Nilsen v. Tesla, Inc., No. 5:2022cv07472 - Document 31 (N.D. Cal. 2023)
Court Description: ORDER GRANTING IN PART AND DENYING IN PART 12 MOTION TO DISMISS; DENYING MOTION TO STRIKE. Signed by Judge Beth Labson Freeman on 5/31/2023. (blflc3, COURT STAFF) (Filed on 5/31/2023)
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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 ROALD NILSEN, Plaintiff, 8 TESLA, INC., Defendant. 11 United States District Court Northern District of California ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS; DENYING MOTION TO STRIKE v. 9 10 Case No. 22-cv-07472-BLF [Re: ECF No. 12] 12 13 This is a lemon law case involving an allegedly defective 2016 Tesla X that Plaintiff Roald 14 Nilsen purchased in 2020. Nilsen asserts claims under state and federal law against Defendant 15 Tesla, Inc., for alleged its breaches of express and implied warranties. Tesla moves to dismiss 16 Nilsen’s claims under Federal Rule of Civil Procedure 12(b)(6) and to strike Nilsen’s requests for 17 certain remedies under Federal Rule of Civil Procedure 12(f). Mot., ECF No. 12; see also Reply, 18 ECF No. 19. Nilsen opposes Tesla’s motion. Opp’n, ECF No. 17. 19 This matter is suitable for determination without oral argument. See Civ. L.R. 7-1(b). For 20 the following reasons, the motion to dismiss is GRANTED IN PART and DENIED IN PART. 21 The motion to strike is DENIED. 22 23 24 25 I. BACKGROUND On February 3, 2020, Nilsen purchased a used 2016 Tesla X. Compl. ¶ 8. Nilsen alleges that “[e]xpress warranties accompanied the sale of the vehicle.” Id. Nilsen alleges that the vehicle was delivered to him with “serious defects and 26 nonconformities to warranty and developed other serious defects and nonconformities to warranty 27 including, but not limited to interior component defects, electrical defects, suspension system 28 defects.” Id. ¶ 9. Nilsen brings four claims against Tesla: (1) breach of express warranty under the Song- 1 2 Beverly Act; (2) breach of implied warranty under the Song-Beverly Act; (3) violation of the 3 California Civil Code § 1793.2(b); and (4) violation of the Magnusson-Moss Warranty Act. United States District Court Northern District of California 4 II. MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM 5 A. 6 Under Federal Rule of Civil Procedure 12(b)(6), a court must dismiss a complaint if it fails 7 to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion, the plaintiff 8 must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. 9 Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when the plaintiff pleads facts Legal Standard 10 that allow the court to “draw the reasonable inference that the defendant is liable for the 11 misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). There must 12 be “more than a sheer possibility that a defendant has acted unlawfully.” Id. While courts do not 13 require “heightened fact pleading of specifics,” a plaintiff must allege facts sufficient to “raise a 14 right to relief above the speculative level.” See Twombly, 550 U.S. at 555, 570. 15 When determining whether a claim has been stated, the Court accepts as true all well-pled 16 factual allegations and construes them in the light most favorable to the plaintiff. Reese v. BP 17 Expl. (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). However, the Court need not “accept as 18 true allegations that contradict matters properly subject to judicial notice” or “allegations that are 19 merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead 20 Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (internal quotation marks and citations 21 omitted). On a motion to dismiss, the Court’s review is limited to the face of the complaint and 22 matters judicially noticeable. MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986); 23 N. Star Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578, 581 (9th Cir. 1983). 24 25 B. DISCUSSION 1. Breach of Express Warranty Under the Song-Beverly Act (Claim 1) 26 Nilsen’s first claim asserts that Tesla breached its express warranty under the Song- 27 Beverly Act (“SBA”). “The Song-Beverly Act is a remedial statute designed to protect consumers 28 who have purchased products covered by an express warranty.” Rodriguez v. FCA US, LLC, 77 2 1 Cal. App. 5th 209, 217 (2022) (quoting Robertson v. Fleetwood Travel Trailers of California, 2 Inc., 144 Cal.App.4th 785, 798 (2006)). “To that end, it regulates warranty terms and imposes 3 service and repair obligations on the parties who issue the warranties.” Id. (citing Joyce v. Ford 4 Motor Co., 198 Cal. App. 4th 1478, 1486 (2011)). A buyer “who is damaged by a failure to 5 comply with any obligation under [the SBA] . . . may bring an action for the recovery of damages 6 and other legal and equitable relief.” Cal. Civ. Code § 1794(a). United States District Court Northern District of California 7 Nilsen seeks relief under the “refund or replace” provision of the SBA, California Civil 8 Code section 1793.2(d)(2). See Compl. ¶ 26. That provision states that “[i]f the manufacturer or 9 its representative in this state is unable to service or repair a new motor vehicle, as that term is 10 defined in paragraph (2) of subdivision (e) of Section 1793.22, to conform to the applicable 11 express warranties after a reasonable number of attempts, the manufacturer shall either promptly 12 replace the new motor vehicle . . . or promptly make restitution to the buyer.” Cal. Civ. Code 13 § 1793.2(d)(2). The statute defines “new motor vehicle” in relevant part as “a new motor vehicle 14 that is bought or used primarily for personal, family, or household purposes,” and specifies that 15 the definition includes “a dealer-owned vehicle and a ‘demonstrator’ or other motor vehicle sold 16 with a manufacturer’s new car warranty.” Cal. Civ. Code § 1793.22(e)(2). 17 Tesla argues that Nilsen has failed to state a claim for breach of express warranty under the 18 SBA because his vehicle is not a “new motor vehicle.” See Mot. 11. Relying on the California 19 Court of Appeal’s recent decision in Rodriguez v. FCA US, LLC, 77 Cal. App. 5th 209 (2022), 20 Tesla argues that Nilsen has not alleged that his vehicle is a “new motor vehicle” under the SBA 21 because he admits he purchased it used and has not alleged that it came with a full new car 22 warranty from Tesla. Id. Nilsen responds that the Court should decline to follow Rodriguez and 23 instead follow Jensen v. BMW of North America, Inc., 35 Cal. App. 4th 112 (1995), in which the 24 California Court of Appeal concluded that a “car[] sold with a balance remaining on the 25 manufacturer’s new more vehicle warranty” is a “new motor vehicle” under the SBA. Opp’n 11- 26 12 (citing Jensen, 35 Cal. App. 4th at 123). 27 28 In Jensen, the plaintiff sued a car manufacturer after the manufacturer could not repair certain defects in the car she leased. 35 Cal. App. 4th 112, 119 (1995). When the plaintiff leased 3 1 the car, the salesperson had “told [her] that the car had been used as a demonstrator for the 2 dealership,” “said she would get the 36,000-mile warranty on top of the miles already on the car,” 3 “gave her the warranty booklet,” and “wrote ‘factory demo’ on the credit application.” Id. at 119- 4 20. Unknown to the plaintiff, however, the defendant had obtained the car in an out-of-state auto 5 action, and the car had been previously owned by a different entity. Id. at 120. On appeal, the 6 manufacturer challenged the trial court’s pretrial ruling that the car was a “new motor vehicle” 7 under the SBA. Id. at 122. The Court of Appeal analyzed Section 1793.22(e)(2) and concluded 8 that “cars sold with a balance remaining on the manufacturer’s new motor vehicle warranty are 9 included within [the SBA’s] definition of ‘new motor vehicle.’” Id. at 123, 126. The court 10 therefore held that the plaintiff’s car qualified as new motor vehicle. Id. at 121, 123, 126. In Rodriguez, a different division of the California Court of Appeal revisited the definition United States District Court Northern District of California 11 12 of “new motor vehicle.” 77 Cal. App. 5th at 225.1 Contrary to the conclusion articulated in 13 Jensen, the Rodriguez court held that definition does not include “previously sold cars 14 accompanied by some balance of the original warranty.” Id. The court distinguished Jensen, 15 noting that “Jensen involved a lease by a manufacturer-affiliated dealer who issued a full new car 16 warranty along with the lease.” Id. at 223 (emphasis in original). The Rodriguez court also noted 17 that other California Court of Appeal decisions had limited Jensen to its facts and expressed 18 “reservations” about Jensen’s seemingly broad holding. Id. at 224 (citing Dagher v. Ford Motor 19 Co., 238 Cal. App. 4th 905 (2015) and Kiluk v. Mercedes-Benz USA, LLC, 43 Cal. App. 5th 334 20 (2019)). 21 The Court finds the California Court of Appeal’s analysis in Rodriguez persuasive and 22 adopts it here. District courts reading Rodriquez and Jensen together have held that to state a 23 claim for breach of express warranty under the SBA, a consumer who purchased a used car must 24 allege that they were issued a full new car warranty by the manufacturer or its agent at the time of 25 26 27 28 1 The California Supreme Court granted review of Rodriguez in July 2022. 295 Cal. Rptr. 3d 351 (2022) (mem.). It declined to depublish the opinion and explained that the Court of Appeal’s opinion could be cited “not only for its persuasive value, but also for the limited purpose of establishing the existence of a conflict in authority that would in turn allow trial courts to exercise discretion . . . to choose between sides of any such conflict.” Id. (internal citation omitted). 4 1 purchase. See Pineda v. Nissan N. Am., Inc., No. CV 22-239-DMG (JCX), 2022 WL 2920416, at 2 *3 (C.D. Cal. July 25, 2022); cf. also Edwards v. Mercedes-Benz USA, LLC, No. CV 21-2671- 3 RSWL-JCX, 2022 WL 5176869, at *3 (C.D. Cal. Oct. 5, 2022) (“[W]hen a consumer purchases a 4 used vehicle, they may only invoke the Act’s protections if the manufacturer or its agent furnished 5 a new warranty at the time of the sale.”). Here, Nilsen bought a used car and nowhere alleges that 6 Tesla issued him a full new car warranty at the time of purchase. Nilsen has therefore not stated a 7 claim for breach of express warranty under the SBA. Although it is unclear whether Nilsen can 8 allege sufficient facts consistent with the Rodriguez requirements, the Court will allow Plaintiff 9 the opportunity to amend. 10 United States District Court Northern District of California 11 12 13 Tesla’s motion to dismiss Nilsen’s claim for breach of express warranty under the SBA is GRANTED WITH LEAVE TO AMEND. 2. Breach of Implied Warranty Under the Song-Beverly Act (Claim 2) Nilsen’s second claim is for breach of implied warranty under the SBA. Compl. ¶¶ 31-42. 14 Tesla moves to dismiss this claim on the ground that Nilsen has not alleged that Tesla was 15 involved in the sale of the vehicle to Nilsen. Mot. 13. Nilsen responds that his allegations are 16 sufficient because he alleged that “Tesla’s express warranties accompanied his purchase of his 17 vehicle,” and therefore “it is possible Tesla issued its warranty at the Subject Vehicle’s sale and, 18 therefore, stepped into the role of the retailer.” Opp’n 15. 19 Under the SBA, “every sale of consumer goods that are sold at retail in this state shall be 20 accompanied by the manufacturer’s and the retail seller’s implied warranty that the goods are 21 merchantable.” Cal. Civ. Code § 1792. “‘Consumer goods’ means any new product or part 22 thereof that is used, bought, or leased for use primarily for personal, family, or household 23 purposes.” Cal. Civ. Code § 1791(a). Section 1795.5 extends the SBA to “used consumer goods.” 24 It states that “[i]t shall be the obligation of the distributor or retail seller making express warranties 25 with respect to used consumer goods (and not the original manufacturer, distributor, or retail seller 26 making express warranties with respect to such goods when new) to maintain sufficient service 27 and repair facilities within this state to carry out the terms of such express warranties.” Cal. Civ. 28 Code § 1795.5(a). If further states that “[t]he duration of the implied warranty of 5 1 merchantability . . . with respect to used consumer goods sold in this state, where the sale is 2 accompanied by an express warranty, shall be coextensive in duration with an express warranty 3 which accompanies the consumer goods.” Cal. Civ. Code § 1795.5(c). In general, “only distributors or sellers of used goods—not manufacturers of new goods— United States District Court Northern District of California 4 5 have implied warranty obligations in the sale of used goods.” E.g., Nunez v. FCA US LLC, 61 Cal. 6 App. 5th 385, 399 (2021) (emphasis in original) (citing Cal. Civ. Code § 1795.5). “Of course, . . . 7 the assumption baked into section 1795.5 is that the manufacturer and the distributor/retailer are 8 distinct entities.” Id. (quoting Kiluk v. Mercedes-Benz USA, LLC, 43 Cal. App. 5th 334, 339 9 (2019)). Where, for example, a manufacturer partners with a dealership to sell used vehicles 10 directly to the public by offering an express warranty as part of the sales package, the 11 manufacturer steps into the role of a retailer and is subject to the obligations of a retailer under 12 Section 1795.5. Kiluk, 43 Cal. App. 5th at 340. 13 Here, Nilsen’s claim fails because Nilsen alleges no facts to support an inference that Tesla 14 itself sold him his used car or otherwise stepped into the role of a retailer. Nilsen argues that Tesla 15 stepped into the role of the retailer because “Tesla’s express warranties accompanied his purchase 16 of the vehicle.” Opp’n 15. But Nilsen does not allege that Tesla was involved in the sale of his or 17 any other used vehicle or offered an express warranty as part of the sale of his or any other used 18 vehicle. Nilsen has therefore not plausibly alleged that Tesla is a “retailer” within the meaning of 19 the SBA. See, e.g., Lemke-Vega v. Mercedez-Benz USA, LLC, 23-cv-1408-DMR, 2023 WL 20 3604318, at *5 (N.D. Cal. May 22, 2023) (complaint “does not allege facts to support a reasonable 21 inference that [defendant] ‘stepped into the role of a retailer’” where “[plaintiff] alleges only that 22 she purchased the subject vehicle and that express warranties by [defendant] accompanied the 23 sale”); see also Hashmi v. Mercedes-Benz USA, LLC, No. 2:21-cv-07291-AC (AFMx), 2021 WL 24 8317124, at *6 (C.D. Cal. Dec. 28, 2021) (“Song-Beverly’s implied warranty protections apply to 25 sales of used goods, when those sales involve issuances of express warranties; but these 26 protections do not apply to sales in which a used good is sold before already attached warranties 27 expire.”). Accordingly, Nilsen has failed to state a claim for breach of implied warranty under the 28 SBA. 6 1 2 3 United States District Court Northern District of California 4 Tesla’s motion to dismiss Nilsen’s claim for breach of implied warranty under the SBA is GRANTED WITH LEAVE TO AMEND. 3. Violation of California Civil Code Section 1793.2(b) (Claim 3) Nilsen’s third claim for relief asserts that Tesla violated California Civil Code Section 5 1793.2(b). That statute provides that manufacturers of consumer goods sold in California and for 6 which the manufacturer has made an express warranty shall “service[ ] or repair[ ]” the consumer 7 goods “so as to conform to the applicable warranties within 30 days.” Cal. Civ. Code § 1793.2(b). 8 Tesla moves to dismiss this claim on the ground that “Plaintiff has failed to plead . . . that 9 Tesla took longer than 30 days to complete any single repair attempt” as required under Schick v. 10 BMW of N. Am., LLC, 801 F. App’x 519 (9th Cir. 2020). Mot. 15. Tesla also argues that the 11 allegations supporting this claim are vague and conclusory. Id. Nilsen responds that the Court 12 should not follow Schick because the opinion “limits, rather than furthers the [SBA’s] remedial 13 purpose.” Opp’n 17. Nilsen argues that its allegations that “Defendant’s authorized repair 14 facilities did not ‘conform the Subject vehicle to warranty within 30-days’ or commence repairs 15 ‘within a reasonable time’” are sufficient to plausibly state a claim for relief. Id. 16 In Schick, the Ninth Circuit held that section 1793.2(b)’s 30-day requirement applies per 17 repair facility visit. 801 F. App’x at 521 (“under any reasonable reading of the statute, § 1793.2(b) 18 requires only that BMW complete any single repair attempt within 30 days” (emphasis in 19 original)). “Thus, in order to state a claim under Section 1793.2(b) of the Act, a plaintiff must 20 plead that a single repair attempt took the defendant more than 30 days to complete.” Herrera v. 21 Ford Motor Co., No. 20-CV-00395-LHK, 2020 WL 3451328, at *4-5 (N.D. Cal. June 24, 2020); 22 see also Ortega v. BMW of N. Am., LLC, No. 2:18-CV-06637-R-SK, 2019 WL 9044692, at *4 23 (C.D. Cal. Oct. 16, 2019); Houston v. Country Coach, Inc., No. C 07-00859 HRL, 2008 WL 24 2783485, at *9 (N.D. Cal. July 17, 2008). 25 Here, the Complaint alleges only that Nilsen “delivered the Subject Vehicle to [Tesla’s] 26 authorized service representatives on multiple occasions” and that Tesla’s “authorized facilities 27 did not conform the Subject Vehicle to warranty within 30-days and/or commence repairs within a 28 reasonable time.” Compl. ¶¶ 48, 49. The Complaint does not allege that any individual repair 7 1 attempt was not completed within 30 days. Accordingly, the Complaint fails to state a claim for 2 violation of Section 1793.2(b). Again, although Plaintiff does not describe additional facts he 3 could allege to support this claim, the Court will allow him to try. 4 5 6 United States District Court Northern District of California 7 Tesla’s motion to dismiss Nilsen’s claim for violation of California Civil Code Section 1793.2(b) is GRANTED WITH LEAVE TO AMEND. 4. Violation of the Magnuson-Moss Warranty Act (Claim 4) Nilsen’s fourth claim for relief asserts that Tesla violated the Magnuson-Moss Warranty 8 Act (MMWA). Compl. ¶¶ 57-42. Tesla argues that Nilsen fails to state a claim under the MMWA 9 because he has not alleged that he complied with Tesla’s “dispute settlement requirements.” Mot. 10 20-21. Nilsen responds that “[p]laintiffs have sustained their Magnuson-Moss claims without first 11 resorting to the manufacturer’s information dispute procedure where the information was not 12 properly displayed on the face of the warranty.” Opp’n 19 (quotations omitted). Nilsen contends 13 that Tesla’s informal dispute resolution procedure does not meet the requirements of the MMWA, 14 and therefore Nilsen was excused from complying with it. Id. at 20. 15 The Court finds that Nilsen’s MMWA claim is not subject to dismissal for failure to plead 16 compliance with Tesla’s informal dispute resolution procedures. Numerous courts have held that 17 failure to participate in the warrantor’s informal dispute settlement procedure is an affirmative 18 defense that a plaintiff need not negate the complaint. See Lessin v. Ford Motor Co., No. 3:19- 19 CV-01082-AJB-AHG, 2020 WL 6544705, at *6 (S.D. Cal. Nov. 6, 2020); Glenn v. Hyundai 20 Motor Am., No. SA CV 15-2052-DOC-KESx, 2016 WL 3621280, at *14 (C.D. Cal. June 24, 21 2016); Lohr v. Nissan N. Am., Inc., No. C16-1023RSM, 2017 WL 1037555, at *8 (W.D. Wash. 22 Mar. 17, 2017); cf. also Maronyan v. Toyota Motor Sales, U.S.A., Inc., 658 F.3d 1038, 1040, 1043 23 (9th Cir. 2011) (holding that § 2310(a) is a prudential and not jurisdictional prerequisite to filing 24 an MMWA claim and that failure to exhaust is an affirmative defense “that may be defeated by 25 compelling reasons”). The Court finds that Nilsen’s failure to allege that he complied with Tesla’s 26 informal dispute resolution procedures does not provide a basis to dismiss his MMWA claim. 27 Tesla’s motion to dismiss Nilsen’s MMWA claim is DENIED. 28 8 5. Request to Add Claims Under California Commercial Code 1 Nilsen has requested that it be permitted to include claims under the California 2 Commercial Code in an amended pleading. Opp’n 13-14. Tesla does not oppose this request. 3 Reply 5. Nilsen may include such claims in any amended pleading. 4 5 III. A. 6 7 8 MOTION TO STRIKE Legal Standard Federal Rule of Civil Procedure 12(f) permits a court to “strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). The function of a motion made under this rule is “to avoid the expenditure of time 9 and money that must arise from litigating spurious issues by dispensing with those issues prior to 10 trial.” Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010). “While a Rule 11 United States District Court Northern District of California 12(f) motion provides the means to excise improper materials from pleadings, such motions are 12 generally disfavored because the motions may be used as delaying tactics and because of the 13 14 strong policy favoring resolution on the merits.” Barnes v. AT & T Pension Ben. PlanNonbargained Program, 718 F. Supp. 2d 1167, 1170 (N.D. Cal. 2010). Motions to strike “should 15 not be granted unless the matter to be stricken clearly could have no possible bearing on the 16 17 18 19 subject of the litigation.” Platte Anchor Bolt, Inc. v. IHI, Inc., 352 F. Supp. 2d 1048, 1057 (N.D. Cal. 2004). “If there is any doubt whether the portion to be stricken might bear on an issue in the litigation, the court should deny the motion.” Id. “With a motion to strike, just as with a motion to dismiss, the court should view the pleading in the light most favorable to the nonmoving party.” 20 Id. 21 22 23 B. Discussion Tesla requests that the Court strike (1) “all reference to recovery of replacement or restitution and related damages pursuant to Plaintiff’s third cause of action” on the basis that 24 California Civil Code § 1793.2(b) does not allow for such remedies, Mot. 4-5, 18; and (2) 25 “Plaintiff’s request for reimbursement of the amount paid under the purchase agreement, as well 26 as his prayer for incidental, consequential, and general damages which Plaintiff alleges result from 27 Defendant’s liability under the Magnuson-Moss Act” on the basis that Plaintiff has no grounds to 28 9 1 bring its MMWA claim, Mot. 21. 2 Tesla’s request to strike “all reference to recovery of replacement or restitution and related 3 damages” in Nilsen’s claim under Section 1793.2(b) is DENIED AS MOOT, as the Court has held 4 that the Complaint fails to state a claim for violation of Section 1793.2(b). See Lemke-Vega, 2023 5 WL 3604318, at *5. The Court now turns to Tesla’s request to strike Nilsen’s request for reimbursement of the United States District Court Northern District of California 6 7 amount paid under the purchase agreement, and his prayer for incidental, consequential, and 8 general damages under the MMWA. The only basis Tesla offers for its request to strike is that 9 Nilsen has no grounds to bring his MMWA claim. The Court denied Tesla’s motion to dismiss 10 Nilsen’s MMWA claim above. Accordingly, Tesla’s motion to strike Nilsen’s requests for 11 reimbursement and incidental, consequential, and general damages under the MMWA is DENIED. 12 IV. ORDER 13 For the foregoing reasons, IT IS HEREBY ORDERED that: 14 1. Tesla’s motion to dismiss Nilsen’s claim for breach of express warranty under the 15 Song-Beverly Act (Claim 1) is GRANTED WITH LEAVE TO AMEND. 16 2. Tesla’s motion to dismiss Nilsen’s claim for breach of the implied warranty of 17 merchantability under the Song-Beverly Act (Claim 2) is GRANTED WITH LEAVE 18 TO AMEND. 19 20 21 22 3. Tesla’s motion to dismiss Nilsen’s claim for violation of California Civil Code § 1793.2(b) (Claim 3) is GRANTED WITH LEAVE TO AMEND. 4. Tesla’s motion to dismiss Nilsen’s claim for violation of the Magnuson-Moss Warranty Act (Claim 4) is DENIED. 23 5. Tesla’s motion to strike is DENIED. 24 Any amended complaint shall be filed by no later than June 29, 2023. 25 26 27 Dated: May 31, 2023 ______________________________________ BETH LABSON FREEMAN United States District Judge 28 10
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