Yan Mei Zheng-Lawson et al v. Toyota Motor Corporation et al, No. 5:2017cv06591 - Document 54 (N.D. Cal. 2018)

Court Description: ORDER GRANTING 33 MOTION TO DISMISS FIRST AMENDED COMPLAINT WITH LEAVE TO AMEND IN PART AND WITHOUT LEAVE TO AMEND IN PART; AND DENYING 33 MOTION TO STRIKE. Amended Pleading due by 6/20/2018. Signed by Judge Beth Labson Freeman on 5/21/2018.(blflc1S, COURT STAFF) (Filed on 5/21/2018)
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1 2 3 4 5 UNITED STATES DISTRICT COURT 6 NORTHERN DISTRICT OF CALIFORNIA 7 SAN JOSE DIVISION 8 9 YAN MEI ZHENG-LAWSON, et al., 10 Plaintiffs, United States District Court Northern District of California 11 12 13 v. TOYOTA MOTOR CORPORATION, et al., Defendants. Case No. 17-cv-06591-BLF ORDER GRANTING MOTION TO DISMISS FIRST AMENDED COMPLAINT WITH LEAVE TO AMEND IN PART AND WITHOUT LEAVE TO AMEND IN PART; AND DENYING MOTION TO STRIKE [Re: ECF 33] 14 15 16 On May 17, 2018, the Court heard oral argument regarding Defendants’ motion to dismiss 17 and/or strike Plaintiffs’ first amended complaint under Federal Rules of Civil Procedure 12(b)(6) 18 and 12(f), respectively. The Court stated its ruling on the record, granting the motion to dismiss 19 and denying the motion to strike. The Court granted leave to amend as to all claims except Count 20 VIII, asserted under the Song-Beverly Consumer Warranty Act, which was conceded by Plaintiffs. 21 Finally, the Court granted Plaintiffs’ request for leave to add a new claim under California’s Secret 22 Warranty Law, California Civil Code § 1795.90 et seq. The Court indicated that it would issue a 23 brief written order memorializing its ruling, and that Plaintiffs would be granted 30 days from the 24 date of the order to file an amended pleading. 25 Accordingly, for the reasons stated on the record and below, the motion to dismiss is 26 GRANTED, with leave to amend as to all claims except Count VIII and with leave to add a new 27 claim under California’s Secret Warranty Law, and the motion to strike is DENIED. 28 I. 1 BACKGROUND1 Plaintiffs Yan Mei Zheng-Lawson, Yuanteng Pei, and Joanne E. Ferrara allege that they 2 3 each purchased a 2016 Toyota Rav 4 XLE based on misrepresentations contained in the “2016 4 Rav 4 brochure” available at Toyota dealerships and on the Internet, referred to in the FAC as the 5 “Brochure.” FAC ¶¶ 3, 7-8, 59, 62-63, 65-66. According to Plaintiffs, the Brochure stated that 6 the model they purchased (2016 Rav 4 XLE) and certain other models (2016 Rav 4 XLE Hybrid 7 and 2016 Rav 4 SE) came equipped with projector-beam headlights with an automatic on/off 8 feature. FAC ¶¶ 7-8. In fact, the standard versions of the 2016 Rav 4 XLE, 2016 Rav 4 XLE 9 Hybrid, and 2016 Rav 4 SE were not equipped with an automatic on/off feature for the vehicle’s headlights. FAC ¶ 10. Plaintiffs bring this putative class action on behalf of persons who 11 United States District Court Northern District of California 10 purchased or leased the model Plaintiffs purchased (2016 Toyota Rav 4 XLE) or one of the other 12 models mentioned in the Brochure (2016 Rav 4 XLE Hybrid and 2016 Rav 4 SE). FAC ¶ 1. 13 Plaintiffs plead the following claims on behalf of a Nationwide Class, a California 14 Subclass, a New York Subclass, and a Pennsylvania Subclass: (1) Deceptive Trade Practices in 15 violation of General Business Law § 349 on behalf of New York Subclass; (2) Deceptive Trade 16 Practices in violation of General Business Law § 350 on behalf of New York Subclass; (3) Breach 17 of Express Warranty in violation of California Commercial Code § 2313 on behalf of Nationwide 18 Class or, alternatively, California Subclass; (4) Breach of Express Warranty in violation of New 19 York Uniform Commercial Code § 2-313 on behalf of New York Subclass; (5) Breach of Express 20 Warranty in violation of 13 Pa. C.S.A. § 2313 on behalf of Pennsylvania Subclass; (6) Unfair 21 Competition in violation of California Business & Professions Code § 17200 et seq. on behalf of 22 Nationwide Class or, alternatively, California Subclass; (7) violation of California’s Consumer 23 Legal Remedies Act, California Civil Code § 1750 et seq., on behalf of Nationwide Class or, 24 alternatively, California Subclass; (8) violation of California’s Song-Beverly Consumer Warranty 25 Act, California Civil Code § 1790 et seq., on behalf of Nationwide Class or, alternatively, 26 27 28 1 Plaintiff’s well-pled factual allegations are accepted as true for purposes of the motion to dismiss. See Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). 2 1 California Subclass; (9) Deceptive Acts in violation of Pennsylvania’s Unfair Trade Practices and 2 Consumer Protection Law, 73 P.S. 201-2 et seq., on behalf of Pennsylvania Subclass; (10) Unfair 3 Conduct in violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, 73 4 P.S. 201-1 et seq., on behalf of Pennsylvania Subclass; and (11) Unjust Enrichment on behalf of 5 Nationwide Class or, alternatively, California Subclass, New York Subclass, and Pennsylvania 6 Subclass. 7 II. MOTION TO DISMISS 8 A. Legal Standard 9 “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’” Conservation 11 United States District Court Northern District of California 10 Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 12 729, 732 (9th Cir. 2001)). While a complaint need not contain detailed factual allegations, it 13 “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible 14 on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 15 550 U.S. 544, 570 (2007)). A claim is facially plausible when it “allows the court to draw the 16 reasonable inference that the defendant is liable for the misconduct alleged.” Id. 17 B. 18 The Court informed Plaintiffs on the record of the defects in the FAC, including the 19 20 21 Discussion following: 1. Failure to Differentiate Between Defendants Although Plaintiffs sue three separate Toyota entities, the FAC lumps all three entities 22 together, alleging throughout the pleading that “Toyota” and “Defendants” made the actionable 23 misrepresentations. See, e.g., FAC ¶¶ 1-3, 6, 9-14. Allegations which lump multiple defendants 24 together are insufficient to put any one defendant on notice of the conduct upon which the claims 25 against it are based. See Chuman v. Wright, 76 F.3d 292, 295 (9th Cir. 1996). This is particularly 26 true with respect to those of Plaintiffs’ claims which are grounded in fraud, which are governed by 27 Federal Rule of Civil Procedure 9(b). See Swartz v. KPMG LLP, 476 F.3d 756, 764-765 (9th Cir. 28 2007) (“Rule 9(b) does not allow a complaint to merely lump multiple defendants together but 3 1 require[s] plaintiffs to differentiate their allegations when suing more than one defendant . . . and 2 inform each defendant separately of the allegations surrounding his alleged participation in the 3 fraud.” (internal quotation marks and citation omitted)). 4 Plaintiffs argue that group pleading is appropriate in this case because the three defendant 5 Toyota entities are intertwined, relying on In re Volkswagen Timing Chain Prod. Liab. Litig., No. 6 CV 16-2765 (JLL), 2017 WL 1902160 (D.N.J. May 8, 2017). In Volkswagen, however, the court 7 concluded that “[w]hile Plaintiffs do use the term ‘Defendants’ throughout the Complaint, they 8 also make particularized allegations against each Defendant, including Defendant VW America, 9 separately.” Volkswagen, 2017 WL 1902160, at *9. Plaintiffs have not made particularized allegations against any of the defendant entities in this case. Plaintiffs must allege facts adequate 11 United States District Court Northern District of California 10 to put each defendant on notice regarding the bases of the claims against it. See In re Nexus 6P 12 Prod. Liab. Litig., 293 F. Supp. 3d 888, 908 (N.D. Cal. 2018) (“Plaintiffs must identify what 13 action each Defendant took that caused Plaintiffs’ harm, without resort to generalized allegations 14 against Defendants as a whole.” (internal quotation marks and citation omitted)). If the relevant 15 facts relate to alter ego, agency, or some other relationship giving rise to liability of one entity for 16 the conduct of another, the relationship should be explained in sufficient detail to allege plausibly 17 that each defendant is liable for the specified conduct. 18 2. Failure to Plead Breach of Express Warranty 19 In Counts III, IV, and V, Plaintiffs plead claims for breach of express warranty under the 20 laws of California, New York, and Pennsylvania. The claims are based on alleged statements in 21 the Brochure referenced throughout the FAC. However, Plaintiffs neither attach a copy of the 22 Brochure to their pleading nor plead its contents verbatim. Defendants provide copies of multiple 23 versions of the Brochure, which the Court considers under the incorporation by reference doctrine. 24 See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (incorporation by reference doctrine 25 permits a court to consider documents referenced in but not physically attached to the complaint). 26 Although Plaintiffs provide a copy of the referenced Brochure with their opposition, it is not clear 27 from the FAC which version Plaintiffs relied on or even that Plaintiff Pei saw the Brochure before 28 purchasing the vehicle. Compare FAC ¶¶ 60, 66 (alleging that Plaintiffs Zheng-Lawson and 4 1 Ferrara reviewed the Brochure before purchase) with FAC ¶ 64 (containing no allegations that 2 Plaintiff Pei reviewed the Brochure). Plaintiffs’ express warranty claims therefore are inadequate 3 under the laws of all three states at issue. See Williams v. Beechnut Nutrition Corp., 185 Cal. 4 App. 3d 135, 142 (1986) (Under California law, plaintiff must allege “the exact terms of the 5 warranty, plaintiff’s reasonable reliance thereon, and a breach of that warranty which proximately 6 causes plaintiff injury.”); DiBartolo v. Abbott Labs., 914 F. Supp. 2d 601, 626 (S.D.N.Y. 2012) 7 (Under New York law, “a claim for breach of express warranty must rest on specific misleading 8 statements.”); McLaughlin v. Bayer Corp., 172 F. Supp. 3d 804, 824 (E.D. Pa. 2016) (finding 9 express warranty claim inadequate under Pennsylvania law where brochure was not adequately 10 United States District Court Northern District of California 11 identified and complaint failed to allege when each plaintiff encountered the warranty). Defendants argue that under any version of the Brochure, Plaintiffs’ express warranty 12 claims are inadequate because the Brochures contained disclaimers sufficient to negate the express 13 warranty claims. The Court is not prepared to take up that issue at this stage of the proceedings, 14 particularly where Plaintiffs have yet to allege with adequate specificity what brochure contained 15 the express warranty and that they all reviewed the brochure prior to purchase of their vehicles. 16 17 3. Failure to Plead Violation of Consumer Protection Statutes In Counts I, II, VI, VII, IX and X, Plaintiffs allege violations of the consumer protection 18 laws of California, New York, and Pennsylvania. The thrust of each of these claims is that 19 Defendants’ deceptive Brochure misled Plaintiffs into believing that the vehicles they purchased 20 were equipped with automatic on/off headlights when in fact the vehicles did not have that feature. 21 Because the claims are grounded in fraud, they are subject to the heightened pleading 22 requirements of Federal Rule of Civil Procedure 9(b). See Davidson v. Kimberly-Clark Corp., No. 23 15-16173, 2018 WL 2169784, at *5 (9th Cir. May 9, 2018). As discussed above, Plaintiffs have 24 not identified in their pleading which Brochure contained the deceptive statements. At the bare 25 minimum, Plaintiffs must allege precisely which statements are at issue and why those statements 26 are misleading. See id. (“To properly plead fraud with particularity under Rule 9(b), a pleading 27 must identify the who, what, when, where, and how of the misconduct charged, as well as what is 28 false or misleading about the purportedly fraudulent statement, and why it is false.” (internal 5 1 quotation marks and citation omitted)). 4. 2 Failure to Plead Violation of Song-Beverly Consumer Warranty Act Plaintiffs concede Defendants’ motion with respect to Count VIII for violation of 3 4 California’s Song-Beverly Consumer Warranty Act. Plaintiffs’ request for leave to replace Count 5 III with a new claim under California’s Secret Warranty Law was granted on the record. 5. 6 Unjust Enrichment Count XI asserts a claim for unjust enrichment. Defendants argue that to the extent the 7 claim is asserted under California law, it fails because California does not recognize a standalone 9 cause of action for unjust enrichment. This Court has held that a claim for unjust enrichment may 10 be asserted under California law. See Romero v. Flowers Bakeries, LLC, No. 14-CV-05189-BLF, 11 United States District Court Northern District of California 8 2015 WL 2125004, at *9 (N.D. Cal. May 6, 2015). However, Plaintiffs do not allege that Count 12 XI is asserted under California law or under any particular state’s law. The claim is subject to 13 dismissal on that basis. The Court declines to take up Defendants’ argument that Plaintiffs have not adequately 14 15 alleged that they received a benefit unless and until Plaintiffs make clear which state’s law on 16 unjust enrichment is to be applied. 17 III. MOTION TO STRIKE 18 A. Legal Standard 19 Federal Rule of Civil Procedure 12(f) permits a court to “strike from a pleading an 20 insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” The 21 function of a motion made under this rule is “to avoid the expenditure of time and money that 22 must arise from litigating spurious issues by dispensing with those issues prior to trial.” 23 Whittlestone, Inc. v. Handi–Craft Co., 618 F.3d 970, 973 (9th Cir. 2010) (quotation marks and 24 citation omitted). “While a Rule 12(f) motion provides the means to excise improper materials 25 from pleadings, such motions are generally disfavored because the motions may be used as 26 delaying tactics and because of the strong policy favoring resolution on the merits.” Barnes v. AT 27 & T Pension Ben. Plan-Nonbargained Program, 718 F. Supp. 2d 1167, 1170 (N.D. Cal. 2010). 28 6 1 B. Discussion 2 Defendants ask the Court to strike Plaintiffs’ claims as to non-purchased and non-leased 3 vehicles for lack of standing and to strike Plaintiffs’ nationwide class action allegations. 4 Defendants raise significant issues regarding Plaintiffs’ standing, and their ability to maintain a 5 nationwide class, which ultimately may preclude class certification. However, the Court 6 concludes that it would be premature to address those issues at this early stage of the proceedings. 7 It is the Court’s experience that class claims frequently are narrowed by the time a case reaches 8 the class certification stage. The Court’s ruling is without prejudice to reassertion of Defendants’ 9 arguments if and when this case reaches class certification. 10 United States District Court Northern District of California 11 IV. ORDER (1) The motion to dismiss is GRANTED, with leave to amend as to all claims except 12 Count VIII and with leave to add a new claim under California’s Secret Warranty 13 Law; 14 (2) The motion to strike is DENIED; and 15 (3) Any amended pleading shall be filed on or before June 20, 2018 (30 days from date 16 of this order). 17 18 19 20 Dated: May 21, 2018 ______________________________________ BETH LABSON FREEMAN United States District Judge 21 22 23 24 25 26 27 28 7