Casey Thornton et al v. Micro Star International Co. Ltd. et al

MEMORANDUM in Opposition to NOTICE OF MOTION AND MOTION to Dismiss First Amended Complaint 37

C.D. Cal.November 3, 2017

PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 WESTERMAN LAW CORP. Jeff S. Westerman (SBN 94559) jwesterman@jswlegal.com 1875 Century Park East, Suite 2200 Los Angeles, CA 90067 Tel: (310) 698-7880 Fax: (310) 698-7452 CONSUMER LAW GROUP OF CALIFORNIA Alan M. Mansfield (SBN 125998) alan@clgca.com 16870 W. Bernardo Dr., Suite 400 San Diego, CA 92127 Tel: (619) 308-5034 Fax: (855) 274-1888 Attorneys for Plaintiffs UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA –WESTERN DIVISION CASEY THORNTON and CARL JONES, individually and on behalf of all others similarly situated, Plaintiffs, v. MICRO-STAR INTERNATIONAL CO., LTD.; MSI COMPUTER CORP. and DOES 1-10, Defendants. CASE NO. 17-cv-03231-CAS (AFMx) CLASS ACTION PLAINTIFFS’ MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT MSI COMPUTER CORP.’S MOTION TO DISMISS FIRST AMENDED COMPLAINT Date: December 4, 2017 Time: 10:00 a.m. Judge: Hon. Christina A. Snyder Courtroom: 8D, 8th Floor Trial Date: Not Set Complaint Filed: April 28, 2017 Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 1 of 30 Page ID #:361 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - i - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS PAGE I. INTRODUCTION ............................................................................................... 1 II. SUMMARY OF FACTUAL ALLEGATIONS .................................................. 3 III. ARGUMENT....................................................................................................... 6 A. PLAINTIFFS PLEAD DEFENDANT’S VIOLATIONS OF CALIFORNIA’S CONSUMER PROTECTION LAWS ......................... 6 1. Plaintiffs Added Detailed Allegations to Comply with the Court’s Ruling ................................................................................. 6 2. Plaintiffs Also Expanded Their Pleading of Actionable Omissions of Material Fact ............................................................. 8 B. PLAINTIFFS PROPERLY ASSERT A CLAIM FOR BREACH OF CONTRACT ..................................................................................... 10 C. PLAINTIFFS PROPERLY PLEAD CLAIMS FOR BREACHGE OF BOTH EXPRESS AND IMPLIED WARRANTIES ....................... 13 1. Plaintiffs Properly Allege an Express Warranty Claim ................ 13 2. Plaintiffs Allege the GT 72/80 Laptops Are Unmerchantable and Breached the Implied Warranty of Merchantability .............. 17 3. Plaintiffs’ Causes of Action for Breach of the Song-Beverly Warranty Act and the Magnuson-Moss Warranty Act are Proper ............................................................................................ 21 D. PLAINTIFFS PROPERLY ALLEGE A CLAIM FOR COMMON COUNTS – ASSUMPSIT, RESTITUTION, UNJUST ENRICHMENT AND QUASI-CONTRACT ......................................... 24 IV. CONCLUSION ................................................................................................. 25 Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 2 of 30 Page ID #:362 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - ii - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES PAGE FEDERAL CASES Anunziato v. eMachines, Inc., 402 F.Supp.2d 1133 (C.D. Cal. 2005) ........................ 17 Avedisian v. Mercedes-Benz USA, LLC, 2013 WL 2285237 (C.D. Cal. May 22, 2013)...................................................................................................... 9 Birdsong v. Apple, Inc., 590 F.3d 955 (9th Cir. 2009) ................................................ 18 Block v. eBay, Inc., 747 F.3d 1135 (9th Cir. 2014) ....................................................... 9 Borchardt v. Mako Marine Int’l., Inc., 2011 WL 2084177 (S.D. Fla. May 24, 2011).................................................................................................... 23 Chamberlan v. Ford Motor Co., 369 F.Supp.2d 1138 (N.D. Cal. 2005) ...................... 9 Concha v. London, 62 F.3d 1493 (9th Cir. 1995) .......................................................... 9 Daniel v. Ford Motor Co., 806 F.3d 1217 (9th Cir. 2015) ...................................... 9, 19 Date v. Sony Electronics, Inc., 2010 WL 3702599 (E.D. Mich. Sept. 16, 2010)........ 17 Doe v. United States, 419 F.3d 1058 (9th Cir. 2005) .................................................. 11 Dorsey v. Rockhard Labs., LLC, 2014 WL 4678969 (C.D. Cal. Sept. 19, 2014) ....... 23 Fayer v. Vaughn, 649 F.3d 1061 (9th Cir. 2011) ........................................................ 19 Friedman v. Guthy-Renker LLC, 2015 WL 857800 (C.D. Cal. Feb. 27, 2005) .......... 24 Gusse v. Damon Corp., 470 F.Supp.2d 1110 (C.D. Cal. 2007) .................................. 22 Herremans v. BMW of N. Am., LLC, 2014 WL 5017843 (C.D. Cal. Oct. 3, 2014) .... 10 In re De Laurentiis Entm't Grp. Inc., 963 F.2d 1269 (9th Cir. 1992) ......................... 25 Keegan v. Am. Honda Motor Co., Inc., 2012 WL 75443 (C.D. Cal. Jan. 6, 2012) ..... 17 McDonnell Douglas Corp. v. Thiokol Corp., 124 F.3d 1173 (9th Cir. 1997) ............. 17 McKinney v. Google, Inc., 2011 WL 3862120 (N.D. Cal. Aug. 30, 2011) ................. 16 Moss v. U.S. Secret Serv., 572 F.3d 962 (9th Cir. 2009) ............................................. 11 Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979 (9th Cir. 2015) .................. 9 Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d 777 (9th Cir. 2012) ....................... 12 Stearns v. Ticketmaster Corp., 655 F.3d 1013 (9th Cir. 2011) ................................. 8, 9 Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 3 of 30 Page ID #:363 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - iii - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES PAGE FEDERAL CASES (Cont’d) Yastrab v. Apple, Inc., 2015 WL 1307163 (N.D. Cal. Mar. 23, 2015) ....................... 16 FEDERAL STATUTES AND RULES 15 United States Code Section 2301 ...................................................................................................... 14 Section 2301, et seq. ................................................................................ 3, 23, 24 Federal Rules of Civil Procedure Rule 7(a) ............................................................................................................ 24 Rule 12(c) .......................................................................................................... 25 Rule 12(g)(2) ................................................................................................. 3, 24 Rule 12(h)(2) ..................................................................................................... 24 Rule 12(h)(3) ..................................................................................................... 24 STATE CASES Anthony v. Gen. Motors Corp., 33 Cal.App.3d 699 (1973) ........................................ 13 Atkinson v. Elk Corp. of Texas, 142 Cal.App.4th 212 (2006) ..................................... 17 Autzen v. John C. Taylor Library Sales, Inc., 572 P.2d 1322 (Ore. 1977) .................. 12 Butler v. Nepple, 54 Cal.2d 589 (1960) ....................................................................... 13 Collins v. eMachines, Inc., 202 Cal.App.4th 249 (2011) .............................................. 9 Donovan v. RRL Corp., 26 Cal. 4th 261 (2001) .................................................... 10, 11 Hauter v. Zogarts, 14 Cal.3d 104 (1975)............................................................... 15, 18 Hicks v. Kaufman & Broad Home Corp., 89 Cal. App. 4th 908 (2001) ..................... 19 In re Tobacco II Cases, 46 Cal.4th 298 (2009) ............................................................. 9 Isip v. Mercedes-Benz USA, LLC, 155 Cal.App.4th 19 (2007) ................................... 20 Keith v. Buchanan, 173 Cal.App.3d 13, 22 (1985) ............................................... 13, 15 Krieger v. Nick Alexander Imports, Inc. 234 Cal.App.3d 205 (1991) ........................ 21 Mass. Mut. Life Ins. Co. v. Sup. Ct., 97 Cal.App.4th 1282 (2002) ................................ 8 Merkin v. Wasserman, 5 Cal.4th 1082 (1993) ........................................................... 8, 9 Mexia v. Rinker Boat Co., 174 Cal.App.4th 1297 (2009) ............................... 19, 20, 21 Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 4 of 30 Page ID #:364 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - iv - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES PAGE STATE CASES (Cont’d) Murillo v. Fleetwood Enterprises, Inc., 17 Cal.4th 985 (1998) .................................. 21 Pisano v. Am. Leasing, 146 Cal.App.3d 194 (1983) ................................................... 20 Robertson v. Fleetwood Travel Trailers of California, Inc., 144 Cal.App.4th 785 (2006) .......................................................................................................... 21 Rutledge v. Hewlett-Packard Co., 238 Cal.App.4th 1164 (2015) ................................. 9 Schauer v. Mandarin Gems of Cal., Inc., 125 Cal.App.4th 949 (2005) ...................... 14 Weinstat v. Dentsply Internat., Inc., 180 Cal.App.4th 1213 (2010). ......... 12, 13, 14, 16 STATE STATUTES AND RULES Business and Professions Code Section 17200, et seq. .......................................................................................... 6 Section 17500, et seq. ...................................................................................... 6, 7 California Civil Code Section 1750, et seq.. ........................................................................................... 6 Section 1790.3 ................................................................................................... 22 Section 1791, et seq. ............................................................................................ 3 Section 1791 ...................................................................................................... 22 Section 1792 ...................................................................................................... 22 Section 1793.2 ................................................................................................... 23 Section 1794 ...................................................................................................... 23 California Commercial Code Section 2313 ...................................................................................................... 14 Section 2314(2) ........................................................................................... 18, 20 OTHER 4 Witkin, Summary of Cal. Law (10th ed. 2005), Sales Section 52, p. 63 ................................................................................................ 22 U.S. District Court, Central District of California, Local Rules Rule 7-3 ............................................................................................................... 7 Rule 7-18 ....................................................................................................... 3, 24 Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 5 of 30 Page ID #:365 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 1 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION On August 21, 2017, this Court granted in part and denied in part Defendant MSI Computer Corp.’s (“MSI” or “Defendant’s”) Motion to Dismiss the original Complaint. The Court largely rejected MSI’s argument that the Complaint was not specific enough to advise MSI of the claims being asserted against it. The Court granted Plaintiffs leave to amend the Complaint to identify more specifically the statements Plaintiffs were exposed to, when they purchased their “upgradable” MSI laptop gaming computers and how much they paid. See Order dated August 21, 2017, Dkt. #32 (“Order”) at pg. 12. This was done. Yet despite the clear factual and legal rulings in the Order, and Plaintiffs’ compliance with that Order, MSI still claims it does not fully understand the claims made against it or that, somehow, the claims are “contradictory”. These positions, including re-arguing issues on which this Court has already ruled in Plaintiffs’ favor, do not support a second motion to dismiss. In response to the Order at pg. 12, the First Amended Complaint (“FAC”) at ¶¶ 6, 15-17 and 21-23 provides expanded details how MSI misrepresented that the GT72/80 laptops at issue would be upgradeable to the next generations of NVIDIA graphics processing units (“GPUs”) when they could not be, or omitted material facts in its possession to the contrary. This detail includes what promises each of the two named Plaintiffs saw from MSI that were a material factor in their respective purchases. In response to the Order at pg. 12, the FAC at ¶¶ 15(g), 20, 24 and 96, and Exs. 2-3 also alleges how these upgradability claims were contained on product packaging, and how this defect went to one of the basic characteristics of this particular line of gaming laptops and thus was a latent defect undiscoverable at time of sale that went to the core functionality of this particular product as an “upgradable” gaming laptop computer. The FAC also alleges at ¶¶ 25-29 and 88-90 how the written warranty accompanying these laptops was breached, and how even though MSI recognized this defect and that it could not measure up to the benefit of its promised bargain, MSI Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 6 of 30 Page ID #:366 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 2 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 offered inadequate remediation after receiving multiple pre-litigation demands to address the problem before Plaintiffs filed this action. The Court also gave Plaintiffs leave to amend to clarify the nature of their claim for breach of contract. Order at pgs. 13-14. In response, Plaintiffs amended the First Cause of Action to provide confirmation that Defendant’s specific advertisements and statements on the product packaging constituted an offer as to the upgradeable characteristic of the GPU in these computers (¶¶ 41-43, 45), that Plaintiffs and others were exposed to and accepted that offer (¶ 44), that MSI admittedly breached that offer (¶¶ 46-48), and that Plaintiffs were damaged as a result of that breach and provided notice prior to filing suit (¶¶ 49-50). No additional allegations are required under California law. In further response to meet the Order, Plaintiffs separated their claims for breach of express and implied warranties from their claims for breach of contract, and alleged them in the Sixth and Seventh Causes of Action. As to the claim for express warranty, Plaintiffs provided a reference in ¶ 85 to the express warranties that accompanied these products and attached the uniform written warranty as Ex. 4 to the FAC, and further alleged in ¶¶ 83-84 and 86-87 how warranties were also created by product advertisements and promotional statements. They also alleged in ¶¶ 88-92 of the FAC how these express warranties were breached. As to the claim for breach of implied warranties, Plaintiffs detailed in ¶ 96 the several independent and alternative bases for asserting this claim, including that the products did not “conform to the promises or affirmations of fact made on the container or label”, and how that warranty was breached. They also alleged in ¶ 97 how the implied warranty of fitness for a particular purpose was breached, which aspect of the implied warranty claim the Court previously upheld in the Order at pg. 19. In response to arguments in the first motion made by MSI and a question raised in the Order at pg. 16 whether such claims were asserted, Plaintiffs removed any uncertainty by expressly alleging separate causes of action for breach of the Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 7 of 30 Page ID #:367 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 3 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 California Song-Beverly Warranty Act, Cal. Civ. Code § 1791, et seq., and its federal analogue, the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq. (“MMWA”) (the Eighth and Ninth Causes of Action). These claims for breach of express and implied warranties are properly plead and are properly included in the FAC as well. Finally, as to the Tenth Cause of Action alleging common counts -- assumpsit, unjust enrichment and quasi contract, the Order at pg. 21 stated that for Plaintiffs to complete this cause of action in response to the arguments raised by MSI, they need only allege a sum certain. Defendant’s other attacks on these claims were not granted. Plaintiffs specifically included the sum certain allegations at ¶¶ 4, 5 and 126 of the FAC. Despite adding the only allegations the Court specified, MSI is now asking the Court to reconsider the previous ruling regarding its arguments. MSI either asserts arguments previously raised and rejected, in which case this is really a motion for reconsideration that should be denied under Local Rule 7-18, or is doing do for this first time even though the cause of action did not change in substance, which should be denied under Fed. R. Civ. Proc. 12(g)(2). The allegations in the FAC meet the elements of the claims asserted and provide MSI with ample detail to defend against the allegations, especially since the marketing information about its promised, but non-existent, product upgrade feature in its own laptops is already within its knowledge. The Motion to Dismiss should be denied. II. SUMMARY OF FACTUAL ALLEGATIONS The Court’s Order at pgs. 1-6, provided a detailed summary of the facts from the original Complaint. This summary focuses on new allegations in the FAC. Throughout the FAC, Plaintiffs provide further detail how MSI uniformly represented, warranted and agreed that the GT 72/80 laptops would be upgradeable to later generations of graphics processing units manufactured by NVIDIA Corp. (“NVIDIA”). As set forth in FAC, ¶¶ 14-18, 20, 26-28, and Exs. 1-3 (and contrary to the claims of MSI in its Opposition to Plaintiffs’ Motion to Set a Rule 26 Conference Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 8 of 30 Page ID #:368 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 4 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (Dkt. No. 24) that MSI had not made such representations), MSI consistently made such claims in advertisements, releases, marketing, reviewers’ guides, labelling, packaging, documents and/or agreements accompanying these laptops. MSI did so through statements on product boxes, information on its own website, in reviewers’ guides and information they disseminated to third parties to be repeated, through statements in which MSI representatives participated in such presentations, and comments by MSI’s own employees recognizing and admitting this defect. Reports from reviewers, who spoke with MSI representatives as early as November 2014, confirmed that MSI uniformly represented that the GT 72/80 series laptops could incorporate up to two generations of NVIDIA GPU upgrades and were easily upgradable by simply taking out the old GPU and replacing it with a new GPU. FAC ¶ 16. In addition, many of these GT 72/80 laptops came with a written upgrade promise on the product packaging, affirming similar statements made on Defendant’s website where MSI offered and agreed to provide a GPU upgrade to those who wished to later upgrade their present GPU. See FAC, ¶ 15, Exs. 1-3 (“Dream Come True Upgradable Design/Easy Upgrade Next Generation GPU Ready”/“MXM SLI” (the reference to “MXM” is MSI’s short hand technical term referring to the upgradability characteristic of these laptops). These laptops also came with a two- year written warranty representing these products conformed to the claims made by MSI, were free from defects and would be repaired when the product “becomes defective under proper usage” or is “problematic” or “defective in hardware”. FAC, ¶¶ 18, 85, Ex.4. Because these upgrade claims were included in promotional materials, MSI marketing, reviewers’ guides, and documents accompanying the laptops, all of which were attributable to MSI, consumers were consistently exposed to such statements. For example, the You Tube video that contains an MSI representative participating in the upgrade discussion early on at 2:30 of that video, was viewed more than 307,000 times. FAC, ¶ 16(c). A reasonable consumer purchasing these gaming laptops thus Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 9 of 30 Page ID #:369 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 5 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 would be reasonably led to believe the GT 72/80 series of laptops could be upgraded to later generations of NVIDIA GPUs. FAC, ¶¶ 16, 24-25. The FAC at ¶¶ 20-23 and 28-30 also adds allegations as to MSI’s knowledge of this defect and its cover-up, and provides further details how Defendant either was, or reasonably should have been, aware these material facts about the characteristics and benefits of these laptops were not true, yet omitted material facts to the contrary. MSI had information months, if not close to a year, before it first released the GT72/80 laptops on the market that there was going to be a major NVIDIA gaming GPU upgrade. FAC ¶¶ 20-22. MSI thus had information not generally available to or understandable by the public about these technical design specifications months before the official release of the new generation of NVIDIA GPUs. Defendant failed to disclose the material fact that the GT 72/80 laptops lacked the key upgrade characteristic that MSI said they possessed, despite having information from NVIDIA to the contrary, while they continued selling these laptops. FAC ¶¶ 23, 29. Such promises were material. The FAC alleges that a reasonable person interested in purchasing these video gaming laptops would attach importance to being told they would, in the long run, save money by purchasing a GT 72/80 laptop because they could upgrade it by only purchasing a later generation NVIDIA GPU at several hundred dollars, rather than purchase one or two more new gaming computers at more than a thousand dollars each. Even an MSI representative claimed they made the decision to purchase this laptop for this characteristic. FAC ¶¶ 16, 24-25. Thus, Plaintiffs and Class members would likely have chosen a different course of action (i.e., paid less money or not bought the laptop at all) if that omitted material fact had been timely disclosed by MSI. Id. MSI admitted in August 2016 that while it previously promised and agreed the GT 72/80 laptops could be upgraded to later generations of NVIDIA GPUs, it was now unable to “honor our agreement” to provide an upgrade. FAC, ¶¶ 20, 26. However, MSI representatives claimed that while a direct upgrade was not Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 10 of 30 Page ID #:370 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 6 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 “recommended”, and thus it would not fix the problem or offer appropriate complete relief, this was a sales opportunity for MSI, which recommended people solve the problem it created by buying its newer computers “So we advise our user to buy the whole new N17 system instead of MXM upgrade if they want to experience new graphic performance.” FAC, ¶ 27. The FAC alleges at ¶¶ 13, 14, 17, 19 and 24-25 that Plaintiffs and Class members were exposed to Defendant’s misrepresentations and omissions of material fact regarding upgradeability and purchased at least one GT 72/80 laptop in response thereto. FAC ¶¶ 4-6, 14-17 and 19 alleges specific statements the two named plaintiffs saw; that in positive response to such representations and unaware of the omissions of material facts to the contrary, Plaintiff Thornton paid $1,784.91 for his GT 72 gaming laptop, and Plaintiff Jones paid $3,047.91 for his GT 80 gaming laptop (which they allege is a premium over other comparable laptops); and that Plaintiffs would not have paid these prices for these laptops, or purchased them at all, if the true facts had been timely disclosed by Defendant. The FAC thus alleges the details of both named Plaintiffs’ purchases, specific representations directly attributable to MSI that form the agreements and warranties upon which such claims are based, the express written warranty and applicable implied warranties and how they were breached, and how Plaintiffs and others were damaged by MSI’s conduct. III. ARGUMENT A. PLAINTIFFS PLEAD DEFENDANT’S VIOLATIONS OF CALIFORNIA’S CONSUMER PROTECTION LAWS 1. Plaintiffs Added Detailed Allegations to Comply with the Court’s Ruling Even though MSI’s counsel did not raise such issues in the parties’ pre-motion meet and confer discussions as required by the Local Rules, MSI now claims the allegations supporting Plaintiffs’ claims under the California’s consumer protection statutes such as the California Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750, et seq., Unfair Competition Law (“UCL”), Cal. Bus. & Prof Code § Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 11 of 30 Page ID #:371 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 7 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17200, et seq., and False Advertising Law (“FAL”), Cal. Bus. & Prof Code § 17500, et seq. are somehow deficient because they are “contradictory.” They are not.1 The FAC at ¶¶ 11, 15-16 and 29-30 alleges that MSI represented these laptops were able to be upgraded to the next generations of NVIDIA GPUs. When the next generation of NVIDIA GPUs were released, MSI revealed this claim was not true – in fact, it tried to use that failure as a further selling opportunity. FAC, ¶¶ 26-28. Plaintiffs’ allegation is that, while MSI claims these laptops can be upgraded to future generations of NVIDIA GPUs, that claim is illusory if in fact the entire laptop needs to be modified to enable that upgrade or such an upgrade is no longer “recommended” because the system is no longer “compatible”, and MSI itself would not perform that upgrade in an effort to provide relief to its GT 72/80 customers. Id. That is precisely what MSI’s representative admitted in November 2016 in response to our pre-litigation demands: “MSI originally planned to honor our agreement to provide an upgrade kit option to all those who wished to upgrade graphics card. Due to unforeseen hardware limitation with the new NVIDIA GeForce 10-series graphic card, we were not able to provide this [upgrade] option.” FAC, ¶ 20 (emphasis added). The FAC alleges “what” was said (or not said) by MSI (making material statements about the ability to upgrade these computers, either directly or that were repeated by others, and concealing material facts that these laptops were not upgradable, FAC, ¶¶ 15-18, 20-23, 27-29); “why” it was misleading (that the laptops were not upgradeable and failing to disclose that, by concealing and/or not correcting statements to the contrary and offering a flawed upgrade replacement program, FAC, ¶¶ 20-23, 27-29); “when” it was said (beginning in 1 During the L.R. 7-3 discussion, MSI’s counsel only raised issues relating to the breach of contract and implied warranty claims, and said this motion would not address the consumer protection claims. Defense counsel did not update Plaintiffs’ counsel or discuss the consumer protection part of their motion before filing. Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 12 of 30 Page ID #:372 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 8 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 November 2014, as of Plaintiffs’ purchases and through the time the true facts became public, FAC, ¶¶ 14-16); and the “where” and the “how” (the channels Defendant used to disseminate information on these laptops, including its website and product documentation, FAC, ¶¶ 14-18). In the FAC at ¶¶ 4-5 and 15-17, Plaintiffs alleged what information they were exposed to, what they reviewed and when, and how much they paid for their laptops – which is all the Court said was needed. Order, pg. 21. In adding such allegations, the FAC did not become “contradictory”, and that certainly is not a basis to allege the FAC is somehow deficient. Further, it does not matter whether the representations were made by MSI directly or indirectly, since MSI is still responsible “if the misrepresentation, although not made directly to the other, is made to a third person and the maker intends or has reason to expect that its terms will be repeated or its substance communicated to the other, and that it will influence his conduct in the transaction or type of transactions involved.” Mirkin v. Wasserman, 5 Cal.4th 1082, 1095–96 (1993). The FAC at ¶ 16 alleges that is what happened here. 2. Plaintiffs Also Expanded Their Pleading of Actionable Omissions of Material Fact California’s consumer protection statutes such as the CLRA, the UCL and the FAL prohibit not only false or misleading representations and advertising but also statements and advertising that omit material facts that have a capacity, likelihood, or tendency to deceive or confuse the public. As set forth in Mass. Mut. Life Ins. Co. v. Sup. Ct., 97 Cal.App.4th 1282, 1292 (2002), which articulated the standard the Ninth Circuit followed in Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1025 (9th Cir. 2011), the test for pleading causation as to these causes of action (to the extent it is an element of such a claim) is simply whether the stated or omitted fact can reasonably be alleged to be material. It is error to dismiss a complaint that includes such allegations. “That one would have behaved differently can be presumed, or at least inferred, when the omission is Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 13 of 30 Page ID #:373 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 9 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 material. [citation]. An omission is material if a reasonable consumer ‘would attach importance to its existence or nonexistence in determining his choice of action in the transaction in question.’” Daniel v. Ford Motor Co., 806 F.3d 1217, 1225 (9th Cir. 2015) (citing In Re Tobacco II Cases, 46 Cal.4th 298, 327 (2009)). “One need only prove that, had the omitted information been disclosed one would have been aware of it and behaved differently.” Mirkin v. Wasserman, 5 Cal.4th at 1093. California law also contains a presumption that when a defendant misleads the public about a consumer product by making material statements or omitting material facts, the “defendant has caused an injury” to persons who bought the product. See Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979, 986 (9th Cir. 2015). The FAC further alleges Defendant’s exclusive knowledge of material facts unknown to Plaintiffs, Defendant’s active concealment of material facts from Plaintiffs, and that had the omitted information been timely disclosed, Plaintiffs would not have purchased the laptops at the prices and when they did. FAC, ¶¶ 20-25. These allegations also explain why Defendant had a duty to disclose the true facts about this lack of upgradeability in the GT72 and 80 lines of laptop computers, which they either were, or should have been, aware of, having both directly and indirectly spoken on the issue in order to make its other claims not misleading. See Collins v. eMachines, Inc., 202 Cal.App.4th 249, 255 (2011); Rutledge v. Hewlett-Packard Co., 238 Cal.App.4th 1164, 1173-75 (2015). Such allegations are sufficient to assert those claims and defeat this Motion. Stearns, 655 F.3d at 1022; Block v. eBay, Inc., 747 F.3d 1135, 1140 (9th Cir. 2014); Chamberlan v. Ford Motor Co., 369 F.Supp.2d 1138, 1144-45 (N.D. Cal. 2005). Finally, Plaintiffs need only allege facts raising “a plausible inference” that Defendant knew of the material undisclosed facts at issue. See Avedisian v. Mercedes-Benz USA, LLC, 2013 WL 2285237, at *7 (C.D. Cal. May 22, 2013). Plaintiffs do not need to plead facts to which they cannot “reasonably be expected to have access.” Concha v. London, 62 F.3d 1493, 1503 (9th Cir. 1995). Although Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 14 of 30 Page ID #:374 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 10 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 discovery will reveal precisely when MSI had information putting it on notice its upgradability claims were untrue, the FAC at ¶¶ 20-23 contains allegations with the appropriate degree of specificity under the circumstances. Herremans v. BMW of N. Am., LLC, 2014 WL 5017843, at *18-19 (C.D. Cal. Oct. 3, 2014) (“precisely because reliance is presumed where an omission is material, such a showing is not required unless the defendant rebuts the presumption. BMW, of course, cannot do so in the context of a motion to dismiss”; the plaintiff was “not required to anticipate such proof and disprove what essentially amounts to a defense in her complaint.”). As factual questions exist whether members of the public are likely to have been deceived by Defendant’s material statements and omissions of fact, notwithstanding Defendant’s arguments to the contrary, the FAC properly asserts such claims. The Court should deny the Motion to Dismiss such claims. B. PLAINTIFFS PROPERLY ASSERT A CLAIM FOR BREACH OF CONTRACT In Donovan v. RRL Corp., 26 Cal. 4th 261, 272 (2001), the California Supreme Court discussed the circumstances where an advertisement or promotional statement can properly form the basis for a breach of contract claim: Various advertisements involving transactions in goods also have been held to constitute offers where they invite particular action.… In addition, an advertisement stating that anyone who purchased a 1954 automobile from a dealer could exchange it for a 1955 model at no additional cost constituted an offer that was accepted when the plaintiff purchased the 1954 vehicle. [citations omitted]…. In such cases, courts have considered whether the advertiser, in clear and positive terms, promised to render performance in exchange for something requested by the advertiser, and whether the recipient of the advertisement reasonably might have concluded that by acting in accordance with the request a contract would be formed. [citations omitted]. Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 15 of 30 Page ID #:375 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 11 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In Donovan, the Court relied on an example of what constitutes an offer in an advertisement, where the seller offered to upgrade the car for a later model the following year. This is similar to what MSI offered as set forth in the FAC at ¶¶ 15- 16 and 27-29 -- buy our computer and we’ll upgrade you with the newer GPU model when it comes out, for only the cost of the new GPU, which they later reneged on and tried to upsell consumers a new computer. The operative question under California law, therefore, is simply ‘whether the advertiser, in clear and positive terms, promised to render performance in exchange for something requested by the advertiser, and whether the recipient of the advertisement reasonably might have concluded that by acting in accordance with the request a contract would be formed.’ Donovan [citation]. Construing the complaint in the light most favorable to the plaintiffs, and drawing all reasonable inferences from the complaint in the plaintiffs’ favor, see Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009); Doe v. United States, 419 F.3d 1058, 1062 (9th Cir. 2005), we conclude that the plaintiffs have adequately alleged the existence of an offer to enter into a unilateral contract ….” Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d 777, 787 (9th Cir. 2012). As alleged in the FAC at ¶¶ 14-16 and 41-45, Defendant clearly and unequivocally made an offer to sell the GT 72/80 series of gaming laptops with a specific offer that these laptops would be upgradable to the next generations of NVIDIA GPUs, and even stated it had a specific replacement program in place to do so. In addition, on product packaging MSI made offers as to the upgradability of these laptops. See FAC, Exs. 2-3. These are clear and positive terms that are sufficient, when accepted by Plaintiffs, to base a claim for breach of contract under California law. Sateriale, 697 F.3d at 787. Because these are representations between the buyer and seller, privity is not a prerequisite for asserting this claim (Id.), and has Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 16 of 30 Page ID #:376 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 12 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 previously been addressed by the Court in connection with other claims. Contrary to MSI’s argument in its Motion, “[a]ny affirmation, once made, is part of the agreement unless there is ‘clear affirmative proof’ that the affirmation has been taken out of the agreement.” Weinstat v. Dentsply Int’l, Inc., 180 Cal.App.4th 1213, 1229 (2010). Defendant offers no “proof,” let alone the requisite “clear affirmative proof,” that such a representation was never made or taken out of the agreement. In addition, by its own statements and using product reviewers as conduits for disseminating this relevant and material information, MSI intended this information to form part of the basis of the bargain between the parties. See FAC, ¶¶ 14-16. As these descriptions “go to the essence of the contract”, they properly form the basis for a breach of contract claim. Weinstat, 180 Cal.App.4th at 1229, quoting, Autzen v. John C. Taylor Library Sales, Inc., 572 P.2d 1322, 1326 (Ore. 1977). By stating this material upgradability feature on its packaging, advertising and the product description, MSI was offering to sell consumers a gaming laptop that was capable of being upgraded to the next generations of NVIDIA GPUs. FAC, ¶¶ 16, 20- 25, 41-43 and 45. Plaintiffs allege they were exposed to and saw MSI’s claims regarding the upgradability feature of the GT 72/80 laptops, and why these offers were material, as MSI representatives later conceded. See FAC, ¶ 44. Plaintiffs demonstrate that MSI recognized the binding nature of such claims, when MSI’s own employees admitted the laptops do not perform as represented and that MSI could not “honor their agreement.” FAC, ¶¶ 16, 20, 27 and 46. Since performance of this obligation is possible because Defendant can replace Plaintiffs’ current laptops with laptops that contain the later generation of NVIDIA GPUs, Plaintiffs adequately allege breach of such agreements and resulting damages. This is the case even if (as MSI claims and Plaintiffs dispute in ¶¶ 20-21 of the FAC), the failure to perform is related to “unforeseen hardware limitations”. As the California Supreme Court held: “The fact that compliance with his contract would involve greater expense than he anticipated would not excuse defendant. Parties sui juris cannot escape performance Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 17 of 30 Page ID #:377 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 13 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 of their undertakings because of unforeseen hardship.” Butler v. Nepple, 54 Cal.2d 589, 599 (1960) (emphasis added). Thus, the First Cause of Action properly alleges an offer, an acceptance of that offer, consideration, breach of that agreement and resulting damages, and thus a claim for breach of contract. C. PLAINTIFFS PROPERLY PLEAD CLAIMS FOR BREACH OF BOTH EXPRESS AND IMPLIED WARRANTIES 1. Plaintiffs Properly Allege an Express Warranty Claim In the Sixth Cause of Action, Plaintiffs allege a breach of express warranties based on: (1) the express written warranty provided with all of these laptops; and (2) advertisements and promotional statements made by or attributable to Defendant. Defendant cannot seriously dispute that the express warranty, attached as Ex. 4, does not cover the GT 72/80 laptops in question. It is an express warranty that, by its language, is provided from MSI directly to consumers such as Plaintiffs. In addition, statements made in an advertisement or promotion, such as alleged in the FAC, ¶¶ 14- 16 and 83-87, can also constitute a separate and actionable express warranty under California law. Anthony v. Gen. Motors Corp., 33 Cal.App.3d 699, 706 (1973); Keith v. Buchanan, 173 Cal.App.3d 13, 21 (1985) (“Courts have liberally construed affirmations of quality made by sellers in favor of injured consumers…. It has even been suggested ‘that in an age of consumerism all seller’s statements, except the most blatant sales pitch, may give rise to an express warranty.’”). The “whole purpose of warranty law is to determine what it is the seller has in essence agreed to sell.” Weinstat, 180 Cal.App.4th at 1228. In keeping with this purpose, the California Commercial Code “focuses on the seller’s behavior and obligations—his or her affirmations, promises, and descriptions of the goods—all of which help define what the seller ‘in essence’ agreed to sell.” Id. Here, as set forth above, MSI made detailed and objective claims about these laptops possessing this specific upgradability characteristic. Thus, by its own “behavior and obligations,” MSI “in essence agreed to sell” laptops that could be upgraded to the next generations Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 18 of 30 Page ID #:378 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 14 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 of NVIDIA GPUs, and that was part of the basis of the parties’ bargain. FAC ¶¶ 86- 87; Weinstat, 180 Cal.App.4th at 1228. In response to the Order, Plaintiffs (1) attached the applicable express warranty (FAC, ¶ 85, Ex. 4), (2) alleged how the product packaging and advertising made material representations directly to consumers (FAC, ¶¶ 14-18, 20, 83-84 and 86-87), and (3) described how those warranties were breached since MSI, by stating on its packaging, advertising and the product description on websites that these laptops were upgradable, gave the Plaintiffs no reason to believe otherwise (FAC, ¶¶ 88-91). Under Cal. Comm. Code § 2313, any affirmation, description or promise made by the seller to the buyer which relates to the goods and becomes a part of the basis of the bargain creates an express warranty that the goods shall conform to that affirmation, description or promise. Defendant’s refusal to fix the inability of these laptops to be upgraded to later generations of NVIDIA GPUs or offer a replacement failed to conform such products to the parties’ original bargain and thus constitutes a breach of both the express warranty attached to the FAC and the warranties Defendant targeted at consumers created by their advertisements. California case law confirms a specific technical product statement can create an express warranty when placed in context with the rest of the product. Schauer v. Mandarin Gems of Cal., Inc., 125 Cal.App.4th 949, 959 (2005). In Schauer, plaintiff stated a claim for breach of express warranty based on allegations that defendant represented that an engagement diamond had a “SI1” clarity rating, when in fact it was of an inferior quality. Here, like the “SI1” clarity rating, Defendant’s representations that the GT 72/80 laptops were upgradable to the next generation of NVIDIA GPUs based on the inclusion of MXM technology in these laptops was a characteristic that formed the basis of the parties’ bargain. Plaintiffs do not need to allege any form of reliance to assert breach of an express warranty. As the California Supreme Court explained: / / / Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 19 of 30 Page ID #:379 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 15 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 We first treat the claim for breach of express warranty, which is governed by California Commercial Code section 2313. The key under this section is that the seller's statements—whether fact or opinion—must become ‘part of the basis of the bargain.’ (See Cal. U.Com.Code, s 2313, com. 8; Ezer, Supra, at p. 287, fn. 39.) The basis of the bargain requirement represents a significant change in the law of warranties. Whereas plaintiffs in the past have had to prove their reliance upon specific promises made by the seller (Grinnell v. Charles Pfizer & Co. (1969) 274 Cal.App.2d 424, 440, 79 Cal.Rptr. 369), the Uniform Commercial Code requires no such proof. According to official comment 3 to the Uniform Commercial Code following section 2313, ‘no particular reliance . . . need be shown in order to weave (the seller's affirmations of fact) into the fabric of the agreement. Rather, any fact which is to take such affirmations, once made, out of the agreement requires clear affirmative proof. (emphasis added). Hauter v. Zogarts, 14 Cal.3d 104, 115, (1975) (emphasis added). The Court of Appeal later confirmed this point: “The official Uniform Commercial Code comment in regard to section 2–313 “indicates that in actual practice affirmations of fact made by the seller about the goods during a bargain are regarded as part of the description of those goods; hence no particular reliance on such statements need be shown in order to weave them into the fabric of the agreement.” [citations] It is clear from the new language of this code section that the concept of reliance has been purposefully abandoned. [citations] Keith v. Buchanan, 173 Cal.App.3d at 23 (1985) (emphasis added). / / / Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 20 of 30 Page ID #:380 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 16 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Thus, contrary to MSI’s assertion, reliance is not an element of Plaintiffs’ claim for breach of express warranty. Weinstat, 180 Cal.App.4th at1227 (“The lower court ruling rests on the incorrect legal assumption that a breach of express warranty claim requires proof of prior reliance. While the tort of fraud turns on inducement, as we explain, breach of express warranty arises in the context of contract formation in which reliance plays no role.”). Indeed, CACI No. 1240, entitled “Affirmative Defense to Express Warranty – Not Basis of Bargain”, which impliedly included some form of reliance for an express warranty claim, was later revoked, based in part on the holding in Weinstat. See “Do You Need To Read the Warranty First”, LA. Daily Journal, July 22, 2010 (reprinted at https: //www.duanemorris.com/articles/ do_you_need_to_read_the_warranty_first_3743. html). Thus, to the extent MSI claims Plaintiffs need to plead reliance to assert a breach of warranty claim, California law is clearly that they do not. Plaintiffs each allege they were exposed to and saw MSI’s claims regarding the upgradability performance of the laptops each purchased, as set forth above. FAC, ¶¶ 6, 14, 18, 25 and 84-86. These allegations provide the “specific and unequivocal written statement” Plaintiffs and Class members were exposed to that created an express warranty based on such advertisements. Yastrab v. Apple, Inc., 2015 WL 1307163, *7 (N.D. Cal. Mar. 23, 2015); McKinney v. Google, Inc., 2011 WL 3862120, *4 (N.D. Cal. Aug. 30, 2011). While Plaintiffs explain why Defendant’s representations would be material and presumptively misleading (FAC ¶¶ 23-24), the “precise time when words of description or affirmation are made … is not material” for such claims. Weinstat, 180 Cal.App.4th at 1230. The “good faith” that “infuses the California Uniform Commercial Code … affords another rationale” for holding Defendant responsible under a breach of express warranty claim. Id. at 1231. Given these detailed allegations, Defendant’s assertion it cannot be liable for breach of express warranty “arguably would fall short of good faith.” Id. Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 21 of 30 Page ID #:381 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 17 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Finally, whether MSI made an actionable affirmation of fact, promise, or product description sufficient to create a warranty is “a specific factual assertion which could be established or disproved through discovery.” Anunziato v. eMachines, Inc., 402 F.Supp.2d 1133, 1140-41 (C.D. Cal. 2005). Questions of fact about the meaning of a technical representation and whether they constitute express warranties are thus not properly resolved on a motion to dismiss. McDonnell Douglas Corp. v. Thiokol Corp., 124 F.3d 1173, 1176 (9th Cir. 1997); Date v. Sony Electronics, Inc., 2010 WL 3702599 (E.D. Mich. Sept. 16, 2010). Plaintiffs properly plead a claim for breach of express warranties. 2. Plaintiffs Allege the GT 72/80 Laptops Are Unmerchantable and Breached the Implied Warranty of Merchantability Defendant argues in its Motion that Plaintiffs do not allege what is required for a laptop in terms of this upgradability feature for purposes of the implied warranty claims. Presumably this argument only goes to the implied warranty of merchantability allegations, since the Court at pg. 19 of its Order upheld the warranty cause of action based on the implied warranty of fitness for a particular purpose. Additionally, MSI makes a claim that certain aspects of the warranty claim do not satisfy applicable privity requirements. The Court at pgs. 18-19 of its Order specifically addressed the sufficiency of such allegations as to the claims for breach of warranty and found this argument lacking, based a number of court rulings that rejected this argument. See, e.g., Keegan v. Am. Honda Motor Co., 838 F.Supp.2d 929, 946–47 (C.D. Cal. 2012) (citing cases). Defendant cites no new law or fact that would justify reconsidering that prior ruling, and it makes no sense that such a ruling would extend to some warranty claims but not others. Cf., Atkinson v. Elk Corp. of Texas, 142 Cal.App.4th 212, 229 (2006) (“It would be inconsistent to recognize privity existing for breach of express quality warranties under Magnuson–Moss and to reach the opposite conclusion in the same transaction for breach of the implied warranty of merchantability.”) MSI claims in its Motion that its laptops are not “unmerchantable” as they Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 22 of 30 Page ID #:382 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 18 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 meet a minimum level of quality. However, there are several alternative bases for asserting a claim for breach of the implied warranty of merchantability, only one of which involves the minimum level of quality inquiry. Cal. Com. Code § 2314(2). “Merchantability has several meanings (see Cal. U. Com.Code, § 2314, subd. (2) (a—f)), two of which are relevant to the instant case: the product must ‘(c)onform to the promises or affirmations of fact made on the container or label’ (Cal. U. Com. Code, § 2314, subd. (2)(f)), and must be ‘fit for the ordinary purposes for which such goods are used.’ (Cal. U. Com. Code, § 2314(2)(c).) The Gizmo fails in both respects.” Hauter, 14 Cal.3d at 117-18. Plaintiffs specifically plead the GT 72/80 laptops: (1) do not pass without objection in the trade; (2) are not of fair average quality within the products’ description; (3) are not adequately contained, packaged, and labeled; or (4) fail to conform to the factual representations made on the product container and label, as evidenced by Exs. 2 and 3. FAC, ¶ 96. Even Defendant’s own authority recognizes these are alternate bases for proving this claim. See Birdsong v. Apple, Inc., 590 F.3d 955, 958 n.2 (9th Cir. 2009). Where, as here, Plaintiffs allege that at least some of the product labeling made such upgradability representations (see FAC, ¶ 15(g), Exs. 2-3), and the products fail to conform that that factual representation, there is no need to resolve whether the product meets a minimum level of quality to assert a breach of implied warranty claim on that ground. That is a separate and independent aspect of that claim. The laptops’ failure to live up to their advertised characteristics in a material way also causes them to not “pass without objection” in the trade, which is a separate aspect of the implied warranty of merchantability claim. Here, MSI’s own representative admitted the laptops do not fully function as promised, and that the laptops did not provide the represented characteristics, and thus would not pass without objection. FAC, ¶¶ 16, 24, 27, 96. Accepting these allegations as true, especially based on admissions from MSI’s own employees, the Court cannot find as a matter of law Plaintiffs received the product they expected and thus would pass Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 23 of 30 Page ID #:383 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 19 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 without objection. See Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011). As to the third alternate aspect of this claim, the laptops at issue also violate the implied warranty of merchantability if they are not “fit for the ordinary purposes for which such goods are used.” Mexia v. Rinker Boat Co., 174 Cal.App.4th 1297, 1303. As the Court of Appeal held in Mexia, [t]he implied warranty of merchantability may be breached by a latent defect undiscoverable at the time of sale. [citations]. Indeed, ‘[u]ndisclosed latent defects ... are the very evil that the implied warranty of merchantability was designed to remedy.’ (Willis Mining, Inc. v. Noggle (1998) 235 Ga.App. 747, 749 [509 S.E.2d 731].) In the case of a latent defect, a product is rendered unmerchantable, and the warranty of merchantability is breached, by the existence of the unseen defect, not by its subsequent discovery. The FAC at ¶¶ 20, 89 and 96 alleges how the GT 72/80 laptops are defective in terms of their inability to be upgraded, and how that defect was latent and undiscoverable at time of sale. Under Mexia (which the Ninth Circuit held federal courts were bound to follow in Daniel, 806 F.3d at 1222), such allegations are sufficient to assert an implied warranty of merchantability claim, without more. See also Hicks v. Kaufman & Broad Home Corp., 89 Cal. App. 4th 908, 918 (2001) (“we conclude proof of breach of warranty [of merchantability] does not require proof the product has malfunctioned but only that it contains an inherent defect which is substantially certain to result in malfunction during the useful life of the product.”) The FAC at ¶¶ 20, 89 and 96 also includes the requisite allegations to assert an additional basis for a breach of implied warranty claim: “As has been pointed out, if this defect were known they would not have been salable ‘as goods of the general kind which were described.’ They would not measure up to the description given by the purchaser, and hence would breach the implied warranty of merchantability.” Mexia, 174 Cal.App.4th at 1305 (emphasis added). Thus, the law does not require the Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 24 of 30 Page ID #:384 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 20 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 product, as Defendant contends, to be totally unusable in order to breach the implied warranty of merchantability as to this alternative ground. California courts “reject the notion that merely because a vehicle provides transportation from point A to point B, it necessarily does not violate the implied warranty of merchantability.” Isip v. Mercedes–Benz USA, LLC, 155 Cal.App.4th 19, 27 (2007). Rather, as stated in Isip in rejecting a jury instruction that claim the law required the product be essentially non- functional, “the core test of merchantability is fitness for the ordinary purpose for which such goods are used.” Here, the FAC at ¶ 96 alleges that the “ordinary purpose” of these particular laptops are to function consistent with their described parameters, i.e., to actually be upgradable, since that is specifically the description given by MSI. Thus, the relevant question for this alternative ground for the breach of implied warranty of merchantability claim is not whether these laptops function at all, but rather whether they possess the basic degree of fitness for their ordinary use to function as an “upgradable” laptop, because that is a core function of these laptops as represented by MSI. Plaintiffs allege the laptops fail in this core, critical respect and that Plaintiffs have been damaged as a result. FAC, ¶¶ 96-103. As Plaintiffs sufficiently allege the GT 72/80 line of laptops do not (a) pass without objection in the trade, (b) are not of fair average quality, (c) are not adequately packaged and labeled, and/or (d) fail to conform to the factual representations made on the container and label, they adequately allege the products breach the implied warranty of merchantability in several independent ways. Cal. Comm. Code § 2314(2). Finally, “resolution of the [merchantability] issue is necessarily dependent upon the facts and, if there be any conflict in the evidence, is a matter for a jury. [citation] At this point in the proceeding, we cannot hold that the boat was merchantable as a matter of law.” Mexia, 174 Cal.App.4th at 1308; see also Pisano v. Am. Leasing, 146 Cal.App.3d 194, 198 (1983) (finding a grant of summary judgment on this issue was improper: “Crucial to the inquiry is whether the product conformed Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 25 of 30 Page ID #:385 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 21 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 to the standard performance of like products used in the trade. [citation]. This determination may depend on testimony of persons familiar with the industry standards and local practices and is a question of fact.”). Thus, whether the inability of these laptops to be upgradable to the next generation of NVIDIA GPUs breaches the implied warranty of merchantability is not properly resolved through this motion, particularly based on the numerous alternate grounds plead. 3. Plaintiffs’ Causes of Action for Breach of the Song-Beverly Warranty Act and the Magnuson-Moss Warranty Act Are Proper Both the express warranty claims and the claims for violation of the implied warranty of merchantability are adequately plead as set forth above. The Court previously upheld Plaintiffs’ claim for breach of the implied warranty for particular purpose (Order at pg. 15). As a result, Plaintiffs’ Eighth and Ninth Causes of Action for breach of the Song-Beverly Warranty Act and its federal analogue, the Magnuson-Moss Warranty Act, are also properly alleged in the FAC. Mexia,174 Cal.App.4th at 1303–04, provides a good summary of the law on this point: Although the Uniform Commercial Code provides a similar warranty of merchantability (U.Com.Code, § 2314), its provisions proved “limited in providing effective recourse to a consumer dissatisfied with a purchase.” (Krieger v. Nick Alexander Imports, Inc. (1991) 234 Cal.App.3d 205, 213, 285 Cal.Rptr. 717 (Krieger).) In order to provide greater protections and remedies for consumers, the Legislature enacted the Song–Beverly Act. (Robertson v. Fleetwood Travel Trailers of California, Inc. (2006) 144 Cal.App.4th 785, 801, 50 Cal.Rptr.3d 731.) It “is strongly pro- consumer” and “makes clear its pro-consumer remedies are in addition to those available to a consumer pursuant to the [Uniform] Commercial Code....” (Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, 990, 73 Cal.Rptr.2d 682, 953 P.2d 858.) As a result, to “the extent that the [Song–Beverly] Act gives rights to the Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 26 of 30 Page ID #:386 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 22 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 buyers of consumer goods, it prevails over conflicting provisions of the Uniform Commercial Code.” (4 Witkin, Summary of Cal. Law (10th ed. 2005) Sales, § 52, p. 63, citing Civ. Code § 1790.3.) Thus, consumers can properly assert a claim for breach of warranty under the California Commercial Code and separately as a claim for breach of warranty under the Song-Beverly Warranty Act based on the sale of a consumer product. There should be no question that privity is not an element of such a claim. Gusse v. Damon Corp., 470 F.Supp.2d 1110, 1116 n. 9 (C.D. Cal. 2007) (imposing a privity requirement would “ignore[ ] the plain language of the Song–Beverly Act” that all goods sold at retail are accompanied by the manufacturer's implied warranty and §1792 of the Song-Beverly Warranty Act). As with the Commercial Code, there are several aspects of the definition of “merchantability” under the Song-Beverly Warranty Act. However, in the Civil Code §1791.1 definition, the product must satisfy all four listed aspects, including that the product "conforms to the promises or affirmations of fact made on the container or label”. In addition, the failure of these laptops to conform to their advertised characteristics of being upgradeable to later NVIDIA GPU generations is the material fact that causes them to not “pass without objection” in the trade, which also violates Cal. Civ. Code § 1791.1(a). While as set forth above Plaintiffs allege how these laptops do not meet this basic level of quality such that they are not “fit for the ordinary purposes for which such goods are used” (see Cal. Civ. Code § 1791.1(a)(2)), there is no requirement in the express words of the statute, as explained in Mexia, supra, about the product having to meet a minimum or basic level of quality for the statutory warranty of merchantability to apply to this alternate ground Defendant’s claims should not apply to this Cause of Action, which as stated above is broader and more “pro consumer” than a standard implied warranty claim under the California Commercial Code. If the device in question does not conform to the affirmation of fact contained Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 27 of 30 Page ID #:387 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 23 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 on the label or pass without objection in the trade (which MSI cannot seriously dispute) and cannot be repaired – (which MSI conceded it either can't or it won't), under Cal. Civ. Code § 1793.2(d) "the manufacturer shall either replace the goods or reimburse the buyer in an amount equal to the purchase price paid by the buyer, less that amount directly attributable to use by the buyer prior to the discovery of the nonconformity”, and under Cal. Civ. Code § 1794 is also liable for damages. These facts also properly form the basis for a breach of warranty claim under the MMWA. In addition to the fact Plaintiffs have adequately plead both express and implied warranty claims under California law as set forth above and thus can also bring a claim for violation of the MMWA, where an MMWA claim concerns an express written warranty as alleged in the FAC at ¶¶ 83-86, 117, the protections of the MMWA are often broader than state law protections. See, e.g., Borchardt v. Mako Marine Int’l., Inc., 2011 WL 2084177, at *5 (S.D. Fla. May 24, 2011) (denying motion to dismiss MMWA claim based on an express written warranty, stating “plaintiffs’ MMWA claim does not fail simply because their state law express warranty claims fail”). Defendant’s claims as to the upgradability of these laptops to the next generations of GPUs, which MSI later admitted were wrong, combined with the failure of the laptops to actually conform to that requirement and meet that specified level of performance also violates the MMWA, as such statements reasonably imply the laptops would be able to comply with this warranty when the new GPUs became available – which they could not. FAC, ¶¶ 14-16, 20-24, 27-29. To the extent MSI argues its representations are not actionable warranty claims for purposes of the MMWA, its statements “relate to the nature of the product and are not mere product descriptions.” Dorsey v. Rockhard Labs., LLC, 2014 WL 4678969, *9 (C.D. Cal. Sept. 19, 2014). Even if Defendant’s representations were product descriptions Plaintiffs would still properly plead an MMWA claim, since at a minimum, Defendant’s representations regarding the ability to upgrade these gaming laptops qualify as affirmations of “specified level[s] of performance.” See 15 U.S.C. Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 28 of 30 Page ID #:388 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 24 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 § 2301(6)(A). Under the MMWA, a “written warranty” means a “written affirmation of fact or written promise made in connection with the sale of a consumer product by a supplier to a buyer which relates to the nature of the material ... and affirms or promises that such material ... is defect free or will meet a specified level of performance over a specified period of time.” Id. “The ‘or’ disjunction does not require a specified period of time in addition to a defect-free representation.” See Friedman v. Guthy-Renker LLC, 2015 WL 857800, *7 (C.D. Cal. Feb. 27, 2005) (quoting 15 U.S.C. § 2301(6)(A)). Thus, no matter what theory may apply in terms of violation of an express or implied warranty, or both, Plaintiffs properly plead their claims under both the Song- Beverly Warranty Act and the MMWA. D. PLAINTIFFS PROPERLY ALLEGE A CLAIM FOR COMMON COUNTS – ASSUMPSIT, RESTITUTION, UNJUST ENRICHMENT AND QUASI-CONTRACT Finally, the only deficiency the Court found in Plaintiffs’ Cause of Action for common counts -- assumpsit, restitution, unjust enrichment and quasi-contract (which is now the Tenth Cause of Action) was the need to add allegations regarding the sum certain at issue. See Order at pgs. 18-19. Under Local Rule 7-18, if a party brings a request to reconsider a prior ruling, it must show how the law or facts materially changed to justify such a motion. The Court dismissed this Cause of Action with leave to amend, solely for Plaintiffs to add the sum certain owed. The FAC ¶¶ 4-5, 18 and 126 included such allegations. To the extent MSI is requesting the Court reconsider that ruling, it is improper to do so. And to the extent MSI is making a new argument on the old allegations that it previously could have made but did not, that is equally improper. Fed. R. Civ. Proc 12(g)(2) states “except as provided in Rule 12(h)(2) or (3), a party that makes a motion under this rule must not make another motion under this rule raising a defense or objection that was available to the party but omitted from its earlier motion.” The substance of this cause of action did not change, and MSI did not file a motion under Rule 7(a) or Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 29 of 30 Page ID #:389 PLTFS’ MEMO OF P&As IN OPPOSITION TO DEFT’S MOTION TO DISMISS FAC - 25 - Case No. 17-cv-03231-CAS (AFMx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12(c). Thus, MSI’s motion is improper. Finally, even assuming the Court would somehow accept the idea that privity is properly alleged for some claims but not others (contrary to the case law set forth above), there is no requirement that Plaintiffs allege “privity of contract” for this claim. The Ninth Circuit held in In re De Laurentiis Entm't Grp. Inc., 963 F.2d 1269, 1273 and n.6 (9th Cir. 1992), that “[t]he whole point of quantum meruit recovery is to compensate plaintiffs who have provided a benefit to defendants but who do not have a contract—express or implied—with those defendants.” IV. CONCLUSION The Court gave Plaintiffs specific directions how to amend the original Complaint. Plaintiffs did so and complied with that Order. The Court should thus overrule the Motion to Dismiss in its entirety and direct Defendant to file an Answer within 10 days. If the Court finds these causes of action deficient in any respect based on the arguments raised by MSI in its Motion, Plaintiffs request leave to amend. DATED: November 3, 2017 CONSUMER LAW GROUP OF CALIFORNIA By: /s/Alan M. Mansfield Alan M. Mansfield (SBN 125998) alan@clgca.com 16870 W. Bernardo Dr., Suite San Diego, CA 92127 Tel: (619) 308-5034 Fax: (855) 274-1888 WESTERMAN LAW CORP. By: /s/ Jeff S. Westerman Jeff S. Westerman (SBN 94559) jwesterman@jswlegal.com 1875 Century Park East, Suite 2200 Los Angeles, CA 90067 Tel: (310) 698-7880 Fax: (310) 698-7452 Attorneys for Plaintiffs Case 2:17-cv-03231-CAS-AFM Document 42 Filed 11/03/17 Page 30 of 30 Page ID #:390