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holding under California law that “the economic loss rule bars Plaintiff's claim for fraudulent inducement by omission”
Summary of this case from Cohen v. Subaru of Am., Inc.Opinion
Case No. 18-ML-02814 AB (FFMx) Case No. CV-17-07338 AB (FFMx)
09-02-2020
IN RE: FORD MOTOR CO. DPS6 POWERSHIFT TRANSMISSION PRODUCTS LIABILITY LITIGATION This Document Relates to: Lorenzo Altamirano-Torres v. Ford Motor Co., et al.
ORDER GRANTING MOTION FOR JUDGMENT ON THE PLEADINGS
ANDRÉ BIROTTE JR., UNITED STATES DISTRICT COURT JUDGE
Before the Court is Defendant Ford Motor Company's ("Ford") Motion for Judgment on the Pleadings. ("Motion," Dkt. No. 839.) Plaintiff Lorenzo Altamirano-Torres ("Plaintiff") filed an opposition and Ford filed a reply. The Court heard oral argument on August 21, 2020. The Motion is GRANTED .
The Motion was filed in the MDL, so the docket numbers refer to the MDL docket, unless otherwise noted.
I. BACKGROUND
This is one of more than 1,000 member cases of the multidistrict litigation In re Ford Motor Co. DPS6 Powershift Transmission Prods. Liability Litig. , Case No. 18-ML-02814, concerning allegedly defective DPS6 dual-clutch powershift transmissions installed in certain Ford vehicles. Like most of the plaintiffs in the MDL, Plaintiff herein asserts claims for breach of express and implied warranties under the Song-Beverly Consumer Warranty Act, Cal. Civ. Code §§ 1790 - 1795.5 ("Song-Beverly" or "Act") (Counts 1 and 2), along with a request for a civil penalty under the Act, and three claims for fraudulent inducement by concealment (Count 3), by intentional misrepresentation (Count 4), and by negligent misrepresentation (Count 5), along with a request for punitive damages, all arising out of an allegedly defective DPS6 transmission with which his 2014 Ford Focus was equipped. See generally Complaint (Altamirano-Torres Dkt. No. 1-1).
Ford now moves for judgment on the pleadings on the fraud claims. Earlier in this MDL, the Court resolved motions for judgment on the pleadings as to four cases, issuing an order that addressed many of the same issues. See Order Re: Motions for Judgment on the Pleadings ("Prior Order," Dkt. No. 301). Some of the Court's rulings herein differ in some respects from those in the Prior Order.
II. LEGAL STANDARD
"After the pleadings are closed – but early enough to not delay trial – a party may move for judgment on the pleadings." Fed. R. Civ. Proc. 12(c). The standard for assessing a Rule 12(c) motion for judgment on the pleadings is the same as the standard for a Rule 12(b)(6) motion to dismiss. Enron Oil Trading & Trans. Co. v. Walbrook Ins. Co., Ltd. , 132 F.3d 526, 529 (9th Cir. 1997).
To defeat a Rule 12(b)(6) motion to dismiss, the complaint must provide enough factual detail to "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The complaint must also be "plausible on its face," that is, the "complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). A plaintiff's "factual allegations must be enough to raise a right to relief above the speculative level." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Labels, conclusions, and "a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955.
A court may dismiss a complaint under Rule 12(b)(6) based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1988). When ruling on a Rule 12(b)(6) motion, "a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus , 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). But a court is "not bound to accept as true a legal conclusion couched as a factual allegation." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (internal quotation marks omitted).
The court generally may not consider materials other than facts alleged in the complaint and documents that are made a part of the complaint. Anderson v. Angelone , 86 F.3d 932, 934 (9th Cir. 1996). However, a court may consider other materials if (1) the authenticity of the materials is not disputed and (2) the plaintiff has alleged the existence of the materials in the complaint or the complaint "necessarily relies" on the materials. Lee v. City of Los Angeles , 250 F.3d 668, 688 (9th Cir. 2001) (citation omitted). The court may also take judicial notice of undisputed facts that are contained in extrinsic materials. Mir v. Little Co. of Mary Hosp. , 844 F.2d 646, 649 (9th Cir. 1988) ; Lee , 250 F.3d at 689-90.
III. DISCUSSION
A. Plaintiff's Claims for Intentional and Negligent Misrepresentation Fail.
The elements of intentional misrepresentation are: "(a) misrepresentation; (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage." CACI 1900 ; Engalla v. Permanente Medical Group, Inc. , 15 Cal.4th 951, 974, 64 Cal.Rptr.2d 843, 938 P.2d 903 (1997). "[F]alse representations made recklessly and without regard for their truth in order to induce action by another are the equivalent of misrepresentations knowingly and intentionally uttered." Id. Claims for fraud based on intentional and negligent misrepresentation are identical except for the intent requirement. Salone v. Bank of Am., N.A. , No. 5:17-cv-01721-AB, 2018 WL 3815041, at *4 (C.D. Cal. June 22, 2018). As relevant here, both claims require "a positive assertion, not merely an omission." Lopez v. Nissan N. Am., Inc. , 201 Cal.App.4th 572, 596, 135 Cal.Rptr.3d 116 (2011).
In federal court, "[in] alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). " Rule 9(b) requires a plaintiff averring fraud to plead the ‘who, what, when, where, and how’ of the alleged misconduct." Vess v. Ciba-Geigy Corp. USA , 317 F.3d 1097, 1106 (9th Cir. 2003).
As in the previous cases, Plaintiff alleges that Ford engaged in two kinds of misrepresentations and/or omissions: (1) that Ford advertised the DPS6 transmission as an "automatic transmission," but that it was not a typical automatic transmission, and (2) that Ford represented that the vehicles would perform in a certain way, but defects in the DPS6 transmission caused performance issues inconsistent with Ford's representations. Ford contends that Plaintiff did not plead either kind of misrepresentation adequately. As before, for purposes of this motion, the parties do not address the intentional and negligent misrepresentation claims separately, which makes sense because the arguments turn on whether a cognizable misrepresentation was adequately alleged. The Court will likewise address the claims together.
1. Plaintiff's Misrepresentation Claims Based on Performance Representations Fail.
Regarding the performance issues, Plaintiff alleges that he reviewed "marketing brochures, viewed television commercials and/or heard radio commercials about the qualities of the" Focus. See Compl. ¶ 71. Plaintiff also alleges that Ford's marketing brochure for the Focus stated that the "On Titanium, standard PowerShift 6-speed automatic delivers torque to the drive wheels 100% of the time during shifts, supplying quick response and acceleration," id. ¶ 146(a), but that the vehicle "had extremely poor handling on all roads, as Plaintiff's drive was repeatedly interrupted by jerky shifts and hesitation." Id. ¶ 147. The Court previously found similar allegations inadequate: the allegations in paragraph 71 do not specify what materials Plaintiff viewed and what performance claims therein he relied upon, while the allegation in paragraph 146(a) refers to a marketing brochure, but does not allege that Plaintiff viewed and relied upon it. Plaintiff fails to distinguish between his misrepresentation claims insofar as they are based on the performance of the vehicle, versus the nature of the transmission. Plaintiff fails to respond to Ford's argument regarding the performance basis of these claims, and fails to point to any more robust allegations in the Complaint. Plaintiff's failure to respond to this argument constitutes his abandonment of the performance basis of his misrepresentation claims. Ford is therefore entitled to judgment on this aspect of those claims.
2. Plaintiff's Misrepresentation Claims Based on the "Automatic Transmission" Representation Fail.
Ford also argues that the misrepresentation claims fail insofar as Plaintiff alleges Ford misrepresented that the vehicle was equipped with an "automatic transmission." Ford points to dictionary definitions of the term "automatic" to show that no reasonable consumer would interpret the term "automatic" in the way that Plaintiff claims he did. As Plaintiff points out, the Court rejected this argument in its earlier Order, see Prior Order p. 6, however, upon further consideration, it prevails.
For the reasons Ford states in its reply, the Court is not bound by the Prior Order on this issue.
Ford contends, and Plaintiff does not dispute, that Plaintiff's misrepresentation claims are governed by the "reasonable consumer" test. Williams v. Gerber Prods. Co. , 552 F.3d 934, 938 (9th Cir. 2008). This standard requires Plaintiff to "show that members of the public are likely to be deceived." Id. (quotation marks and citation omitted); see also Bank of West v. Superior Court , 2 Cal.4th 1254, 1257, 10 Cal.Rptr.2d 538, 833 P.2d 545 (1992). This requires more than a mere possibility that a representation "might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner." Lavie v. Procter & Gamble Co. , 105 Cal.App.4th 496, 508, 129 Cal.Rptr.2d 486 (2003) (rejecting position that "unreasonable expectations or perceptions of the least sophisticated consumer or most gullible consumer would be protected," instead the test looks to "the likely effect on the normally credulous consumer"). The reasonable consumer standard requires a probability "that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled." Id.
The above elaboration of the reasonable consumer test was taken largely from Becerra v. Dr Pepper/Seven Up, Inc. , 945 F.3d 1225 (9th Cir. 2019), an instructive case. As relevant, the Ninth Circuit found that, on a motion to dismiss, the district court properly relied on dictionary definitions of the term "diet" to assess a plaintiff's claim that the adjective "diet" used to describe soda was a misrepresentation because it " ‘reasonably’ " caused her to believe that the soda would " ‘assist in weight loss or healthy weight management.’ " Becerra , 945 F.3d at 1229. The Court found that the plaintiff's claimed understanding of the adjective "diet" was unreasonable in light of dictionary definitions showing that it means simply having fewer calories than usual. Id. ("In context, the use of ‘diet’ in a soft drink's brand name is understood as a relative claim about the calorie content of that soft drink compared to the same brand's ‘regular’ (full-caloric) option."). The Court characterized the plaintiff's inference that a "diet" soda assisted with weight loss as an unreasonable assumption. Id. at 1229-1230. Plaintiff fails entirely to distinguish Becerra and the Court finds it analogous.
Plaintiff argues that the Court cannot adjudicate the reasonableness of Plaintiff's understanding on a motion to dismiss based on dictionary definitions, and that a trial is required. But this is exactly how the claim in Becerra was disposed of: the Ninth Circuit affirmed the trial court's determination, on a motion to dismiss, that the plaintiff's understanding was not reasonable based solely on dictionary definitions.
Here, Plaintiff alleges that the window stickers stating the vehicle was equipped with an "automatic" transmission were misleading because the vehicle "was not actually equipped with an automatic transmission." Compl. ¶ 70. As for why the transmission was not actually automatic, Plaintiff alleges that is was not a "typical" (id. ¶ 13) or "traditional" (id. ¶147) automatic transmission because "[t]ypical automatic transmissions" use torque converters and "wet" clutches (id. ¶¶ 15, 18) while the DPS6 transmission does not. Id. ¶ 18. But multiple dictionary definitions of the adjective "automatic" undermine the reasonableness of Plaintiff's claimed understanding. Merriam-Webster defines the adjective "automatic" as something done "involuntarily ... unconsciously ... as if by machine" or as "having a self-acting or self-regulating mechanism." See https://www.merriam-webster.com/dictionary/automatic (last visited Aug. 20, 2020). Merriam-Webster also uses "an automatic transmission" as its main example for the definition "having a self-acting or self-regulating mechanism." Id. Other dictionaries provide similar definitions and use "automatic transmission" as an example. See, e.g. , American Heritage Dictionary (5th ed. 2020), https://www.ahdictionary.com/word/search.html?q=automatic (last visited Aug. 20, 2020) ("A transmission or a motor vehicle with an automatic gear-shifting mechanism"); Cambridge Dictionary, https://dictionary-cambridge-org.nwulib.nwu.ac.za/dictionary/english/automatic (last visited Aug. 20, 2020) ("a vehicle in which the driver does not have to change the gears, or ... a feature of such a vehicle"); Collins Dictionary, https://www.collinsdictionary.com/dictionary/english/automatic (last visited Aug. 20, 2020) ("has controls that enable it to perform a task without needing to be constantly operated by a person"; "An automatic is a car in which the gears change automatically as the car's speed increases or decreases.").
Thus, when the adjective "automatic" modifies the noun "transmission," it describes how the transmission operates from the driver's point of view: it denotes that the transmission is self -acting or self -regulating, meaning that the transmission shifts gears on its own and the driver does not have to. Plaintiff claims that the adjective automatic indicates something about the internal componentry of the transmission (torque converters, wet clutches) as opposed to how it operates from the driver's point of view (that its gears shift without the driver having to shift them). But Plaintiff's claimed understanding is not supported by the ordinary dictionary definitions of the word, and Plaintiff provides no argument whatsoever to suggest that his claimed understanding concerning the internal componentry of a transmission is one than an ordinary reasonable consumer would share. That an ordinary reasonable consumer would have such expectations—that an automatic transmission has a wet clutch, not a dry clutch, for example—is simply implausible and the dictionary definitions reinforce this.
The Complaint, too, includes allegations consistent with the dictionary definitions of the word and that suggest Plaintiff's claimed expectation about the components is not reasonable. The Complaint describes "manual transmissions" as having a "driver-controlled clutch" that the driver controls by using a foot pedal that causes the clutch to mechanically engage and disengage the engine from the transmission. Compl. ¶ 14. "In contrast, typical automatic transmissions free the driver from operating the clutch [with a] torque converter [that] substitutes for the manual transmission's clutch, transmitting power from the engine to the transmission through a fluid medium." Id. ¶ 15 (emphasis added). Thus, even according to Plaintiff's own allegations, from a consumer's point of view the difference between a manual transmission and an automatic transmission is that a manual requires the driver to shift gears, whereas a "typical" automatic "frees the driver from operating the clutch," which is what the transmission here did. For these reasons, the Court concludes that Plaintiff's claimed understanding of "automatic transmission" fails the reasonable consumer test, so it cannot support his misrepresentation claims.
Furthermore, the Complaint includes an allegation that all but admits that the transmission did in fact operate as an automatic in the way a reasonable consumer would expect: "a test drive of the vehicle [ ] reinforced Plaintiff's belief that the Vehicle was in fact equipped with an automatic transmission." Compl. ¶ 70. This allegation implies that Plaintiff did not have to use the clutch to shift gears. A test drive would establish that the transmission shifted gears on its own without the driver shifting them (consistent with a "typical automatic" as defined in Compl. ¶ 15), but it would not reveal to the driver the particulars of the transmission's componentry. If "automatic" referred to the internal componentry of the transmission, as Plaintiff now claims, he would have had to do more than merely test drive it to ascertain whether it had those components and was actually automatic. No such allegations are pled here: Plaintiff does not allege that "automatic" connoted to him certain specific componentry, or that he asked about the internal componentry or sought to inspect it, or that anyone told him anything at all about it before purchase. Plaintiff's misrepresentation claims therefore depend on an unreasonable and frankly implausible claimed understanding about what the phrase "automatic transmission" means. Ford is therefore entitled to judgment on the pleadings on Plaintiff's misrepresentation claims.
B. Plaintiff's Claim for Fraudulent Omissions Fails.
A claim for fraud based on concealment or omission requires that: (1) the defendant must have concealed or suppressed a material fact; (2) the defendant must have been under a duty to disclose the fact to the plaintiff; (3) the defendant must have intentionally concealed or suppressed the fact with intent to defraud the plaintiff; (4) the plaintiff must have been unaware of the fact and would have acted otherwise if he had known of the concealed or suppressed fact; and (5) as a result of the concealment or suppression of the fact, the plaintiff sustained damage. Boschma v. Home Loan Center, Inc. , 198 Cal.App.4th 230, 248, 129 Cal.Rptr.3d 874 (2011). Fraudulent omission claims are subject to Rule 9(b). Kearns v. Ford Motor Co. , 567 F.3d 1120, 1126–27 (9th Cir. 2009). "To plead the existence of an omission sufficient to support a fraudulent concealment claim, a plaintiff ‘must describe the content of the omission and where the omitted information should or could have been revealed.’ " Tapia v. Davol, Inc. , 116 F. Supp. 3d 1149, 1163 (S.D. Cal. 2015) (citation omitted).
1. Any Claim for Fraud By Omission Based on Partial Misrepresentation Fails.
Insofar as Plaintiff asserts a claim for fraudulent omission based on a partial misrepresentation, that claim fails. "A plaintiff arguing a duty to disclose additional facts arising from a defendant's misleading partial representation must also satisfy the Rule 9(b) standard." Espineli v. Toyota Motor Sales, U.S.A., Inc. , No. 2:17-CV-00698-KJM-CKD, 2019 WL 2249605, at *4 (E.D. Cal. May 24, 2019). Ford argues that if Plaintiff has not sufficiently alleged a misrepresentation, then he also has not alleged a partial misrepresentation. Plaintiff does not respond to this argument, and therefore concedes the point. As discussed above, Plaintiff has not sufficiently alleged a misrepresentation, so any partial misrepresentation claim likewise fails.
2. Plaintiff Has Not Pled An Omission With Particularity.
Plaintiff fails to plead the omission with particularity. The gravamen of the Complaint is that Ford failed to disclose a defect in the DPS6 transmission. The Complaint describes the fraudulently omitted/concealed "Transmission Defect" as as follows: the DPS6 transmission "is defective in design and/or manufacture in that, among other problems, the transmission consistently slips, bucks, kicks, jerks, harshly engages, has premature internal wear, sudden acceleration, delay in downshifts, delayed acceleration, difficulty stopping the vehicle, and, eventually, premature transmission failure (the ‘Transmission Defect’)." Compl. ¶ 21. This is the exact same language that the Court held inadequate in the Prior Order. See Prior Order p. 10. As stated therein, this merely describes performance problems with the vehicle and does not amount to identifying the defect that Ford failed allegedly to disclose. It is therefore insufficient. Accord Callaghan v. BMW of N. Am., LLC , No. 13-CV-04794-JD, 2014 WL 6629254, at *3 (N.D. Cal. Nov. 21, 2014) (fraudulent omission claim insufficiently pled where it asserted an unavoidable defect, but alleged only that the transmissions are prone to premature failure without alleging what the defect is); see also McQueen v. BMW of N. Am., LLC , No. CIV.A. 12-6674 SRC, 2013 WL 4607353, at *7 (D.N.J. Aug. 29, 2013) ("Throughout her Complaint, Plaintiff merely identifies the effects of the alleged defect: namely that the Vehicle shifts into neutral contrary to operator command. There is no identification as to what precisely the defect is, other than a conclusory allegation that the transmission system is defective."). Plaintiff argues that Ford suppressed the material fact that the "defective PowerShift transmissions were subject to a litany of problems," Opp'n 16:13-15, but again this is premised on a defect that Plaintiff's Complaint fails to allege with specificity.
Plaintiff contends that he should be allowed to amend the Complaint to cure these defects because he was able to do so in previous cases. But the parties stipulated to (and the Court adopted) a process and a deadline for seeking to amend the Complaint, and that deadline has passed. See Order (Dkt. No. 786) (by May 29, 2020, Plaintiff was to provide Ford a draft of his intended amended complaint, with the parties to meet and confer thereafter about Ford's response thereto). The fact that Plaintiff was clearly on notice of this deficiency in his Complaint but failed to amend the Complaint is not the diligence required to establish good cause to amend the scheduling order, as necessary to permit an amendment at this stage. The fact that Ford was going to file its motion regardless does not obviate Plaintiff's obligation to attempt to cure obvious deficiencies in a Complaint when it can do so before Court intervention. But, regardless, amendment would be futile because the claim is barred by the economic loss rule, discussed next.
3. Plaintiff's Fraudulent Omission Claim is Barred By the Economic Loss Rule.
Ford also argues that the fraudulent omission claims are barred by the economic loss rule. "Economic loss" consists of "damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits—without any claim of personal injury or damages to other property." Robinson Helicopter Co., Inc. v. Dana Corp. , 34 Cal.4th 979, 988, 22 Cal.Rptr.3d 352, 102 P.3d 268 (2004) (internal quotation omitted). "[T]he economic loss rule provides [that] where a purchaser's expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only ‘economic’ losses." Id. (internal quotation omitted). The rule "bar[s] a plaintiff's tort recovery of economic damages unless such damages are accompanied by some form of physical harm (i.e., personal injury or property damage)." North American Chemical Co. v. Superior Court , 59 Cal.App.4th 764, 777, 69 Cal.Rptr.2d 466 (1997). Thus, "in actions arising from the sale or purchase of a defective product, plaintiffs seeking economic losses must be able to demonstrate that either physical damage to property (other than the defective product itself) or personal injury accompanied such losses; if they cannot, then they would be precluded from any tort recovery in strict liability or negligence." Ladore v. Sony Computer Entertainment America, LLC , 75 F.Supp.3d 1065, 1075 (N.D. Cal. 2014) (quoting North American Chemical Co. , 59 Cal.App.4th at 780, 69 Cal.Rptr.2d 466.) Accordingly, a plaintiff cannot assert tort claims based on a product not performing as promised—that is simply an economic loss recoverable in a contract-based action. The purpose of this rule is to "prevent[ ] the law of contract and the law of tort from dissolving into the other." Robinson Helicopter , 34 Cal.4th at 988, 22 Cal.Rptr.3d 352, 102 P.3d 268 (internal quotation omitted).
Here, Plaintiff's harm is purely economic and derives from Ford's alleged breach of its warranty obligation to fix or replace the vehicle if it is defective. Stated differently, the foundation of Plaintiff's claim is that his expectations about the vehicle were frustrated because it did not work properly as Ford promised it would. Thus, it appears that the economic loss rule applies. But Plaintiff argues it does not.
The crux of the parties’ dispute about the application of the economic loss rule concerns the scope of an exception to it set forth in Robinson Helicopter. Ford acknowledges that Robinson Helicopter and its predecessor cases hold that fraud claims based on misrepresentations may not be subject to the economic loss rule, so Ford does not seek judgment on the fraudulent misrepresentation claims based on the economic loss rule. However, Ford argues that fraudulent inducement claims based on omissions are subject to the economic loss rule. Ford presented this argument in its prior motion for judgment on the pleadings. In its Prior Order, the Court found "insufficient support in the California cases Ford cites for its distinction between fraudulent inducement by misrepresentation and fraudulent inducement by omission, and therefore declines to apply the economic loss rule to the omission claims at this stage." Prior Order p. 10. Upon review of the further briefing in this Motion, including cases applying Robinson Helicopter , the Court concludes that Plaintiff's fraudulent omission claims are barred by the economic loss rule.
Among the many cases referenced are Superior Court orders applying the economic loss rule to bar analogous if not identical fraudulent omission claims. See Ford's Request for Judicial Notice (Dkt. No. 892). The Court takes notice of these orders.
In Robinson Helicopter , Dana fraudulently misrepresented to Robinson that a helicopter clutch it supplied to Robinson had a certain level of hardness, per Robinson's specifications, and presented FAA-required certificates of conformance to that effect. Robinson Helicopter , 34 Cal.4th at 985-987, 22 Cal.Rptr.3d 352, 102 P.3d 268. At some point, after years of doing business, Dana changed the hardness of its clutches, failed to inform Robinson of that, and instead continued to supply certificates attesting to the prior level of hardness. Id. The clutches had an unacceptably high failure rate and Robinson had to undertake extensive efforts at significant expense to figure this out and correct the problem by recalling and replacing the clutches. Robinson sued Dana for fraudulent misrepresentation or fraud in performance of the contract in connection with Dana's supplying the false certificates of conformance. Id. at 984, 22 Cal.Rptr.3d 352, 102 P.3d 268. The issue was whether Robinson's fraudulent misrepresentation claim against Dana was barred by the economic loss rule. The Court focused on Dana's provision of the false certificates of conformance, found that such conduct was independent of the breach of contract, and concluded that the claim survived the economic loss rule: "We hold the economic loss rule does not bar Robinson's fraud and intentional misrepresentation claims because they were independent of Dana's breach of contract." Id. at 991, 22 Cal.Rptr.3d 352, 102 P.3d 268. The Court further emphasized "[o]ur holding today is narrow in scope and limited to a defendant's affirmative misrepresentations on which a plaintiff relies and which expose a plaintiff to liability for personal damages independent of the plaintiff's economic loss." Id. at 993, 22 Cal.Rptr.3d 352, 102 P.3d 268. Thus, Robinson Helicopter provides that a claim for fraud by affirmative misrepresentation may avoid the economic loss rule, but it does not establish any other exception, such as a for a claim for fraud by omission, as Plaintiff argues for in this case. The Court therefore rejects Plaintiff's broad interpretation of the Robinson Helicopter exception.
Plaintiff also argues that Robinson Helicopters recognizes an exception where a plaintiff is exposed to potential liability for a defective product. This is not quite accurate. The full quote is cited above, and the exception is clearly premised on "a defendant's affirmative misrepresentations." Id. at 991, 22 Cal.Rptr.3d 352, 102 P.3d 268. Furthermore, the liability for personal damages to which Robinson Helicopters referred was liability to third parties "for personal damages if a helicopter crashed and to disciplinary action by the FAA"—risks that established that Dana's fraud in supplying the inaccurate certificates was independent of a breach of contract. Id. Here, Plaintiff's damages are purely economic and derive from Ford's alleged breach of it warranty to repair or replace the vehicle. Plaintiff has not alleged fraudulent conduct similar to the issuance of false certificates in Robinson Helicopter , or conduct that is otherwise sufficiently independent of Ford's contractual/warranty obligations to repair or replace the vehicle, as would be required to exempt his fraudulent omission claim from the economic loss rule. To the contrary, Ford's allegedly tortious omission was its failure to disclose a defect in the vehicle—conduct that overlaps with Ford's alleged breach of its warranty obligations.
Plaintiff posits other reasons why the economic loss rule does not apply here, but none are convincing. Primarily, Plaintiff insists that the economic loss rule applies only in the context of a contract claim, whereas his non-fraud claims are statutory claims under Song-Beverly. But the economic loss rule turns not on what claims a plaintiff alleges, but rather on the harm caused (whether it is purely economic) and on the nature of the conduct that caused it, and more particularly on whether that conduct overlaps with a contractual obligation or is independent of it. Furthermore, the foundation of Plaintiff's Song-Beverly claims is the warranty (contract) that Ford allegedly breached by failing to fix his vehicle or repurchase it, and the nature of Plaintiff's damages are purely economic—he alleges no physical injury or damage to any property (other than the vehicle). The fact that Song-Beverly provides Plaintiff statutory remedies for economic harm caused by the breach of a warranty does not exempt Plaintiff's associated tort claims from the economic loss rule.
Finally, to the extent lower court cases arguably reflect some uncertainty about the scope of the Robinson Helicopter exception, "federal courts are bound by the pronouncements of the state's highest court on applicable state law." Ticknor v. Choice Hotels Int'l, Inc. , 265 F.3d 931, 939 (9th Cir. 2001). This Court, sitting in diversity, must honor the contours of California law as set forth by the California Supreme Court, and is "not free to create new exceptions to it." Clemens v. DaimlerChrysler Corp. , 534 F.3d 1017, 1024 (9th Cir. 2008) (citing Day & Zimmermann, Inc. v. Challoner , 423 U.S. 3, 4, 96 S.Ct. 167, 46 L.Ed.2d 3 (1975)).
For all of these reasons, the economic loss rule bars Plaintiff's claim for fraudulent inducement by omission. Ford is therefore entitled to judgment on this claim.
At oral argument, both sides identified certain cases for the Court's further review. These cases only reinforce the reasoning above. Ford referred the Court to four cases wherein the trial court applied the economic loss rule to fraudulent omission claims indistinguishable from those here, finding the narrow Robinson Helicopter exception inapplicable. See Macias v. Chrysler , No. CV 17-1823, 2020 WL 4723976, at *2 (C.D. Cal. Aug. 13, 2020) (applying economic loss rule to fraudulent omission claim); Kelsey v. Nissan N. Am. , No. CV 20-4835 MRW, 2020 WL 4592744, at *2 (C.D. Cal. July 15, 2020) (citing "numerous California federal courts sitting in diversity [that] have applied the economic loss rule to prohibit a follow-on fraudulent inducement claim in run-of-the-mill Song-Beverly Act warranty breach actions"); Traba v. Ford Motor Co. , No. CV 18-808 SVW (GJSx), 2018 WL 6038302 at *4 (C.D. Cal. 2018) (economic loss rule applies because defendant's fraudulent concealment "resulted only in Plaintiffs’ disappointed expectations," and plaintiffs "do not claim that the vehicle's alleged defects caused any personal injury or damage to property other than the vehicle"); Leon v. Kia Motors America, Inc. (Orange Cnty Cal. Super. 30-2019-01093543-CU-BC-CJC) (Order 12/13/2019), RJN Ex. G (applying economic loss rule to fraudulent concealment/omission claim).
Plaintiff referred the Court to two cases declining to apply the economic loss rule, but neither aids him. In Van Halen v. Berkeley Hall Sch. Found., Inc. , 2014 WL 7192559, at *7-*8 (Cal. Ct. App. Dec. 17, 2014), the economic loss rule did not apply because the plaintiffs alleged actual non-economic injury. Furthermore, the relevant discussion was about a fraudulent misrepresentation claim, not a fraudulent omission claim. Antiques Off Fair Oaks, LLC v. Galapagos Holdings ,LLC , No. B254774, 2015 WL 9412804, at *7 (Cal. Ct. App. Dec. 22, 2015) is also inapt because it too concerned a fraudulent misrepresentation, not a fraudulent omission.
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IV. CONCLUSION
For the foregoing reasons, the Court GRANTS Ford's Motion for Judgment on the Pleadings as to all of Plaintiff's fraud claims.