsply Int’l, Inc., 103 Cal. Rptr. 3d 614, 9 626 (Ct. App. 2010). The court reasoned that the statute focuses not on the buyer’s actions, but on “the seller’s behavior and obligation—his or her affirmations, promises, and descriptions of the 11 United States District Court Northern District of California 10 goods—all of which help define what the seller ‘in essence’ agreed to sell.” Id. at 627. Therefore, 12 “[a]ny affirmation, once made, is part of the agreement unless there is ‘clear affirmative proof’ 13 that the affirmation has been taken out of the agreement.” Id. 14 The Court acknowledges that some district court cases continue to indicate that reliance is 15 required after the decision in Weinstat. See, e.g., Nabors v. Google, Inc., No. 10-CV-03897 EJD, 16 2011 WL 3861893, at *4 (N.D. Cal. Aug. 30, 2011) (dismissing express warranty claims where 17 plaintiff failed to allege reasonable reliance on any specific representations made by the 18 defendant). However, these cases are not dispositive because they are not decisions of the 19 California Supreme Court (or of any California state court) and they do not discuss Weinstat or 20 comment 3 to UCC § 2-313. Moreover, many of the cases are distinguishable because they did 21 not involve written warranties included as part of the sale, as here. In this situation, “an assertion 22 that the warranty [is] not part of the deal between the issuing party and receiving party is far less 23 persuasive.” In re MyFord, 46 F. Supp. 3d at 973. 24 In its reply, Huawei asserts that Weinstat is distinguishable because it involved parties that 25 were in privity with one another. Huawei Reply 8. In support of its argument, Huawei cites a 26 district court case drawing that distinction. See Coleman v. Boston Sci. Corp., No. 10-CV-01968- 27 OWW, 2011 WL 3813173, at *4 (E.D. Cal. Aug. 29, 2011) (“Neither Weinstat nor Keith supports 28 Plaintiff’s erroneous contention that reliance is not required where privity is absent.”). Although 17 1 some district courts have reached that conclusion, multiple others have interpreted California law 2 not to require a showing of reliance even if privity is lacking. See, e.g., In re MyFord, 46 F. Supp. 3 3d at 973 (“[O]ther courts interpreting California law have not found such a limitation—i.e., they 4 have not required reliance where the parties are not in privity.”); McVicar v. Goodman Glob., Inc., 5 1 F. Supp. 3d 1044, 1057 (C.D. Cal. 2014) (relying on Weinstat in a suit by plaintiffs against an air 6 conditioning manufacturer and holding that the express warranty claim was well-pled even though 7 plaintiffs “did not allege that they saw any promises or affirmations of fact prior to purchase”); In 8 re Toyota Motor Corp., 754 F. Supp. 2d at 1183 n.22 (noting that plaintiffs, in a suit against a car 9 manufacturer, “are not required to allege reliance”). 10 At least on the facts of this case, the Court follows those cases that have not required United States District Court Northern District of California 11 reliance as a prerequisite to asserting an express warranty claim. As Weinstat emphasizes, the 12 statute focuses on the seller and looks to the promises and affirmations that the seller made. 103 13 Cal. Rptr. 3d at 627. The ultimate question is “what the seller ‘in essence’ agreed to sell.” See id. 14 Here, in selling the phones to retailers to sell to the public, Huawei provided a written Limited 15 Warranty that the Nexus 6P phones are “free from material defects” in normal operation. Huawei 16 Mot., Ex. A, Preamble. Although two out of three California Plaintiffs did not purchase directly 17 from Huawei, there is no dispute that Huawei treated the Limited Warranty as extending to 18 Plaintiffs upon their purchase. See CAC ¶ 15 (alleging that “Huawei informed [California 19 Plaintiff] Makcharoenwoodhi that his warranty was voided,” not that it did not apply to him); see 20 also, e.g., id. ¶¶ 44 (alleging that Huawei denied warranty coverage even though Florida Plaintiff 21 Martorello claimed within the warranty period), 242 (alleging that Huawei’s Limited Warranty is 22 designed to cover end-users, not retailers). In these circumstances, a privity requirement would 23 have little meaning and would serve only to allow Huawei to evade the promises it made in 24 writing about the Nexus 6P phones. Accordingly, failure to adequately plead reliance is not an 25 appropriate basis on which to dismiss the express warranty claims of Plaintiffs 26 Makcharoenwoodhi, Gorbatchev, and Christensen. 27 28 (b) Florida Under Florida law, “an express warranty is generally considered to arise only where the 18 1 seller asserts a fact of which the buyer is ignorant prior to the beginning of the transaction and on 2 which the buyer justifiably relies as part of the ‘basis of the bargain.’” Thursby v. Reynolds 3 Metals Co., 466 So. 2d 245, 250 (Fla. Dist. Ct. App. 1984) (citations omitted); see also Royal 4 Typewriter Co. v. Xerographic Supplies Corp., 719 F.2d 1092, 1101 (11th Cir. 1983) (holding 5 that, under Florida law, “absence of reliance will negate the existence of an express warranty”). 6 Plaintiffs do not cite any contrary authority. Because the sole Florida Plaintiff, Martorello, does 7 not allege facts to support the necessary element of reliance, the Court GRANTS Huawei’s motion 8 to dismiss this claim with leave to amend to allege relevant facts. (c) 9 10 Illinois Whether a plaintiff must plead reliance under Illinois law is slightly unclear. Some Illinois United States District Court Northern District of California 11 courts have suggested that reliance is an invariable requirement for an express warranty claim. 12 See, e.g., Regopoulos v. Waukegan P’ship, 608 N.E.2d 457, 461 (Ill. Ct. App. 1992) (stating that 13 one necessary element of an express warranty claim is that “the purchaser actually relied upon the 14 warranty”); Coryell v. Lombard Lincoln-Mercury Merkur, Inc., 544 N.E.2d 1154, 1158 (Ill. Ct. 15 App. 1989) (“[T]he buyer must show reliance on the seller’s representations in order for an 16 express warranty to exist.”). Other Illinois courts have held that a seller’s representations create a 17 rebuttable presumption of reliance by the buyer so that reliance need not be pled. See, e.g., Felley 18 v. Singleton, 705 N.E.2d 930, 934 (Ill. Ct. App. 1999) (“[R]epresentations [by the seller] constitute 19 express warranties, regardless of the buyer’s reliance on them, unless the seller shows by clear 20 affirmative proof that the representations did not become part of the basis of the bargain.”); Weng 21 v. Allison, 678 N.E.2d 1254, 1256 (Ill. Ct. App. 1997) (“In this matter, the seller’s statements to 22 the buyers . . . were affirmations of fact and descriptions of the [product] that created an express 23 warranty.”). These courts have acknowledged the tension in the cases. See Felley, 705 N.E.2d at 24 934 (citing the above-quoted statement in Coryell and “recogniz[ing] that Illinois courts have not 25 always consistently stated these principles”). 26 Despite the inconsistency, the legal principles do not seem to be irreconcilable. In 27 particular, the cases can be harmonized based on the presence or absence of privity. When privity 28 is lacking, the background rule mandates pleading and proving reliance. See Regopoulos, 608 19 1 N.E.2d at 461. In contrast, when the plaintiff is in privity with the defendant, the defendant’s 2 representations about the product presumptively establish the reliance element. See Felley, 705 3 N.E.2d at 934; Weng, 678 N.E.2d at 1256. Indeed, one of the cases that Plaintiffs cite explicitly 4 notes the connection between allegations of privity and allegations of reliance. See In re Rust- 5 Oleum Restore Mktg., Sales Practices & Prods. Liab. Litig., 155 F. Supp. 3d 772, 809 (N.D. Ill. 6 2016). And Plaintiffs’ other case involved the quintessential privity relationship—that between 7 buyer and seller. See Bietsch v. Sergeant’s Pet Care Prod., Inc., No. 15-CV-05432, 2016 WL 8 1011512, at *5 (N.D. Ill. Mar. 15, 2016). Under Illinois law, then, it appears that a plaintiff must 9 plead reliance if he does not adequately allege privity with the defendant. 10 As discussed in more detail in the privity section below, Illinois Plaintiff Tran does not United States District Court Northern District of California 11 sufficiently plead that he is in privity with Huawei or that an exception applies. Without an 12 adequate allegation of privity, Plaintiff Tran’s claim must be dismissed for failure to plead 13 reliance. Accordingly, the Court GRANTS Huawei’s motion to dismiss Plaintiff Tran’s express 14 warranty claim with leave to amend to allege relevant facts. 15 16 (d) New York Under New York law, the buyer may bring an action for breach of express warranty 17 against a manufacturer only if “the buyer relied [on the manufacturer’s statements] when 18 contracting with his immediate seller.” Avola v. La.-Pac. Corp., 991 F. Supp. 2d 381, 391 19 (E.D.N.Y. 2013); see also Horowitz v. Stryker Corp., 613 F. Supp. 2d 271, 286 (E.D.N.Y. 2009) 20 (holding that, under New York law, “an action for breach of express warranty requires . . . reliance 21 on th[e] promise or representation” (citing CBS Inc. v. Ziff-Davis Pub. Co., 553 N.E.2d 997, 1000– 22 01 (N.Y. 1990))). Plaintiffs do not identify any contrary authority. Because the sole New York 23 Plaintiff, Davydov, does not allege facts to support the necessary element of reliance, the Court 24 GRANTS Huawei’s motion to dismiss this claim with leave to amend to allege relevant facts. 25 (e) 26 North Carolina The same result obtains under North Carolina law. As Plaintiffs’ own authority provides, 27 “[a] plaintiff must have relied upon the warrantor’s statement in order to establish an express 28 warranty and its breach.” Eclipse Packaging, Inc. v. Stewarts of Am., Inc., No. 14-CV-0019520 1 RLV, 2016 WL 3619120, at *4 (W.D.N.C. July 6, 2016) (citing Pake v. Byrd, 286 S.E.2d 588, 590 2 (N.C. Ct. App. 1982)); see also Harbor Point Homeowners’ Ass’n, Inc. ex rel. Bd. of Dirs. v. DJF 3 Enters., Inc., 697 S.E.2d 439, 447 (N.C. Ct. App. 2010) (noting that a claim for breach of express 4 warranty requires that the affirmation “was relied upon by the plaintiff in making his decision to 5 purchase” (citation omitted)). However, “the element of reliance can often be inferred from 6 allegations of mere purchase or use if the natural tendency of the representations made is such as 7 to induce such purchase or use.” Bernick v. Jurden, 293 S.E.2d 405, 413 (N.C. 1982) (citing 8 Kinlaw v. Long Mfg. N. C., Inc., 259 S.E.2d 552, 557 n.7 (N.C. 1979)). North Carolina Plaintiffs Harrison and Himes do not argue or allege that the natural 10 tendency of Huawei’s representation that the Nexus 6P phones are “free from material defects” in 11 United States District Court Northern District of California 9 normal operation was to induce them to purchase the phone. This representation stands in stark 12 contrast to the representation at issue in Bernick. There, the North Carolina Supreme Court held 13 that the defendants’ statement that their hockey mouthguard offered “maximum protection to the 14 lips and teeth” would naturally tend to induce a mother to purchase one for her son. Bernick, 293 15 S.E.2d at 413–14. The court emphasized the “family purpose of the mother’s purchase.” Id. at 16 414. No similar circumstances or facts are alleged in this case. Accordingly, the Court GRANTS 17 Huawei’s motion to dismiss the express warranty claims of Plaintiffs Harrison and Himes with 18 leave to amend to allege relevant facts. 19 20 (f) Ohio In the case of express written warranties, Ohio law follows the same approach as 21 California law—namely, that express warranty claims may proceed even in the absence of an 22 allegation of reliance. In Norcold, Inc. v. Gateway Supply Co., the Ohio Court of Appeals rested 23 on comment 3 of UCC § 2-313 and followed the “decisive majority of courts” that have held that 24 “reliance is not an element in a claim for breach of an express written warranty.” 798 N.E.2d 618, 25 623–24 (Ohio Ct. App. 2003). As the court explained, a written warranty is an integral part of a 26 transaction whose purpose is to assure “one party to a contract of the existence of a fact upon 27 which the other party may rely.” Id. at 624 (quoting Metro. Coal Co. v. Howard, 155 F.2d 780, 28 784 (2d Cir. 1946)). Thus, in that case, the court held that “because the warranties . . . were part of 21 1 a written contract, . . . enforcement thereof is not dependant [sic] upon any reliance by [the 2 plaintiff].” Id. Although this case does not involve a warranty explicitly written into a contract 3 between the parties, Norcold’s reasoning applies in this situation, where the manufacturer has 4 warranted specific terms in writing. 5 Huawei’s cited authority, McKinney v. Bayer Corp., 744 F. Supp. 2d 733 (N.D. Ohio 6 2010), is distinguishable. Although the district court in McKinney was also interpreting Ohio law, 7 the court relied heavily on a Sixth Circuit opinion interpreting Kentucky law and acknowledged as 8 much. Id. at 754 (citing Sixth Circuit’s decision in Overstreet v. Norden Labs., Inc., 669 F.2d 9 1286 (6th Cir. 1982), and noting that the Sixth Circuit was “applying analogous Kentucky law”). Notably, the district court in McKinney did not address Norcold at all, likely because the Ohio 11 United States District Court Northern District of California 10 Court of Appeals in Norcold limited its holding to “the context of an express written warranty,” 12 798 N.E.2d at 623, whereas the warranties at issue in McKinney were contained in advertising and 13 labeling, 744 F. Supp. 2d at 754–55. Because the instant case involves an express written 14 warranty, the Court concludes that Norcold is controlling and Ohio Plaintiff Servodio’s need not 15 plead reliance to state a claim for express warranty under Ohio law. Accordingly, this is not an 16 appropriate basis on which to dismiss Plaintiff Servodio’s express warranty claim. 17 18 (g) Pennsylvania Under Pennsylvania law, there is a rebuttable presumption of reliance. See Cole v. Gen. 19 Motors Corp., 484 F.3d 717, 726 (5th Cir. 2007). Specifically, Pennsylvania law follows the 20 approach that “all statements of the seller [become] part of the basis of the bargain unless clear 21 affirmative proof is shown to the contrary.” Sessa v. Riegle, 427 F. Supp. 760, 766 (E.D. Pa. 22 1977), aff’d, 568 F.2d 770 (3d Cir. 1978). Accordingly, reliance is not an appropriate basis on 23 which to dismiss Pennsylvania Plaintiff Leone’s express warranty claim. 24 (h) Texas 25 Texas courts have interpreted Texas’s express warranty law to incorporate a reliance 26 requirement. In Compaq Computer Corp. v. Lapray, the Texas Supreme Court surveyed the states 27 that have and have not adopted the reliance requirement and noted that “[u]nder Texas law, we 28 have said that ‘[r]eliance is . . . not only relevant to, but an element of proof of, plaintiffs’ claims 22 1 of breach of express warranty (to a certain extent).’” 135 S.W.3d 657, 676 (Tex. 2004) (second 2 and third alterations in original) (quoting Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 686 3 (Tex. 2002)); Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 436 (Tex. 1997) (“[A]n express 4 warranty claim also requires a form of reliance.”). Although Plaintiffs identify a Texas Court of 5 Appeals case stating in a footnote that it is error to include reliance as a necessary element of proof 6 for breach of express warranty, Villalon v. Vollmering, 676 S.W.2d 220, 222 n.1 (Tex. App. 1984), 7 other divisions of the Texas Court of Appeals have reached a different conclusion. In any event, 8 the statement in Villalon cannot override the strong indications by the Texas Supreme Court about 9 reliance. Accordingly, the Court GRANTS Huawei’s motion to dismiss the express warranty 10 United States District Court Northern District of California 11 12 claim of Texas Plaintiff Poore with leave to amend to allege relevant facts. (i) Washington Washington courts sometimes require a form of reliance. For example, in Touchet Valley 13 Grain Growers, Inc. v. Opp & Seibold General Construction, Inc., the Washington Supreme Court 14 explained that “[r]ecovery for breach of an express warranty is contingent on a plaintiff’s 15 knowledge of the representation.” 831 P.2d 724, 731 (Wash. 1992); Baughn v. Honda Motor Co., 16 727 P.2d 655, 669 (Wash. 1986) (“Although the UCC does not require a plaintiff to show reliance 17 on the manufacturer’s statements, he or she must at least be aware of such representations to 18 recover for their breach.”). However, the Court does not read those cases to require a showing of 19 awareness when the plaintiffs base their claims on an express written warranty, rather than other 20 representations (such as advertising statements), to form the basis of the bargain. See In re Myford 21 Touch Consumer Litig., No. 13-CV-03072-EMC, 2015 WL 5118308, at *6 (N.D. Cal. Aug. 31, 22 2015) (recognizing that awareness of representations must be shown under Washington law 23 “where the representations are used by the plaintiff to define the scope of the warranty”). 24 Huawei’s authority is to the same effect, as Huawei’s identified case involved advertising 25 statements and cited a Washington Supreme Court case for the proposition that “before recovering 26 on a claim of breach of an express warranty contained in an advertisement, a plaintiff must 27 demonstrate that he or she justifiably relied on a statement contained in the advertisement.” Reece 28 v. Good Samaritan Hosp., 953 P.2d 117, 123 (Wash. Ct. App. 1998) (citing Arrow Transp. Co. v. 23 1 A. O. Smith Co., 454 P.2d 387, 390 (Wash. 1969)). Accordingly, reliance is not an appropriate 2 basis on which to dismiss Washington Plaintiff Johnston’s express warranty claim. 3 In sum, the Court GRANTS WITH LEAVE TO AMEND Huawei’s Motion to Dismiss the 4 express warranty claim of Plaintiffs Martorello, Tran, Davydov, Harrison, Himes, and Poore—but 5 not Plaintiffs Makcharoenwoodhi, Gorbatchev, Christensen, Servodio, Leone, or Johnston—for 6 failure to adequately plead reliance. (4) 7 8 Privity Finally, Huawei contends that the Court should dismiss the express warranty claims of Florida Plaintiff Martorello and Illinois Plaintiff Tran because those Plaintiffs are not in privity of 10 contract with Huawei. Huawei Mot. 12. Huawei properly asserts that the CAC’s bare allegation 11 United States District Court Northern District of California 9 that all Plaintiffs “were in privity of contract with Huawei . . . by virtue of their interactions with 12 Huawei,” CAC ¶ 242, is conclusory and does not plausibly allege privity. Thus, the Court must 13 address whether privity of contract is required to state a claim for breach of express warranty 14 under Florida and Illinois law. 15 16 (a) Florida Florida courts are split on whether claims for breach of express warranty always require 17 privity. See In re Clorox Consumer Litig., No. 12-CV-00280-SC, 2013 WL 3967334, at *10 18 (N.D. Cal. July 31, 2013) (summarizing the split). Some courts hold that because express 19 warranty claims are contractual, “the plaintiff must be in privity of contract with the defendant.” 20 Hill v. Hoover Co., 899 F. Supp. 2d 1259, 1266 (N.D. Fla. 2012) (quoting T.W.M. v. Am. Med. 21 Sys., Inc., 886 F. Supp. 842, 844 (N.D. Fla. 1995)). Other courts have declined to apply the privity 22 requirement when the seller is unlikely to have knowledge about the manufacturer’s product. 23 Smith v. Wm. Wrigley Jr. Co., 663 F. Supp. 2d 1336, 1343 (S.D. Fla. 2009) (“[I]t defies common 24 sense to argue that purchasers of Eclipse gum presumed that the cashier at the local convenience 25 store is familiar with the scientific properties of MBE.”). Even if the Court finds the latter line of 26 cases persuasive, Florida Plaintiff Martorello purchased his phone from Google. CAC ¶ 38. The 27 CAC provides no basis to conclude that Huawei has detailed knowledge about the Nexus 6P that 28 Google does not; to the contrary, the CAC often lumps Huawei and Google together. 24 1 Accordingly, the Court GRANTS Huawei’s Motion to Dismiss the express warranty claim of 2 Plaintiff Martorello with leave to amend to allege further facts about the privity relationship 3 between Plaintiff Martorello and Huawei or any disparity in knowledge between Huawei and 4 Google regarding the Nexus 6P phone. (b) 5 6 Illinois As noted above, Illinois’s law on privity is congruous with its law on reliance. Illinois 7 generally requires the plaintiff to be in privity with the defendant. Baldonado v. Wyeth, No. 04- 8 CV-04312, 2012 WL 729228, at *4 (N.D. Ill. Mar. 6, 2012). Illinois Plaintiff Tran has not 9 sufficiently alleged privity with Huawei. He purchased his Nexus 6P phone through the Google Store, and he interacted solely with Google when trying to remedy the Bootloop Defect. CAC 11 United States District Court Northern District of California 10 ¶¶ 52–54. The CAC’s unsupported allegation that all Plaintiffs “were in privity of contract with 12 Huawei . . . by virtue of their interactions with Huawei,” id. ¶ 242, is conclusory and does not 13 plausibly allege privity. 14 That conclusion does not end the analysis. Where the parties are not in privity, there may 15 be an express warranty if the plaintiff shows that the statement became part of the basis of the 16 bargain. Ampat/Midwest, Inc. v. Ill. Tool Works, Inc., No. 85-CV-10029, 1988 WL 53222, at *3 17 (N.D. Ill. May 12, 1988). More precisely, Illinois courts have recognized an exception to the 18 privity requirement, holding that “manufacturer documents given directly to the buyer prior to a 19 purchase may give rise to an express warranty.” Canadian Pac. Ry. Co. v. Williams-Hayward 20 Protective Coatings, Inc., No. 02-CV-08800, 2005 WL 782698, at *15 (N.D. Ill. Apr. 6, 2005); 21 see also Wheeler v. Sunbelt Tool Co., 537 N.E.2d 1332, 1341 (Ill. Ct. App. 1989) (“Documents, 22 brochures, and advertisements [from the manufacturer] may constitute express warranties.”). 23 Although the CAC provides a website to access Huawei’s Limited Warranty, CAC ¶ 219 & n.17, 24 there are no allegations that the warranty was available online at the time that Plaintiff Tran 25 purchased his Nexus 6P or that he was directed to the online warranty, accessed the warranty 26 online, or otherwise received the warranty before his purchase, id. ¶¶ 52–57. While Plaintiffs’ 27 opposition suggests that Huawei’s Limited Warranty was “included in every Google Nexus 6P 28 box,” Opp’n 17, there is no corresponding allegation in the CAC. These circumstances do not fit 25 1 within the privity exception, and Plaintiffs do not even clearly argue that the exception is met in 2 this case. Accordingly, the Court GRANTS Huawei’s Motion to Dismiss the express warranty 3 claim of Plaintiff Tran with leave to amend to allege further facts about the privity relationship 4 between Plaintiff Tran and Huawei. 5 6 7 8 9 In sum, the Court GRANTS WITH LEAVE TO AMEND Huawei’s Motion to Dismiss the express warranty claim of Plaintiffs Martorello and Tran for failure to adequately plead privity. ii. Breach of Implied Warranty of Merchantability Plaintiffs bring their second cause of action for breach of the implied warranty of merchantability on behalf of a putative nationwide class but do not specify which law governs the claim. CAC ¶ 235. Alternatively, they assert claims for breach of the implied warranty of 11 United States District Court Northern District of California 10 merchantability on behalf of the putative statewide subclasses under the laws of the respective 12 states. Id. ¶ 236. Specifically, Plaintiffs’ cause of action alleges that Huawei “impliedly 13 warranted that the Phones were of a merchantable quality” but failed to keep that promise because 14 the Nexus 6Ps “were not in merchantable condition and are not fit for the ordinary purpose for 15 which phones are used.” Id. ¶ 239. Huawei seeks dismissal on the grounds that Plaintiffs have not 16 adequately pled that they were in privity with Huawei, that they provided Huawei notice and an 17 opportunity to cure, and that the phones were unmerchantable. Huawei Mot. 13–16. (1) 18 19 Privity and Third-Party Beneficiary Huawei first contends that certain Plaintiffs who did not purchase from Huawei cannot 20 assert implied warranty claims. Huawei Mot. 14. Huawei argues that vertical privity is a 21 necessary element to sustain an implied warranty claim and that these Plaintiffs do not adequately 22 plead privity. Id. With one limited exception, Plaintiffs concede that the relevant states require 23 vertical privity, but they respond that the third-party beneficiary exception applies here and is 24 adequately pled. Opp’n 31–34. 25 Preliminarily, Plaintiffs have failed to sufficiently plead privity between the relevant 26 Plaintiffs and Huawei. Specifically, Plaintiffs Makcharoenwoodhi, Gorbatchev, Martorello, Tran, 27 Berry, Davydov, Harrison, Himes, Servodio, and Johnston did not purchase their phones from 28 Huawei. CAC ¶¶ 12 (Makcharoenwoodhi: Best Buy), 19 (Gorbatchev: Google), 38 (Martorello: 26 1 Google), 52 (Tran: Google), 70 (Berry: Google), 79 (Davydov: Amazon), 91 (Harrison: Amazon), 2 99 (Himes: Best Buy), 119 (Servodio: Newegg), 153 (Johnston: Best Buy). Moreover, without 3 any supporting factual content, the conclusory statement that all Plaintiffs “were in privity of 4 contract with Huawei . . . by virtue of their interactions with Huawei,” id. ¶ 242, does not 5 plausibly allege privity. Thus, the Court must address the existence of the vertical privity 6 requirement and the third-party beneficiary exception. 7 First, Plaintiffs correctly note that “Michigan has abandoned the privity requirement for 8 implied-warranty claims.” Pack v. Damon Corp., 434 F.3d 810, 820 (6th Cir. 2006); see also 9 Heritage Res., Inc. v. Caterpillar Fin. Servs. Corp., 774 N.W.2d 332, 343 (Mich. Ct. App. 2009) (“[The Michigan] Supreme Court . . . has previously held that for some remote purchasers it is 11 United States District Court Northern District of California 10 unnecessary in actions for breach of implied warranty to establish privity of contract with the 12 manufacturer.”). Huawei does not counter that precedent. Accordingly, the claim by Michigan 13 Plaintiff Berry is not properly dismissed on this ground. 14 Huawei cites cases recognizing a vertical privity requirement under California, Illinois, 15 New York, North Carolina, Ohio, and Washington law. See Clemens v. DaimlerChrysler Corp., 16 534 F.3d 1017, 1023 (9th Cir. 2008) (California); Zaro v. Maserati N. Am., Inc., No. 07-CV- 17 03565-JWD, 2007 WL 4335431, at *2 (N.D. Ill. Dec. 6, 2007) (Illinois); Kolle v. Mainship Corp., 18 No. 04-CV-00711-TCP, 2006 WL 1085067, at *5 (E.D.N.Y. Apr. 20, 2006) (New York); Traxler 19 v. PPG Indus., Inc., 158 F. Supp. 3d 607, 623 (N.D. Ohio 2016) (North Carolina); McKinney, 744 20 F. Supp. 2d at 758 (Ohio); Chance v. Richards Mfg. Co., 499 F. Supp. 102, 105 (E.D. Wash. 1980) 21 (Washington). Plaintiffs do not challenge that proposition because they argue that application of 22 the third-party beneficiary exception obviates any need to satisfy the vertical privity requirement. 23 In its moving papers, Huawei concedes that the relevant states allow plaintiffs to bring 24 implied warranty claims in the absence of privity if the plaintiff shows that he was a beneficiary to 25 a contract between the defendant and a third party. Huawei Mot. 14 (citing In re NVIDIA GPU 26 Litig., No. 08-CV-04312-JW, 2009 WL 4020104, at *6 (N.D. Cal. Nov. 19, 2009)). Because the 27 parties do not identify any material differences among the relevant state laws, the Court uses 28 California law as the rubric for analyzing these arguments. California has codified the third-party 27 1 beneficiary exception: “A contract, made expressly for the benefit of a third person, may be 2 enforced by him at any time before the parties thereto rescind it.” Cal. Civ. Code § 1559. 3 “Because third party beneficiary status is a matter of contract interpretation, a person seeking to 4 enforce a contract as a third party beneficiary must plead a contract which was made expressly for 5 his [or her] benefit and one in which it clearly appears that he [or she] was a beneficiary.” 6 Schauer v. Mandarin Gems of Cal., Inc., 23 Cal. Rptr. 3d 233, 239 (Ct. App. 2005) (alterations in 7 original) (internal quotation marks and citation omitted). 8 9 With respect to Huawei, Plaintiffs fulfill these pleading requirements. Specifically, Plaintiffs point to Huawei’s Limited Warranty as the contract which is made expressly for Plaintiffs’ benefit. CAC ¶ 242. That express warranty represents to the original purchaser that the 11 United States District Court Northern District of California 10 Nexus 6P is free from material defects and that Huawei would repair or replace defective or 12 malfunctioning parts. Id. ¶¶ 218–20. As Plaintiffs allege, the Limited Warranty is designed to 13 benefit only the end users, not the retailers who sell the phones. Id. ¶ 242; see also id. ¶ 294 (“The 14 retailers were not intended to be the ultimate consumers of the Nexus 6P smartphones and have no 15 rights under the warranty agreements connected with the Nexus 6P smartphones; these agreements 16 were designed for and intended to benefit the end-users only.”). Similar allegations have been 17 held to be sufficient to invoke the third-party beneficiary exception. See, e.g., In re MyFord, 46 F. 18 Supp. 3d at 982–84 & n.15 (finding third-party beneficiary allegations sufficient where Plaintiffs 19 alleged that the retailers “ha[d] no rights under the warranty agreements” and “the warranty 20 agreements were designed for and intended to benefit the ultimate consumers only”); In re Toyota 21 Motor Corp., 754 F. Supp. 2d at 1185 (finding third-party beneficiary allegations sufficient where 22 Plaintiffs alleged that they “were the intended consumers” who bought from “a network of dealers 23 who are agents of Defendants”). 24 25 26 27 28 Accordingly, lack of privity is not an appropriate basis on which to dismiss Plaintiffs’ claims for breach of the implied warranty of merchantability. (2) Notice and Opportunity to Cure In a similar vein to its argument for dismissal of the express warranty claims, Huawei contends that certain Plaintiffs’ failure to give Huawei notice or an opportunity to cure is fatal to 28 1 these Plaintiffs’ implied warranty claims. Huawei Mot. 15–16. In particular, Plaintiffs Beheler, 2 Berry, Harrison, Himes, Leone, and Poore do not allege that they provided Huawei notice of their 3 breach of implied warranty claims. Id. at 16. Due to the variations in state law on this issue, the 4 Court proceeds through each Plaintiff’s state-law claim individually. 5 6 (a) Indiana The cases cited with respect to Indiana’s notice requirement for express warranty claims 7 apply equally to implied warranty of merchantability claims. See Anderson, 662 F.3d at 780 8 (express warranty and implied warranty of merchantability claims); see also Agrarian Grain Co., 9 526 N.E.2d at 1193 (implied warranty of merchantability claims). Accordingly, for the same reasons discussed above, Indiana Plaintiff Beheler’s implied warranty claim cannot be dismissed 11 United States District Court Northern District of California 10 for failure to allege notice and an opportunity to cure. 12 13 (b) Michigan Under Michigan law, a “plaintiff’s failure to give defendants reasonable notice of her 14 breach-of-warranty claims” justifies dismissal. Gorman v. Am. Honda Motor Co., 839 N.W.2d 15 223, 229 (Mich. Ct. App. 2013); see also In re Carrier IQ, Inc., 78 F. Supp. 3d 1051, 1104 (N.D. 16 Cal. 2015). More specifically, “the seller must be given actual notice that the buyer believes that 17 the seller is in breach.” Gorman, 839 N.W.2d at 231. Here, the CAC’s allegations that Michigan 18 Plaintiff Berry contacted Google and engaged in various (unsuccessful) troubleshooting options 19 are not sufficient to meet that standard. CAC ¶¶ 72–75. Not only did Plaintiff Berry have no 20 interactions with Huawei, but he did not put Huawei on notice that he believed Huawei to be in 21 breach of the implied warranty of merchantability. Accordingly, the Court GRANTS Huawei’s 22 Motion to Dismiss Plaintiff Berry’s claim for breach of the implied warranty of merchantability 23 with leave to amend to allege further facts about whether he put Huawei on notice that he believed 24 Huawei to be in breach of the implied warranty of merchantability. 25 26 (c) North Carolina In North Carolina, “the burden of pleading . . . that seasonable notification has been given 27 is on the buyer.” Maybank v. S. S. Kresge Co., 273 S.E.2d 681, 683 (N.C. 1981); see Phillips v. 28 Rest. Mgmt. of Carolina, L.P., 552 S.E.2d 686, 692 (N.C. Ct. App. 2001) (listing “timely notice to 29 the seller” as an essential element to establish a claim for breach of the implied warranty of 2 merchantability (quoting Ismael v. Goodman Toyota, 417 S.E.2d 290, 295 (N.C. Ct. App. 1992))). 3 “Whether the notice given was seasonable is a question of fact and normally must be determined 4 by the trier of fact.” Maybank, 273 S.E.2d at 684 n.1. Moreover, in deciding an appeal from a 5 motion for directed verdict, the North Carolina Supreme Court has held that there may be 6 compliance with the notice requirement where “the plaintiff is a lay consumer and notification is 7 given to the defendant by the filing of an action within the period of the statute of limitations.” Id. 8 at 685 (“When the plaintiff is a lay consumer and notification is given to the defendant by the 9 filing of an action within the period of the statute of limitations, and when the applicable policies 10 behind the notice requirement have been fulfilled, we hold that the plaintiff is entitled to go to the 11 United States District Court Northern District of California 1 jury on the issue of seasonable notice.”). 12 Based on those standards, both North Carolina Plaintiffs have adequately pled notice. 13 Most importantly, Plaintiffs Harrison and Himes are lay consumers who filed this action against 14 Huawei and are not alleged to be untimely. Additionally, both Plaintiffs contacted Huawei about 15 the problems they were experiencing with their Nexus 6P phones and followed up with Huawei 16 when their concerns were not resolved. CAC ¶¶ 94 (Harrison), 103–04 (Himes). Other North 17 Carolina cases have held that repeatedly returning a product can be sufficient to put the defendant 18 on notice. See, e.g., Ismael, 417 S.E.2d at 295 (noting that the plaintiff “repeatedly returned the 19 car to defendant for repair”); Wright v. T & B Auto Sales, Inc., 325 S.E.2d 493, 495–96 (N.C. Ct. 20 App. 1985) (“Plaintiff gave Defendant timely notice of the defects by repeatedly returning the car 21 to Defendant from March 1982 through September 1982 complaining that the car was overheating 22 and that water was in the oil.”). Accordingly, Plaintiffs Harrison and Himes’s implied warranty 23 claims cannot be dismissed for failure to allege notice and an opportunity to cure. 24 25 (d) Pennsylvania The parties present no reason to conclude that, with regard to notice, express and implied 26 warranty claims should be treated differently under Pennsylvania law. As noted above, there is 27 authority holding that the filing of a complaint can be sufficient to notify the manufacturer of 28 breach. See Precision Towers, 2002 WL 31247992, at *5 (“The filing of a complaint has been 30 1 held to satisfy the notice requirement for a breach of warranty claim.”). Although the timeliness 2 of the notice remains an open issue, the filing of this action is sufficient to preclude dismissal of 3 Plaintiff Leone’s implied warranty claim for failure to provide notice. See In re MyFord, 46 F. 4 Supp. 3d at 978. (e) 5 6 Texas Although some Texas courts have held that notice to a manufacturer is not required, Vintage Homes, Inc. v. Coldiron, 585 S.W.2d 886, 888 (Tex. Civ. App. 1979), the weight of 8 authority in Texas favors the position that notice is required in this circumstance, see McKay v. 9 Novartis Pharm. Corp., 934 F. Supp. 2d 898, 912 (W.D. Tex. 2013) (“Three out of the four Texas 10 courts of appeals which have addressed the issue have held that a buyer is required to give notice 11 United States District Court Northern District of California 7 of an alleged breach of warranty to a remote as well as an immediate seller/manufacturer.”), aff’d, 12 751 F.3d 694 (5th Cir. 2014). Moreover, under Texas law, “[t]he manufacturer must be made 13 aware of a problem with a particular product purchased by a particular buyer” and commencement 14 of a lawsuit does not satisfy that requirement. U.S. Tire-Tech, Inc. v. Boeran, B.V., 110 S.W.3d 15 194, 202 (Tex. App. 2003). 16 Although the CAC states that Texas Plaintiff Poore “contacted Huawei to request that his 17 Phone be repaired or replaced,” CAC ¶ 147, it gives no indication that Poore communicated the 18 particular issues that he was having with his phone to Huawei. Contrary to Plaintiffs’ suggestion, 19 Opp’n 26, Plaintiff Poore cannot rely on Huawei’s generalized knowledge of concerns about the 20 phones. See U.S. Tire-Tech, 110 S.W.3d at 202; see also In re Carrier IQ, 78 F. Supp. 3d at 1104. 21 Accordingly, the Court GRANTS Huawei’s Motion to Dismiss Plaintiff Poore’s claim for breach 22 of the implied warranty of merchantability with leave to amend to allege further facts about 23 whether he made Huawei aware of the problems with his Nexus 6P. 24 Accordingly, the Court GRANTS Huawei’s Motion to Dismiss the implied warranty 25 claims of Plaintiffs Berry and Poore—but not Plaintiffs Beheler, Harrison, Himes, or Leone—with 26 leave to amend to allege further facts about whether any of these Plaintiffs provided notice and an 27 opportunity to cure. 28 31 (3) 1 2 Merchantability In a particularly weak final argument, Huawei contends that Plaintiffs do not plausibly 3 allege that their Nexus 6P phones were not merchantable. Huawei Mot. 16. Huawei’s argument is 4 unpersuasive. 5 The implied warranty of merchantability arises by operation of law rather than contract. 6 See, e.g., Hauter v. Zogarts, 534 P.2d 377, 385 (Cal. 1975). It guarantees not that the goods 7 “precisely fulfill the expectation of the buyer,” but instead that the goods meet “a minimum level 8 of quality.” Am. Suzuki Motor Corp. v. Superior Court, 44 Cal. Rptr. 2d 526, 529 (Ct. App. 1995) 9 (citation omitted). “The core test of merchantability is fitness for the ordinary purpose for which such goods are used.” Mexia v. Rinker Boat Co., 95 Cal. Rptr. 3d 285, 289 (Ct. App. 2009) 11 United States District Court Northern District of California 10 (citation omitted). 12 Plaintiffs’ allegations easily satisfy these requirements. The CAC identifies some of the 13 basic functions of a smartphone, including “mak[ing] calls, send[ing] text messages, access[ing] 14 the internet,” and storing “photographs, videos, text messages, and contact lists.” CAC ¶ 175. 15 Further, the Bootloop and Battery Drain Defects render the phones unfit for those purposes. When 16 the Bootloop Defect manifests, the phone experiences total failure and the customer permanently 17 loses access to any data stored on the phone. Id. ¶¶ 174–75; see also id. ¶ 175 (describing a Nexus 18 6P with the Bootloop Defect as “essentially an expensive paperweight”). When the Battery Drain 19 Defect manifests, the phone experiences severe battery drainage with early shut-off. Id. ¶¶ 176– 20 77. The customer may use the phone again only after connecting the phone to power. Id. ¶ 178. 21 It is no response that some Plaintiffs continued to use their phones after the defects manifested, see 22 Huawei Mot. 16, as “the implied warranty can be breached when, although capable of performing 23 its ordinary function, the product nonetheless fails in a significant way to perform as a reasonable 24 consumer would expect.” In re Carrier IQ, 78 F. Supp. 3d at 1109. 25 Accordingly, Plaintiffs have adequately pled that the Nexus 6Ps were unmerchantable, and 26 this is not an appropriate basis on which to dismiss Plaintiffs’ claims for breach of the implied 27 warranty of merchantability. 28 32 iii. 1 Song–Beverly Consumer Warranty Act The California Plaintiffs’ cause of action for violations of the Song–Beverly Consumer 2 Warranty Act (“Song–Beverly Act”), Cal. Civ. Code §§ 1791.1, 1792, on behalf of the California 4 subclass fails because Plaintiffs do not allege where they purchased their phones. The protections 5 of the Song–Beverly Act extend only to “sale[s] of consumer goods that are sold at retail in this 6 state [California].” Cal. Civ. Code § 1792. The California Plaintiffs do not allege where they 7 purchased their phones, and they seek to represent a class of persons in the state of California who 8 purchased or own at least one Nexus 6P. CAC ¶¶ 205, 285. It is not plausible to infer that any 9 person in California who owns a Nexus 6P purchased the phone in California. See In re Carrier 10 IQ, 78 F. Supp. 3d at 1107 (“[W]hile Plaintiffs allege a number of Plaintiffs reside in California 11 United States District Court Northern District of California 3 there are actually no allegations in the [complaint] that any of these Plaintiffs purchased their 12 mobile devices in California.”). Plaintiffs must allege whether the phone purchases took place in 13 California.5 Accordingly, the Court GRANTS Huawei’s Motion to Dismiss the Song–Beverly Act 14 15 claim with leave to amend to assert where the phone purchases took place. iv. 16 Magnuson–Moss Warranty Act Plaintiffs’ third cause of action alleges violations of the Magnuson–Moss Warranty Act, 15 17 18 U.S.C. § 2301 et seq., presumably on behalf of the nationwide class, though the CAC does not 19 specify. CAC ¶¶ 249–67. The parties agree that, in this case, “the claims under the Magnuson– 20 Moss Act stand or fall with [the] express and implied warranty claims under state law.” Clemens, 21 534 F.3d at 1022. The Court has concluded that all of the implied warranty claims survive except 22 those brought by Plaintiffs Berry and Poore under Michigan and Texas law, respectively. The 23 Court has also concluded that the express warranty claims of Plaintiffs Berry and Poore should be 24 dismissed with leave to amend. As it stands, then, the Court GRANTS Huawei’s Motion to 25 26 27 28 5 Huawei makes an argument in its Motion to Dismiss that the Song–Beverly Act requires that the plaintiff deliver a defective product to the manufacturer for repair within the express warranty coverage period. Huawei Mot. 17–18. Plaintiffs respond that the provision Huawei cites is applicable only to assistive devices for disabled persons. Opp’n 36. Huawei does not repeat the argument in its reply. Huawei Reply 13. 33 1 Dismiss the Magnuson–Moss Warranty Act claims of Plaintiffs Berry and Poore with leave to 2 amend, but otherwise DENIES Huawei’s Motion to Dismiss Plaintiffs’ Magnuson–Moss Warranty 3 Act claims.6 b. 4 Fraud and Deceptive Practices Claims Plaintiffs assert various fraud claims against Huawei. Specifically, they bring common- 5 law claims for deceit and fraudulent concealment, CAC ¶¶ 268–77, as well as claims under a 7 number of state consumer fraud statutes, id. ¶¶ 297–535. There are two common theories 8 underlying fraud claims: affirmative misrepresentations and fraudulent omissions. The CAC does 9 not allege that Huawei made any affirmative representations about Nexus 6P phones, other than to 10 treat Huawei and Google as a collective. See, e.g., id. ¶ 275 (“Plaintiffs and Class members relied 11 United States District Court Northern District of California 6 to their detriment upon Defendants’ . . . fraudulent misrepresentations . . . regarding the quality of 12 Phones and the Defects in deciding to purchase their Phones.”). Rather, Plaintiffs rely on 13 Huawei’s failure to notify consumers of the alleged Bootloop and Battery Drain Defects. Id. 14 ¶¶ 270, 303, 319, 335, 343, 356, 374, 394, 403, 418, 428, 437, 448, 466, 482, 491, 508, 522. 15 Huawei challenges the viability of this fraudulent omissions theory on multiple grounds and then 16 makes additional arguments with regard to some of the statutory claims. i. 17 No Duty to Disclose Huawei first contends that it had no duty to disclose the defects because Plaintiffs have 18 19 not plausibly alleged that Huawei had knowledge of the defects prior to the time of sale. Huawei 20 Mot. 19. The Court looks to California law to guide the analysis because Plaintiffs rely solely on 21 California law in responding to Huawei’s arguments and do not identify any material differences 22 with other state laws. Opp’n 41–48, 50. California law supports this common-sense notion that a 23 defendant cannot “disclose facts of which it was unaware.” In re Sony Grand Wega, 758 F. Supp. 24 2d at 1095. The Ninth Circuit has put it explicitly: to state a claim for fraud based on failure to 25 disclose under California law, the plaintiff must allege that “the manufacturer knew of the defect 26 27 28 6 Huawei also claims a separate notice issue with respect to Plaintiffs’ Magnuson–Moss Warranty Act claims but fails to fully develop the point or explain how the argument differs from the notice arguments under state law. Huawei Mot. 18. 34 1 at the time a sale was made.” Williams v. Yamaha Motor Co., 851 F.3d 1015, 1025 (9th Cir. 2 2017); see also LiMandri v. Judkins, 60 Cal. Rptr. 2d 539, 543 (Ct. App. 1997) (noting that 3 nondisclosure is actionable in fraud when the defendant “had exclusive knowledge of material 4 facts not known to the plaintiff,” “actively conceals a material fact from the plaintiff,” or “makes 5 partial representations but also suppresses some material facts”). 6 As explained in detail above, Plaintiffs have not adequately pled that Huawei had 7 knowledge of either the Bootloop Defect or the Battery Drain Defect when the Plaintiffs 8 purchased their Nexus 6Ps. Therefore, Huawei had no duty to disclose the defects. Accordingly, 9 the Court GRANTS Huawei’s Motion to Dismiss Plaintiffs’ fraud claims to the extent they are based on a fraudulent omissions theory with leave to amend to allege facts about Huawei’s 11 United States District Court Northern District of California 10 knowledge of the defects at the time of sale. ii. 12 13 No Unreasonable Safety Hazard Huawei next contends that Plaintiffs’ statutory fraud claims under California, Florida, 14 North Carolina, Texas, and Washington law must be dismissed because the CAC does not 15 plausibly allege that the phone defects posed an unreasonable safety hazard. Huawei Mot. 21. 16 Although Plaintiffs argue that an unreasonable safety hazard is not a necessary element for the 17 statutory fraud claims, the Ninth Circuit recently held that, in the absence of affirmative 18 misrepresentations, “[t]o state a claim for failing to disclose a defect, a party must allege,” among 19 other things, “the existence of an unreasonable safety hazard.” Williams, 851 F.3d at 1025; see 20 also id. at 1026 (citing Wilson, 668 F.3d at 1142–43, as “holding that where a defendant has not 21 made an affirmative misrepresentation, a plaintiff must allege the existence of an unreasonable 22 safety hazard”). Even Plaintiffs’ California authority cannot help Plaintiffs here because it states 23 that the duty to disclose extends to “material information known to a manufacturer and concealed 24 from a consumer.” Rutledge v. Hewlett-Packard Co., 190 Cal. Rptr. 3d 411, 420 (Ct. App. 2015) 25 (emphasis added). Thus, in these circumstances, Plaintiffs are required to plead an unreasonable 26 safety hazard. 27 28 The Court disagrees with Plaintiffs’ contention that the CAC adequately alleges such an unreasonable safety hazard. “[A] party’s allegations of an unreasonable safety hazard must 35 1 describe more than merely ‘conjectural and hypothetical’ injuries.” Williams, 851 F.3d at 1028 2 (quoting Birdsong v. Apple, Inc., 590 F.3d 955, 961 (9th Cir. 2009)). Here, the CAC obliquely 3 claims that “the Defects raise serious safety concerns” based on one user who “was temporarily 4 stranded on a freezing night after her Phone abruptly died when she was trying to request a ride 5 from the ride-sharing app Uber.” CAC ¶ 180. Not only have Plaintiffs identified only one 6 example, but the safety risk of being stranded with a nonfunctioning phone has been held to be too 7 speculative to amount to an unreasonable safety hazard. See Missaghi v. Apple Inc., No. 13-CV- 8 02003-GAF, 2013 WL 12114470, at *8 (C.D. Cal. Aug. 28, 2013); see also Smith v. Ford Motor 9 Co., 462 F. App’x 660, 663 (9th Cir. 2011) (rejecting as too speculative the safety concern that a defective ignition-lock could leave consumers stranded on the side of the road). Similarly, the 11 United States District Court Northern District of California 10 Ninth Circuit has concluded that the more-egregious risk of fires due to defects in a boat motor 12 were hypothetical where the complaint contained no allegations that any customer had 13 experienced such a fire. Williams, 851 F.3d at 1028–29. Accordingly, the Court GRANTS 14 Huawei’s Motion to Dismiss Plaintiffs’ statutory fraud claims under California, Florida, North 15 Carolina, Texas, and Washington law with leave to amend to allege whether the defects pose an 16 unreasonable safety hazard. 17 18 iii. Manifestation of Defect Outside Warranty Huawei separately contends that there can be no fraudulent omissions claims for Plaintiffs 19 Gorbatchev, Christensen, and Tran because their Nexus 6Ps did not allegedly malfunction until 20 after the expiration of the Limited Warranty, CAC ¶¶ 19–21, 28–29, 52–53. Huawei Mot. 22–23. 21 It is true that, as a policy matter, California courts have cabined the scope of the duty to disclose to 22 avoid the unsavory result that manufacturers are on the hook for every product defect that occurs 23 at any time, regardless of any time limits contained in their warranties. See Daugherty v. Am. 24 Honda Motor Co., 51 Cal. Rptr. 3d 118, 122 (Ct App. 2006); see also Williams, 851 F.3d at 1029 25 (“[T]he fact that the alleged defect concerns premature, but usually post-warranty, onset of a 26 natural condition raises concerns about the use of consumer fraud statutes to impermissibly extend 27 a product’s warranty period.”). But this policy consideration appears to be a variation on 28 Huawei’s arguments above, and Huawei has not fully explained how it independently justifies 36 1 dismissal of Plaintiffs’ fraud claims. Accordingly, at this stage, the Court does not rely on this 2 basis to dismiss the fraud claims of Plaintiffs Gorbatchev, Christensen, and Tran. iv. 3 4 California Consumers Legal Remedies Act The California Plaintiffs bring a claim under California’s Consumers Legal Remedies Act 5 (“CLRA”), Cal. Civ. Code § 1780, on behalf of the California subclass. CAC ¶ 310. Huawei 6 argues that Plaintiffs have failed to comply with the statutory provision. Huawei Mot. 23. 7 Specifically, under the CLRA, “concurrently with the filing of the complaint, the plaintiff shall file 8 an affidavit stating facts showing that the action has been commenced in a county described in this 9 section as a proper place for the trial of the action.” Cal. Civ. Code § 1780(d). The statute also provides the appropriate course of action when the plaintiff fails to comply: dismissal without 11 United States District Court Northern District of California 10 prejudice. Id. 12 Plaintiffs do not dispute that none of the California Plaintiffs filed the CLRA affidavit 13 required by the statute. Opp’n 50. Instead, Plaintiffs characterize this requirement as a state 14 procedural rule that does not apply in federal court. Id. Plaintiffs’ characterization is inaccurate. 15 “The clear intent of the [CLRA] is to provide and facilitate pre-complaint settlements of consumer 16 actions wherever possible and to establish a limited period during which such settlement may be 17 accomplished.” Outboard Marine Corp. v. Superior Court, 124 Cal. Rptr. 852, 859 (Ct. App. 18 1975). In this way, “compliance with the [notice] requirement is necessary to state a claim.” 19 Wehlage v. EmpRes Healthcare Inc., No. 10-CV-05839-CW, 2012 WL 380364, at *7 (N.D. Cal. 20 Feb. 6, 2012). Therefore, this Court and multiple other California district courts have required 21 submission of the CLRA affidavit. See Romero v. Flowers Bakeries, LLC, No. 14-CV-05189- 22 BLF, 2015 WL 2125004, at *8 (N.D. Cal. May 6, 2015); see also Rossetti v. Stearn’s Prods., Inc., 23 No. 16-CV-01875-GW, 2016 WL 3277295, at *2 (C.D. Cal. June 6, 2016); McVicar, 1 F. Supp. 24 3d at 1056; In re Apple In-App Purchase Litig., 855 F. Supp. 2d 1030, 1037 (N.D. Cal. 2012). But 25 see Sandoval v. PharmaCare US, Inc., 145 F. Supp. 3d 986, 999 (S.D. Cal. 2015) (holding on the 26 facts of the case that the notice requirement “does not apply to CLRA claims filed in federal 27 court”). 28 In their opposition, Plaintiffs state that “[s]hould the Court require venue affidavits here, 37 1 Plaintiffs will attach them to an amended complaint.” Opp’n 50. Accordingly, the Court 2 GRANTS Huawei’s Motion to Dismiss Plaintiffs’ CLRA claim with leave to file the necessary 3 CLRA affidavit. 4 5 v. California Unfair Competition & False Advertising Laws The California Plaintiffs assert a claim under California’s Unfair Competition Law 6 (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq., and a claim under California’s False 7 Advertising Law (“FAL”), Cal. Bus. & Prof. Code § 17500 et seq., on behalf of the California 8 subclass. CAC ¶¶ 298, 333. Huawei makes claim-specific arguments for dismissal, and the Court 9 addresses the UCL and FAL claims in turn. (1) 10 United States District Court Northern District of California 11 UCL The Court first turns to the UCL claim. The UCL prohibits any “unlawful, unfair or 12 fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200; see also Cel-Tech 13 Commc’ns, Inc. v. L.A. Cellular Tel. Co., 973 P.2d 527, 539 (Cal. 1999). Because the statute is 14 written in the disjunctive, it applies separately to business practices that are (1) unlawful, (2) 15 unfair, or (3) fraudulent. See Pastoria v. Nationwide Ins., 6 Cal. Rptr. 3d 148, 153 (Ct. App. 16 2003). Plaintiffs contend that Huawei’s conduct has violated all three prongs. Huawei, however, 17 argues that the CAC does not adequately allege that its conduct was unlawful, unfair, or 18 fraudulent. Huawei Mot. 24–25. 19 (a) Unlawful Business Act or Practice 20 Plaintiffs predicate their claim under the “unlawful” prong in part on Huawei’s alleged 21 violation of the Magnuson–Moss Warranty Act. See CAC ¶ 300. The “unlawful” prong of the 22 UCL covers “any business practice that violate[s] an independent statutory duty.” Cel-Tech 23 Commc’ns, 973 P.2d at 549. Because the Court has already concluded that the California 24 Plaintiffs have stated a claim against Huawei under the Magnuson–Moss Warranty Act, they have 25 also stated a claim against Huawei for violation of the UCL “unlawful” prong. Accordingly, the 26 Court DENIES Huawei’s Motion to Dismiss Plaintiffs’ UCL claim under the unlawful prong. 27 (b) 28 Unfair Business Act or Practice The “unfair” prong of the UCL creates a cause of action for a business practice that is 38 1 unfair even if not proscribed by some other law. Korea Supply Co. v. Lockheed Martin Corp., 63 2 P.3d 937, 943 (Cal. 2003). The UCL does not define the term “unfair,” and the proper definition 3 in the consumer context is “currently in flux” among California courts. See Lozano v. AT & T 4 Wireless Servs., Inc., 504 F.3d 718, 735–36 (9th Cir. 2007). 5 Although the precise test for the UCL’s “unfair” prong has not been definitively 6 established, Plaintiffs endorse the balancing test enunciated in South Bay Chevrolet v. General 7 Motors Acceptance Corp., 85 Cal. Rptr. 2d 301 (Ct. App. 1999), or the FTC Act section 5 test 8 employed in Camacho v. Automobile Club of Southern California, 48 Cal. Rptr. 3d 770 (Ct. App. 9 2006). Opp’n 39. Pursuant to the South Bay balancing test, a practice is “unfair” “when it offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous 11 United States District Court Northern District of California 10 or substantially injurious to consumers.” 85 Cal. Rptr. 2d at 316. “This test involves balancing 12 the harm to the consumer against the utility of the defendant’s practice.” Lozano, 504 F.3d at 735 13 (citing S. Bay, 85 Cal. Rptr. 2d at 315). Under the FTC Act section 5 test, three factors define 14 unfairness: “(1) the consumer injury must be substantial; (2) the injury must not be outweighed by 15 any countervailing benefits to consumers or competition; and (3) it must be an injury that 16 consumers themselves could not reasonably have avoided.” Camacho, 48 Cal. Rptr. 3d at 777. 17 Huawei contends that regardless of the test applied, Plaintiffs’ claim fails. Huawei Mot. 24–25; 18 see also Huawei Reply 15 (“No matter what test is applied, the [CAC] lacks any factual basis to 19 sustain such a claim.”). 20 Under any test, Plaintiffs do not allege sufficient facts to establish that Huawei engages in 21 a “practice of selling defective phones without providing an adequate remedy to cure the Defects.” 22 CAC ¶ 302. Specifically, Plaintiffs point to five aspects of “Defendants” Huawei and Google’s 23 conduct: (1) knowingly sold defective phones, (2) refused to repair or replace phones when the 24 defects manifested outside the warranty period, (3) avoided providing warranty service by blaming 25 minor cosmetic issues, (4) had long wait periods on warranty claims, and (5) provided replacement 26 phones that were also defective. Id. ¶ 301. Although Plaintiffs endorse evaluating this conduct as 27 a whole without testing the sufficiency of each aspect, the problem is that Plaintiffs lump Huawei 28 and Google together under the heading of “Defendants” when each aspect does not apply 39 1 uniformly to both. Therefore, the Court must undertake the difficult endeavor of teasing out 2 which actions the CAC attributes to Huawei alone. Ground (1) is easily discarded, as it merely parrots the already-rejected contention that 3 Huawei had knowledge of the defects at the time of sale. Ground (2) also falls away because the 5 California courts have held that there can be no “unfair” business practice, at least under the FTC 6 Act section 5 test, when the product functions as warranted throughout the term of an express 7 warranty. Daugherty, 51 Cal. Rptr. 3d at 130 (“[T]he failure to disclose a defect that might, or 8 might not, shorten the effective life span of an automobile part that functions precisely as 9 warranted throughout the term of its express warranty . . . does not constitute an unfair practice 10 under the UCL.”). Ground (3) appears more promising, but Plaintiffs do not provide sufficient 11 United States District Court Northern District of California 4 facts to support it. Only one California Plaintiff alleges that Huawei denied warranty coverage 12 based on a cosmetic flaw in his phone. See CAC ¶ 15 (“Huawei informed [Plaintiff] 13 Makcharoenwoodhi that his warranty was voided because his Phone had a small dent by the 14 volume button.”).7 One isolated instance where Huawei allegedly did not provide warranty 15 coverage based on a minor cosmetic issue does not rise to the level of an unfair practice of failing 16 to honor its warranties. Ground (4) asserts that Huawei “[r]equir[ed] consumers to wait several weeks to several 17 18 months to receive accommodation for warranty claims.” CAC ¶ 301.d. However, Plaintiffs have 19 not identified any California Plaintiff who complains about wait times, see id. ¶¶ 65, 85, 122, 156, 20 and Plaintiffs do not argue, by reference to allegations in the CAC, that there is a basis to infer that 21 Huawei’s practice has affected any California resident. Moreover, the failure to provide timely 22 responses to warranty claims might amount to poor customer service but, standing alone, cannot 23 fairly be characterized as immoral, unethical, oppressive, or unscrupulous. Finally, based on the 24 present allegations, ground (5) does not apply to Huawei at all: Google is the only actor alleged to 25 have provided certain Plaintiffs with a defective replacement phone. Id. ¶¶ 49, 75, 113–14, 136. 26 7 27 28 Plaintiffs separately point to the allegations by Ohio Plaintiff Servodio. Even if those allegations could be relevant for a California claim under California law, they state only that Huawei noted a small dent in the side of his phone and determined that his phone was ineligible for warranty coverage, not that Huawei denied coverage because of the dent. Id. ¶¶ 122, 124. 40 1 Thus, none of Plaintiffs’ five asserted aspects of Huawei’s conduct withstands scrutiny at the 2 motion to dismiss stage. 3 More broadly, the CAC pleads that Huawei’s conduct is unfair because it “violated 4 California public policy, legislatively declared in the Song–Beverly Consumer Warranty Act, 5 requiring a manufacturer to ensure that goods it places on the market are fit for their ordinary and 6 intended purposes.” Id. ¶ 301. Even if that description of the Song–Beverly Act accurately 7 captures the general thrust of the statute, it fails to account for the Song–Beverly Act’s 8 circumscribed geographic reach to sales of consumer goods in California. See Cal. Civ. Code 9 § 1792. At a minimum, the Song–Beverly Act’s purpose is not offended by sales of unmerchantable consumer goods outside the state of California. Thus, like with Plaintiffs’ claim 11 United States District Court Northern District of California 10 under the Song–Beverly Act, Plaintiffs’ claim under the UCL unfair prong fails because the CAC 12 does not allege that the California Plaintiffs purchased their phones in California. 13 14 15 16 Accordingly, the Court GRANTS Huawei’s Motion to Dismiss Plaintiffs’ UCL claim under the unfair prong with leave to amend to allege relevant facts. (c) Fraudulent Business Act or Practice In the CAC, Plaintiffs identify three fraudulent acts on the part of Huawei and Google: (1) 17 “[k]nowingly and intentionally concealing from Plaintiffs and California Subclass members the 18 existence of the Defects in the Phones”; (2) “[f]alsely marketing the Phones as being functional 19 and not possessing defects that would render them useless”; and (3) “[p]romoting the battery 20 capabilities and lifespan despite knowing of the significant Defects in the Phones.” CAC ¶ 303. 21 Putting aside the fact that the allegations do not distinguish between Huawei and Google, all three 22 acts are premised on Huawei’s knowledge of the defects at the time of sale to the California 23 Plaintiffs. Plaintiffs’ opposition likewise characterizes the claim under the UCL fraud prong as 24 turning on the “allegations of Defendants’ knowledge of the Nexus 6Ps core defects, failure to 25 disclose them, and portrayal of these phones as well functioning.” Opp’n 40. As the Court has 26 repeatedly reiterated, Plaintiffs have not adequately alleged that Huawei had knowledge of the 27 defects when the California Plaintiffs purchased their phones. Accordingly, the Court GRANTS 28 Huawei’s Motion to Dismiss Plaintiffs’ UCL claim under the fraud prong with leave to amend to 41 1 allege that Huawei had knowledge of the defects at the time that the California Plaintiffs 2 purchased their phones. 3 (2) FAL 4 The Court next addresses the FAL claim. In relevant part, the statutory provision provides: 5 11 It is unlawful for any . . . corporation . . . with intent directly or indirectly to dispose of real or personal property or to perform services, professional or otherwise, or anything of any nature whatsoever or to induce the public to enter into any obligation relating thereto, to make or disseminate or cause to be made or disseminated . . . from this state before the public in any state, in any newspaper or other publication, or any advertising device, . . . or in any other manner or means whatever, including over the Internet, any statement, concerning that real or personal property or those services, professional or otherwise, or concerning any circumstance or matter of fact connected with the proposed performance or disposition thereof, which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading. 12 Cal. Bus. & Prof. Code § 17500. Huawei contends that Plaintiffs’ FAL claim is inadequately pled 13 because they fail to allege actual reliance on an advertisement by Huawei. Huawei Mot. 23. 6 7 8 9 United States District Court Northern District of California 10 14 Huawei is correct. As reflected in the statutory language quoted above, an FAL claim 15 requires an advertising statement. See Norcia v. Samsung Telecommunications Am., LLC, No. 14- 16 CV-00582-JD, 2015 WL 4967247, at *8 (N.D. Cal. Aug. 20, 2015) (“There can be no FAL claim 17 where there is no ‘statement’ at all.”); VP Racing Fuels, Inc. v. Gen. Petroleum Corp., 673 F. 18 Supp. 2d 1073, 1088 (E.D. Cal. 2009) (“The underlying element of a false advertising claim is 19 some type of advertising statement.”). The CAC is devoid of any factual allegation that Huawei 20 made an advertising statement. The only allegation for the FAL claim regarding advertisements is 21 that “Defendants promoted false and misleading [statements] through advertising, marketing and 22 other publications,” CAC ¶ 335, but that allegation fails to separate out Huawei’s and Google’s 23 conduct and the CAC otherwise refers only to advertising statements by Google. Therefore, 24 Plaintiffs cannot plead actual reliance on any advertising statement by Huawei because they have 25 not identified any statement by Huawei. Accordingly, the Court GRANTS Huawei’s Motion to 26 Dismiss Plaintiffs’ FAL claim with leave to amend to allege facts about Plaintiffs’ actual reliance 27 on an advertising statement made by Huawei. 28 42 vi. 1 2 Ohio Trade Deceptive Practices Act Plaintiff Servodio asserts a claim under the Ohio Deceptive Trade Practices Act 3 (“ODTPA”) on behalf of the Ohio subclass. CAC ¶¶ 461–75. This claim must be dismissed 4 because Servodio, as a consumer, lacks standing to sue under the ODTPA. 5 Although the Ohio Supreme Court has not addressed this question, the Ohio Court of Appeals has held that the ODTPA affords no relief to consumers because the statute is designed to 7 protect commercial actors against objectionable commercial conduct. Dawson v. Blockbuster, 8 Inc., 2006-Ohio-1240, ¶ 24. It is well settled that Ohio courts look to the interpretation of the 9 analogous federal Lanham Act when interpreting the ODTPA, Chandler & Assoc., Inc. v. Am.’s 10 Healthcare All., Inc., 709 N.E.2d 190, 195 (Ohio Ct. App. 1997), and all five circuits to address 11 United States District Court Northern District of California 6 the issue have held that consumers have no standing to sue under the Lanham Act, see 5 J. 12 Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 27:39 (5th ed. 2017) 13 (citing the holdings of the Second, Third, Fourth, Seventh, and Ninth Circuits). Although at least 14 one federal district court has reached a contrary conclusion, “[t]he vast majority of federal courts 15 and all lower state courts to address the issue have concluded that relief under the [ODTPA] is not 16 available to consumers.” Phillips v. Philip Morris Cos., 290 F.R.D. 476, 482 (N.D. Ohio 2013). 17 Plaintiffs cite a case where the District Court of New Hampshire deferred deciding the 18 ODTPA standing issue at the motion for certification stage. In re Dial Complete Mktg. & Sales 19 Practices Litig., 320 F.R.D. 326, 328 n.1 (D.N.H. 2017). Although the court stated that Ohio law 20 on the issue is “unsettled,” the court also noted that the parties had not “properly briefed the 21 issue.” Id. Here, in contrast, the parties have sufficiently briefed the issue, and Plaintiffs have not 22 provided authority outweighing the many cases that go against their position. 23 Accordingly, the Court GRANTS Huawei’s Motion to Dismiss the ODTPA claim. 24 Because consumers cannot bring the ODTPA claim as a matter of law, the Court dismisses this 25 claim without leave to amend. 26 27 28 c. Unjust Enrichment Claim Plaintiffs’ final cause of action is for unjust enrichment. CAC ¶¶ 278–83. Relying on Astiana v. Hain Celestial Group, Inc., 783 F.3d 753, 762 (9th Cir. 2015), this Court has held that, 43 1 under California law, a claim alleging unjust enrichment states a claim for relief as a quasi- 2 contract claim for restitution. Romero, 2015 WL 2125004, at *9; see also ESG Capital Partners, 3 LP v. Stratos, 828 F.3d 1023, 1038 (9th Cir. 2016) (“While California case law appears unsettled 4 on the availability of such a cause of action, th[e Ninth] Circuit has construed the common law to 5 allow an unjust enrichment cause of action through quasi-contract.”). This Court has also rejected 6 the notion that unjust enrichment claims should be dismissed at the pleadings stage even if they 7 are duplicative of other claims. See Romero, 2015 WL 2125004, at *9 (citing Fed. R. Civ. P. 8 8(d)(2)). 9 However, Plaintiffs do not identify any particular law but instead assert their claim “on behalf of the nationwide Class based upon universal principles in equity.” CAC ¶ 279. As this 11 United States District Court Northern District of California 10 Court and other courts in this district have recognized, “due to variances among state laws, failure 12 to allege which state law governs a common law claim is grounds for dismissal.” Romero v. 13 Flowers Bakeries, LLC, No. 14-CV-05189-BLF, 2016 WL 469370, at *12 (N.D. Cal. Feb. 8, 14 2016); In re TFT-LCD (Flat Panel) Antitrust Litig., 781 F. Supp. 2d 955, 966 (N.D. Cal. 2011) 15 (“Several other courts in this district have similarly held that a plaintiff must specify the state 16 under which it brings an unjust enrichment claim.”). In order for the Court to determine whether 17 the unjust enrichment claim has been adequately pled, Plaintiff must allege the applicable law. 18 19 20 21 Accordingly, the Court GRANTS Huawei’s Motion to Dismiss the unjust enrichment claim with leave to amend to assert which state law applies. 4. Claims Asserted Against Google In broad strokes, the CAC asserts three categories of claims against Google—warranty 22 claims, fraud claims, and unjust enrichment claims. The Court first addresses an argument about 23 Google’s choice-of-law clause that cuts across these three categories for the non-California 24 Plaintiffs who purchased from Google, then addresses each category individually. 25 26 a. Google’s Choice-of-Law Clause Google first seeks dismissal of claims under out-of-state laws for five non-California 27 Plaintiffs who purchased their Nexus 6Ps from Google. Google Mot. 3. Specifically, Plaintiffs 28 Tran, Berry, and Leone purchased their Nexus 6Ps through the Google Store, and Plaintiffs 44 1 Martorello and Jones purchased theirs directly from Google. CAC ¶¶ 38, 52, 70, 111, 130. Under 2 Google’s Terms of Sale, “[t]he laws of California, U.S.A. apply to these Terms, excluding 3 California’s choice of law rules, and will apply to any disputes arising out of or relating to these 4 Terms.” Google argues that this choice-of-law clause should be enforced against the out-of-state 5 Plaintiffs attempting to assert non-California based causes of action, Google Mot. 3–4, and 6 Plaintiffs offer no meaningful response. The Court briefly examines the issues related to Google’s 7 choice-of-law clause. 8 9 One issue is whether these out-of-state Plaintiffs mutually assented to Google’s Terms of Sale, a question which implicates the law of Internet-based contract formation. As the Ninth Circuit has recognized, “[c]ontracts formed on the Internet come primarily in two flavors: 11 United States District Court Northern District of California 10 ‘clickwrap’ (or ‘click-through’) agreements, in which website users are required to click on an ‘I 12 agree’ box after being presented with a list of terms and conditions of use; and ‘browsewrap’ 13 agreements, where a website’s terms and conditions of use are generally posted on the website via 14 a hyperlink at the bottom of the screen.” Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1175–76 15 (9th Cir. 2014). Google submits evidence that its Terms of Sale fall in the former category 16 because, for online purchases, customers must click a button which indicates that the customer 17 agrees to the Terms of Sale. Gotuaco Decl. ¶ 3, ECF No. 57-2. Plaintiffs do not argue to the 18 contrary. In any event, regardless of whether Google’s Terms of Sale are more appropriately 19 characterized as a “clickwrap” or “browsewrap” agreement, courts have often enforced such 20 agreements when the user “had actual notice of the Terms of Use or was required to affirmatively 21 acknowledge the Terms of Use before completing his online purchase.” Nguyen, 763 F.3d at 22 1176; see also, e.g., Nevarez v. Forty Niners Football Co., LLC, No. 16-CV-07013-LHK, 2017 23 WL 3492110, at *8 (N.D. Cal. Aug. 15, 2017). The Court sees no reason to depart from those 24 cases here, and Plaintiffs provide none. 25 Another issue is whether to enforce the contractual choice-of-law provision. California 26 law recognizes “strong policy considerations favoring the enforcement of freely negotiated choice- 27 of-law clauses” in contracts. Nedlloyd Lines B.V. v. Superior Court, 834 P.2d 1148, 1149 (Cal. 28 1992). Typically, choice-of-law provisions will be enforced in California unless (1) the chosen 45 1 state has no substantial relationship to the parties or the transaction or (2) application of the chosen 2 state’s law would be contrary to a fundamental policy of another interested state. Id. at 1151. 3 Neither of those exceptions is applicable in the instant case. 4 As to the first exception, California has a substantial relationship to defendant Google 5 because Google has its principal place of business in California and seeks to apply California law 6 to its sales transactions. See CAC ¶ 161. Courts have reached the same conclusion on nearly 7 identical choice-of-law provisions being applied in nearly the same manner. See Rojas-Lozano v. 8 Google, Inc., 159 F. Supp. 3d 1101, 1110 (N.D. Cal. 2016) (enforcing Google’s choice-of-law 9 provision in part because “California has a substantial relationship to Google”). As for the second exception, this Court has not located or been directed to any authority where a court in Florida, 11 United States District Court Northern District of California 10 Illinois, Michigan, North Dakota, or Pennsylvania has declined to apply California consumer law 12 for public policy reasons. In fact, a court in Pennsylvania has even agreed to apply California law 13 in an unfair business practices case, explaining that “Pennsylvania has no interests that would be 14 impaired by the application of California law.” Nat’l Conference of Bar Examiners v. Multistate 15 Legal Studies, Inc., 413 F. Supp. 2d 485, 488 (E.D. Pa. 2005). Without any argument to the 16 contrary from Plaintiffs, the Court agrees with Google that its choice-of-law clause may properly 17 be enforced against the out-of-state Plaintiffs. 18 Accordingly, the Court GRANTS Google’s Motion to Dismiss the express warranty, 19 implied warranty, and fraud claims of Plaintiffs Martorello, Tran, Berry, Jones, and Leone to the 20 extent those claims are premised on Florida, Illinois, Michigan, North Dakota, and Pennsylvania 21 law, respectively. The Court also GRANTS Google’s Motion to Dismiss the related state-law 22 statutory claims—namely, Plaintiff Martorello’s claim under the Florida Deceptive and Unfair 23 Trade Practices Act (“FDUTPA”), Fla. Stat. § 501.204 et seq., CAC ¶¶ 340–51; Plaintiff Tran’s 24 claims under the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFDBPA”), 25 815 Ill. Comp. Stat. § 505/1 et seq., and the Illinois Uniform Deceptive Trade Practices Act 26 (“IUDTPA”), 815 Ill. Comp. Stat. § 510/1 et seq., CAC ¶¶ 352–83; Plaintiff Berry’s claim under 27 the Michigan Consumer Protection Act (“MCPA”), Mich. Comp. Laws § 445.903 et. seq., CAC 28 ¶¶ 397–414; Plaintiff Jones’s claim under the North Dakota Consumer Fraud Act (“NDCFA”), 46 1 N.D. Cent. Code § 51-15-01 et seq., CAC ¶¶ 444–60; and Plaintiff Leone’s claim under the 2 Pennsylvania Unfair Trade Practices and Consumer Protection Law (“PUTPCPL”), Pa. Stat. Ann. 3 § 201-1 et seq., CAC ¶¶ 488–500. The Court GRANTS Google’s Motion to Dismiss these claims 4 with leave to amend. b. 5 Warranty Claims Plaintiffs assert four sets of warranty claims: (1) breach of express warranty, (2) breach of 6 7 the implied warranty of merchantability, (3) violation of the California Song–Beverly Consumer 8 Warranty Act, and (4) violation of the federal Magnuson–Moss Warranty Act. Google moves to 9 dismiss all four causes of action. The Court addresses each in turn. i. 10 Plaintiffs bring their first cause of action for breach of express warranty on behalf of a 11 United States District Court Northern District of California Breach of Express Warranty 12 putative nationwide class but do not specify which law governs the claim. CAC ¶ 214. 13 Alternatively, they assert claims for breach of express warranty on behalf of the putative statewide 14 subclasses under the laws of the respective states. Id. ¶ 215. Unlike with Huawei, Plaintiffs do not plead that the Nexus 6P is accompanied by an 15 16 express written warranty from Google. Rather, Plaintiffs turn to statements that Google made in 17 advertising for the Nexus 6P. In particular, the Google webpage for the Nexus 6P states that 18 charging is “fast—get up to seven hours of use after only ten minutes of charging.” CAC ¶ 227.a; 19 RJN, Ex. 1. Plaintiffs also identify two other potentially relevant statements. First, the website 20 also provides that the battery “keeps you talking, texting and apping into the night.” CAC ¶ 227.c; 21 RJN, Ex. 1. Along the same lines, a Google presentation contained a statement that “[b]attery life 22 keeps you going all day and into the night.” CAC ¶¶ 7, 227.b.8 According to Plaintiffs, those statements are concrete promises that give rise to Plaintiffs’ 23 24 8 25 26 27 28 Plaintiffs also point to a representation at the 2015 launch event by Google’s Product Management Director Sabrina Ellis that, under the Nexus Protect insurance package, consumers with valid claims would “get a new device as early as the next business day.” CAC ¶¶ 170, 227.d. Google argues that that statement cannot form the basis for any of the California Plaintiffs’ express warranty claims because no California Plaintiff alleges purchasing the Nexus Protect insurance package. Google Mot. 6. Plaintiffs offer no response in their opposition. The Court agrees with Google that there is no express warranty based on this statement for Plaintiffs without a Nexus Protect insurance package. 47 1 express warranty claims. Opp’n 21–24. Google responds that none of its statements are 2 sufficiently specific to create an express warranty, and thus the express warranty claims of all 3 Plaintiffs should be dismissed. Google Mot. 5–9. If the express warranty claims are not dismissed 4 on this ground, Google provides various bases applicable to different classes of Plaintiffs. As to 5 all Plaintiffs, Google contends that their allegations do not plausibly plead reliance on Google’s 6 advertising statements. Id. at 6–9. As to Plaintiffs that bought from Google, Google contends that 7 their express warranty claims are barred by Google’s disclaimer. Id. at 5. As to Plaintiffs that did 8 not purchase from Google, Google contends that the lack of privity defeats their claims. Id. at 5, 9 8–9. Finally, as to an undefined grouping of Plaintiffs, Google claims that they did not give Google notice and an opportunity to cure. Id. at 5; Google Reply 5. The Court sorts through this 11 United States District Court Northern District of California 10 tangled series of arguments by taking them one at a time. 12 13 (1) Actionable Misrepresentations Google does not dispute that an express warranty claim may be based on advertising 14 statements. See Rice v. Sunbeam Prods., Inc., No. 12-CV-07923-CAS, 2013 WL 146270, at *11 15 (C.D. Cal. Jan. 7, 2013). Instead, Google contends that none of the identified statements amounts 16 to a specific and unequivocal representation regarding the Nexus 6P. Google Mot. 5–6. Under 17 California law, which Google asserts as representative of the other states and Plaintiffs rely on 18 exclusively for this issue, no express warranty is created when the defendant makes 19 “[g]eneralized, vague, and unspecified assertions.” Azoulai v. BMW of N. Am. LLC, No. 16-CV- 20 00589-BLF, 2017 WL 1354781, at *8 (N.D. Cal. Apr. 13, 2017) (citation omitted); Cal. Com. 21 Code § 2313(2) (“[A]n affirmation merely of the value of the goods or a statement purporting to 22 be merely the seller’s opinion or commendation of the goods does not create a warranty.”). To 23 constitute an actionable express warranty, the statement regarding the product must be “specific 24 and measurable.” Azoulai, 2017 WL 1354781, at *8 (citing Southland Sod Farms v. Stover Seed 25 Co., 108 F.3d 1134, 1145 (9th Cir. 1997)). 26 Google’s statement about “get[ting] up to seven hours of use after only ten minutes of 27 charging” is sufficiently specific and measurable. Most prominently, that statement relies on 28 numerical figures with a set meaning and defines the relationship between them—specifically, if 48 1 the user charges for “ten minutes,” he will be able to use the phone for “up to seven hours.” 2 Google counters with a footnote hanging off its “get up to seven hours” statement, which says that 3 “[a]ll battery life claims are approximate and based on an average mixed use profile that includes 4 both usage and standby time.” RJN, Ex. 1; see also id. (“Actual battery performance will vary and 5 depends on many factors . . . .”). That footnote does not undermine the specificity of the “get up 6 to seven hours” statement but merely clarifies that the “get up to seven hours” statement 7 contemplates normal use of the phone. In other words, a consumer who continuously streams 8 movies on his phone should not be upset if he is unable to watch for seven hours after charging for 9 ten minutes. But that does not preclude a consumer who engages in normal usage from reasonably 10 United States District Court Northern District of California 11 expecting to get up to seven hours of use after ten minutes of charging. Measurability is not defeated by the fact that Google’s statement is phrased as assuring “up 12 to” seven hours, but not guaranteeing exactly seven hours. On this point, this case lies closer to 13 Plaintiffs’ cited authority than Google’s. In the case Google cites, the district court concluded that 14 a car manufacturer did not create an express warranty in advertising language, which stated that 15 the powertrain in its trucks “offers a maximum highway range of up to 680 miles on a single fill- 16 up.” Acedo v. DMAX, Ltd., No. 15-CV-02443-MMM, 2015 WL 12696176, at *24 (C.D. Cal. 17 Nov. 13, 2015). Although the court noted the “qualifying language ‘up to,’” the court did not rest 18 its conclusion on that basis alone. Id. The defendant’s statement also specified that the 680-mile 19 range was a “maximum” and included a footnote expressly indicating that each individual driver’s 20 “range may be less.” Id. Google’s statement does not contain any comparable hedging language. 21 Moreover, in Acedo, the plaintiff’s theory was that, based on the car manufacturer’s statement, he 22 justifiably believed that “he would actually be able to drive 680 . . . miles on a single tank of gas.” 23 Id. Here, in contrast, Plaintiffs construe Google’s statement as a warranty that their phones would 24 not experience sudden shutdowns from battery failure, not that their phones would consistently get 25 exactly seven hours or almost seven hours of use. 26 In that last respect, this case is analogous to Plaintiffs’ cited authority. In In re Toyota 27 Motor Corp., the warranty “statements convey[ed] that [the] [d]efendants’ use of advanced 28 technology in their vehicles . . . enhances safety.” 754 F. Supp. 2d at 1182. The plaintiffs’ theory 49 1 was that the use of the advanced technology was actually contributing to the danger of sudden 2 unintended acceleration in the defendants’ vehicles. Id. In this way, the plaintiffs plausibly 3 alleged breach of express warranty because the pleaded facts represented the “antithesis” of the 4 defendants’ statements. Id. The same is true in this case. Google’s statement that a user can “get 5 up to seven hours of use after only ten minutes of charging” is directly contrary to Plaintiffs’ 6 allegations about sudden shutdowns from battery failures. See, e.g., CAC ¶¶ 13 (alleging that “[i]f 7 [Plaintiff Makcharoenwoodhi] connected the Phone to a charger and fully charged the Phone, it 8 would turn back on and the battery would operate for approximately 10 minutes before the battery 9 would run out and the Phone would turn off again”), 60 (alleging that “[i]n less than one hour [Plaintiff Beheler’s] Phone would go from a fully charged battery to shutting down, despite being 11 United States District Court Northern District of California 10 in safe mode with Google’s Chrome browser the only open application”). Thus, Google’s “get up 12 to seven hours” statement is sufficiently specific and measurable. 13 By contrast, the statements that the Nexus 6P’s battery life “keeps you talking, texting and 14 apping into the night” and “keeps you going all day and into the night” are not adequate to create 15 express warranties. For one thing, neither statement discusses what length of time of charging or 16 what level of battery charge is envisioned. Equally important, the references to “into the night” 17 and “all day and into the night” are inexact and do not provide a baseline against which to measure 18 the rest of the statement. Such vague product superiority claims cannot reasonably be interpreted 19 by consumers as reliable factual claims about the battery life and performance of the Nexus 6P. 20 See Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 246 (9th Cir. 1990) 21 (“[A]dvertising which merely states in general terms that one product is superior is not 22 actionable.” (citation omitted)). Indeed, courts have found similar statements to be nonactionable 23 puffery, including that a consumer using the defendant’s battery “will always have access to 24 power” when needed. Punian v. Gillette Co., No. 14-CV-05028-LHK, 2016 WL 1029607, at *9 25 (N.D. Cal. Mar. 15, 2016). 26 The “keeps you talking, texting and apping” and “keeps you going” statements do not 27 constitute express warranties, whether taken individually or collectively. See Elias v. Hewlett- 28 Packard Co., 950 F. Supp. 2d 1123, 1134 (N.D. Cal. 2013) (“[T]he combination of several ‘puff’ 50 1 statements does not automatically create an actionable misrepresentation.”). Nevertheless, to the 2 extent that Plaintiffs’ express warranty claims are premised on Google’s “get up to seven hours” 3 statement, they are not properly dismissed as inactionable puffery. (2) 4 5 Basis of the Bargain and Reliance Google next contends that the Court should dismiss the express warranty claims of all 6 Plaintiffs because they do not adequately plead reliance on Google’s advertising statements. 7 Google Mot. 6–9. Like with Huawei, the relevant question is whether Plaintiffs must show 8 reliance on the statement or representation for it to be considered part of the “basis of the bargain” 9 under each state’s express warranty law. Cal. Com. Code § 2313(1)(a)–(b); Ind. Code Ann. § 261-2-313(1)(a)–(b); N.Y. U.C.C. Law § 2-313(1)(a)–(b); N.C. Gen. Stat. Ann. § 25-2-313(1)(a)– 11 United States District Court Northern District of California 10 (b); Ohio Rev. Code Ann. § 1302.26(A)(1)–(2); Tex. Bus. & Com. Code Ann. § 2.313(a)(1)–(2); 12 Wash. Rev. Code Ann. § 62A.2-313(1)(a)–(b). That analysis plays out somewhat differently in 13 the context of Google’s advertising statements as compared with Huawei’s written warranty. 14 In particular, authority from each of the pertinent states supports the proposition that, at a 15 minimum, the plaintiff must plead that he was aware of the advertising statements, though some 16 cases state that principle more explicitly than others. See Osborne v. Subaru of Am., Inc., 243 Cal. 17 Rptr. 815, 824 (Ct. App. 1988) (California); Royal Bus. Machs., Inc. v. Lorraine Corp., 633 F.2d 18 34, 44 & n.7 (7th Cir. 1980) (Indiana); CBS Inc., 553 N.E.2d at 1001 (New York); Harbor Point, 19 697 S.E.2d at 447 (North Carolina); Rogers v. Toni Home Permanent Co., 147 N.E.2d 612, 615– 20 16 (Ohio 1958) (Ohio); Lapray, 135 S.W.3d at 676 (Texas); Reece, 953 P.2d at 123 (citing Arrow 21 Transp., 454 P.2d at 390) (Washington). There is a logical basis for states to have different 22 standards for written warranties and advertising warranties: “‘awareness’ must be shown if the 23 plaintiff intends to argue that other types of ‘representation[s]’ (e.g., advertising statements) form 24 part of the express warranty; i.e., where the representations are used by the plaintiff to define the 25 scope of the warranty.” In re MyFord, 2015 WL 5118308, at *6 (emphasis deleted) (interpreting 26 Washington law). 27 Plaintiffs challenge this conclusion only with respect to California law, arguing that 28 51 1 California does not require reliance. Opp’n 24.9 Although, as described above, the California 2 Court of Appeal’s decision in Weinstat makes clear that a plaintiff need not plead reliance on 3 individual representations, California law still requires the plaintiff to plead exposure to the 4 advertising. See Rosales v. FitFlop USA, LLC, 882 F. Supp. 2d 1168, 1178 (S.D. Cal. 2012) 5 (“While this does not require that plaintiff relied on the individual advertisements, it does require 6 that plaintiff was actually exposed to the advertising.”). Indeed, one of Plaintiffs’ central 7 authorities explains that, at the motion to dismiss stage, plaintiffs need not allege reliance but must 8 provide “specific allegations that they were aware of the statements made in a national advertising 9 campaign.” In re Toyota Motor Corp., 754 F. Supp. 2d at 1182–83 & n.22. Thus, the operative question is whether Plaintiffs have adequately alleged that they became 10 United States District Court Northern District of California 11 aware of Google’s statements by exposure to its advertising. Plaintiffs do not clear that hurdle 12 simply by alleging in a conclusory manner that “Plaintiffs and Class members were exposed to 13 and relied on [Google’s above-identified] statements when they decided to buy Nexus 6P Phones” 14 and that “Google’s express warranties formed part of the basis of the bargain that was reached 15 when Plaintiffs and Class Members purchased their Phones.” CAC ¶ 228. The Court must 16 scrutinize each individual Plaintiff’s allegations about exposure to Google’s actionable 17 promotional promises. For convenience, the Court groups Plaintiffs by controlling state law. 18 (a) California The three California Plaintiffs and the five out-of-state Plaintiffs who purchased from 19 20 Google (Plaintiffs Martorello, Tran, Berry, Jones, and Leone) are subject to California law. Six of 21 these Plaintiffs—Plaintiffs Makcharoenwoodhi, Gorbatchev, Christensen, Martorello, Berry, and 22 Jones—do not allege that they saw any advertising statements; instead, they merely allege that 23 they purchased the Nexus 6P. CAC ¶¶ 12–51, 70–78, 111–18. The remaining two Plaintiffs plead 24 facts about advertising, but those allegations still are insufficient. Though the CAC alleges that 25 9 26 27 28 Plaintiffs decline to respond to Google’s assertions with respect to the other states because, in Plaintiffs’ view, “Google’s legal challenges to the express warranty claims of non-California Plaintiffs contradict its position that California law controls.” Opp’n 24 (citations omitted). But Plaintiffs misread Google’s Motion to Dismiss, which advocates applying California law to those out-of-state Plaintiffs who purchased from Google and are subject to the choice-of-law provision in Google’s Terms of Sale. See Google Mot. 3–4, 6. 52 1 Plaintiff Tran “saw online advertisements representing that the Google Nexus 6P had a superior 2 battery life,” id. ¶ 52, it does not identify which advertisements he observed. That fact matters 3 because only one of Google’s statements—the “get up to seven hours” statement—is sufficiently 4 specific and measurable at this stage to create an express warranty. As to Plaintiff Leone, the 5 CAC alleges that he “watched the live stream of the Nexus 6P release event in San Francisco and 6 was exposed to Google’s representations regarding the Phone at that event,” and so he understood 7 that “superior battery life” was a major selling point for the Nexus 6P. Id. ¶ 129. But Plaintiffs do 8 not allege that the “get up to seven hours” statement was made at the launch event; that statement 9 appeared on Google’s website. Accordingly, the Court GRANTS Google’s Motion to Dismiss the express warranty claims of Plaintiffs Makcharoenwoodhi, Gorbatchev, Christensen, Martorello, 11 United States District Court Northern District of California 10 Tran, Berry, Jones, and Leone with leave to amend to allege which advertisements they saw. 12 (b) 13 Indiana Indiana Plaintiff Beheler’s express warranty claim must also be dismissed on this ground. 14 The CAC states that “[t]he Nexus 6P’s purportedly long battery life factored heavily into 15 [Plaintiff] Beheler’s decision to purchase this Phone.” CAC ¶ 59. But the CAC does not present 16 the source of Plaintiff Beheler’s view that the Nexus 6P had a long battery life. More precisely, it 17 is not alleged that Plaintiff Beheler received that information from advertising at all, let alone the 18 advertising containing Google’s “get up to seven hours” statement. Accordingly, the Court 19 GRANTS Google’s Motion to Dismiss the express warranty claim of Plaintiff Beheler with leave 20 to amend to allege which advertisements he saw. 21 22 (c) New York The CAC does not allege that New York Plaintiff Davydov saw or relied on the advertising 23 statements identified as the basis for Plaintiffs’ express warranty claims. CAC ¶¶ 79–89. 24 Accordingly, the Court GRANTS Google’s Motion to Dismiss the express warranty claim of 25 Plaintiff Davydov with leave to amend to allege which advertisements he saw. 26 27 28 (d) North Carolina Like with New York Plaintiff Davydov, the CAC does not allege that North Carolina Plaintiff Himes saw or relied on the advertising statements identified as the basis for Plaintiffs’ 53 1 express warranty claims. CAC ¶¶ 99–110. The allegations with respect to the other North 2 Carolina Plaintiff, Harrison, are more detailed but still unsatisfactory. Specifically, Plaintiff 3 Harrison’s decision to purchase a Nexus 6P was “materially influenced” by her viewing of 4 “advertisements representing that the Nexus 6P’s battery life was very good and touting the Nexus 5 6P as Google’s top-of-the-line phone.” Id. ¶ 91. Nonetheless, that language does not appear in the 6 advertising containing Google’s “get up to seven hours” statement. Nor does the CAC otherwise 7 nail down what particular advertising or statements Plaintiff Harrison encountered. Accordingly, 8 the Court GRANTS Google’s Motion to Dismiss the express warranty claims of Plaintiffs 9 Harrison and Himes with leave to amend to allege which advertisements they saw. (e) 10 The CAC does not allege that Ohio Plaintiff Servodio saw or relied on the advertising 11 United States District Court Northern District of California Ohio 12 statements identified as the basis for Plaintiffs’ express warranty claims. CAC ¶¶ 119–27. 13 Accordingly, the Court GRANTS Google’s Motion to Dismiss the express warranty claim of 14 Plaintiff Servodio with leave to amend to allege which advertisements he saw. (f) 15 Texas Like with Ohio Plaintiff Servodio, the CAC does not allege that Texas Plaintiff Poore saw 16 17 or relied on the advertising statements identified as the basis for Plaintiffs’ express warranty 18 claims. CAC ¶¶ 142–51. Accordingly, the Court GRANTS Google’s Motion to Dismiss the 19 express warranty claim of Plaintiff Poore with leave to amend to allege which advertisements he 20 saw. 21 22 (g) Washington Finally, the CAC alleges that Washington Plaintiff Johnston’s decision to purchase a 23 Nexus 6P was “materially influenced” by his viewing of “television and online advertisements” 24 which “promoted the Phone in part on the basis of its superior battery life.” CAC ¶ 153. For 25 many of the same reasons noted above, that allegation is not enough. Because the CAC does not 26 pinpoint which advertisements Plaintiff Johnston has seen, there is no way to tell whether they 27 contained Google’s “get up to seven hours” statement, the actionable statement Plaintiffs have 28 identified as a basis for the express warranty claim. Accordingly, the Court GRANTS Google’s 54 1 Motion to Dismiss the express warranty claim of Plaintiff Johnston with leave to amend to allege 2 which advertisements he saw. 3 4 In sum, the Court GRANTS Google’s Motion to Dismiss Plaintiffs’ express warranty claims with leave to amend. (3) 5 6 Disclaimer In its motion to dismiss, Google appears to separately contend that Plaintiffs who purchased from Google—namely, Plaintiffs Gorbatchev, Martorello, Tran, Berry, Jones, and 8 Leone, CAC ¶¶ 19, 38, 52, 70, 111, 130—are barred from pursuing an express warranty claim 9 based on Google’s disclaimer in its Terms of Sale. Google Mot. 5. Google’s terms include a 10 section titled “Defects; Warranties; Disclaimer of Warranties,” which states in relevant part: 11 United States District Court Northern District of California 7 “GOOGLE . . . EXPRESSLY DISCLAIM[S] ALL WARRANTIES AND CONDITIONS OF 12 ANY KIND, WHETHER EXPRESS OR IMPLIED, REGARDING ANY DEVICES.” To the 13 extent that Google contends that that language overrides Google’s advertising statements, Google 14 is incorrect. 15 California law on limiting warranties provides that “[w]ords or conduct relevant to the 16 creation of an express warranty and words or conduct tending to negate or limit warranty shall be 17 construed wherever reasonable as consistent with each other; but . . . negation or limitation is 18 inoperative to the extent that such construction is unreasonable.” Cal. Com. Code § 2316(1). 19 “Because a disclaimer . . . is inconsistent with an express warranty, words of disclaimer . . . give 20 way to words of warranty unless some clear agreement between the parties dictates the contrary 21 relationship.” Hauter, 534 P.2d at 386; see also Arroyo v. TP-Link USA Corp., No. 14-CV-04999- 22 EJD, 2015 WL 5698752, at *10 (N.D. Cal. Sept. 29, 2015). In its reply, Google appears to 23 acknowledge this line of authority: Google’s sole rebuttal to Plaintiffs’ position is that it 24 “rehashes” the argument that “Google’s sales statements created a warranty.” Google Reply 3. 25 Because the Court has already determined that Google’s “get up to seven hours” statement is 26 sufficiently specific and measurable at this stage of the proceedings to create an express warranty, 27 these Plaintiffs may rely on that statement to support their express warranty claim. 28 55 1 2 (4) Privity Google next makes a species of privity argument in favor of dismissing the express 3 warranty claims of all Plaintiffs who did not purchase from Google. Google Mot. 5, 8–9. In 4 particular, Google suggests that it is not covered by the state statutory language requiring an 5 affirmation or promise “made by the seller to the buyer.” Cal. Com. Code § 2313(1)(a); Ind. Code 6 Ann. § 26-1-2-313(1)(a); N.Y. U.C.C. Law § 2-313(1)(a); N.C. Gen. Stat. Ann. § 25-2-313(1)(a); 7 Tex. Bus. & Com. Code Ann. § 2.313(a)(1); Wash. Rev. Code Ann. § 62A.2-313(1)(a). Because 8 Google develops this argument only with respect to California and Indiana law, see Google Mot. 9 5, 9; Google Reply 4, the Court performs the analysis under these state laws. 10 United States District Court Northern District of California 11 (a) California As a general matter, California law requires privity of contract in an action for breach of 12 express warranty. Burr v. Sherwin Williams Co., 268 P.2d 1041, 1048 (Cal. 1954); Blanco v. 13 Baxter Healthcare Corp., 70 Cal. Rptr. 3d 566, 582 (Ct. App. 2008) (stating that privity of 14 contract is the “general rule” (citation omitted)). And such privity is lacking “between the original 15 seller and a subsequent purchaser who is in no way a party to the original sale.” Burr, 268 P.2d at 16 1048. Nevertheless, there are exceptions to the general rule, including “where representations are 17 made by means of labels or advertisements.” Id. at 1049. The California courts appear to fit many 18 cases within this exception, going so far as to say that “[p]rivity is not required for an action based 19 upon an express warranty.” Hauter, 534 P.2d at 383 n.8 (citing Seely v. White Motor Co., 403 20 P.2d 145, 148 (Cal. 1965)); Cardinal Health 301, Inc. v. Tyco Elecs. Corp., 87 Cal. Rptr. 3d 5, 27 21 (Ct. App. 2008) (“Privity is generally not required for liability on an express warranty because it is 22 deemed fair to impose responsibility on one who makes affirmative claims as to the merits of the 23 product, upon which the remote consumer presumably relies.”). 24 In light of these strong statements in the case law, the Court concludes that Plaintiffs’ 25 allegations are sufficient to invoke the privity exception with respect to Google. The CAC alleges 26 that Google and Huawei worked together to create the Nexus 6P and that Google developed the 27 software. CAC ¶ 165. Moreover, Google released the phone for pre-order and sold the phone 28 through its own Google Store. Id. ¶¶ 166, 193. Finally, Google made claims about the phone at 56 1 the launch event, id. ¶ 169, and made specific statements about the phone in advertising on its 2 website, id. ¶ 227. It is of no moment that the examples cited in Burr all involved statements by a 3 manufacturer in labels or advertising material. 268 P.2d at 1049. The justification for the 4 exception does not appear to turn solely on the status of the warrantor. Instead, “it is deemed fair 5 to impose responsibility on one who makes affirmative claims as to the merits of the product, upon 6 which the remote consumer presumably relies.” Cardinal Health 301, 87 Cal. Rptr. 3d at 27. 7 Given Google’s significant role in the development of the Nexus 6P and its disseminated promises 8 about the phone, the Court sees no convincing reason to absolve Google of all liability for express 9 warranties to non-purchasers. Accordingly, this is not an appropriate basis on which to dismiss 10 United States District Court Northern District of California 11 Plaintiffs’ express warranty claims. (b) Indiana 12 Although the default rule under Indiana law appears to be that “vertical privity is required 13 for claims of breach of express warranty,” Atkinson v. P & G-Clairol, Inc., 813 F. Supp. 2d 1021, 14 1026 (N.D. Ind. 2011), that rule is not absolute. In Prairie Production, Inc. v. Agchem Division- 15 Pennwalt Corp., 514 N.E.2d 1299, 1302 (Ind. Ct. App. 1987), the Indiana Court of Appeals held 16 that, on the facts of the case, the plaintiff was not precluded from suing the defendant for breach of 17 express warranty even though the parties were not in privity. In particular, the court permitted the 18 plaintiff to sue the remote manufacturer where the manufacturer had made affirmations about the 19 products in advertising. Id. at 1303. The court explained that discarding the privity requirement 20 was justified in these circumstances because “manufacturers commonly extoll the merits and 21 quality of their products in . . . media directed to each purchaser in the chain of distribution” and 22 their affirmations “may effectively induce the purchase, and are even intended to have that effect.” 23 Id. at 1302–03. More recently, the Indiana Supreme Court relatedly ruled that vertical privity is 24 not a necessary condition for a consumer to bring an implied warranty of merchantability claim 25 against a manufacturer. See Hyundai Motor Am., Inc. v. Goodin, 822 N.E.2d 947, 959 (Ind. 2005). 26 Under these precedents, the Court concludes that Indiana Plaintiff Beheler’s implied 27 warranty claim is not barred by failure to adequately plead privity. Like the manufacturer in 28 Prairie Production, Google here made affirmations about the Nexus 6P in advertising. The Court 57 1 has already determined that one of those statements was a specific and measurable promise. Even 2 if the CAC does not sufficiently plead that Google is a manufacturer, the rationale of Prairie 3 Production extends to this case. The CAC establishes that Google had significant involvement in 4 the development of the Nexus 6P and advertised the virtues of the phone on its website in 5 statements directed to consumers to induce them to buy the product. CAC ¶¶ 165–66, 169, 193, 6 227. On these facts, it is proper to discard the privity requirement. Accordingly, this is not an 7 appropriate basis on which to dismiss Plaintiff Beheler’s express warranty claim. (5) 8 Notice and Opportunity to Cure Google’s offhand reference to notice in its motion to dismiss does not sufficiently raise the 10 issue for resolution. The sole mention of “notice” is in a statement that “the [California] Plaintiffs 11 United States District Court Northern District of California 9 do not allege reliance or pre-suit notice, as the law requires.” Google Mot. 5. Google’s reply is 12 equally unilluminating, stating that the letters of certain Plaintiffs were insufficient to put Google 13 on notice. Google Reply 5. In these filings, Google nowhere indicates what law should apply, 14 provides the relevant contours of the legal landscape, or clearly states which Plaintiffs are affected. 15 Given the potential variances among the states and Plaintiffs (as indicated by the analysis with 16 respect to Huawei), the Court declines to consider Google’s bare assertion that notice provides 17 another basis on which to dismiss Plaintiffs’ express warranty claims. 18 19 ii. Breach of Implied Warranty of Merchantability Plaintiffs’ second cause of action is for breach of the implied warranty of merchantability 20 on behalf of a putative nationwide class under an unspecified law or, alternatively, on behalf of the 21 putative statewide subclasses under the laws of the respective states. CAC ¶¶ 235–36. Plaintiffs’ 22 cause of action alleges that Google “impliedly warranted that the Phones were of a merchantable 23 quality” but failed to live up to that guarantee because the Nexus 6Ps “were not in merchantable 24 condition and are not fit for the ordinary purpose for which phones are used.” Id. ¶ 239. Google’s 25 arguments are split between Plaintiffs who purchased from Google and Plaintiffs who did not. For 26 the former group, Google contends that these Plaintiffs are barred by the explicit disclaimer of the 27 implied warranty of merchantability in its Terms of Sale. Google Mot. 5. For the latter, Google 28 contends that these Plaintiffs have failed to adequately plead privity. Id. at 11–13. 58 1 (1) Disclaimer and Unconscionability Google first contends that the implied warranty claims of Plaintiffs Gorbatchev, 3 Martorello, Tran, Berry, Jones, and Leone—who purchased their Nexus 6Ps from Google, CAC 4 ¶¶ 19, 38, 52, 70, 111, 130—are barred by Google’s disclaimer in its Terms of Sale. Google Mot. 5 5. In relevant part, Google’s terms state: “GOOGLE . . . EXPRESSLY DISCLAIM[S] ALL 6 WARRANTIES AND CONDITIONS OF ANY KIND, WHETHER EXPRESS OR IMPLIED, 7 REGARDING ANY DEVICES, INCLUDING ANY IMPLIED WARRANTIES OF 8 MERCHANTABILITY.” Plaintiffs argue that there is no evidence about whether Plaintiffs had 9 actual or constructive notice of Google’s disclaimer and that, even if they did, the CAC adequately 10 pleads that Google’s disclaimer is unconscionable. Opp’n 27–29. Neither argument is persuasive. 11 United States District Court Northern District of California 2 First, Plaintiffs suggest that Google has not carried its burden of establishing that the 12 affirmative defense of disclaimer applies. Id. at 27–28. But Google’s submission of its Terms of 13 Sale demonstrates a valid disclaimer, and Plaintiffs have not identified any allegation in the CAC 14 that undercuts its application to this set of Plaintiffs. Under California law, a written disclaimer of 15 the implied warranty of merchantability must mention merchantability and be conspicuous. Cal. 16 Com. Code § 2316(2). Here, Google’s Terms of Sale disclaimed the implied warranty of 17 merchantability in accordance with California law because, under the bold heading “Defects; 18 Warranties; Disclaimer of Warranties,” the Terms provide in clear language and capitalized 19 formatting that Google “expressly disclaim[s] all warranties and conditions of any kind, whether 20 express or implied, regarding any devices, including any implied warranty of merchantability.” 21 The disclaimer is in all capital letters while the surrounding text is in lower case font of the same 22 size, and the disclaimer is one of only two places in the entirety of the Terms of Sale that uses 23 capitalized lettering. In these circumstances, the Court concludes that the disclaimer is 24 conspicuous. See Cal. Com. Code § 1201(10) (defining “conspicuous” as covering “[a] heading 25 . . . in contrasting type, font, or color to the surrounding text of the same or lesser size” and 26 “[l]anguage in the body of a record or display . . . in contrasting type, font, or color to the 27 surrounding text of the same size, or set off from surrounding text of the same size by symbols or 28 other marks that call attention to the language”). Courts in this district have found that very 59 1 similar disclaimers barred implied warranty claims. See Minkler v. Apple, Inc., 65 F. Supp. 3d 2 810, 819 (N.D. Cal. 2014) (barring an implied warranty claim based on Apple’s disclaimer of 3 “ALL STATUTORY AND IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION, 4 WARRANTIES OF MERCHANTABILITY”); In re Google Phone Litig., No. 10-CV-01177- 5 EJD, 2012 WL 3155571, at *8 (N.D. Cal. Aug. 2, 2012) (barring an implied warranty claim based 6 on Google’s disclaimer of “ALL WARRANTIES AND CONDITIONS OF ANY KIND, 7 WHETHER EXPRESS OR IMPLIED, REGARDING ANY DEVICES, INCLUDING ANY 8 IMPLIED WARRANTIES OF MERCHANTABILITY”). 9 Plaintiffs attempt to overcome this conclusion by challenging whether Plaintiffs had actual or constructive knowledge of Google’s disclaimer. Opp’n 27. Plaintiffs point out that a 11 United States District Court Northern District of California 10 disclaimer is valid only if “the buyer has knowledge or is chargeable with notice of the disclaimer 12 before the bargain is complete.” Burr, 268 P.2d at 1047. The problem is that Plaintiffs’ position 13 conflicts with the CAC’s allegations and the law. The CAC acknowledges the existence of 14 Google’s disclaimer and the manner in which it is presented. CAC ¶¶ 245 (“Fairness therefore 15 requires invalidating the disclaimer of the implied warranty of merchantability in Google’s form 16 document.”), 261 (alleging that “[a]ny disclaimer of implied warranties by Google was 17 unconscionable”). In this way, Plaintiffs’ allegations are consistent with Google’s submitted 18 evidence, which provides that customers had to click a button to complete their online purchases 19 and that, next to the button, there was language advising that customer that clicking indicated 20 acceptance of Google’s Terms of Sale. Gotuaco Decl. ¶ 3. Plaintiffs do not otherwise allege that 21 they did not see or understand the disclaimer. Thus, this case is unlike the one cited by Plaintiffs 22 where the allegations established that the plaintiff did not have a reasonable opportunity to view 23 the disclaimer prior to purchase. See Clark v. LG Elecs. U.S.A., Inc., No. 13-CV-00485-JM, 2013 24 WL 5816410, at *13 (S.D. Cal. Oct. 29, 2013) (“Based on Plaintiff’s allegations, there would have 25 been no way for Plaintiff to have noticed the disclaimer prior to receiving the product manual 26 when the refrigerator was delivered.”). 27 28 Second, Plaintiffs contend that, even if the disclaimer is binding, the CAC adequately pleads that the disclaimer is unconscionable. As explained earlier, under California law, a contract 60 1 provision is “unconscionable, and therefore unenforceable, only if it is both procedurally and 2 substantively unconscionable.” In re iPhone, 2011 WL 4403963, at *7 (citing Armendariz, 6 P.3d 3 at 690). The procedural element focuses on oppression and surprise, while the substantive element 4 examines whether the terms of the agreement are so overly harsh or one-sided as to shock the 5 conscience. Aron, 49 Cal. Rptr. 3d at 564. 6 Plaintiffs’ procedural unconscionability argument is, at best, weak. They contend that the 7 disclaimer is unconscionable because Google and its customers are in an unequal bargaining 8 position and because Google had “exclusive knowledge of the Defects and true quality of the 9 Phones.” CAC ¶ 261. On the latter point, the Court has already concluded that Plaintiffs’ allegations are insufficient. That conclusion significantly weakens the former point that Google 11 United States District Court Northern District of California 10 had superior bargaining power. See In re Sony Grand Wega, 758 F. Supp. 2d at 1101 (rejecting 12 argument that defendant had superior bargaining power where plaintiffs had not sufficiently 13 alleged that the defendant knew of the defect before the point of sale). Even if the terms of the 14 disclaimer are non-negotiable, Plaintiffs do not plead that they had no meaningful alternatives; 15 they could have purchased other phones or obtained an additional warranty from Google. 16 Davidson, 2017 WL 976048, at *12. Moreover, the CAC does not allege that Plaintiffs were 17 “surprised” by the disclaimer’s terms or that they could not or did not access Google’s Terms of 18 Sale online at the time of purchase. See id. 19 Plaintiffs make no further allegations to support their claim of substantive 20 unconscionability. Plaintiffs repeat and reemphasize that Google knew of and concealed the 21 defects at the time that it sold the Nexus 6Ps. Opp’n 28–29; CAC ¶ 245 (“Google knowingly sold 22 a defective product without disclosing the Defects, while affirmatively misrepresenting purported 23 attributes of the product that were important to consumer purchasers.”). Again, Plaintiffs’ 24 allegations are insufficient to establish that conclusion. In their opposition, Plaintiffs also slightly 25 change course from their complaint, asserting that a disclaimer may be substantively 26 unconscionable any time a product is unfit for its intended use. Opp’n 29 (citing the statement in 27 Clark, 2013 WL 5816410, at *13, that the “inability to use the LG refrigerator for its intended 28 purpose suggests that substantive unconscionability may exist”). That reading of the law seems 61 1 somewhat odd, as it works to invalidate a disclaimer of the implied warranty whenever the 2 underlying implied warranty claim appears viable. In any event, Plaintiffs’ allegations are 3 insufficient to show that Google’s disclaimer “create[s] overly harsh or one-sided results as to 4 shock the conscience,” and thus Plaintiffs have not established substantive unconscionability. 5 Aron, 49 Cal. Rptr. 3d at 564 (internal quotation marks and citation omitted). 6 Based on the allegations in the CAC, Google’s disclaimer is not unconscionable, and the disclaimer is enforceable. Accordingly, Plaintiffs have not stated a claim for breach of the implied 8 warranty of merchantability for express warranty for Plaintiffs Gorbatchev, Martorello, Tran, 9 Berry, Jones, and Leone. The Court GRANTS Google’s Motion to Dismiss the implied warranty 10 claim of Plaintiffs Gorbatchev, Martorello, Tran, Berry, Jones, and Leone with leave to amend to 11 United States District Court Northern District of California 7 allege further facts in support of Plaintiffs’ lack of notice and unconscionability arguments. (2) 12 13 Privity For the remaining Plaintiffs who did not purchase from Google—namely, Plaintiffs 14 Makcharoenwoodhi, Christensen, Beheler, Davydov, Harrison, Himes, Servodio, Poore, and 15 Johnston, CAC ¶¶ 12, 28, 58, 79, 91, 99, 119, 142, 153—Google argues that their claims must be 16 dismissed for failure to plead privity. Google Mot. 11–13. Even for the states that do not require 17 a strict showing of privity, Google draws on the common-sense notion that, because an implied 18 warranty of merchantability is “implied in a contract for the[] sale [of goods] if the seller is a 19 merchant with respect to goods of that kind,” UCC § 2-314(1), a defendant cannot be liable unless 20 it has sold the goods in question. Google Mot. 11. Plaintiffs’ central response is that Plaintiffs’ 21 claims may be sustained under the third-party beneficiary exception to the privity requirement. 22 Opp’n 31–33. 23 Most of the relevant states require privity of contract to state a claim for breach of the 24 implied warranty of merchantability. See, e.g., Clemens, 534 F.3d at 1024; Curl v. Volkswagen of 25 Am., Inc., 871 N.E.2d 1141, 1147 (Ohio 2007); Tex Enters., Inc. v. Brockway Standard, Inc., 66 26 P.3d 625, 630 (Wash. 2003). And Google is correct that Plaintiffs’ blanket assertion that 27 “Plaintiffs and Class members were in privity of contract with . . . Google by virtue of their 28 interactions with . . . Google,” CAC ¶ 242, is not plausible when some of the relevant Plaintiffs are 62 1 not alleged to have had any interactions with Google. See, e.g., id. ¶¶ 12–18 (alleging that 2 Plaintiff Makcharoenwoodhi contacted Huawei but not Google), 90–98 (alleging that Plaintiff 3 Harrison contacted Huawei but not Google). 4 Even for the states that have abandoned the privity requirement for implied warranty 5 claims, see, e.g., Pack, 434 F.3d at 820 (Michigan); Goodin, 822 N.E.2d at 959 (Indiana), Google 6 notes that the defendants in those cases had sold the products at some point in the distribution 7 chain, see, e.g., Gared Holdings, LLC v. Best Bolt Prod., Inc., 991 N.E.2d 1005, 1016 (Ind. Ct. 8 App. 2013) (emphasizing that the defendant had made multiple sales and was willing to sell to 9 prospective buyers). The requirement that the defendant has sold the product at issue flows naturally from the statutory language, which provides that an implied warranty of merchantability 11 United States District Court Northern District of California 10 claim arises in a contract for the sale of goods by a merchant seller of those goods. See UCC § 2- 12 314(1); see also Ind. Code Ann. § 26-1-2-314(1) (same); Mich. Comp. Laws Ann. § 440.2314(1) 13 (same). The CAC does not satisfy this requirement because it nowhere provides that Google sold 14 the Nexus 6Ps to the retailers from whom Plaintiffs purchased. Although the CAC states that 15 “Defendants sell the Phones . . . through authorized retailers, including Newegg and Best Buy,” 16 CAC ¶ 168, it fails to distinguish between Google and Huawei. Indeed, without more factual 17 detail, it would be implausible to conclude that both Google and Huawei sold the same physical 18 phones through retailers. See Garcia v. M-F Athletic Co., No. 11-CV-02430-WBS, 2012 WL 19 531008, at *2 (E.D. Cal. Feb. 17, 2012) (“It seems, however, implausible if not impossible that all 20 three defendants sold plaintiff the [product].”). 21 Plaintiffs attempt to steer around these roadblocks by resort to the third-party beneficiary 22 exception to the privity requirement. CAC ¶ 242; Opp’n 31–33. As noted above, the third-party 23 beneficiary exception allows a plaintiff to enforce a contract made expressly for his or her benefit. 24 See Cal. Civ. Code § 1559. Nevertheless, the plaintiff must identify and plead a contract between 25 the defendant and a third party which was expressly made for the benefit of the plaintiff. See 26 Schauer, 23 Cal. Rptr. 3d at 239; Cartwright v. Viking Indus., Inc., 249 F.R.D. 351, 356 (E.D. Cal. 27 2008). Plaintiffs have failed to do so here. 28 Plaintiffs identify no agreement that Google has entered into for Plaintiffs’ benefit. 63 1 Specifically, Plaintiffs plead that they “are the intended third-party beneficiaries of the implied 2 warranties and other contracts between Defendants and the retailers who sell the Phones.” CAC 3 ¶ 242. Even shelving the ever-persisting issue of lumping Google with Huawei, Plaintiffs do not 4 plead that Google had contracts to sell the Nexus 6P to retailers, such as Best Buy, Newegg, and 5 Amazon. The sole agreement that Plaintiffs identify is Huawei’s Limited Warranty. Opp’n 33. 6 But Plaintiffs cannot use that warranty to bootstrap Google’s liability without an accompanying 7 allegation that Huawei’s Limited Warranty was an agreement with Google to benefit customers. 8 Because Plaintiffs have not done so, they have not pleaded sufficient facts to make use of the 9 third-party beneficiary exception. 10 Accordingly, the Court GRANTS Google’s Motion to dismiss the implied warranty of United States District Court Northern District of California 11 merchantability claims of Plaintiffs Makcharoenwoodhi, Christensen, Beheler, Davydov, 12 Harrison, Himes, Servodio, Poore, and Johnston with leave to amend to allege further facts about a 13 privity relationship or an agreement between Google and a third-party that is intended for the 14 benefit of these Plaintiffs. 15 iii. Song–Beverly Consumer Warranty Act 16 The California Plaintiffs assert a cause of action under the Song–Beverly Act, Cal. Civ. 17 Code §§ 1791.1, 1792, on behalf of the California subclass. CAC ¶¶ 284–96. As to individual 18 Plaintiffs, Google asserts that Plaintiffs Makcharoenwoodhi and Christensen’s claims should be 19 dismissed because they did not purchase their phones from Google and that Plaintiff Gorbatchev’s 20 claim should be dismissed because he has not plausibly alleged unmerchantability. Google Mot. 21 13. Google also puts forward a basis on which the claim should be dismissed that applies to all 22 three California Plaintiffs—namely, that Plaintiffs do not allege that they purchased their phones 23 in California. Id. The Court marches through each of these three arguments. 24 (1) 25 Manufacturer or Retail Seller Google first contends that Plaintiffs Makcharoenwoodhi and Christensen’s claims fail 26 because they did not purchase from Google. The Song–Beverly Act generates an implied 27 warranty of merchantability by manufacturers and retail sellers. Cal. Civ. Code § 1792. Google 28 argues that the CAC does not establish that Google counts as either a manufacturer or retail seller 64 1 of the Nexus 6P as to Plaintiffs Makcharoenwoodhi and Christensen. Google Mot. 13–14. Based on the CAC’s present allegations, Google is neither a “manufacturer” nor a “retail 3 seller” with respect to Plaintiffs Makcharoenwoodhi and Christensen. A “manufacturer” is “any 4 individual, partnership, corporation, association, or other legal relationship that manufactures, 5 assembles, or produces consumer goods.” Cal. Civ. Code § 1791(j). At multiple places in the 6 CAC (including the section asserting the Song–Beverly Act claim), the CAC labels Huawei as the 7 “manufacturer” of the Nexus 6P. See CAC ¶¶ 165 (stating that “Huawei manufactured the 8 device”), 288 (“Huawei is a ‘manufacturer’ of the Nexus 6P smartphones within the meaning of 9 Cal. Civ. Code § 1791(j).”). The CAC does not make any such allegations as to Google and does 10 not otherwise state that Google “manufactures, assembles, or produces” the Nexus 6P. Plaintiffs 11 United States District Court Northern District of California 2 cannot shoehorn Google into the “manufacturer” definition merely by pointing out that Google 12 and Huawei “collaborat[ed]” to create the Nexus 6P, especially when the allegation explicitly 13 singles out Huawei as the entity that “manufactured” the phone. Id. ¶ 165. 14 Nor does the CAC provide that Google is a “retail seller” as to Plaintiffs 15 Makcharoenwoodhi and Christensen. A “retail seller” is “any individual, partnership, corporation, 16 association, or other legal relationship that engages in the business of selling or leasing consumer 17 goods to retail buyers.” Cal. Civ. Code § 1791(l). The California courts have interpreted “retail” 18 as “to sell in small quantities directly to the ultimate consumer.” Dagher v. Ford Motor Co., 190 19 Cal. Rptr. 3d 261, 269 (Ct. App. 2015) (citation omitted). Although Google and Huawei both 20 generally “market and distribute the Phones” and specifically “sell the Phones to consumers 21 directly as well as through authorized retailers,” CAC ¶¶ 165, 168, Google did not sell the Nexus 22 6P to the end consumers at issue here. Rather, Plaintiff Makcharoenwoodhi bought from Best 23 Buy, and Plaintiff Christensen bought from Huawei. Id. ¶¶ 12, 28. Plaintiffs make no other 24 arguments for why Google falls under the definition of “retail seller.” 25 Accordingly, the Court GRANTS Google’s Motion to Dismiss the Song–Beverly Act 26 claims of Plaintiffs Makcharoenwoodhi and Christensen with leave to amend to allege further 27 facts about whether Google qualifies as a “manufacturer” or “retail seller.” 28 65 (2) 1 2 Merchantability Google next challenges the sufficiency of the allegations as to the unmerchantability of 3 Plaintiff Gorbatchev’s Nexus 6P. Google Mot. 14. The implied warranty of merchantability 4 guarantees that the goods meet “a minimum level of quality.” Am. Suzuki, 44 Cal. Rptr. 2d at 529 5 (citation omitted). The key inquiry is whether the goods are “fit[] for the ordinary purpose for 6 which such goods are used.” Mexia, 95 Cal. Rptr. 3d at 289 (citation omitted). Under that test, an 7 alleged defect must constitute more than an inconvenience; the defect must be “so fundamental as 8 to render the product unfit for its ordinary purpose.” In re Carrier IQ, 78 F. Supp. 3d at 1108; see 9 also Mocek v. Alfa Leisure, Inc., 7 Cal. Rptr. 3d 546, 549 (Ct. App. 2003) (“[A] breach of the implied warranty of merchantability means the product did not possess even the most basic degree 11 United States District Court Northern District of California 10 of fitness for ordinary use.”). 12 The allegations with respect to Plaintiff Gorbatchev’s Nexus 6P meet these requirements. 13 The CAC first alleges that “[d]uring his first few months of owning the Phone, [Plaintiff] 14 Gorbatchev regularly experienced incidents in which it would suddenly shut down and restart 15 without warning, sometimes on a daily basis.” CAC ¶ 20. The CAC then goes on to say that, on 16 March 17, 2017, Plaintiff Gorbatchev’s phone exhibited the Bootloop Defect. While Plaintiff 17 Gorbatchev was trying to call an Uber, his phone froze and restarted, then cycled through this 18 process for the rest of the day without ever proceeding beyond the Google logo screen. Id. ¶ 21. 19 As the CAC explains, Plaintiff “Gorbatchev’s Phone never proceeded past the Google logo screen 20 again.” Id. ¶ 24. These circumstances clearly demonstrate that Plaintiff Gorbatchev’s Nexus 6P 21 was unfit for ordinary use. After the Bootloop Defect manifested, Plaintiff Gorbatchev could not 22 use any of the basic functions of his phone, such as placing calls, sending texts, or using apps. Id. 23 ¶ 175. Accordingly, failure to plead unmerchantability is not an appropriate basis on which to 24 dismiss the express warranty claim of Plaintiff Gorbatchev. 25 26 (3) Location of Purchases As discussed above with respect to Huawei, the California Plaintiffs’ Song–Beverly Act 27 claim must be dismissed because Plaintiffs have failed to allege the necessary element of whether 28 the phone purchases took place in California. Accordingly, the Court GRANTS Google’s Motion 66 1 to Dismiss the Song–Beverly Act claim with leave to amend to assert where the phone purchases 2 took place. iv. 3 4 Magnuson–Moss Warranty Act Plaintiffs’ third cause of action alleges violations of the Magnuson–Moss Warranty Act, 15 5 U.S.C. § 2301 et seq., presumably on behalf of the nationwide class. CAC ¶¶ 249–67. With one 6 caveat, the parties agree that, in this case, “the claims under the Magnuson–Moss Act stand or fall 7 with [the] express and implied warranty claims under state law.” Clemens, 534 F.3d at 1022. As 8 for the caveat, Plaintiffs contend that where a state-law breach of implied warranty claim 9 insufficiently alleges privity, an implied warranty claim under the Magnuson–Moss Warranty Act may proceed if there is an express warranty. Opp’n 35. However, Plaintiffs’ cited authority is 11 United States District Court Northern District of California 10 inapplicable because Plaintiffs have not alleged that Google issued a written warranty that 12 complies with the requirements of the Magnuson–Moss Warranty Act. See Szajna v. Gen. Motors 13 Corp., 503 N.E.2d 760, 769 (Ill. 1986) (“In cases where no Magnuson–Moss written warranty has 14 been given, Magnuson–Moss has no effect upon State-law privity requirements . . . .”). Therefore, 15 in this case, Plaintiffs’ claims under the Magnuson–Moss Warranty Act survive only if the 16 underlying state-law express or implied warranty claims do. 17 The Court has dismissed all of the express and implied warranty claims against Google. 18 Accordingly, the Court GRANTS Google’s Motion to Dismiss the Magnuson–Moss Warranty Act 19 claims of all Plaintiffs with leave to amend. 20 21 c. Fraud and Deceptive Practices Claims Plaintiffs assert a common-law claim for deceit and fraudulent concealment and fraud 22 claims under various state statutes. The Court first addresses the common-law claim, then 23 analyzes each of the remaining state statutory claims. 24 25 i. Deceit and Fraudulent Concealment Plaintiffs assert a cause of action for deceit and fraudulent concealment on behalf of each 26 of the twelve statewide subclasses. CAC ¶ 269. As reflected both in the CAC and Plaintiffs’ 27 opposition, every state-law claim is premised on the allegation that Google “concealed and 28 suppressed material facts” regarding the Nexus 6P because Google “knew (or in the exercise of 67 1 reasonable diligence should have known) of the Defects, but failed to disclose them prior to or at 2 the time [it] marketed Phones and sold them to consumers.” Id. ¶ 270; Opp’n 50. For the reasons 3 already stated, the CAC does not sufficiently plead that Google had knowledge of the Bootloop or 4 Battery Drain Defect at the time that Plaintiffs acquired their Nexus 6Ps. Accordingly, the Court 5 GRANTS Google’s Motion to Dismiss the deceit and fraudulent concealment claims with leave to 6 amend to allege further facts in support of Google’s knowledge. ii. 7 8 California Consumers Legal Remedies Act The California Plaintiffs bring a claim under the CLRA, Cal. Civ. Code § 1780, on behalf of the California subclass. CAC ¶ 310. Google seeks dismissal on a procedural ground—namely, 10 the failure to submit the affidavit under § 1780(d)—and on substantive grounds—namely, failure 11 United States District Court Northern District of California 9 to state a claim. Google Mot. 15–18. The Court addresses these grounds in turn. (1) 12 13 Procedural Ground Courts must dismiss without prejudice CLRA claims that are unaccompanied by “an 14 affidavit stating facts showing that the action has been commenced in a county described in this 15 section as a proper place for the trial of the action.” Cal. Civ. Code § 1780(d). As noted above, 16 this Court requires the submission of such an affidavit. See Romero, 2015 WL 2125004, at *8. 17 Because Plaintiffs concede that no CLRA affidavit has been filed, Opp’n 50, the Court GRANTS 18 Google’s Motion to Dismiss Plaintiffs’ CLRA claim with leave to file the necessary CLRA 19 affidavit. 20 21 (2) Substantive Grounds The CLRA proscribes “unfair methods of competition and unfair or deceptive acts or 22 practices undertaken by any person in a transaction intended to result or that results in the sale . . . 23 of goods or services to any consumer.” Cal. Civ. Code § 1770(a). The CAC advances two 24 distinct theories for Google’s liability under that section. First, the CAC charges that Google 25 committed fraud by omission because it had a duty to disclose its knowledge of the defects. CAC 26 ¶¶ 318–19. Second, the CAC avows that Google affirmatively misrepresented the qualities of the 27 Nexus 6P despite knowing of the defects. Id. ¶¶ 321–22. Both theories depend on Google’s 28 awareness of the defects at the time of sale, which Plaintiffs have not adequately pled. 68 1 Accordingly, the Court GRANTS Google’s Motion to Dismiss Plaintiffs’ CLRA with leave to 2 amend to allege further facts about Google’s knowledge of the defects. 3 4 The Court also briefly addresses Google’s other arguments that neither the fraudulent omissions theory nor the affirmative misrepresentation theory is well-pled. Google Mot. 16–17. (a) 5 6 Fraudulent Omissions Plaintiffs’ fraudulent omissions theory avers that “Defendants had a duty to disclose the Defects because Huawei and Google had exclusive knowledge of the Defects prior to making sales 8 of Phones and because Defendants made partial representations about the quality of the Phones, 9 but failed to fully disclose the Defects.” CAC ¶ 319. As the Court noted earlier, “[t]o state a 10 claim for failing to disclose a defect, a party must allege . . . the existence of an unreasonable 11 United States District Court Northern District of California 7 safety hazard.” Williams, 851 F.3d at 1025. Plaintiffs do not offer unreasonable-safety-hazard 12 allegations specific to Google that go beyond those alleged as to Huawei. For the same reasons 13 stated with respect to Huawei, Plaintiffs’ allegations are insufficient as to Google. Accordingly, 14 the Court GRANTS Google’s Motion to Dismiss Plaintiffs’ CLRA claim to the extent it is 15 predicated on a fraudulent omissions theory with leave to amend to allege whether the defects 16 pose an unreasonable safety hazard. 17 18 (b) Affirmative Misrepresentation Plaintiffs’ affirmative misrepresentation theory avers that Google made false statements 19 about the Nexus 6P even though Google was aware that the phones were suffering from the 20 Bootloop and Battery Drain Defects. CAC ¶ 322. Plaintiffs point to the same three statements 21 that the Court analyzed above for Plaintiffs’ express warranty claims—namely, the “get up to 22 seven hours” statement, the “keeps you talking, texting and apping” statement, and the “keeps you 23 going” statement. Id. ¶ 321. Although Google asserts that these three statements are not 24 actionable, Google Mot. 16, the standard under the CLRA is identical to the standard for an 25 express warranty. See Azoulai, 2017 WL 1354781, at *8 (analyzing CLRA and express warranty 26 claims together). Thus, the Court’s determination that the “get up to seven hours” statement is 27 adequately specific and measurable holds here. 28 Google’s meatier—and ultimately meritorious—challenge is that Plaintiffs fail to 69 sufficiently allege that they relied on Google’s misrepresentation. Under the CLRA, a plaintiff 2 must allege that he relied on the defendant’s alleged misrepresentations and that he suffered injury 3 as a result. See Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d 777, 794 (9th Cir. 2012) 4 (“[C]onsumers seeking to recover damages under the CLRA based on a fraud theory must prove 5 ‘actual reliance on the misrepresentation and harm.’” (citation omitted)); Durell v. Sharp 6 Healthcare, 108 Cal. Rptr. 3d 682, 697 (Ct. App. 2010) (concluding that complaint was properly 7 dismissed where plaintiff did not allege that he “relied on any representation by” the defendant). 8 Furthermore, when CLRA claims are premised on misleading advertising statements, the pleading 9 standard in Federal Rule of Civil Procedure 9(b) governs and requires the plaintiff to allege “the 10 particular circumstances surrounding [the] representations.” Kearns v. Ford Motor Co., 567 F.3d 11 United States District Court Northern District of California 1 1120, 1126 (9th Cir. 2009). In other words, the plaintiff must “specify which statements the 12 plaintiff actually saw and relied upon.” In re Arris Cable Modem Consumer Litig., No. 17-CV- 13 01834-LHK, 2018 WL 288085, at *8 (N.D. Cal. Jan. 4, 2018). 14 Plaintiffs do not come close to fulfilling that high burden here. The CAC does not allege 15 that any of the California Plaintiffs saw any advertising about the Nexus 6P at all, let alone that 16 they saw and relied upon Google’s “get up to seven hours” statement. CAC ¶¶ 12–37. Generally, 17 Rule 9(b) requires that a plaintiff plead “an account of the time, place, and specific content of the 18 false representations as well as the identities of the parties to the misrepresentations.” Swartz v. 19 KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (internal quotation marks and citation omitted); 20 Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (“Averments of fraud must 21 be accompanied by ‘the who, what, when, where, and how’ of the misconduct charged.” (citation 22 omitted)). Plaintiffs must provide that level of detail. Accordingly, the Court GRANTS Google’s 23 Motion to Dismiss Plaintiffs’ CLRA claim to the extent it is predicated on an affirmative 24 misrepresentation theory with leave to amend to allege which of Google’s statements Plaintiffs 25 actually saw and relied upon. 26 27 28 iii. California Unfair Competition & False Advertising Laws The California Plaintiffs assert claims under the UCL, Cal. Bus. & Prof. Code § 17200 et seq., and under the FAL, Cal. Bus. & Prof. Code § 17500 et seq., on behalf of the California 70 1 subclass. CAC ¶¶ 298, 333. Google first contends that Plaintiffs cannot sustain either the UCL or 2 FAL claim because they have not shown entitlement to equitable relief. Google Mot. 20–21. 3 Google then makes arguments specific to the UCL and FAL claims. Id. at 21–24. The Court first 4 examines Google’s contention that applies to both the UCL and FAL claims, then considers the 5 arguments about each individual claim. (1) 6 7 Entitlement to Equitable Relief The only forms of relief that a private individual may pursue under the UCL and FAL are 8 the equitable remedies of restitution and injunctive relief. Korea Supply Co., 63 P.3d at 943 9 (UCL); Chern v. Bank of Am., 544 P.2d 1310, 1315 (Cal. 1976) (FAL). Google presses three arguments that Plaintiffs have not adequately pled entitlement to these equitable remedies. First, 11 United States District Court Northern District of California 10 Google argues that none of the California Plaintiffs has standing to seek injunctive relief. Google 12 Mot. 21. Second, Google argues that Plaintiffs Makcharoenwoodhi and Christensen have not 13 adequately pled entitlement to restitution. Id. Third, Google argues that Plaintiffs have not shown 14 that there is no adequate remedy at law available. Id. at 20. The Court proceeds through each of 15 these arguments. 16 (a) Standing to Seek Injunctive Relief 17 Google challenges the California Plaintiffs’ Article III standing to seek injunctive relief. 18 Google Mot. 21. After briefing on Google’s Motion to Dismiss was complete, the Ninth Circuit 19 issued a decision bearing on the question. In Davidson v. Kimberly-Clark Corp., 873 F.3d 1103, 20 1107 (9th Cir. 2017), the defendants marketed and sold pre-moistened wipes as suitable for 21 flushing down a toilet, but the plaintiff discovered that the products were not truly “flushable.” 22 The plaintiff brought UCL and FAL claims, which sought both restitution and an injunction. Id. at 23 1108. The district court dismissed the claims for injunctive relief, finding that the plaintiff lacked 24 standing because she was unlikely to purchase the wipes in the future. Id. at 1109. 25 The Ninth Circuit reversed. The court resolved the open question whether a “previously 26 deceived consumer who brings a false advertising claim can allege that her inability to rely on the 27 advertising in the future is an injury sufficient to grant her Article III standing to seek injunctive 28 relief.” Id. at 1113. Specifically, the court held that consumers can have standing to pursue 71 1 2 3 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 injunctive relief in at least two circumstances: In some cases, the threat of future harm may be the consumer’s plausible allegations that she will be unable to rely on the product’s advertising or labeling in the future, and so will not purchase the product although she would like to. In other cases, the threat of future harm may be the consumer’s plausible allegations that she might purchase the product in the future, despite the fact it was once marred by false advertising or labeling, as she may reasonably, but incorrectly, assume the product was improved. Id. at 1115. Under those standards, the court deemed sufficient the plaintiff’s allegations that she wanted to purchase the defendants’ flushable wipes in the future but that she could not rely on the defendants’ representation with any confidence. Id. at 1116. Without the benefit of the Ninth Circuit’s guidance in Davidson, it will come as no surprise that Plaintiffs’ allegations are deficient. The CAC does not fit either of the two scenarios countenanced by the Ninth Circuit because there is no pleading that the California Plaintiffs would like to purchase in the future but cannot trust Google’s advertising or that the California Plaintiffs might purchase in the future on the belief that the product has been improved. See CAC ¶¶ 12–37, 297–308, 332–39. Plaintiffs’ opposition even concedes that their allegations are lacking on the latter point. Opp’n 49. Because Davidson was unavailable at the time that Plaintiffs were drafting their CAC and writing their opposition, they also have not presented any other theory about how they “suffer[ed] an ‘actual and imminent, not conjectural or hypothetical’ threat of future harm.” 873 F.3d at 1115 (quoting Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009)). In their amended allegations, Plaintiffs will have the opportunity to make that showing. Accordingly, the Court GRANTS Google’s Motion to Dismiss the California Plaintiffs’ claims for injunctive relief with leave to amend to allege further facts about Plaintiffs’ nonspeculative threat of future harm. (b) Entitlement to Restitution Google contends that Plaintiffs Makcharoenwoodhi and Christensen, who did not purchase from Google, have not adequately pled entitlement to restitution because the CAC does not allege that money or property in which they have a vested interest is in Google’s possession. Google Mot. 21. “[I]n appropriate circumstances, the plaintiff in a UCL action may obtain restitution 72 1 from a defendant with whom the plaintiff did not deal directly.” Shersher v. Superior Court, 65 2 Cal. Rptr. 3d 634, 640 (Ct. App. 2007); see also Cty. of Solano v. Vallejo Redevelopment Agency, 3 90 Cal. Rptr. 2d 41, 52 (Ct. App. 1999) (“For a benefit to be conferred, it is not essential that 4 money be paid directly to the recipient by the party seeking restitution.”). Nevertheless, in order 5 to recover from a defendant from whom the plaintiff did not purchase, the plaintiff must trace his 6 money or property to money or property within the defendant’s possession. See Shersher, 65 Cal. 7 Rptr. 3d at 641 (concluding that plaintiff who purchased product from defendant’s retailer 8 adequately alleged entitlement to restitution because defendant indirectly acquired plaintiff’s 9 money); Cheverez v. Plains All Am. Pipeline, LP, No. 15-CV-04113-PSG, 2016 WL 4771883, at 10 United States District Court Northern District of California 11 *3 (C.D. Cal. Mar. 4, 2016). These standards compel dismissal of Plaintiffs Makcharoenwoodhi and Christensen’s 12 claims for restitution. The allegations as to Plaintiff Christensen clearly fall flat. The CAC 13 alleges that Plaintiff Christensen purchased his Nexus 6P directly from Huawei. CAC ¶ 28. The 14 CAC makes no further effort to identify how that money came into Google’s possession as a result 15 of Plaintiff Christensen’s purchase. The allegations as to Plaintiff Makcharoenwoodhi come 16 closer but do not warrant a different conclusion. According to the CAC, Plaintiff 17 Makcharoenwoodhi purchased his Nexus 6P from Best Buy. Id. ¶ 12. Google is alleged to have a 18 connection with Best Buy, as the CAC states that “Defendants sell the Phones to consumers . . . 19 through authorized retailers, including . . . Best Buy.” Id. ¶ 168. While it may be plausible to 20 infer that a plaintiff’s money ends up in the defendant’s possession when the plaintiff buys the 21 defendant’s product from the defendant’s retailer, see Shersher, 65 Cal. Rptr. 3d at 641, the waters 22 are more muddied here. In particular, by treating Google and Huawei as a single unit without 23 otherwise identifying Google’s relationship with Best Buy, the CAC obscures the relevant actor. 24 In these circumstances, it is equally plausible that Plaintiff Makcharoenwoodhi’s money is in 25 Huawei’s possession, not Google’s. Thus, neither Plaintiff Makcharoenwoodhi nor Plaintiff 26 Christensen has adequately pled entitlement to restitution. 27 28 Accordingly, the Court GRANTS Google’s Motion to Dismiss Plaintiffs Makcharoenwoodhi and Christensen’s claims for restitution with leave to amend to allege further 73 1 2 3 facts about how their money came into Google’s possession. (c) Adequate Remedy at Law Google’s final, and broadest, contention is that Plaintiffs cannot seek equitable remedies 4 because they have available an adequate remedy at law—namely, compensatory damages for the 5 same alleged conduct. Google Mot. 20. Of course, it is axiomatic that a plaintiff seeking 6 equitable relief must establish that he has no adequate legal remedy. Philpott v. Superior Court, 7 36 P.2d 635, 638 (Cal. 1934); Prudential Home Mortg. Co. v. Superior Court, 78 Cal. Rptr. 2d 8 566, 573 (Ct. App. 1998) (applying these fundamental equitable principles in the context of a UCL 9 claim). Although the California Plaintiffs’ claims for equitable relief are not necessarily doomed 10 United States District Court Northern District of California 11 to fail, the Court concludes that dismissal is proper at this juncture. In addition to retrospective relief for injuries already suffered, Plaintiffs seek to “enjoin 12 [Google] from continuing [its] unfair, unlawful, and fraudulent practices.” CAC ¶ 308. That 13 injunctive relief is asserted on behalf of the class and, if granted, would accrue to the benefit of the 14 public at large. See id. ¶¶ 208(h) (requesting injunctive relief for Plaintiffs and class members), 15 212 (“Defendants have acted or refused to act on grounds generally applicable to Plaintiffs and 16 Class members, making final injunctive relief . . . appropriate with respect to the Class as a 17 whole.”). In this way, the injunctive relief could provide a remedy above and beyond a legal 18 award of damages. See Cal. Bus. & Prof. Code §§ 17203 (allowing plaintiff to pursue 19 representative claims for injunctive relief on behalf of similarly situated individuals), 17205 20 (noting that UCL remedies “are cumulative . . . to the remedies or penalties available under all 21 other laws of this state”). However, a plaintiff cannot seek injunctive relief on behalf of the public 22 unless he is individually entitled to such relief. See Hodgers-Durgin v. de la Vina, 199 F.3d 1037, 23 1045 (9th Cir. 1999) (en banc) (“Unless the named plaintiffs are themselves entitled to seek 24 injunctive relief, they may not represent a class seeking that relief.”); Rhynes v. Stryker Corp., No. 25 10-CV-05619-SC, 2011 WL 2149095, at *4 (N.D. Cal. May 31, 2011). Because the Court has 26 presently determined that the California Plaintiffs have not adequately pled standing to seek 27 injunctive relief, their prayer for injunctive relief on behalf of the entire class must also fail. 28 Accordingly, the Court the Court GRANTS Google’s Motion to Dismiss the California 74 1 Plaintiffs’ UCL and FAL claims with leave to amend to allege further facts about Plaintiffs’ 2 standing to seek injunctive relief. (2) 3 4 UCL Having considered the arguments applicable to both the UCL and FAL claims, the Court 5 next addresses the UCL claim. As noted above, the UCL provides three distinct grounds for 6 liability: a business practice cannot be (1) unlawful, (2) unfair, or (3) fraudulent. See Cal. Bus. & 7 Prof. Code § 17200; Pastoria, 6 Cal. Rptr. 3d at 153. Plaintiffs contend that Google’s conduct has 8 violated all three prongs. CAC ¶¶ 300–01, 303. Google, however, argues that the CAC does not 9 adequately allege that its conduct was unlawful, unfair, or fraudulent. Google Mot. 21–24. (a) 10 United States District Court Northern District of California 11 Unlawful Business Act or Practice Plaintiffs predicate their claim under the “unlawful” prong on Google’s alleged violations 12 of the Magnuson–Moss Warranty Act, the Song–Beverly Act, the CLRA, and the FAL and on 13 Google’s breach of express and implied warranty, fraudulent concealment, and unjust enrichment. 14 CAC ¶ 300. The UCL “borrows violations of other laws and treats them as unlawful practices that 15 the unfair competition law makes independently actionable.” Wilson, 668 F.3d at 1140 (quoting 16 Cel-Tech Commc’ns, 973 P.2d at 539–40). Because the Court concludes that the California 17 Plaintiffs have not stated a claim against Google under any of these statutes or causes of action, 18 they have not stated a claim against Google for violation of the UCL “unlawful” prong. 19 Accordingly, the Court GRANTS Google’s Motion to Dismiss Plaintiffs’ UCL claim under the 20 unlawful prong with leave to amend. 21 (b) Unfair Business Act or Practice 22 The “unfair” prong of the UCL creates a cause of action that is not limited to business 23 practices that are proscribed by some other law. Korea Supply Co., 63 P.3d at 943. As noted 24 above, courts have not coalesced around one test for measuring what is “unfair” under the UCL. 25 Lozano, 504 F.3d at 735–36. Plaintiffs advocate for the South Bay balancing test or the FTC Act 26 section 5 test. Opp’n 39. Google contends that Plaintiffs’ claim fails under either test. Google 27 Mot. 22; see also Google Reply 14 (“[N]one of the five acts [California] Plaintiffs identify as the 28 basis for the ‘unfair’ claim in the CAC are ‘unfair’ under either the FTC Act Section 5 test or the 75 1 balancing test . . . .”). Like with Huawei, Plaintiffs’ allegation that Google has engaged in a “practice of selling 2 3 defective phones without providing an adequate remedy to cure the Defects,” CAC ¶ 302, fails 4 under any test. Plaintiffs point to five aspects of “Defendants” Google and Huawei’s conduct: (1) 5 knowingly sold defective phones, (2) refused to repair or replace phones when the defects 6 manifested outside the warranty period, (3) avoided providing warranty service by blaming minor 7 cosmetic issues, (4) had long wait periods on warranty claims, and (5) provided replacement 8 phones that were also defective. Id. ¶ 301. Again, due to the melding of Google and Huawei 9 under the heading of “Defendants,” the Court must strive to unravel which actions the CAC 10 attributes solely to Google.10 United States District Court Northern District of California 11 For the same reasons discussed with respect to Huawei, grounds (1) and (2)—alleging 12 knowledge of the defects and unwillingness to fix out-of-warranty phones—are unsustainable. 13 Ground (3) is even weaker with respect to Google. No California Plaintiff alleges that Google 14 denied warranty coverage by pointing to cosmetic damage. CAC ¶¶ 12–37. Although 15 Pennsylvania Plaintiff Leone pleads that Google rejected warranty coverage based on “screen 16 scratches, dents in the metal frame, [and] cracked rear glass,” id. ¶¶ 133–34, that allegation—even 17 if relevant for a California claim under California law—does not show that Google’s practice was 18 to turn down warranty coverage on these grounds. Ground (4) is inapplicable to Google because 19 the allegations about long wait times for warranty claims all relate to Huawei. See id. ¶¶ 65, 85, 20 122, 156. Finally, the CAC accuses Google of providing some non-California Plaintiffs with 21 defective replacement phones. Id. ¶¶ 49, 75, 113–14, 136. No California Plaintiff was allegedly 22 affected by this conduct, and Plaintiffs provide no argument that such an inference is reasonable 23 based on the allegations. Moreover, Plaintiffs do not identify any authority holding that a 24 defendant who provides a defective product on more than one occasion has committed an unfair 25 business practice. Hence, none of Plaintiffs’ five asserted aspects of Google’s conduct withstands 26 scrutiny at the motion to dismiss stage. 27 10 28 In the future, if Plaintiffs combine the allegations against Google and Huawei, the Court will not try to unwind them in the same fashion but will simply dismiss. 76 1 Plaintiffs’ argument that Google’s conduct violates the Song–Beverly Act’s policy of 2 preventing unmerchantable products from reaching consumers, id. ¶ 301, fares no better. As noted 3 with respect to Huawei, Plaintiffs’ conception of the Song–Beverly Act’s purpose improperly 4 extends beyond California state lines. See Cal. Civ. Code § 1792. Plaintiffs therefore cannot rely 5 on the Song–Beverly Act’s purpose without accompanying allegations about where the California 6 Plaintiffs purchased their phones. 7 8 Accordingly, the Court GRANTS Google’s Motion to Dismiss Plaintiffs’ UCL claim under the unfair prong with leave to amend to allege relevant facts. (c) 9 10 Fraudulent Business Act or Practice The analysis with respect to Google and Huawei under the UCL fraud prong is identical United States District Court Northern District of California 11 because the CAC depends on the same three fraudulent acts for both companies. See CAC ¶ 303. 12 As Plaintiffs’ opposition admits, Opp’n 40, all three acts take as a given Google’s knowledge of 13 the defects at the time of sale to the California Plaintiffs. The Court has previously explained at 14 length that Plaintiffs have not adequately alleged that Google had knowledge of the defects when 15 the California Plaintiffs purchased their phones. Accordingly, the Court GRANTS Google’s 16 Motion to Dismiss Plaintiffs’ UCL claim under the fraud prong with leave to amend to allege that 17 Google had knowledge of the defects at the time that the California Plaintiffs purchased their 18 phones. 19 20 (2) False Advertising Law The disposition on Plaintiffs’ FAL claim requires little explanation because the analysis is 21 substantively identical to that under the UCL fraud prong. Indeed, this Court and other courts in 22 this district have treated FAL claims together with the UCL fraud prong, Singh v. Google Inc., No. 23 16-CV-03734-BLF, 2017 WL 2404986, at *4–5 (N.D. Cal. June 2, 2017); Chacanaca v. Quaker 24 Oats Co., 752 F. Supp. 2d 1111, 1124–26 (N.D. Cal. 2010), and both Google and Plaintiffs 25 recommend following that approach here, Google Mot. 23; Opp’n 41. Because the allegations 26 underlying the FAL claim are also contingent on Google’s knowledge of the Nexus 6P’s defects, 27 see CAC ¶ 335, Plaintiffs have failed to state a claim upon which relief can be granted. 28 Accordingly, the Court GRANTS Google’s Motion to Dismiss Plaintiffs’ FAL claim with leave to 77 1 amend to allege that Google had knowledge of the defects at the time that the California Plaintiffs 2 purchased their phones. iv. 3 Indiana Deceptive Consumer Sales Act Indiana Plaintiff Beheler asserts a claim under the Indiana Deceptive Consumer Sales Act 4 5 (“IDCSA”), Ind. Code § 24-5-0.5-1 et seq., on behalf of the Indiana subclass. CAC ¶¶ 384–96. 6 Under the IDCSA, “[a] person relying upon an . . . incurable deceptive act may bring an action for 7 the damages actually suffered as a consumer as a result of the deceptive act.” Ind. Code Ann. 8 § 24-5-0.5-4(a). The IDCSA in turn defines “incurable deceptive act” as “a deceptive act done by 9 a supplier as part of a scheme, artifice, or device with intent to defraud or mislead.” Id. § 24-50.5-2(a)(8). The CAC bases the IDCSA claim on Google’s alleged misrepresentation that the 11 United States District Court Northern District of California 10 Nexus 6P has a “high-performing batter[y]” that will keep consumers “talking, texting, and apping 12 into the night.” CAC ¶¶ 390, 395. Plaintiffs do not challenge that Rule 9(b)’s heightened pleading standard applies, but 13 14 instead argue that their allegations satisfy that standard. Opp’n 54–55. Plaintiffs are incorrect. 15 The CAC states that “[t]he Nexus 6P’s purportedly long battery life factored heavily into 16 [Plaintiff] Beheler’s decision to purchase this Phone,” CAC ¶ 59, but does not indicate whether 17 Plaintiff Beheler received this information from Google’s advertising or came upon it by some 18 other means, such as word of mouth from a friend or a technical review written by another 19 company. This is insufficient to support Plaintiffs’ contention that Plaintiff Beheler “saw and 20 relied upon Google’s advertising of long battery life.” Opp’n 55. Accordingly, the Court 21 GRANTS Google’s Motion to Dismiss Plaintiff Beheler’s IDCSA claim with leave to amend to 22 specify the advertisements and the content of the advertisements that Plaintiff Beheler relied upon 23 in purchasing his Nexus 6P.11 24 25 11 26 27 28 The Court need not address Google’s separate argument about Plaintiff Beheler’s failure to give Google written notice. Google Mot. 25. As Google indicated in its Motion to Dismiss, that argument applies only to the extent that Plaintiff Beheler alleges an “uncured” deceptive act, as opposed to an “incurable” deceptive act. Id. In their opposition, Plaintiffs make clear that Plaintiff Beheler pleads an “incurable” deceptive act, as reflected in paragraph 395 of the CAC. Opp’n 55. 78 1 2 v. New York General Business Law New York Plaintiff Davydov asserts claims under N.Y. Gen. Bus. Law §§ 349–350 on 3 behalf of the New York subclass. CAC ¶¶ 415–32. N.Y. Gen. Bus. Law § 349 makes unlawful 4 “[d]eceptive acts or practices in the conduct of any business,” while N.Y. Gen. Bus. Law § 350 5 prohibits “[f]alse advertising in the conduct of any business.” Google contends that the claims 6 under §§ 349 and 350 should be dismissed for failure to plead causation. Google Mot. 25. 7 Because both sections include the element of causation, a plaintiff’s claim is not sufficiently pled 8 if he does not “state in his complaint that he has seen the misleading statements of which he 9 complains before he came into possession of the products he purchased.” Goldemberg v. Johnson 10 United States District Court Northern District of California 11 & Johnson Consumer Cos, 8 F. Supp. 3d 467, 480 (S.D.N.Y. 2014). Based on the CAC’s lumping together of Google and Huawei, Plaintiff Davydov’s 12 allegations here do not clear that hurdle. To be sure, other cases have allowed claims under 13 §§ 349 and 350 to proceed past a motion to dismiss on relatively thin allegations. For example, in 14 Dash v. Seagate Technology (U.S.) Holdings, Inc., the court concluded that there was a reasonable 15 inference that the plaintiff purchased the product at issue as a result of seeing the misleading 16 statements where the plaintiff “describe[d] in detail the allegedly misleading and deceptive 17 statements contained on the [product’s] packaging upon which he relied in purchasing the 18 product.” 27 F. Supp. 3d 357, 361 (E.D.N.Y. 2014). The court drew the same inference in 19 Goldemberg where the plaintiff “describe[d] in particular the allegedly misleading advertising and 20 other statements” and alleged that the defendant’s “false, misleading, and deceptive 21 misrepresentations . . . ha[d] already deceived and misled Plaintiff.” 8 F. Supp. 3d at 480. 22 The allegations here superficially fit that mold. The CAC first details the allegedly 23 misleading statements by Google. CAC ¶ 227. Then, the CAC alleges that “[i]n purchasing 24 Phones, [Plaintiff] Davydov . . . relied on the misrepresentations and/or omissions of Defendants 25 with respect to the quality, functionality, and performance of the Phones” and that Plaintiff 26 Davydov would not have purchased the phone in the absence of those misrepresentations. Id. 27 ¶ 430. The problem is that, by referring to the Google and Huawei together without denoting 28 particular statements, there is no assurance that Plaintiff Davydov relied on Google’s allegedly 79 1 misleading statements in purchasing his Nexus 6P. Without more, it is not plausible that Plaintiff 2 Davydov saw every relevant misrepresentation made by Google. Accordingly, the Court 3 GRANTS Google’s Motion to Dismiss Plaintiff Davydov’s N.Y. Gen. Bus. Law §§ 349–350 4 claims with leave to amend to assert whether he viewed Google’s statements before he purchased 5 his phone. 6 7 vi. North Carolina Unfair and Deceptive Trade Practices Act North Carolina Plaintiffs Harrison and Himes assert a claim under the North Carolina 8 Unfair and Deceptive Trade Practices Act (“NCUDTPA”), N.C. Gen. Stat. § 75-1.1 et seq., on 9 behalf of the North Carolina subclass. CAC ¶¶ 433–43. To state a claim under the NCUDTPA, a plaintiff must plead that “(1) defendant committed an unfair or deceptive act or practice, (2) the 11 United States District Court Northern District of California 10 action in question was in or affecting commerce, and (3) the act proximately caused injury to the 12 plaintiff.” Dalton v. Camp, 548 S.E.2d 704, 711 (N.C. 2001); see also N.C. Gen. Stat. Ann. 13 §§ 75-1.1(a) (declaring unlawful “unfair or deceptive acts or practices in or affecting commerce”), 14 75-16 (creating private right of action for persons “injured by reason of any [unfair or deceptive] 15 act”). The CAC alleges that Google engaged in “unfair” and “deceptive” acts. First, it states that 16 Google’s acts were “unfair” because “Defendants knowingly sold [Plaintiff] Harrison, [Plaintiff] 17 Himes, and North Carolina Subclass members Phones with the Defects, refused to honor 18 warranties, required consumers to wait several weeks to several months on warranty claims, and 19 replaced Phones under warranty with other defective Phones.” CAC ¶ 437. Second, the CAC also 20 goes on to say that Google’s acts are “deceptive” because Google made misrepresentations about 21 the Nexus 6P in advertising. Id. ¶ 439. Neither is well-pled. 22 As to “unfair” acts, the alleged actions pertain to Huawei and appear to include Google 23 only by the misleading use of the cover term “Defendants.” Not only do the CAC’s allegations 24 fail to plausibly plead that Google had knowledge at the time of sale, but the CAC admits that 25 Google did not sell to Plaintiffs Harrison and Himes at all—they purchased their phones from 26 Amazon and Best Buy, respectively. Id. ¶¶ 91, 99. The rest of the allegations relate to warranty 27 problems, but neither Plaintiff Harrison nor Plaintiff Himes submitted a warranty claim to Google. 28 Rather, Plaintiff Harrison “called Huawei to make a warranty claim,” id. ¶ 94, and Plaintiff Himes 80 1 2 made no warranty claim at all, despite contacting both Google and Huawei, id. ¶¶ 102–04. As to “deceptive” acts, the CAC looks to Google’s advertising statements. The North 3 Carolina Supreme Court has instructed that “a claim under section 75-1.1 stemming from an 4 alleged misrepresentation does indeed require a plaintiff to demonstrate reliance on the 5 misrepresentation in order to show the necessary proximate cause.” Bumpers v. Cmty. Bank of N. 6 Va., 747 S.E.2d 220, 226 (N.C. 2013). For essentially the same reasons discussed with respect to 7 their breach of express warranty claims, Plaintiffs Harrison and Himes have both failed to 8 adequately plead reliance on Google’s advertising statements. 9 10 Accordingly, the Court GRANTS Google’s Motion to Dismiss the NCUDTPA claim of Plaintiffs Harrison and Himes with leave to amend to allege further facts. vii. United States District Court Northern District of California 11 12 Ohio Deceptive Trade Practices Act Ohio Plaintiff Servodio asserts a claim under the ODTPA on behalf of the Ohio subclass. 13 CAC ¶¶ 461–75. As discussed above with respect to Huawei, this claim must be dismissed 14 without leave to amend because, as a legal matter, consumers lack standing to sue under the 15 ODTPA. Accordingly, the Court GRANTS WITHOUT LEAVE TO AMEND Google’s Motion 16 to Dismiss the ODTPA claim. viii. 17 18 Ohio Consumer Sales Practices Act Ohio Plaintiff Servodio asserts a claim under the Ohio Consumer Sales Practices Act 19 (“OCSPA”), Ohio Rev. Code § 1345.01 et seq., on behalf of the Ohio subclass. CAC ¶¶ 476–87. 20 The OCSPA provides a private right of action to consumers for “unfair or deceptive act[s] or 21 practice[s] in connection with a consumer transaction.” Ohio Rev. Code Ann. §§ 1345.02(A), 22 1345.09(A). Nevertheless, “a consumer may qualify for class-action certification under [the 23 OCSPA] only if the defendant’s alleged violation of the Act is substantially similar to an act or 24 practice previously declared to be deceptive by” a rule adopted by the Attorney General or an 25 Ohio court decision holding such deceptive conduct unlawful. Marrone v. Philip Morris USA, 26 Inc., 850 N.E.2d 31, 33 (Ohio 2006). “Cases that involve industries and conduct very different 27 from the defendant’s do not provide meaningful notice of specific acts or practices that violate the 28 [OCSPA].” Id. at 36. 81 Plaintiffs do not adequately allege that Google was put on notice by an Ohio court 2 decision. The bare allegation that “Defendants acted in the face of prior notice that their conduct 3 was deceptive, unfair, or unconscionable” does not satisfy Plaintiffs’ burden. CAC ¶ 482. More 4 importantly, Plaintiffs do not identify any cases where, for example, a court has held that selling a 5 defective product constitutes a deceptive act under the OCSPA. Rather, as the CAC admits, the 6 cases cited therein stand for the proposition that “failing to honor express and implied warranties 7 violates the OCSPA.” Id. ¶ 483 (citing Nee v. State Indus., Inc., 3 N.E.3d 1290, 1306 (Ohio Ct. 8 App. 2013); Brown v. Decorator Carpets of Canton, Inc., 1979 WL 185083, at *2 (Ohio Ct. Com. 9 Pl. Nov. 5, 1979); and Mason v. Mercedes-Benz USA, LLC, 2005 WL 1995087 at *5 (Ohio Ct. 10 App. Aug. 18, 2005)). Given that Plaintiffs have not pled that Google failed to honor Plaintiff 11 United States District Court Northern District of California 1 Servodio’s warranty, CAC ¶¶ 119–27, or that Google breached any express or implied warranty at 12 all, these cases do not provide meaningful notice that Google’s alleged acts and practices violate 13 the OCSPA. 14 Although the Court agrees with Google on the substance of its argument, the Court parts 15 ways with Google as to the remedy. Google suggests that dismissal of Plaintiff Servodio’s 16 OCSPA claim is appropriate. Google Mot. 27. But the cases do not support that view. The 17 principal authority on which Google relies, the Ohio Supreme Court decision in Marrone, 18 concerns the prerequisites for “a consumer [to] qualify for class-action certification under [the 19 OCSPA].” 850 N.E.2d at 33. Similarly, Google’s district court case states that class action claims 20 under the OCSPA may be dismissed at the pleadings stage. See Gascho v. Glob. Fitness 21 Holdings, LLC, 863 F. Supp. 2d 677, 693 (S.D. Ohio 2012). Because Google has identified no 22 other ground on which to dismiss Plaintiff Servodio’s individual OCSPA claim, that claim will not 23 be dismissed. 24 Accordingly, the Court GRANTS Google’s Motion to Dismiss Plaintiff Servodio’s 25 OCSPA class claims with leave to amend to allege further facts about whether Google was on 26 notice that its conduct violated the OCSPA, but DENIES Google’s Motion to Dismiss Plaintiff 27 Servodio’s individual OCSPA claim. 28 82 ix. 1 Texas Deceptive Trade Practices Act 2 Texas Plaintiff Poore asserts a claim under the Texas Deceptive Trade Practices Act 3 (“TDTPA”), Tex. Bus. & Com. Code § 17.41 et seq., on behalf of the Texas subclass. CAC 4 ¶¶ 501–17. A consumer may bring an action under the TDTPA when the defendant employs a 5 deceptive act or practice enumerated in Tex. Bus. & Com. Code § 17.46(b) that is a “producing 6 cause” of the consumer’s economic damages. Tex. Bus. & Com. Code § 17.50(a)(1). Although 7 the CAC lists violations of multiple subsections of § 17.46(b), CAC ¶ 509, Plaintiffs’ opposition 8 confirms that its claim is that Google ran afoul of § 17.46(b)(24), Opp’n 53. That subsection 9 proscribes “failing to disclose information concerning goods or services which was known at the time of the transaction if such failure to disclose such information was intended to induce the 11 United States District Court Northern District of California 10 consumer into a transaction into which the consumer would not have entered had the information 12 been disclosed.” Tex. Bus. & Com. Code § 17.46(b)(24). 13 With the Plaintiffs’ claim limited to this subsection, the TDTPA claim fails for familiar 14 reasons. Google cannot violate § 17.46(b)(24) unless Google “fail[ed] to disclose information . . . 15 which was known at the time of the transaction.” As even the most cursory reader will have 16 gleaned by this point, Plaintiffs have not adequately pled that Google had knowledge of the 17 defects at the time that Plaintiff Poore purchased his Nexus 6P. Therefore, Plaintiffs’ allegations 18 do not establish that Plaintiff Poore is entitled to relief on the TDTPA claim. 19 Google’s fallback argument that Plaintiff Poore did not provide the required pre-suit 20 notice, Google Mot. 28, is unavailing. Google appears to have overlooked Plaintiffs’ allegation 21 that “[o]n or about April 19, 2017, [Plaintiff] Poore notified Defendants of the damage and Defect 22 in his Phone in satisfaction of Tex. Bus. & Com. Code § 17.505.” CAC ¶ 517. Google concedes 23 this point in its reply. Google Reply 18. 24 Accordingly, the Court GRANTS Google’s Motion to Dismiss Plaintiff Poore’s TDTPA 25 claim with leave to amend to allege that Google had knowledge of the defects at the time that he 26 purchased his phone. 27 28 x. Washington Consumer Protection Act Washington Plaintiff Johnston asserts a claim under the Washington Consumer Protection 83 1 Act (“WCPA”), Wash. Rev. Code § 19.86 et. seq., on behalf of the Washington subclass. CAC 2 ¶¶ 518–35. The WCPA authorizes “[a]ny person who is injured in his or her business or property 3 by a violation of [the WCPA] . . . [to] bring a civil action . . . to enjoin further violations [or] to 4 recover the actual damages sustained by him or her.” Wash. Rev. Code Ann. § 19.86.090. One 5 such violation occurs when a defendant commits “unfair or deceptive acts or practices in the 6 conduct of any trade or commerce.” Id. § 19.86.020. 7 The CAC alleges that Google engaged in “unfair” and “deceptive” acts in nearly the same 8 fashion as the now-dismissed NCUDTPA claim. Plaintiff Johnston’s WCPA claim falters on the 9 same grounds. First, the CAC states that Google’s acts were “unfair” because “Defendants knowingly sold [Plaintiff] Johnston and Washington Subclass members Phones with the Defects, 11 United States District Court Northern District of California 10 refused to honor warranties, required consumers to wait several weeks to several months on 12 warranty claims, and replaced Phones under warranty with other defective Phones.” CAC ¶ 522. 13 Google did not do any of those things with respect to Plaintiff Johnston, who bought his Nexus 6P 14 from Best Buy and did not submit a warranty claim to Google. Id. ¶¶ 152–59. Second, the CAC 15 states that Google’s acts are “deceptive” because Google made misrepresentations about the 16 Nexus 6P in advertising. Id. ¶ 524. Like with his breach of express warranty claim, Plaintiff 17 Johnston has failed to adequately identify which Google advertisements he saw. 18 19 Accordingly, the Court GRANTS Google’s Motion to Dismiss Plaintiff Johnston’s WCPA claim with leave to amend to allege further facts. d. 20 21 Unjust Enrichment Claim Plaintiffs assert a cause of action for unjust enrichment. CAC ¶¶ 278–83. As discussed 22 above with respect to Huawei, although a claim alleging unjust enrichment may state a claim for 23 relief as a quasi-contract claim for restitution, Romero, 2015 WL 2125004, at *9, Plaintiffs’ claim 24 must be dismissed for “failure to allege which state law governs,” Romero, 2016 WL 469370, at 25 *12. Accordingly, the Court GRANTS Google’s Motion to Dismiss the unjust enrichment claim 26 with leave to amend to assert which state law applies. 27 C. Motions to Strike 28 Huawei and Google both move to strike Plaintiffs’ class allegations under Federal Rule of 84 1 Civil Procedure 12(f). Huawei Mot. 26–28; Google Mot. 29. “There is a split in this District as to 2 whether a motion to strike class action allegations may be entertained at the motion to dismiss 3 stage.” Ogola v. Chevron Corp., No. 14-CV-00173-SC, 2014 WL 4145408, at *2 (N.D. Cal. Aug. 4 21, 2014). Even courts that have been willing to entertain such a motion early in the proceedings 5 “have applied a very strict standard to motions to strike class allegations on the pleadings.” Id. 6 “Only if the court is convinced that any questions of law are clear and not in dispute, and that 7 under no set of circumstances could the claim or defense succeed may the allegations be stricken.” 8 Id. (internal quotation marks and citation omitted). Huawei and Google contend that the putative nationwide class and the statewide 9 subclasses are facially overbroad because they include individuals who never experienced 11 United States District Court Northern District of California 10 problems with their Nexus 6Ps. Huawei Mot. 26–27; Google Mot. 29. Moreover, Huawei and 12 Google assert that a class action will be unmanageable because the suit requires adjudicating 13 various claims under differing state laws and resolving individualized inquiries. Huawei Mot. 27– 14 28; Google Mot. 29. Although these concerns are not without merit, Huawei’s and Google’s arguments are 15 16 more appropriately addressed at a later stage of the proceedings when the issues have been more 17 fully developed and sharpened. At the hearing, the Court indicated its inclination to defer these 18 issues to the class certification stage. The Court remains convinced that it would be premature to 19 resolve the issues at the pleading stage. See Los Gatos Mercantile, Inc v. E.I. DuPont De 20 Nemours & Co., No. 13-CV-01180-BLF, 2015 WL 4755335, at *33 (N.D. Cal. Aug. 11, 2015). Accordingly, the Court DENIES Huawei’s and Google’s motions to strike class allegations 21 22 without prejudice to raising the arguments presented in those motions at a later stage of the 23 proceedings. 24 25 IV. ORDER For the foregoing reasons, IT IS HEREBY ORDERED that Huawei’s and Google’s 26 Motions to Dismiss are GRANTED WITH LEAVE TO AMEND IN PART, GRANTED 27 WITHOUT LEAVE TO AMEND IN PART, AND DENIED IN PART. Specifically, with respect 28 to Huawei, the Court rules as follows: 85 1 The Court GRANTS WITH LEAVE TO AMEND Huawei’s Motion to Dismiss the 2 express warranty claims of Plaintiffs Gorbatchev, Christensen, Martorello, Tran, Berry, 3 Davydov, Harrison, Himes, Jones, Leone, and Poore and DENIES Huawei’s Motion to 4 Dismiss the express warranty claims of all remaining Plaintiffs. 5 The Court GRANTS WITH LEAVE TO AMEND Huawei’s Motion to Dismiss the 6 implied warranty claims of Plaintiffs Berry and Poore and DENIES Huawei’s Motion to 7 Dismiss the implied warranty claims of all remaining Plaintiffs. 8 California Plaintiffs’ Song–Beverly Act claim. 9 10 The Court GRANTS WITH LEAVE TO AMEND Huawei’s Motion to Dismiss the The Court GRANTS WITH LEAVE TO AMEND Huawei’s Motion to Dismiss the United States District Court Northern District of California 11 Magnuson–Moss Warranty Act claims of Plaintiffs Berry and Poore and DENIES 12 Huawei’s Motion to Dismiss the Magnuson–Moss Warranty Act claims of all remaining 13 Plaintiffs. 14 fraud claims to the extent they are based on a fraudulent omissions theory. 15 16 The Court GRANTS WITH LEAVE TO AMEND Huawei’s Motion to Dismiss the California Plaintiffs’ CLRA claim. 17 18 The Court GRANTS WITH LEAVE TO AMEND Huawei’s Motion to Dismiss Plaintiffs’ The Court GRANTS WITH LEAVE TO AMEND Huawei’s Motion to Dismiss the 19 California Plaintiffs’ UCL claim under the unfair and fraudulent prongs and DENIES 20 Huawei’s Motion to Dismiss the California Plaintiffs’ UCL claim under the unlawful 21 prong. 22 California Plaintiffs’ FAL claim. 23 24 27 28 The Court GRANTS WITHOUT LEAVE TO AMEND Huawei’s Motion to Dismiss Ohio Plaintiff Servodio’s ODTPA claim. 25 26 The Court GRANTS WITH LEAVE TO AMEND Huawei’s Motion to Dismiss the The Court GRANTS WITH LEAVE TO AMEND Huawei’s Motion to Dismiss the unjust enrichment claims of all Plaintiffs. Specifically, with respect to Google, the Court rules as follows: 86 1 warranty claims of all Plaintiffs. 2 3 United States District Court Northern District of California 28 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss New York Plaintiff Davydov’s claims under N.Y. Gen. Bus. Law §§ 349–350. 26 27 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss Michigan Plaintiff Berry’s MCPA claim. 24 25 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss Indiana Plaintiff Beheler’s IDCSA claim. 22 23 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss Illinois Plaintiff Tran’s ICFDBPA and IUDTPA claims. 20 21 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss Florida Plaintiff Martorello’s FDUTPA claim. 18 19 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss the California Plaintiffs’ FAL claim. 16 17 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss the California Plaintiffs’ UCL claim. 14 15 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss the California Plaintiffs’ CLRA claim. 12 13 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss the deceit and fraudulent concealment claims of all Plaintiffs. 10 11 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss the Magnuson–Moss Warranty Act claims of all Plaintiffs. 8 9 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss the California Plaintiffs’ Song–Beverly Act claim. 6 7 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss the implied warranty claims of all Plaintiffs. 4 5 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss the express The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss North Carolina Plaintiffs Harrison and Himes’s NCUDTPA claims. 87 1 Dakota Plaintiff Jones’s NDCFA claim. 2 3 The Court GRANTS WITHOUT LEAVE TO AMEND Google’s Motion to Dismiss Ohio Plaintiff Servodio’s ODTPA claim. 4 5 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss North The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss Ohio 6 Plaintiff Servodio’s OCSPA class claims and DENIES Google’s Motion to Dismiss Ohio 7 Plaintiff Servodio’s individual OCSPA claim. 8 Pennsylvania Plaintiff Leone’s PUTPCPL claim. 9 10 United States District Court Northern District of California 15 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss Washington Plaintiff Johnston’s WCPA claim. 13 14 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss Texas Plaintiff Poore’s TDTPA claim. 11 12 The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss The Court GRANTS WITH LEAVE TO AMEND Google’s Motion to Dismiss the unjust enrichment claims of all Plaintiffs. 16 Finally, with respect to Huawei and Google, the Court DENIES their motions to strike Plaintiffs’ 17 class allegations. 18 An amended complaint shall be filed on or before June 8, 2018. Plaintiffs may request 19 additional time, if needed, to accommodate the jurisdictional discovery schedule set forth in a 20 separate order. 21 22 23 24 Dated: March 5, 2018 ______________________________________ BETH LABSON FREEMAN United States District Judge 25 26 27 28 88