Opinion
CASE NO. C13-518-MJP
02-24-2014
AMY COE, et. al., Plaintiffs, v. PHILIPS ORAL HEALTHCARE INC, Defendant.
ORDER ON MOTIONS TO DISMISS
(DKT. NOS. 35, 43)
This matter comes before the Court on the motions of Defendant Philips Oral Health Care Inc., to dismiss. (Dkt. Nos. 35, 43). The Court has considered the motions, the responses, the replies, all related papers, and heard oral argument on January 28, 2014. Fully informed, the Court DENIES Philips' motion to dismiss for lack of Article III standing. (Dkt. No. 35.) The Court GRANTS Philips' motion to dismiss for failure to state a claim in part and DENIES it in part. (Dkt. No. 43.)
Background
Plaintiffs bring this suit as a putative class action against the Philips Oral Health Care, the maker of Sonicare electronic toothbrushes (referred to hereafter as "Sonicare Toothbrushes"). Plaintiffs allege the metal shaft of the toothbrush, which controls the brush speed, becomes loose, thereby reducing the number of brushstrokes and quality of the cleaning. (Dkt. No. 20 at 1-2.) Plaintiffs characterize this as a "common and inherent defect" in all Sonicare Toothbrushes. (Id. at 3.) Yet, Plaintiffs allege the product packaging and product specification posted on the website indicate the vibrating shaft of the toothbrush, will produce 31,000 "brushstrokes" per minute and "provide superior cleaning as compared to a manual toothbrush." (Id. at 2.) Philips provides a two-year warranty for all Sonicare Toothbrushes. (Id.) After two-years, Philips offers a 30% discount on the purchase of a new toothbrush. (Id.)
Plaintiffs allege Philips is aware of the defect. (Id. at 4.) They claim consumers in the United Kingdom are told a loose handle requires replacement of the toothbrush. (Id. at 77.) Consumers in the United Kingdom are then sent a new toothbrush. (Id. at 4.) In the United States, in contrast, consumers are not told to seek a replacement if the speed of the brushstrokes slows, but to replace the toothbrush heads.
The Complaint is brought by four named Plaintiffs. New York resident Lance Ng purchased a Sonicare model HX6972 in 2010 or 2011 from an online seller. (Id. at 11.) He alleges that within a few months, he "noticed the vibrations were no longer effectively being transmitted to the brush head and the toothbrush was no longer providing the superior cleaning advertised or properly cleaning his teeth." (Id.) Mr. Ng exercised Philips' warranty and was sent a new toothbrush. (Id.) He claims the replacement suffered from the defect, with the shaft on the replacement toothbrush becoming loose—resulting in a slower brush head speed—within a year and a half after receiving it from Philips. He again exercised his warranty and was given a replacement toothbrush. (Id.) When the second replacement toothbrush experienced the same purported defect outside the warranty period, Mr. Ng paid a third party to repair it.
The second Plaintiff, Robert Bueso, is a Florida resident. (Id. at 12.) He purchased a Sonicare Healthy White in 2010 at a Costco in Florida. He claims the toothbrush manifested "the defect" within two years of use. In April 2013, more than two years after he purchased the toothbrush, Mr. Bueso called Philips and demanded a full refund based on his belief "Philips could not provide him with a defect free toothbrush." (Id.)
Plaintiff Amy Coe purchased a Sonicare for Kids toothbrush in 2011. (Id. at 13) She claims the toothbrush failed "long before the end of the expected useful life" as a "result of the Defect." She never sought to exercise her warranty rights. (Id.)
Finally, Connecticut resident Sam Chawla purchased a Flexcare+ model approximately three years before this lawsuit commenced. (Id.) Mr. Chawla claims his toothbrush's vibrations became less powerful and the toothbrush was not providing the superior cleaning as advertised. . (Id. at 14.) He bought new brush heads in an attempt to fix the problem. He never exercised his warranty. (Id.)
Plaintiffs' Complaint includes seven claims for relief. Plaintiffs' first claim, brought on behalf of the four named Plaintiffs and the entire putative class, alleges a violation of the Magnuson-Moss Warranty Act, 15 U.S.C. §2301 et. seq. The second and third claims are brought on behalf of the four named Plaintiffs and the Florida, New Jersey, Connecticut, and New York putative subclasses and assert claims for breach of express and implied warranties. The fourth claim is on behalf of all four named Plaintiffs and the proposed national class for violations of the Washington Consumer Protection Act, RCW § 19.86.010 et seq. The fifth claim is brought on behalf of Plaintiff Chawla and the Connecticut subclass for violations of Connecticut Unfair Trade Practices Act, Conn. Gen. stat. §§42-110a et. seq. The sixth claim is brought on behalf of Plaintiff Ng and the New York subclass for violations of New York General Business Law, §§349, 350. The seventh, and final claim, is brought on behalf Plaintiff Coe and the New Jersey subclass and alleges violations of the New Jersey Consumer Fraud Act, N.J.S. §58:8-1, et. seq.
Philips moves to dismiss Plaintiffs' claims on a number of grounds. First, it argues Plaintiffs cannot meet Article III standing requirements. (Dkt. No. 35.) Second, Philips asserts that Plaintiffs' consumer protection claims, which sound in fraud, do not meet the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). (Dkt. No. 43 at 13.) Third, Philips contends Plaintiffs' allegations fail to plead the elements of relevant Connecticut, Florida, New York, New Jersey express/implied warranty laws and the Magnuson-Moss Warranty Act. (Id. at 19-21.)
Discussion
A. Article III Standing
To establish standing under the "case or controversy" requirement of Article III of the United States Constitution, a plaintiff must demonstrate a sufficient personal stake in the outcome to justify the invocation of judicial process. Baker v. Carr, 369 U.S. 186, 204 (1962). To have standing under Article III, a plaintiff must demonstrate that (1) he has suffered an actual or threatened injury in fact; (2) the injury is causally connected to the conduct complained of; and (3) it is likely, and not merely speculative, that his injury will be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). The requisite injury-in-fact pursuant to Article III must be actual or threatened, and not merely speculative. Id.
Plaintiffs have the burden of establishing these elements to invoke federal jurisdiction. Id. However, in ruling on a motion to dismiss for want of standing, the "court[ ] must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party." Warm v. Seldin, 422 U.S. 490, 501 (1975). Thus, "[a]t the pleading stage," as in this case, "general factual allegations of injury resulting from the defendant's conduct may suffice...." Cardenas v. Anzai, 311 F.3d 929, 933 (9th Cir. 2002) (quoting Lujan, 504 U.S. at 561); see also Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1014 n. 3(1992) ("Lujan, since it involved the establishment of injury in fact at the summary judgment stage, required specific facts to be adduced by sworn testimony; had the same challenge to a generalized allegation of injury in fact been made at the pleading stage, it would have been unsuccessful."). The court cannot, however, interpret the complaint so liberally as to extend its jurisdiction beyond constitutional limits. Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981).
In this putative class action, "if none of the named plaintiffs purporting to represent a class establishes the requisite of a case or controversy with defendants, none may seek relief on behalf of himself or any other member of the class." Id. (quoting Lierboe v. State Farm Mut. Auto Ins. Co., 350 F.3d 1018, 1022 (9th Cir. 2003)). Finally, "Petitioners must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent." Warm v. Selding, 422 U.S. 490, 501 (1975).
Philips argues Plaintiffs lack standing because they have not suffered any injury, there is no causal connection, and a favorable decision would not provide any redress because Philips already offer a full warranty. (Dkt. No. 35 at 6-7.) The Court addresses each required element of standing.
The main element disputed is the first, injury in fact. Philips argues Plaintiffs have not suffered a concrete and particularized injury when (1) Plaintiffs do not claim worse dental hygiene from the alleged defect; and (2) Plaintiffs failed to exercise their warranty or request Philips cure the defect. (Dkt. No. 35 at 6.) In essence, because Plaintiffs received the benefit of the bargain—in the form of a full warranty—they cannot prove an injury. (Id. at 8.)
Plaintiffs assert a benefit of the bargain theory sufficient to find an injury in fact. Under established Ninth Circuit precedent, allegations a plaintiff overpaid for a product because it did not work as advertised, is legally cognizable loss for standing. Mazza v. American Honda Motor Co., Inc., 666 F.3d 581, 594-95 (9th Cir. 2012), accord In re Toyota Motor Corp. Unintended Acceleration Mktgs., Sales Practices, and Prods. Liab. Litig., 754 F.Supp.2d 1145, 1164 (C.D.Cal. 2010). In Mazza, the Ninth Circuit found a consumer's allegations he would not have purchased certain products had their labels been accurate and that he paid a premium due to the labeling were sufficient to plead injury in fact, even if the product contained a warranty. The court concluded that the plaintiffs alleged an injury in fact because they "were relieved of their money by Honda's deceptive conduct." Id. at 595. Like in Mazza, Plaintiffs allege they were "relieved of their money" and paid too much for their Sonicare Toothbrushes by Philips' failure to disclose a known defect. (Dkt. No. 20, at 11.) Plaintiffs Ng and Chawla allege additional injury, in the form of expenses incurred in attempts to repair or correct the alleged defect. (Id.)
The injury Plaintiffs allege is not hypothetical, which distinguishes it from Birdsong v. Apple, Inc., 590 F.3d 955 (9th Cir. 2009), the chief case relied on by Philips. In Birdsong, the plaintiffs claimed "that the iPod's inherent risk of hearing loss has reduced the value of their iPods and deprived them of the full benefit of their bargain because they cannot 'safely' listen to music." Thus, the injury claimed in Birdsong flowed from the potential for injury, not already incurred financial losses. Id. at 960. Nor is this case like Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234 (2005). In Thiedmann, the court found Mercedes-Benz actually fixed the defect in the vehicles. In contrast, Plaintiff Ng alleges Philips merely replaced one defective product with another. On the issue of standing, Thiedmann is neither authoritative nor applicable.
Plaintiffs also plead causation for Article III standing. Causation requires there be a "fairly ... trace[able]" connection between the alleged injury in fact and the alleged conduct of the defendant. Lujan, 504 U.S. at 506-61. Here, there is no real dispute that plaintiffs plead but for the alleged omissions, they would not have purchased the toothbrushes or taken steps to correct the defect. Philips takes issue with the lack of proof, but at the pleading stage, the bar is low for standing. Anzai, 311 F.3d 929. The Court finds it met.
Finally, Plaintiffs demonstrate redressability. Redressability means it is "likely" and not "merely speculative" that the plaintiff's injury will be remedied by the relief plaintiff seeks in bringing suit. Lujan, 504 U.S. at 506-61. Plaintiffs allege they paid too much for a defective product. Without question, the relief sought—compensation for the overpayment—remedies the alleged injury. Association of Public Agency Customers v. Bonneville Power Admin., 733 F.3d 939, 954 (9th Cir. 2013).
In sum, the Court finds all the elements of Article III standing met.
Philips also takes issue with Plaintiffs' standing to pursue claims for toothbrushes they did not purchase. (Dkt. No. 35, at 15.) Given the early stage of this case, the Court finds the allegations sufficient. While there is no controlling authority, the majority of federal courts that have addressed the issue hold a plaintiff may have standing to assert claims for unnamed class members based on products he or she did not purchase so long as the products and alleged misrepresentations are substantially similar. See, e.g., Donohue v. Apple, Inc., 871 F.Supp.2d 913, 921-22 (N.D.Cal. 2012) (collecting cases); accord Anderson v. Jamba Juice Co., 888 F.Supp.2d 1000, 1005 (N.D.Cal. 2012)("There is sufficient similarity between the products purchased (Mango-a-go-go and Razzmatazz smoothie kits) and the products not purchased (Strawberries Wild, Caribbean Passion, and Orange Dream Machine smoothie kits) because the same alleged misrepresentation was on all of the smoothie kits regardless of flavor."). Like Donohue and Anderson, Plaintiffs allege all Sonicare Toothbrushes have the same shaft defect, which ultimately slows the speed of the brush heads. (Dkt. No. 20 at 19.) Moreover, in this early stage of the litigation, Philips' argument is "better taken under the lens of typicality or adequacy of representation, rather than standing.") Forcellati v. Hyland's, Inc., 876 F.Supp.2d 1155, 1161 (C.D.Cal. 2012).
The cases cited by Philips do not support a different conclusion. First, Miller v. Ghirardelli Chocolate Co., 912 F. Supp. 2d 861 (N.D. Cal. 2012), is off point, because the court found the products in that case, various kinds of packaged chocolate, were dissimilar. Id. at 864. Here, in contrast, Plaintiffs allege the exact same shaft design (and defect) for all the toothbrushes at issue. In re Wash. Mut. Mortgage-Backed Secs. Litig., 276 F.R.D. 658 (W.D.Wash. 2011), addressed if Plaintiffs had standing under Section 11 of the Securities Act of 1933, not Article III. Id. It does not apply to the facts of this case.
The Court finds the allegations sufficient to establish Plaintiffs' standing to sue for models of toothbrushes they did not purchase.
B. Warranty Claims
In considering Philips' motion to dismiss under Federal Rule 12(b)(6), this Court must accept all of the Complaint's well-pled factual allegations as true and must draw all reasonable inferences in Plaintiffs' favor. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). However, Rule 12(b)(6) requires a court to dismiss a claim when "there is no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A plaintiff must plead "more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 44, 570 (2007)).
1. Breach of Implied Warranty Claims
Philips argues Plaintiffs lack contractual privity because they did not purchase their toothbrushes directly from Philips, and thus cannot maintain a claim for breach of implied warranty of merchantability. (Dkt. No. 43 at 21.)
As an initial matter, the Court addresses what substantive law applies to Plaintiffs' breach of implied warranty claims. Although Plaintiffs cite to Washington cases in their opposition to the motion, they offer no reason why the laws of this state would apply. (Dkt. No. 52 at 12)("The law of Washington might likely govern any implied warranty claims.") Moreover, Plaintiffs actually plead claims under the laws of the specific states where they purchased the toothbrushes—Florida, New Jersey, Connecticut, and New York—on behalf of consumers in those states. (Dkt. No. 20 at 35.) The Court therefore applies Florida, New Jersey, Connecticut, and New York law.
Even if the Court were faced with a dispute about what law governs, it would still apply Florida, New Jersey, Connecticut, and New York law. Patton v. Cox, 276 F.3d 493, 495 (9th Cir. 2002) (A federal court, sitting in diversity, must apply "the forum state's choice of law rules to determine the controlling substantive law"). Washington has adopted the Restatement (Second) of Conflict of Laws and engages in a conflict of law analysis for each issue. Singh v. Edwards Lifesciences Corp., 151 Wn. App. 137, 210 P.3d 337 (2009). Under that approach, the Court initially addresses whether a conflict between the law of Washington and those of Florida, New Jersey, Connecticut, and New York exists. For the purposes of this analysis only, the Court assumes one does, because Washington recognizes a third-party beneficiary exception to the privity requirement and the other states do not.
Next, the Court applies the "most significant relationship" test to determine which substantive law to apply. The "most significant relationship" test requires a two-step inquiry. Johnson v. Spider Staging Corp., 87 Wn.2d 577, 580 (1976). First, the Court must determine which state has the most significant relationship to the cause of action. Id. Second, if the relevant contacts to the case are balanced, then the Court must consider "'the interests and public policies of potentially concerned states and ... the manner and extent of such policies as they relate to the transaction in issue.'" Id. at 582 (quoting Potlatch No. 1 Fed. Credit Union v. Kennedy, 76 Wn.2d 806, 810 (1969)). Plaintiffs reside in Florida, New Jersey, Connecticut, and New York. They allege purchasing the toothbrushes for use in their home states. The purported representations were made in these states, as was the alleged damage and injury. In contrast, the only connection to Washington is Philips' incorporation here. The significant relationship test weighs in favor of Florida, New Jersey, Connecticut, and New York.
Turning to the second step, the Court finds Plaintiffs' home states have substantial public policy interests in protecting their consumers from defective products. See Mazza, 666 F.3d 581)("Consumer protection laws are a creature of the state in which they are fashioned. A state may impose or not impose liability depending on policy choices made by state legislatures or, if legislators left a gap or ambiguity, by state supreme courts"). Because the states where Plaintiffs and the putative class reside have the most significant relationship to the facts of this case, the Court applies the laws of New Jersey, Connecticut, and New York.
Applying that law, the Court finds Plaintiffs fail to allege viable claims for breach of implied warranty of merchantability. The focus of the Parties' arguments and this Court's analysis is whether New Jersey, Connecticut, and New York require contractual privity between a consumer and the manufacturer. Plaintiffs do not argue they have contractual privity with Philips. Instead, they claim New Jersey, Connecticut, and New York have abandoned the requirement of privity. This is not true. See Hamon v. Digliani, 174 A.2d 294 (Conn. 1961) (privity of contract is required for an implied warranty claim); Hartford Cas. Ins. Co. v. PureTech Waters of Am., LLC, 2012 WL 1435221, at *2-4 (Conn. Super. Ct. Mar. 30, 2012) (discussing privity as a requirement for implied warranty of merchantability claim, but not for implied warranty of fitness for particular purpose); Duall Bldg. Restoration, Inc. v. 1143 E. Jersey Ave. Assocs., 652 A.2d 1225, 1229-30 (N. J. Super. Ct. App. Div. 1995)(same); Lexow & Jenkins, P.C. v. Hertz Commercial Leasing Corp., 122 A.D.2d 25, 26 (N.Y. App. Div. 1986) (vertical privity is required unless seller is the agent of manufacturer). Because Plaintiffs fail to allege vertical privity, a prerequisite for a breach of implied warranty of merchantability, the Court DISMISSES the claims.
Plaintiffs admit privity is a requirement in Florida: "Plaintiffs do not dispute that Florida generally requires vertical priviy for an implied warranty claim." (Dkt. No. 52 at 21.) By this concession, the complaint fails as to the Florida claim.
2. Breach of Express Warranty
Plaintiffs assert claims for breach of express warranty under the laws of Florida, New Jersey, Connecticut, and New York. (Dkt. 20 at 32.) Plaintiffs identify the following as express warranties: (1) Philips' two-year product guarantee; and (2) statements on the Sonicare Toothbrush packaging and product specifications. (Dkt. No. 20 at 23.)
Philips contends the Complaint fails to state a claim for either the two-year warranty or Sonicare Toothbrush packaging/specifications, because Plaintiffs fail to allege they relied on the supposed warranties before purchasing the products or that Philips breached them. The Court agrees.
Beginning with Philips' two-year product guarantee, it provides:
Philips Consumer Lifestyle guarantees its products for a period of two years after the date of purchase. In any defect due to faulty materials and workmanship occurs within this two-year guaranteed period, Philips Consumer Lifestyle will repair or replace the product at its expense.(Dkt. No. 20 at 69.)
Plaintiffs Coe, Bueso, and Chawla, who never exercised that warranty, cannot assert a claim for breach of express warranty. A manufacturer is "not liable for breach of express warranty merely because a product manifests recurring failures during the warranty period. Rather, the question is whether [a plaintiff] sought repairs, refunds, or replacements and, if so, whether [the manufacturer] responded appropriately under the warranty." Kent v. Hewlett-Packard Co., No. 09-5341 JF (PVT), 2010 WL 2681767, at *10 (N.D. Cal. July 6, 2010). Plaintiffs Coe, Bueso, and Chawla cannot establish a breach of express warranty, because there is no allegation they exercised that warranty or that Philips responded inappropriately. See David v. Am. Suzuki Motor Corp., 629 F.Supp.2d 1309, 1318 (S.D.Fla. 2009)(Manufacturer is only liable under the terms of the warranty); Matter of Cadillac V8-6-4 Class Action, 93 N.J. 412, 428 (1983)("Whether the...warranty was actually breached.. .depends.. .on the manufacturer's failure to meet its obligation to repair").
Plaintiffs' creative pleading does not save the Complaint. For example, Plaintiffs assert, "Philips is unable or unwilling to provide a repair for the Defect or replacement Toothbrushes that do not suffer from the Defect." (Dkt. No. 20 at 34.) This is speculation. Plaintiffs Coe, Bueso, and Chawla never gave Philips a chance to honor, or breach, the two-year guarantee. Twombly, 550 U.S. at 555 (the complaint must indicate more than mere speculation of a right to relief.) Nor do they offer any authority that allows them to extrapolate the experience of Plaintiff Ng as their own. In another instance, Plaintiffs explicitly speculate: "[t]o the extent any Plaintiffs did not make a demand for repair under the express warranty, it was because Philips failed to disclose the Defect, and instead sought to obfuscate the existence of the Defect by informing consumers that the loss of cleaning power was due to worn brush heads, and not the result of a systemic and inherent Defect." (Dkt. No. 20 at 34.) Plaintiffs, however, do not allege any facts to support the notion they were induced to sit on their hands and not submit their warranty claim. The Court DISMISSES the claims of Plaintiffs Coe, Bueso, and Chawla for breach of warranty based on the two-year guarantee.
Plaintiff Ng, who twice exercised his two-year product guarantee, also fails to state a claim, but for different reasons. His claim for breach of express warranty under New York law requires him to plead the warranty existed, it was breached, and he relied on the warranty. Haag v. Hyundai Motor America, No. 12-6521L, 2013 WL 481234, at *2 (W.D.N.Y Sept. 10, 2013.) Plaintiff Ng's claim fails on the second element, breach. "A manufacturer's liability for breach of an express warranty derives from, and is measured by, the terms of that warranty." Cipollone v. Liggett Group, Inc., 505 U.S. 504, 525 (1992). Here, Philips' two-year guarantee promised replacement of a Sonicare Toothbrush, if "any defect due to faulty materials and workmanship occurs within this two-year guaranteed period." (Dkt. No. 20 at 69.) Philips complied with the terms of that warranty by replacing Plaintiff Ng's toothbrush twice during the two-years after purchase. There is no allegation of breach. Asp v. Toshiba Am. Consumer Products, LLC, 616 F.Supp.2d 721, 731 (S.D.Ohio 2008)(in applying New York law, "if a lack of breach is apparent from complaint, dismissal is appropriate"). The Court DISMISSES Plaintiff Ng's claim.
In addition to the two-year product guarantee, Plaintiffs identify four statements on the Sonicare Toothbrush packaging and specifications as express warranties:
(i) Philips claims on the product packaging and the product specifications posted on its website that the vibrations generated by the handle (the "Sonic Technology") result in the brush head providing 31,000 "brushstrokes" per minute, far more "brushstrokes" than possible with a manual brush;(Dkt. No. 20 at 33.) Plaintiffs allege these statements became the benefit of the bargain, which was breached when the Sonicare Toothbrushes did not perform as promised.
(ii) the specifications and product packaging. promise that the Toothbrushes will remove twice as much dental plaque as a manual toothbrush, while the DiamondClean model promises to remove five times as much plaque as a manual toothbrush;
(iii) The specifications for the Sonicare Kids model state that it will remove more plaque than a manual toothbrush; and
(iv) the product packaging and specifications for all models of the Toothbrushes, other than the Sonicare Kids model also promise that the "Sonic Technology" will remove dental staining, whiten teeth, and improve gum health more effectively than a manual toothbrush.
On a motion to dismiss, the court may consider documents or exhibits attached to Plaintiffs' complaint, a writing of unquestioned authenticity that is relied upon in the complaint, or public records. Swartz v. KPMG, LLP, 476 F.3d 756, 763 (9th Cir. 2007) (stating that on motion to dismiss court may consider exhibits attached to the complaint or other documents relied upon in the complaint). Here, the Court considers the documents attached to the Complaint.
Even if the Court construes the allegations in the Complaint as true, it nonetheless dismisses the Florida, New York, and Connecticut claims because Plaintiffs fail to allege they relied on these statements. See Schimmenti v. Ply Gem Indus., Inc., 156 A.D.2d 658, 659 (N.Y. App. Div. 2 1989)(To state a claim for breach of express warranty under New York law, the plaintiff must show that there was an "affirmation of fact or promise by the seller, the natural tendency of which [was] to induce the buyer to purchase, and that the warranty was relied upon."); State Farm Ins. Co. v. Nu Prime Roll-A-Way of Miami, Inc., 557 So.2d 107, 108 (Fla. Dist. Ct. App. 1990)(reliance required under Florida law); Danise v. Safety-Kleen Corp., 17 F.Supp.2d 87, 97 (D.Conn. 1998) ("In order for a statement to form part of the basis of the bargain between parties, the buyer must demonstrate that he relied on the statement"). Plaintiffs Ng, Chawla, and Bueso's failure to plead reliance is fatal to their claims.
The remaining New Jersey claim requires Plaintiff Coe to allege: (1) Defendant made an affirmation, promise, or description about the product; (2) this affirmation, promise, or description became part of the basis of the bargain for the product; and (3) the product ultimately did not conform to the affirmation, promise, or description. Arlandson v. Hartz Mt. Corp., 792 F.Supp.2d 691, 706 (D.N.J. 2011). Plaintiff Coe's allegations have two fundamental problems. First, she misstates the actual language of the toothbrush packaging; the product packaging actually states, "Speed: Up to 31,000 brush strokes per minute." (Dkt. No. 20 at 62-67)(emphasis added). Even if this could be accurately characterized as a warranty, there is no allegation Philips failed to provide a toothbrush that did not comply with the specification, of "up to 31,000 brush strokes per minute." Second, her conclusory allegations are insufficient to show the toothbrushes she purchased, the Sonicare Kids model, do not conform to the representations. The Sonicare Kids toothbrush represents "Performance: Removes significantly more plaque in hard-to-reach areas than a children's manual toothbrush [Oral-B Stages 4] in children aged 7-10."(Dkt. No. 20 at 67.) Plaintiff Coe alleges broadly that the toothbrushes she "purchased do not provide the vastly superior cleaning promised by Philips for the expected useful life of the product, and are therefore unsuitable for their intended purpose (i.e. providing teeth cleaning capabilities that are vastly superior to a manual toothbrush)." (Dkt. No. 20 at 13.) Plaintiff Coe does not allege the toothbrushes failed to conform to this specific representation - removal of plaque in hard to reach areas compared to the Oral-B Stages 4 manual toothbrush for children aged 7-10. Her claim is consequently DISMISSED.
In sum, Plaintiffs' claims for breach of express warranties are DISMISSED.
C. Magnuson-Moss Warranty Claim
"[The] disposition of the state law warranty claims determines the disposition of the Magnuson-Moss Act claims." Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th Cir. 2008). Having dismissed Plaintiffs' warranty claims under state law, the Magnuson-Moss Warranty Act claim is not viable. The Court DISMISSES the claim.
Philips also seeks dismissal of the Magnuson-Moss Warranty Act claim under Rule 9(b). The Court finds that rule has no bearing on the Magnuson-Moss Warranty Act claim, which does not sound in fraud. Philips cases on this point are not persuasive. See e.g. In re Con Agra, 908 F.Supp.2d at 1102)(dismissing Magnuson-Moss Warranty Act claim for failure to plead an express or implied warranty and not for failing to meet Rule 9(b)).
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D. Consumer Protection Claims
Philips argues two bases to dismiss Plaintiffs' consumer protection claims. First, Philips argues the claims fail under Federal Civil Rule 9(b). Second, Philips claims Plaintiffs fail to allege required elements of their claim, and therefore, dismissal is appropriate under Rule 12(b)(6).
1. Rule 9(b)
Rule 9(b) requires, when fraud is alleged, "a party must state with particularity the circumstances constituting fraud . . . ." It demands that the circumstances constituting the alleged fraud "be specific enough to give defendants notice of the particular misconduct . . . so that they can defend against the charge and not just deny that they have done anything wrong." Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2004). "Rule 9(b) serves three purposes: (1) to provide defendants with adequate notice to allow them to defend the charge and deter plaintiffs from the filing of complaints as a pretext for the discovery of unknown wrongs; (2) to protect those whose reputation would be harmed as a result of being subject to fraud charges; and (3) to prohibit plaintiffs from unilaterally imposing upon the court, the parties, and society enormous social and economic costs absent some factual basis." Id. at 1125 (internal citations and quotations omitted); v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-04 (9th Cir. 2003) ("In cases where fraud is not a necessary element of a claim, a plaintiff may choose nonetheless to allege in the complaint that the defendant has engaged in fraudulent conduct. In some cases, the plaintiff may allege a unified course of fraudulent conduct and rely entirely on that course of conduct as the basis of a claim. In that event, the claim is said to be 'grounded in fraud' or to 'sound in fraud,' and the pleading of that claim as a whole must satisfy the particularity requirement of Rule 9(b)").
As a threshold issue, Philips ignores the well-settled rule that in fraudulent omission cases, like this one, the Rule 9(b) standard is relaxed. Carideo v. Dell, Inc., 706 F.Supp.2d 1122, 1133 (W.D.Wash. 2010) (in such cases, a plaintiff "will not be able to specify the time, place, and specific content of an omission as precisely as would a plaintiff in a false representation claim."); See also, Falk v. Gen. Motors Corp., 496 F.Supp.2d 1088, 1098-99 (N.D.Cal. 2007). Applying those principles here, the Court finds Plaintiffs have sufficiently plead their fraud-based claims. Plaintiffs have sufficiently pleaded the what (concealment of a shaft defect and failure to inform consumers of the defect), and the why (to induce customers to purchase the toothbrushes at the price sold), and when (The date of purchase). In doing so, Philips has adequate notice of the facts underlying the claims. In re Conagra Foods Inc., 908 F.Supp.2d 1090 (C.D.Cal. 2012).
Philips also errs in suggesting Plaintiffs' pleading of scienter is insufficient. Rule 9(b) provides that "[m]alice, intent, knowledge and other conditions of a person's mind may be alleged generally." In practice, this means that "[t]he requirement for pleading scienter is less rigorous than that which applies to allegations regarding the 'circumstances that constitute fraud.'" Oestreicher v. Alienware Corp., 544 F.Supp.2d 964, 968 (N.D.Cal. 2008). Plaintiffs allege knowledge generally. In particular, the Court finds Plaintiffs' references to the Philips' related United Kingdom website sufficient to support the inference Philips knew of the defect. In the United Kingdom, Philips specifically informs consumers that a loose metal shaft is indicative of a defect and the toothbrush should be returned for replacement. (Dkt. No. 20 at 77.) The Court finds this allegation sufficient at this early stage of the case. See Cooper v. Pickett, 137 F.3d 616, 628 (9th Cir. 1997); see also Carideo, 706 F.Supp.2d at 1133.
Plaintiffs meet Rule 9(b)'s pleading requirements.
2. Rule 12(b)(6)
Next, Philips argues the Court should dismiss Plaintiffs' Washington Consumer Protection ("CPA") claim.
The CPA prohibits any "unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." RCW 19.86.020. To establish a violation, the plaintiff must show: "(1) an unfair or deceptive act or practice; (2) occurring in the conduct of trade or commerce; (3) affecting the public interest; (4) injuring the plaintiff's business or property; and (5) a causal link between the unfair or deceptive act and the injury suffered." Seattle Endeavors, Inc. v. Mastro, 123 Wn.2d 339, 349 (1994).
Philips argues the Complaint does not allege a causal link between the alleged deceptive act and the injury suffered. (Dkt. No. 43 at 28.) The Court disagrees. Plaintiffs assert that Philips' failure to disclose the defect caused them to pay substantially more for the product or buy it at all. (Dkt. No. 56 at 27.) The claimed proximate cause between the alleged deceptive trade practice and their claimed injury is sufficiently pled. See Zwicker v. General Motors Corp., No. C07-0291-JCC, 2007 WL 5309204, 5 (W.D.Wash. July 26, 2007) (finding causation where "Plaintiffs specifically pled that had GM informed them about the nature of the speedometer defect they would either not have purchased the cars or paid less for them...Common sense also dictates they may have taken steps to avoid damages other than the sheer costs of repair, such as... court fees for her speeding ticket, by fixing the device prior to a full-fledged malfunction").
Plaintiffs' claim under the Connecticut Unfair Trade Practices Act also survives the motion to dismiss. Philips arguments for dismissal wrongly cast Plaintiffs' claim as one of misrepresentation. (Dkt. No. 43 at 29.) Instead, Plaintiff Chawla, a Connecticut resident, alleges he overpaid for his toothbrush and purchased new toothbrush heads because Philips failed to disclose the defect. (Dkt. No. 20 at 11.) Further, in this case alleging omission, reliance is not required. See Caldor v. Heslin, 577 A.2d 1009, 1013 (Conn. 1990). Nor must Plaintiff Chawla allege scienter. Bailey v. Employment Sys., Inc. v. Hahn, 545 F. Supp. 62, 67 (D. Conn. 1982). Finally, viewing the Complaint's factual allegations as true, the Court also finds an ascertainable loss: expenses for the new toothbrush heads and overpayment for the toothbrush. Although Philips may well be correct that Plaintiff Chawla would have to purchase the toothbrush heads regardless of the defect, on a motion to dismiss, the Court draws all inferences in favor of Mr. Chawla. The Court DENIES the motion as to the Connecticut Unfair Trade Practices Act claim.
Philips contends that Plaintiff Coe's claim fails under the New Jersey Consumer Fraud Act because she did not first exercise her warranty. (Dkt. No. 43 at 27). Generally, this is true. Thiedemann, 872 A.2d at 786. However, New Jersey recognizes an exception to the requirement that a plaintiff exercise her warranty, where it would be futile because repair or replacement would not cure an underlying defect. N.J.S.A. 12A:2-719(2); Asp, 616 F.Supp.2d at 737. Plaintiff Coe pleads the exact situation contemplated in the exception: if she had initiated a request for repair or replacement, she would have simply swapped one defective product for another. (Dkt. No. 56 at 26.) Under New Jersey law, the claim survives. Ackerman v. Coca-Cola Co., 2010 WL 2925955, at * 24 (E.D.N.Y. July 21, 2010). Nor is Coe's failure to plead reliance grounds for dismissal. Unlike common law fraud, which requires allegations that the plaintiff relied on the defendant's misrepresentations or omissions, New Jersey does not require a plaintiff to demonstrate reliance. Gennari v. Weichert Co. Realtors, 148 N.J. 582, 607, 691 A.2d 350 (1997). The New Jersey Consumer Fraud Act is also viable as pled.
Finally, Plaintiff Ng pleads a claim under New York General Business law ("GBL") §§ 349, 350. "In order to show that Plaintiff is entitled to relief... a plaintiff must show: (1) that the act, practice, or advertisement was consumer-oriented; (2) that the act, practice, or advertisement was misleading in a material respect, and (3) that the plaintiff was thereby injured. Akerman, 2010 WL 2925955 at *22. Contrary to Philips' representations, a Plaintiff is not required to plead reliance. (Id. at *23.) Additionally, a plaintiff adequately alleges injury if he claims to have paid a premium for a product based on defendants' inaccurate representations or omissions. Goshen v. Mut. Life Ins. Co. of New York, 98 N.Y.2d 314, 324 (N.Y. 2002). Here, Plaintiff Ng pleads this exact claim and thus, for purposes of Rule 12(b)(6), has a viable claim under §§ 349, 350.
Having found the consumer protection claims viable under Rules 9(b) and 12(b)(6), the Court DENIES the motion as to these claims.
E. Leave to Amend
Plaintiffs request leave to amend the complaint, should the Court dismiss any of their claims. In the Ninth Circuit, if a claim is based on a proper legal theory but fails to allege sufficient facts, the plaintiff should be afforded the opportunity to amend the complaint. Keniston v. Roberts, 717 F.2d 1295, 1300 (9th Cir. 1983). "Dismissal without leave to amend is improper unless it is clear, upon de novo review, that the complaint could not be saved by any amendment." Moss v. U.S. Secret Service, 572 F.3d 962 (9th Cir. 2009).
The Court GRANTS the request to amend all the claims dismissed by this Order, except Plaintiffs Coe, Bueso, and Chawla's breach of express warranty for the two-year product guarantee.
Conclusion
The Court DENIES Philips' motion to dismiss for lack of standing under Rule 12(b)(1). (Dkt. No. 35.) The Court GRANTS Philips' motion to dismiss for failure to state a claim in part and DENIES it in part. (Dkt. No. 43) The Court GRANTS the motion and dismisses Plaintiffs' claims for breach of implied and express warranties. Lacking the required state-law claims, the Court also GRANTS the motion to dismiss the Magnuson-Moss Warranty Act claim. Finding Plaintiffs plead the consumer protection claims under Rule 9(b) and 12(b)(6), the Court DENIES the motion. The clerk is ordered to provide copies of this order to all counsel.
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Marsha J. Pechman
Chief United States District Judge