In re: Kia Engine Litigation

NOTICE OF MOTION AND MOTION to Dismiss Plaintiffs' Class Action Consolidated Complaint

C.D. Cal.December 21, 2017

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 Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS QUINN EMANUEL URQUHART & SULLIVAN, LLP Shon Morgan (Bar No. 187736) shonmorgan@quinnemanuel.com 865 South Figueroa Street, 10th Floor Los Angeles, California 90017-2543 Telephone: (213) 443-3000 Facsimile: (213) 443-3100 Kari Wohlschlegel (Bar No. 294807) kariwohlschlegel@quinnemanuel.com Tina Lo (Bar No. 311184) tinalo@quinnemanuel.com 50 California Street, 22nd Floor San Francisco, CA 94111 Telephone: (415) 875-6600 Facsimile: (415) 875-6700 Attorneys for Defendant Kia Motors America, Inc. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, SOUTHERN DIVISION In re: Kia Engine Litigation CASE NO. 8:17-cv-00838 DEFENDANT KIA MOTORS AMERICA, INC.’S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFFS’ CLASS ACTION COMPLAINT PURSUANT TO FED. R. CIV. P. 12(B)(1), 12(B)(6), AND 8; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: February 9, 2018 Time: 2:30 p.m. Crtrm.: 10-A The Hon. Josephine L. Staton Trial Date: December 11, 2018 Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 1 of 32 Page ID #:629 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 04772-00006/9758621.4 -i- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE THAT, on February 9, 2018, at 2:30 p.m. or as soon thereafter as the matter may be heard, defendant Kia Motors America, Inc. (“Kia”) will and hereby does move the above-entitled Court pursuant to Federal Rules of Civil Procedure 8, 9(b), 12(b)(1) and 12(b)(6) to dismiss the claims identified below in plaintiffs’ Consolidated Class Action Complaint (Dkt. 54). This motion is made on the grounds that each of these purported claims fails to state a claim upon which relief can be granted. This motion is made following the conference of counsel pursuant to Local Rule 7-3 on December 13, 2017. Specifically: (1) plaintiffs fail to state a UCL, CLRA, FAL, MUTPA, or fraud claim because their allegations do not meet the particularity requirement of Fed. R. Civ. P. 9(b) and they do not adequately plead Kia had knowledge of the purported defect at issue; (2) plaintiffs fail to state a claim for breach of express warranty because they do not allege what express warranty Kia purportedly breached nor whether the purported defect manifested during the warranty period; (3) plaintiffs fail to state a claim for breach of implied warranty because their vehicles remain fit for use; (4) plaintiffs’ claims under the Magnuson-Moss Warranty Act and Song- Beverly Act fail because they do not satisfy the statutory requirements; (5) plaintiffs’ claims for breach of the duty of good faith and fair dealing fail because they do not allege non-duplicative claims; and (6) plaintiffs lack standing to assert claims related to vehicles they did not purchase. This motion is based upon this Notice of Motion and Motion, the attached Memorandum of Points and Authorities in support thereof, the concurrently-filed Request for Judicial Notice, all pleadings on file in this action, such other evidence or arguments as may be presented to the Court, and such other matters of which this Court may take judicial notice. Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 2 of 32 Page ID #:630 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 -ii- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS DATED: December 21, 2017 QUINN EMANUEL URQUHART & SULLIVAN, LLP By /s/ Shon Morgan Shon Morgan Attorneys for Defendant Kia Motors America, Inc. Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 3 of 32 Page ID #:631 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 -iii- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS TABLE OF CONTENTS Page Preliminary Statement ................................................................................................. 1 Background .................................................................................................................. 3 Legal Standard ............................................................................................................. 6 I. PLAINTIFFS’ UCL, CLRA, MUTPA, FAL, AND FRAUD CLAIMS FAIL .................................................................................................................. 7 A. Plaintiffs’ Fraud-Based Claims are Subject to Rule 9(b) ....................... 7 B. Plaintiffs Do Not Plead Specific Misleading Statements ....................... 7 C. Plaintiffs Fail to Allege a Duty to Disclose ............................................ 9 D. Plaintiffs Fail to Adequately Plead Kia Knew About the Purported Defect at the Time of Sale .................................................... 10 II. PLAINTIFFS’ EXPRESS WARRANTY CLAIMS FAIL ............................. 12 A. Plaintiffs Do Not Allege An Enforceable Express Warranty ............... 12 B. Plaintiffs Fail to Allege Their Vehicle Was Under Warranty When They Sought Repairs .................................................................. 13 C. Plaintiffs Fail To Allege Breach Of Any Express Warranty ................ 14 D. To The Extent Plaintiffs Base Their Warranty Claim On Advertising, No Actionable Warranties Are Alleged ........................... 15 III. PLAINTIFFS’ CLAIMS FOR BREACH OF IMPLIED WARRANTY OF MERCHANTABILITY FAILS ................................................................ 16 IV. PLAINTIFFS’ MAGNUSON-MOSS WARRANTY ACT CLAIMS FAIL ................................................................................................................ 18 V. PLAINTIFFS’ SONG-BEVERLY ACT CLAIMS FAIL .............................. 18 VI. PLAINTIFFS FAIL TO STATE A CLAIM FOR BREACH OF THE DUTY OF GOOD FAITH AND FAIR DEALING ........................................ 20 VII. PLAINTIFFS LACK STANDING TO ASSERT CLAIMS RELATING OTHER VEHICLE MODELS ........................................................................ 22 Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 4 of 32 Page ID #:632 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 -iv- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS TABLE OF AUTHORITIES Page Cases Acedo v. DMAX, Ltd., No. CV1502443MMMASX, 2015 WL 12912365 (C.D. Cal. July 31, 2015) .......................................................................................................... 14, 15, 17 Am. Suzuki Motor Corp. v. Superior Court, 37 Cal. App. 4th 1291 (1995) ............................................................................... 17 Atkinson v. Elk Corp. of Texas, 142 Cal. App. 4th 212, 48 Cal. Rptr. 3d 247 (2006) ............................................. 19 Baba v. Hewlett-Packard Co., No. C 09-05946 RS, 2010 WL 2486353 (N.D. Cal. June 16, 2010) ................... 7, 8 Barabino v. Dan Gamel, Inc., No. 2:04-cv-2359-MCE-PAN, 2006 WL 2083257 (E.D. Cal. 2006) ................... 18 Barakezyan v. BMW of N. Am., LLC, No. CV1600173SJOGJSX, 2016 WL 2840803 (C.D. Cal. Apr. 7, 2016) ...... 15, 16 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ................................................................................................. 6 Belodoff v. Netlist, Inc., No. SA CV 07-00677 DOC(MLGx), 2008 WL 2356699 (C.D. Cal. May 30, 2008) ................................................................................................................ 13 Birdsong v. Apple, Inc., 590 F.3d 955 (9th Cir. 2009) ................................................................................. 20 Chartier v. Farm Family Life Ins. Co., 113 A3d 234 (Me. 2015) ....................................................................................... 21 Chin v. Gen. Mills, Inc., No. 12-2150(MJD/TNL), 2013 WL 2420455 (D. Minn. June 3, 2013) ............... 24 Clemens v. DaimlerChrysler Corp., 534 F.3d 1017 (9th Cir. 2008) ......................................................................... 13, 18 Cummins, Inc. v. Superior Ct., 36 Cal. 4th 478 (Cal. 2005) ................................................................................... 19 Datel Holdings, Ltd., 712 F. Supp. 2d 974 (N.D. Cal. 2010) ..................................................................... 6 Daugherty v. American Honda Motor Co., 144 Cal. App. 4th 824 (Ct. App. 2006) ............................................................. 9, 13 Davidson v. Apple, Inc., No. 16-CV-04942-LHK, 2017 WL 976048 (N.D. Cal. March 14, 2017)........... 8, 9 Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 5 of 32 Page ID #:633 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 -v- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS Davis v. Apperience Corp., No. C 14-00766 WHA, 2014 WL 5528232 (N.D. Cal. 2014) .............................. 22 Edejer v. DHI Mortgage Co., No. C 09-1302 PJH, 2009 WL 1684714 (N.D. Cal. 2009) ................................... 21 Env’t Furniture, Inc. v. Bina, No. CV 09-7978 PSG(JCz), 2010 WL 5060381 (C.D. Cal. Dec. 6, 2010) ........... 21 Fisher v. Honda N. Am., Inc., 2014 WL 2808188 (C.D. Cal. June 12, 2014) ....................................................... 15 Green v. Green Mountain Coffee Roasters, Inc., 279 F.R.D. 275 (D.N.J. 2011) ............................................................................... 24 Grodzitsky v. Am. Honda Motor Co., No. 2:12-cv-1142, 2013 WL 690822 (C.D. Cal. Feb. 19, 2013) .............. 12, 19, 20 Haines v. Great Northern Paper, Inc. et al, 808 A.2d 1246 (Me. 2002) ................................................................................... 20 Hoey v. Sony Electronics, Inc., 515 F. Supp. 2d 1099 (N.D. Cal. 2007) ............................................................. 9, 10 In re Homestore.com, Inc. Sec. Litig., 347 F. Supp. 2d 814 (C.D. Cal. 2004) ..................................................................... 5 Hovsepian v. Apple, Inc., No. 08-5788 JF(PVT), 2009 WL 2591445 (N.D. Cal. Aug. 21, 2009) ................ 20 Johns v. Bayer Corp., No. 09CV1935 DMS(JMA), 2010 WL 476688 (S.D. Cal. Feb. 9, 2010)............. 23 Kearney v. Hyundai Motor Am., No. SACV09-1298-JST(MLGx), 2010 WL 8251077 (C.D. Cal. Dec. 17, 2010) ................................................................................................................ 12, 18 Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009) ....................................................................... 7, 9, 10 Kent v. Hewlett-Packard Co., No. 09-5341 JF, 2010 WL 2681767 (N.D. Cal. July 6, 2010) ........................... 7, 8 Kowalsky v. Hewlett-Packard Co., 771 F. Supp. 2d 1156 (N.D. Cal. 2011) ................................................................. 10 Larsen v. Nissan N. Am., No. A121838, 2009 WL 1766797 (Cal. Ct. App. June 23, 2009) ......................... 19 Lewis v. Casey, 518 U.S. 343 (1996) ............................................................................................... 23 Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) ............................................................................................... 23 Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 6 of 32 Page ID #:634 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 -vi- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS Marchante v. Sony Corp. of Am., Inc., 801 F. Supp. 2d 1013 (S.D. Cal. 2011) ................................................................. 20 Marolda v. Symantec Corp., 672 F. Supp. 2d 992 (N.D. Cal. 2009) ..................................................................... 8 Mexia v. Rinker Boat Co., Inc., 174 Cal. App. 4th 1297 (2009) .............................................................................. 20 Mlejnecky v. Olympus Imaging Am. Inc., No. 2:10-cv-02630 JAM-KJN, 2011 WL 1497096 (E.D. Cal. Apr. 19, 2011) ...................................................................................................................... 23 Mocek v. Alfa Leisure, Inc., 114 Cal. App. 4th 402 (2003) ................................................................................ 16 Oestreicher v. Alienware Corp., 322 F. App'x 489 (9th Cir. 2009) ...................................................................... 9, 11 Otworth v. S. Pac. Transp. Co., 166 Cal. App. 3d 452 (1985) ................................................................................. 12 Park-Kim v. Daikin Industries, Ltd., No. 2:15-cv-09523-CAS(KKx), 2016 WL 5958251 (C.D. Cal. Aug. 3, 2016) ................................................................................................................ 12, 15 Peterson v. Mazda Motor of Am., Inc., 44 F. Supp. 3d 965 (C.D. Cal. 2014) ..................................................................... 19 Pilgrim v. Universal Health Card, LLC, 660 F.3d 943 (6th Cir. 2011) ................................................................................. 22 Racine & Laramie, Ltd. v. Dep’t of Parks & Recreation, 11 Cal. App. 4th 1026 (1992) ................................................................................ 21 Sanders v. Apple Inc., 672 F. Supp. 2d 978 (N.D. Cal. 2009) ................................................................... 22 Smith v. Ford Motor Co., 462 Fed. Appx. 660 (9th Cir. 2011) ...................................................................... 10 In re Sony Grand Wega KDF-E a10/a20 Series Rear Projection HDTV Television Litig., 758 F. Supp. 2d 1077 (S.D. Cal 2010) .................................................................... 6 Synopsys, Inc. v. ATopTech, Inc., No. C 13-cv-02965 SC, 2013 WL 5770542 (N.D. Cal. 2013) .............................. 22 Tae Hae Lee v. Toyota Motor Sales, U.S.A., Inc., 992 F. Supp. 2d 962 (C.D. Cal. 2014) ................................................................... 16 Tietsworth v. Sears, Roebuck & Co., No. 5:09-CV-00288 JFHRL, 2009 WL 3320486 (N.D. Cal. Oct. 13, 2009) ...... 20 Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 7 of 32 Page ID #:635 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 -vii- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales Practices, & Prod. Liab. Litig., 754 F. Supp. 2d 1145 (C.D. Cal. 2010) ................................................................. 16 Trinity Hotel Investors, LLC v. Sunstone OP Prop., LLC, No. SA CV 07-1356 AHS(MLGx), 2009 WL 303330 (C.D. Cal. Feb. 6, 2009) ...................................................................................................................... 21 U.S. v. Ritchie, 342 F.3d 903 (9th Cir. 2003) ................................................................................. 13 Wallis v. Kia Motors America, No. 8:16-cv-01033 (C.D. Cal. June 2, 2016) ....................................................... 5, 6 Wallis v. Kia Motors America, No. 8:16-cv-01033 (C.D. Cal. Nov. 7, 2016) .......................................................... 6 Williams v. Beechnut Nutrition Corp., 229 Cal. Rptr. 605 (Cal. Ct. App. 1986) ................................................................ 12 Wilson v. Hewlett-Packard Co., 668 F.3d 1136 (9th Cir. 2012) ..................................................................... 9, 10, 11 Statutory Authorities 15 U.S.C. § 2310(a)(3)(C)(ii) .................................................................................... 18 15 U.S.C. § 2310(d)(1) .............................................................................................. 18 815 ILCS 505/1 et seq ................................................................................................. 5 Cal. Bus. & Prof. Code § 17500, et seq ....................................................................... 5 Cal. Civ. Code § 1791.1(c) ........................................................................................ 19 Cal. Civ. Code § 1792 ................................................................................................ 18 Cal. U. Com. Code § 2314(2) .................................................................................... 16 Rules and Regulations Fed. R. Civ. P. 9(b) ............................................................................................ 7, 8, 10 Other Authorities Denial of Motor Vehicle Defect Petition, 66 FR 55243-01 (Nov. 1, 2001) .............. 10 Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 8 of 32 Page ID #:636 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 -1- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS Preliminary Statement Plaintiffs’ Consolidated Complaint is a fraud case with no misrepresentation, and a warranty case with no breach. It instead involves a manufacturer that consistently provided voluntary, proactive support and remedies to customers with vehicle models that might be affected by a particular issue-above and beyond its contractual warranty obligations-being sued because it did not extend those same extraordinary steps to plaintiffs’ unaffected models. Specifically, Kia identified in 2016 a manufacturing issue that could result in lubrication-based connecting rod failures in the Theta II engine in some 2011-2014 model years of the Kia Optima, Sorento, and Sportage. Kia voluntarily extended the warranties for these vehicles in mid-2016 and offered to reimburse customers who previously paid for such repairs. Kia upgraded those actions on March 31, 2017 by conducting a recall in conjunction with the National Highway Traffic Safety Administration. The additional benefit under the recall was to provide free inspections, but to only replace engines if an actual connecting rod lubrication defect was determined to exist. Although denominated as a safety recall, the notices unambiguously state that no affected consumer ever experienced a resulting accident or injury, and plaintiffs do not allege otherwise. Kia determined no other model and model years were affected by the same issue, and thus no other Kia vehicle and customer received those extended warranty benefits. Nor did NHTSA conclude any other vehicles should be subject to a recall-including specifically plaintiffs’ 2015 Optimas and 2015 Sorento. Thus, those vehicles were not part of any remedial program. In June 2016, after Kia had decided to extend the warranty for the connecting rod issue for the 2011-2014 Optima, Kia was sued in a purported class action regarding those Optima vehicle models and others. In connection with Kia’s voluntary remedies, the class action claims were voluntarily dismissed before any court hearings on the matter. Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 9 of 32 Page ID #:637 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 -2- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS Here, plaintiffs contend their vehicles experienced engine noise and damage that Kia dealers determined resulted from metal shavings in the engine, engine sludge and a “bad” PCV valve-but there is no allegation their vehicles experienced any connecting rod failure as occurred in some of the 2011-2014 models. Lacking any factual connection between their issues and the proactive remedial programs Kia instituted for the earlier model years, plaintiffs have illogically speculated and now allege that the earlier connecting rod issue must also have affected them. Their purported class action seeks to represent all owners and lessees of 2011-2016 Kia Optima, Sportage, and Sorento model vehicles. These claims disregard that owners and lessees of affected Theta II engines have already been provided full remedial benefits. Plaintiffs fail to allege any factual basis to conclude that the later model year Theta II engines had any identifiable connecting rod issue, or that their cars suffered from anything but poor maintenance. Consistent with a complaint based largely on surmise and hope, each claim suffers insurmountable pleading holes. Most significantly, the fraud-based allegations fail because plaintiffs do not identify any actionable fraud-based affirmative misrepresentations or any material omissions of which Kia was aware. As to the breach of warranty claims, plaintiffs present no factual support that either their warranty was breached or, even more significantly, of any classwide breach of Kia’s warranty repair obligations. Rather, for the 2011-2014 model years, not only did Kia honor customer warranties, it extended them and offered customers the opportunity to submit claims for previous repairs. Plaintiffs’ remaining claims fail for various additional reasons detailed in this motion. Independent of plaintiffs’ failure to plead individual claims, they also lack standing to sue concerning other vehicle models and years they never owned or leased. Courts have not hesitated to strike overbroad class definitions and limit any purported class to the model vehicle the named plaintiffs actually possess. That result is appropriate here, should any of plaintiffs’ individual claims survive. Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 10 of 32 Page ID #:638 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 -3- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS Background Plaintiff Stanczak’s Alleged Experiences With His 2015 Kia Optima LX. Plaintiff Stanczak leased a 2015 Kia Optima LX on October 8, 2014. (Dkt. 54 (“Compl.”) ¶ 18). Stanczak later purchased the vehicle during his lease term, on an unspecified date. (Id.). He does not allege he viewed any owner’s manuals, advertisements, or other marketing or information materials related to his vehicles before leasing or purchasing. Almost two years later, on August 22, 2016, Stanczak allegedly “began to hear an unusual engine noise upon acceleration.” (Id. ¶ 20). The dealer found metal shavings in the engine and recommended replacement. (Id. ¶ 21). Stanczak took his vehicle to obtain a second opinion. (Id. ¶ 22). Shortly thereafter, his engine seized. (Id.). Stanczak does not allege he was ever at risk of accident or injury. (Id.) He does not allege the vehicle remained under warranty, though he contends Kia refused to honor the warranty. (Id. ¶¶ 21, 24). Plaintiff Crep’s Alleged Experiences With Her 2015 Kia Optima EX. Plaintiff Creps purchased a 2015 Kia Optima EX on April 21, 2015. (Id. ¶ 31). Creps does not allege she viewed any owner’s manuals, advertisements or other marketing or informational materials related to the vehicle before purchasing. (Id.). Approximately 15 months later, in July 2016, Creps allegedly “heard a loud banging noise originating from the engine” while accelerating to merge onto the highway. (Id. ¶ 33). The dealer recommended replacement of the PCV valve and found sludge in the engine oil. (Id. ¶¶ 33-34). The dealer agreed to replace the PCV valve under warranty, but denied coverage to clean the engine sludge. (Id. ¶ 34). In early August 2016, Creps allegedly heard “a loud knocking noise” when accelerating her vehicle and it subsequently “shut off entirely.” (Id. ¶ 35). Creps brought her vehicle to Rowe Kia Auburn on August 8, 2016, with approximately 44,688 miles on the odometer. (Id. ¶ 37). The dealership recommended engine replacement. Because Creps could not demonstrate appropriate maintenance, the Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 11 of 32 Page ID #:639 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 -4- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS dealership denied her warranty claim. (Id. ¶ 39). A Kia corporate representative offered her $1,200 as a goodwill gesture, but Creps declined this offer. (Id., ¶ 40). Creps does not allege the vehicle remained under warranty, though she contends Kia refused to honor the warranty. (Id. ¶¶ 34, 39-40). Plaintiffs Centko’s and Lazar’s Alleged Experiences with their 2015 Sorento. Centko and Lazar leased a 2015 Sorento from Kia of Valencia in September 2014. (Id. ¶ 47). Centko and Lazar do not allege that they viewed any owner’s manuals, advertisements or other marketing or informational materials related to the vehicle before leasing. More than two years later, in December 2016, Centko and Lazar allegedly “began experiencing major issues with the engine and it became noisier and noisier.” (Id. ¶ 48). Centko and Lazar took the vehicle in to be inspected and were told that oil sludge was causing performance issues. (Id.). Kia of Portland recommended they replace the engine long block, but denied the warranty claim because of inability to document appropriate maintenance. (Id. and ¶ 50). Centko and Lazar refused to pay for a full diagnostic and took the vehicle home without receiving repairs. (Id. ¶¶ 51-52). Centko and Lazar do not allege the vehicle remained under warranty, though they contend Kia refused to honor the warranty. Plaintiffs’ Broad, Unspecified Purported Class. Plaintiffs now allege that their vehicles, along with other Kia models, contain a defect “that results in the restriction of oil flow through the connecting rod bearings” and other areas of the engine, leading to vehicles “stalling during operation and catastrophic engine failure.” (Id. ¶¶ 1-2). Plaintiffs sue not merely for buyers of their model year Sorento and Optimas, but also on behalf of owners of three Kia models that span six years from 2011 to 2016. Plaintiffs connect their purported class only by stating that the vehicles at issue all contain an engine designated by Kia as the Theta 2.0 liter and 2.4 liter. They do not allege that the engines of all of these vehicles were Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 12 of 32 Page ID #:640 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 -5- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS identically designed or manufactured, or that the relevant marketing or warranty statements were the same for each model over this wide range of model years. As evidentiary support for their broad class, plaintiffs reference customer complaints that appear on the NHTSA website. The earliest complaints identified by plaintiffs for the 2015 Kia Optima and 2015 Kia Sorento were May 24, 2016, and August 24, 2016, respectively. (Compl. at ¶¶ 31, 33). The remaining complaints are associated with different models and model years. Kia Already Addressed Any Issues With Potentially Affected Vehicles. In 2016, Kia’s regular ongoing review of warranty data and customer feedback revealed a heightened number of issues surrounding engine lubrication for certain model years of the Kia Optima, Sportage, and Sorento.1 On June 2, 2016, Kia was sued in a purported class action in the Central District of California concerning engine lubrication issues with the 2011-2014 model year Optima, 2011-2014 Sportage, and 2012-2014 Sorento. That action, Wallis v. Kia Motors America, Case No. 8:16-cv-01033-AG-DFM, asserted claims under the CLRA, UCL, California False Advertising Law (Cal. Bus. & Prof. Code § 17500, et seq.); Illinois Consumer Fraud and Deceptive Trade Practices Act (815 ILCS 505/1 et seq.); and for breach of warranty.2 Kia notified owners of the 2011-2014 Optima that it was extending the warranty coverage for the “short block” engine assembly to 10 years starting from 1 This section is offered merely as background and is not necessary to resolve any issues in this motion. Fact citations are provided where appropriate. 2 Complaint, Wallis v. Kia Motors America, No. 8:16-cv-01033 (C.D. Cal. June 2, 2016), ECF No. 1 (Ex. C). The Court may take judicial notice of exhibits C and D attached to the Request for Judicial Notice because they are court records from another proceeding. In re Homestore.com, Inc. Sec. Litig., 347 F. Supp. 2d 814, 816 (C.D. Cal. 2004) (“[A] court may take judicial notice of court records and court proceedings.”). All exhibits cited in this memorandum are attached to Kia’s concurrently filed Request for Judicial Notice. Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 13 of 32 Page ID #:641 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 -6- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS the date of first service or 120,000 miles, whichever occurs first.3 This warranty extension was then also provided to owners of the 2011-2014 Sportage and 2012- 2014 Sorento.4 In light of these and other remedial efforts by Kia, the Wallis plaintiffs dismissed the case on November 7, 2016.5 Kia continued to monitor the situation with respect to all its vehicles. On March 31, 2017, in coordination with NHTSA, Kia issued a recall (“Part 573 Safety Recall Report”) for the engine lubrication issues for the 2011-2014 Optima; 2012- 2014 Sorento; and 2011-2013 Sportage. Kia did not conclude any action was warranted regarding other vehicles falling within the class definition. Legal Standard To withstand a motion to dismiss, the complaint must plead sufficient facts to state a claim that is plausible on its face. In re Sony Grand Wega KDF-E a10/a20 Series Rear Projection HDTV Television Litig., 758 F. Supp. 2d 1077, 1086 (S.D. Cal 2010) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A plaintiff is obligated to plead “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 1087. A court may not assume the plaintiff can prove facts that have not been alleged, nor may the court assume the defendant has violated laws in a way that has not been alleged. Id. 3 June 10, 2016 letter from Kia to owners of the 2011-2014 model year Optima vehicles (Compl. Ex. 3). 4 August 24, 2016 letter from Kia to owners of the 2011-2014 model year Sportage vehicles (Ex. A); August 29, 2016 letter from Kia to owners of the 2012- 2014 model year Sorento vehicles (Ex. B). The court may take judicial notice of exhibits A and B because their contents and existence are readily confirmable. Datel Holdings, Ltd., 712 F. Supp. 2d 974, 984 (N.D. Cal. 2010) (taking judicial notice of product packaging). 5 Stipulation to Dismiss Case, Wallis v. Kia Motors America, No. 8:16-cv- 01033 (C.D. Cal. Nov. 7, 2016), ECF No. 23 (Ex. D). Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 14 of 32 Page ID #:642 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 -7- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS Claims premised on fraudulent conduct must satisfy Federal Rule of Civil Procedure 9(b). Rule 9(b) requires plaintiffs to “state with particularity the circumstances constituting fraud or mistake. This means the plaintiff must state “the who, what, when, where, and how” of the misconduct. I. PLAINTIFFS’ UCL, CLRA, MUTPA, FAL, AND FRAUD CLAIMS FAIL A. Plaintiffs’ Fraud-Based Claims are Subject to Rule 9(b) Plaintiffs’ claims under the UCL, CLRA, FAL, MUTPA and common law fraud are premised on Kia’s purported “misrepresentations,” “fraudulent business practices,” and “conceal[ment]” of the alleged defect. (Compl. ¶¶ 135, 149, 168, 207-08). Accordingly, the claims sound in fraud and are subject to the heightened pleading requirements of Rule 9(b). See Kent v. Hewlett-Packard Co., No. 09-5341 JF, 2010 WL 2681767, at *10 (N.D. Cal. July 6, 2010) (“Allegations of active concealment sound in fraud, and thus must meet the heightened pleading requirements of Fed. R. Civ. P. 9(b).”); Kearns v. Ford Motor Co., 567 F.3d 1120, 1125-26 (9th Cir. 2009) (dismissing CLRA and UCL claims premised on fraudulent course of conduct for failing to meet Rule 9(b) pleadings standards). Where, as here, plaintiffs allege “a unified course of fraudulent conduct,” the heightened pleading standard applies to the pleading as a whole even if fraud is not a necessary element of the claim. Kearns, 567 F.3d at 1125. B. Plaintiffs Do Not Plead Specific Misleading Statements The mere fact that a product did not meet the plaintiff’s expectations is not sufficient to state a cause of action. See Baba v. Hewlett-Packard Co., No. C 09- 05946 RS, 2010 WL 2486353, at *4 n.2 (N.D. Cal. June 16, 2010). A plaintiff must plead what the representations “specifically stated” and the “particular circumstances” surrounding the communications. Kearns, 567 F.3d at 1124-27. Plaintiffs purport to plead UCL and MUTPA claims by alleging that “Defendants have engaged in unfair competition and unfair, unlawful or fraudulent Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 15 of 32 Page ID #:643 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 -8- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS business practices by the conduct, statements, and omissions described above . . . .” (Compl. ¶¶ 149, 168). Plaintiffs, however, nowhere explain what “conduct, statements, and omissions” this allegation refers to, nor when, where and by whom they allegedly occurred. (Id.). Similarly, plaintiffs’ FAL claim alleges that Kia disseminated “through advertising, marketing, and other publications, statements that were untrue or misleading,” regarding the safety, reliability, and functionality of the vehicles (Compl. ¶¶ 158-59), but the complaint fails to identify any specific statement or advertisement containing the representations, much less when the statements were made, in what medium they were distributed, and who made the misleading statements. See Baba, 2010 WL 2486353, at *4 (citations omitted) (allegation that defendant “warranted that the computers would be ‘free from defects’ [and] promised to repair the computers if a defect existed” did not “‘provide the who, what, where, when, and how’ of any affirmative misrepresentations as required under Rule 9(b)”). To the extent plaintiffs’ claims are based on Kia’s purported failure to disclose information, such claims must also be pleaded with particularity. Marolda v. Symantec Corp., 672 F. Supp. 2d 992, 997 n.2 (N.D. Cal. 2009) (nondisclosure is a form of misrepresentation and must be pleaded with particularity); Kent, 2010 WL 2681767, at *10 (N.D. Cal. July 6, 2010) (“Allegations of active concealment sound in fraud, and thus must meet the heightened pleading requirements of Fed. R. Civ. P. 9(b).”). Even where plaintiffs “do not premise their fraudulent omission claims on any ‘particular advertisement,’” they must still comply with Rule 9(b). Davidson v. Apple, Inc., No. 16-CV-04942-LHK, 2017 WL 976048, at *9 (N.D. Cal. March 14, 2017). Here, however, plaintiffs rely on generalized allegations that Kia failed to disclose an alleged defect (Compl. ¶¶ 135, 149, 168, 207-208), but do not allege “they reviewed or were exposed to any information, advertisements, labeling, or packaging by” Kia that would satisfy the heightened pleading standard. Davidson, Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 16 of 32 Page ID #:644 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 -9- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS 2017 WL 976048, at *10 (emphasis added). The court in Hoey v. Sony Electronics, Inc., rejected this type of barebones pleading: [P]laintiffs should note that the court is not satisfied that the allegations sufficiently allege fraudulent conduct. For example, the allegations in paragraph ¶ 9 stating, inter alia, that “Sony concealed from and/or failed to disclose . . . the true defective nature of the Affected Computers” and that it “sold and serviced the Affected Computers even though it knew, or was reckless in not knowing, that the Affected Computers were defectively designed, would prematurely fail and would ultimately result in [the] inability to use the[] Affected Computers for their intended use” are so general that the statement could be made of regarding any design defect in any product. 515 F. Supp. 2d 1099, 1106 (N.D. Cal. 2007). Plaintiffs’ allegations are similarly generic and do no more than recite the elements of the claims. (See Compl. ¶¶ 135, 149, 168 (Kia “knowingly and intentionally conceal[ed] from . . . Class Members that the Class Vehicles suffer from a defect(s)”); ¶ 207 (“Defendants did not fully and truthfully disclose to their customers the true nature of the inherent defect”); ¶¶ 208-209). See also Kearns, 567 F.3d at 1127 (dismissing fraudulent omission claim because plaintiffs “claims of nondisclosure were couched in general pleading alleging Ford’s intent to conceal” material information). C. Plaintiffs Fail to Allege a Duty to Disclose Plaintiffs have also failed to demonstrate that Kia had an obligation to disclose information regarding any alleged defect. Federal courts applying California law have generally rejected a broad obligation to disclose information. See, e.g., Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1141 (9th Cir. 2012). A manufacturer may only be held liable for fraud if the omission is “contrary to a representation actually made by the defendant or an omission of fact that the defendant was obliged to disclose.” Id. (quoting Daugherty v. American Honda Motor Co., 144 Cal. App. 4th 824, 835 (Ct. App. 2006)); Oestreicher v. Alienware Corp., 322 F. App'x 489, 493 (9th Cir. 2009) (“[A] manufacturer’s duty to consumers is limited to its warranty obligations absent either an affirmative misrepresentation or a safety issue.”). As noted above, plaintiffs have not identified Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 17 of 32 Page ID #:645 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 -10- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS any affirmative representations by Kia, much less contrary representations that would trigger an obligation to disclose information regarding a purported defect. Hoey, 515 F. Supp. 2d at 1104 (dismissing fraudulent concealment claim because complaint did not identify any representations by defendant that product would be defect-free). Moreover, plaintiffs have not adequately alleged a safety risk that would trigger Kia’s duty to disclose. Although plaintiffs assert, without any factual support, that the alleged defect “poses serious safety and security issues,” (Compl. ¶ 93), they fail to allege a single injury or accident purportedly caused by the alleged defect, despite the “hundreds of thousands of Class Vehicles [that] have been sold or leased” since 2010. (Compl. ¶ 125). This alleged safety risk, based purely on conjecture, is too speculative to impose a disclosure obligation. Smith v. Ford Motor Co., 462 Fed. Appx. 660, 663 (9th Cir. 2011); see also Denial of Motor Vehicle Defect Petition, 66 FR 55243-01 (Nov. 1, 2001) (declining to investigate vehicular defects under similar circumstances, finding risk of stalling was reduced by progressive nature of the damage which gave consumers sufficient notice).6 D. Plaintiffs Fail to Adequately Plead Kia Knew About the Purported Defect at the Time of Sale For a misrepresentation (including omission) to be actionable, plaintiffs must demonstrate that Kia knew of the purported defect (and falsity of any statement) at the time of plaintiffs’ transaction. Kowalsky v. Hewlett-Packard Co., 771 F. Supp. 6 To the extent plaintiffs contend that Kia had a duty to disclose beyond that set forth in Wilson v. Hewlett-Packard Co., this too fails. (See Compl. ¶ 138). First, plaintiffs cannot plausibly allege Kia had exclusive knowledge of the purported defect while also claiming that consumer complaints regarding the same defect were publicly available since October 11, 2011. (Compl. ¶ 104). Second, plaintiffs’ conclusory assertions that Kia “actively conceal[ed]” the purported defect in their vehicles, without supporting facts, is insufficient to demonstrate a duty to disclose. See Kearns, 567 F.3d at 1127 (“claims of nondisclosure . . . couched in general pleading” regarding intent to conceal insufficient under Rule 9(b)). Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 18 of 32 Page ID #:646 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 -11- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS 2d 1156, 1163 (N.D. Cal. 2011) (A defendant cannot be “liable under the CLRA for representations about [a product’s] characteristics that are rendered misleading due to a defect of which [the defendant] did not know, or of which it did not have reason to know, at the time [the defendant] made the representations.” ); Oestreicher, 544 F. Supp. 2d at 974 (dismissing fraudulent concealment claim because plaintiff failed to allege the basis for plaintiff’s allegations that plaintiff knew of the defect and concealed the defect); Wilson, 668 F.3d at 1145-48 (affirming dismissal of UCL claim for failing to have sufficiently alleged that the defendant knew of alleged defect at the time of sale). Plaintiffs allege that Kia would have learned of the alleged defect through customer complaints, dealership repair records, warranty and post-warranty claims, and “other various sources.” (Compl. ¶ 96). Plaintiffs, however, do not state when any of these purported events occurred, and they thus provide no basis to conclude Kia knew of the alleged defect when plaintiffs relied on any alleged misrepresentations or omissions. Plaintiffs cite customer complaints regarding plaintiffs’ model year vehicles that were either lodged with NHTSA after plaintiffs leased or purchased their vehicle or that concerned different models and model years. (Id. at 26-89). Plaintiffs also allege that Kia would have become aware of any defects through pre-sale durability testing (id. ¶¶ 105-11), suggesting without basis in fact or common experience that field failures occurring long after a product has been sold would necessarily be identified during research and development. In Wilson v. Hewlett-Packard Co., the Ninth Circuit rejected similarly attenuated allegations of a defendant’s knowledge in affirming dismissal of UCL and CLRA claims. 668 F.3d at 1145-48. The plaintiffs in Wilson alleged: (i) the defendant had access to data regarding the claimed defect; (ii) there was another lawsuit involving the same defect in a different model; and (iii) several customer complaints were made regarding the defect. Id. at 1146. The court found these Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 19 of 32 Page ID #:647 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- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS allegations speculative, that the lawsuit did not involve the plaintiffs’ product, and none of the customer complaints pre-dated the plaintiffs’ purchase. Id. at 1146-48. So here. Complaints to NHTSA regarding other vehicles or those lodged after plaintiffs leased or purchased their vehicles do not plausibly give rise to the conclusion that Kia knew of an alleged defect in plaintiffs’ vehicle at the time of the lease. Grodzitsky v. Am. Honda Motor Co., No. 2:12-cv-1142, 2013 WL 690822, at *7 (C.D. Cal. Feb. 19, 2013) (plaintiffs cannot “establish a plausible inference of knowledge based on their allegation that Defendant received customer complaints after the sales of the vehicle in question.”). Just as clearly, if the mere fact that a car undergoes pre-sale testing sufficed to show knowledge of a later-manifesting defect, a presumption would have developed that all auto manufacturers are aware of defects at the time of sale. That is not and has never been the law. II. PLAINTIFFS’ EXPRESS WARRANTY CLAIMS FAIL A. Plaintiffs Do Not Allege An Enforceable Express Warranty Under California law, “to plead a cause of action for breach of express warranty, one must allege the exact terms of the warranty . . . .” Kearney v. Hyundai Motor Am., No. SACV09-1298-JST (MLGx), 2010 WL 8251077, at *7 (C.D. Cal. Dec. 17, 2010) (quoting WIlliams v. Beechnut Nutrition Corp., 229 Cal. Rptr. 605, 608 (Cal. Ct. App. 1986)); Park-Kim v. Daikin Industries, Ltd., No. 2:15- cv-09523-CAS(KKx), 2016 WL 5958251, at *15 (C.D. Cal. Aug. 3, 2016) ) (quoting Otworth v. S. Pac. Transp. Co., 166 Cal. App. 3d 452, 459 (1985)) (warranty terms “must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference”). Here, plaintiffs generally allege that Kia “agreed to repair defects reported within the earlier of 5 years or 60,000 miles” under the New Vehicle Limited Warranty and “agreed to repair defects affecting various powertrain components through 10 years and 100,000 miles” under the Powertrain Warranty. (Compl. ¶¶ Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 20 of 32 Page ID #:648 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 -13- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS 113-14). However, plaintiffs omit the qualifying language that is also included in the KMA Warranty and Consumer Information Manual: Subject to the other terms and conditions of this limited warranty manual, Kia Motors America, Inc. (“Kia”) warrants that it will arrange for an Authorized Kia dealer at locations of its choice to provide for the repair of your vehicle if it fails to function properly during normal use. Authorized service facilities will remedy such failures to function properly at Kia’s expense, if you present your vehicle to such a service facility during its normal operating hours, provide sufficient information to permit a proper identification and diagnosis of the failure to function, and permit the facility adequate time to perform the necessary repairs. As this obligation is subject to the terms, conditions and limitations of this manual, you should refer to the manual to understand which repairs and replacements are covered by this warranty. Ex. E at 4 (emphasis added).7 Plaintiffs’ failure to accurately portray Kia’s warranty is precisely why a plaintiff is required to plead exact and full warranty terms. B. Plaintiffs Fail to Allege Their Vehicle Was Under Warranty When They Sought Repairs “[A]n express warranty does not cover repairs made after the applicable time or mileage periods have elapsed.” Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1023 (9th Cir. 2008) (citation omitted); Daugherty, 144 Cal. App. 4th at 830 (noting that “[s]everal courts have expressly rejected the proposition that a latent defect, discovered outside the limits of a written warranty, may form the basis for a valid express warranty claim if the warrantor knew of the defect at the time of sale”). Kia’s Basic Warranty Coverage covers new Kia vehicles for 60 months or 60,000 miles. The Power Train Coverage covers certain engine components for up to 120 months or 100,000 miles. These limited warranties exclude certain items 7 Kia’s warranty is incorporated by reference in the complaint and forms the basis of plaintiffs’ express warranty claim. (Compl. ¶¶ 112-115) (“Warranty”). For this reason, the Court may take judicial notice of the warranty (Ex. E). See Belodoff v. Netlist, Inc., No. SA CV 07-00677 DOC (MLGx), 2008 WL 2356699, at *4 (C.D. Cal. May 30, 2008) (quoting U.S. v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003)). Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 21 of 32 Page ID #:649 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 -14- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS from coverage and require owners to “properly operate and maintain” their vehicles, “retain maintenance records since it may be necessary in some instances for [owners] to prove that the required maintenance has been performed,” and take vehicles to authorized dealers in order to maintain coverage. (Ex. E at 8-13 ). Plaintiffs do not allege any facts to indicate they performed all required maintenance and retained appropriate records as indicated in Kia’s warranty terms. In fact, it appears from plaintiffs’ allegations that the dealer rejected Plaintiffs Creps’, Centko’s, and Lazar’s warranty claims precisely on the basis of the maintenance history.8 (Compl. ¶¶ 37, 49). These specific circumstances putting their warranty compliance at issue cannot be overcome by plaintiffs’ conclusory statements that they “adhered to Kia’s recommended maintenance intervals,” (Id. ¶¶ 27, 38, 50), and “have performed all things agreed to or required under the lease agreement and warranty, except as may have been excused or prevented by the conduct of Kia,” (Id. ¶ 53). These conclusory allegations are insufficient. Acedo v. DMAX, Ltd., No. CV1502443MMMASX, 2015 WL 12912365, at *18 (C.D. Cal. July 31, 2015) (citations omitted) (conclusory statements of warranty compliance are “more akin to a statement of a legal requirement than a factual allegation.”). C. Plaintiffs Fail To Allege Breach Of Any Express Warranty Plaintiffs have not alleged any facts to demonstrate Kia breached an express warranty. In fact, the complaint indicates that the dealership informed plaintiffs they could make the repairs under warranty on the condition that plaintiffs produce documentation of their maintenance obligations (Compl. ¶¶ 37, 49), as required under the terms of the warranty. Plaintiffs ignore the limitations contained in the 8 It is not clear from the complaint whether or not Plaintiff Stanczak’s warranty claim was denied due to issues with the vehicle’s maintenance history as he does provide information regarding the basis for Kia’s denial of his warranty claim. (Compl. ¶ 21). Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 22 of 32 Page ID #:650 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 -15- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS written warranty and do not allege the Kia dealerships were unjustified in suggesting their vehicle did not qualify for warranty coverage under the terms of the limited warranty. (Id. ¶¶ 21-22, 24, 34, 39, 50). Further, courts have rejected mere conclusory allegations, such as plaintiffs make here, that a defendant breached a warranty to repair. (Id. 54 ¶¶ 24, 39, 50). See Acedo, 2015 WL 12912365, at *19 (finding insufficient the allegation that the “[Defendant] breached the express warranty by . . . refusing to honor the express warranty by repairing or replacing, free of charge [the alleged defect] and instead, charging for repair and replacement parts.”). Without factual allegations that demonstrate plaintiffs abided by the terms of the limited warranty and were eligible for warranty coverage for the repairs, plaintiffs’ “allegations amount[] to nothing more than a legal conclusion which fails to give rise to a plausible claim under Twombly and Iqbal.” Id. at *18.9 D. To The Extent Plaintiffs Base Their Warranty Claim On Advertising, No Actionable Warranties Are Alleged Kia’s advertising representations, such as their GDI engines “deliver outstanding performance” and have “smooth, powerful acceleration,” (Compl. ¶ 72), are not actionable express warranties. Park-Kim, 2016 WL 5958251, at *15 (internal quotation marks and citations omitted) (“Under California law, to create a warranty, representations regarding a product must be specific and unequivocal.”); Barakezyan v. BMW of N. Am., LLC, No. CV1600173SJOGJSX, 2016 WL 9 Plaintiffs passingly suggest, with no specificity, that the limitations of Kia’s warranty are unconscionable. (Compl. ¶¶ 183-84). But vehicle warranties that contain similar provisions are routinely deemed both procedurally and substantively fair. See Fisher v. Honda N. Am., Inc., 2014 WL 2808188, at *9-10 (C.D. Cal. June 12, 2014) (durational limits on an auto warranty not procedurally unconscionable because of the availability of alternative vehicles; not substantively unconscionable because no allegation the defendant was aware of the defect at the time of the warranty). And contrary to plaintiffs’ allegations, Kia’s Power Train warranty clearly indicate the coverage distinction between Original Owners and subsequent owners. See Ex. E at 3, 5-6. Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 23 of 32 Page ID #:651 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 -16- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS 2840803, at *6 (C.D. Cal. Apr. 7, 2016) (“[A]dvertising that merely states in general terms that one product is superior is not actionable.”). Further, a threshold requirement of breach of warranty is that plaintiffs “read or relied on [Kia’s statements] before entering into [their] lease agreement with [Kia].” Barakezyan, 2016 WL 2840803, at *6. Plaintiffs contend that “Defendants provided all purchasers and lessees of the Class Vehicles with the express warranties described herein, which became part of the basis of the bargain” (Compl. ¶¶ 178, 200). However, beyond this conclusory statement, plaintiffs do not provide any additional facts regarding where, when, and how the plaintiffs were exposed to Kia’s advertised representations, that plaintiffs read the warranties allegedly provided, or that plaintiff relied on the representations before leasing or purchasing their vehicles. See In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales Practices, & Prod. Liab. Litig., 754 F. Supp. 2d 1145, 1182 (C.D. Cal. 2010) (“Plaintiffs cannot base a claim on [an express warranty created by representations in advertisements] in the absence of allegations that they were exposed to them.”). III. PLAINTIFFS’ CLAIMS FOR BREACH OF IMPLIED WARRANTY OF MERCHANTABILITY FAILS A plaintiff claiming breach of an implied warranty of merchantability must show that the product “did not possess even the most basic degree of fitness for ordinary use.” Mocek v. Alfa Leisure, Inc., 114 Cal. App. 4th 402, 406 (2003) (citing Cal. U. Com. Code § 2314(2)). In the context of automobiles, the vehicle “need not be perfect in every detail.” Tae Hae Lee v. Toyota Motor Sales, U.S.A., Inc., 992 F. Supp. 2d 962, 980 (C.D. Cal. 2014). “The basic inquiry, therefore, is whether the vehicle was fit for driving.” Id. Plaintiff Creps alleges that her car stalled during operation in August 2016 approximately a year and a half after she purchased her vehicle. (Compl. ¶ 35). Before which, no issues with the car is alleged. After the stalling event, plaintiff alleges that her vehicle was then towed to a Kia dealership in New Jersey where Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 24 of 32 Page ID #:652 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 -17- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS they filled it with oil and instructed her to drive it back to her dealership in Maine, which Plaintiff Creps alleges she did. (Id. at ¶ 36). Per plaintiff’s own statement, her car was functional and drive-able after it was filled with oil, such that she was able to drive the distance from New Jersey to Maine. Once she reached the dealership in Maine, plaintiff alleges that the dealership suggested she replace her engine; however, plaintiff does not describe the problem or reason for the need for the engine replacement. Plaintiff also does not allege that the car was otherwise unusable or unfit to be driven, just that she was unable to drive her vehicle while it was at the dealership “from August 8, 201[6], until August 26, 201[6].”10 (Id. ¶ 41). Plaintiffs Centko and Lazar claim their car “became noisier” and it was recommended that they replace the engine long block (Id. ¶ 48), they do not allege that the functionality of the vehicle was impaired. It appears the car operated without incident for more than two years. These facts do not indicate the car was unfit for expected use. Moreover, the risk that a defect will arise in the future does not establish a current breach of an implied warranty. See Am. Suzuki Motor Corp. v. Superior Court, 37 Cal. App. 4th 1291, 1299 (1995), as modified on denial of reh'g (Sept. 21, 1995) (breach of implied warranty action cannot be used to compensate a plaintiff “for a potential injury that never, in fact, materialized ... for a product ‘defect’ that was never made manifest . . . .”); Acedo, 2015 WL 12912365, at *22 (citations omitted) (“[I]t is not enough to allege that a product line contains a defect or that a product is at risk for manifesting this defect; rather the plaintiffs must allege that their product actually exhibited the alleged defect.”). 10 Plaintiff alleges that she was unable to drive her vehicle while it was at the dealership “from August 8, 2017 until August 26, 2017.” However, it seems likely that plaintiff meant 2016, not 2017, as she alleges that the vehicle was brought to the dealership on August 8, 2016. (Compl. ¶ 37). Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 25 of 32 Page ID #:653 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 -18- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS IV. PLAINTIFFS’ MAGNUSON-MOSS WARRANTY ACT CLAIMS FAIL The written vehicle warranty requires plaintiffs to participate in Kia’s informal dispute resolution procedure. See 15 U.S.C. § 2310(a)(3)(C)(ii) (requiring an owner to first participate in a warrantor’s informal dispute resolution procedure before filing a Magnuson-Moss claim if mandated by the express warranty); Ex. E at 43 (“You must use BBB AUTO LINE prior to seeking remedies available to you through a court action pursuant to the Magnuson-Moss Warranty Act.”). Plaintiffs’ failure to allege they participated in this process thus precludes their implied warranty claim under the Magnuson-Moss Warranty Act. See Kearney, 2010 WL 9093204, at *6 (dismissing Magnuson-Moss claim where plaintiffs failed to participate in required informal dispute resolution mechanism). Second, plaintiffs must plead a viable state law warranty claim in order to state a Magnuson-Moss claim. The Magnuson-Moss Warranty Act creates a federal cause of action for breach of written and implied warranties under state law. See 15 U.S.C. § 2310(d)(1) (creating a “civil action” for a “consumer who is damaged by the failure of a . . . warrantor . . . to comply with any obligation . . . under a written warranty [or] implied warranty). Therefore, without a viable state breach of warranty claim, a Magnuson-Moss claim cannot proceed. See Clemens, 534 F.3d at 1022 (“[The] disposition of the state law warranty claims determines the disposition of the Magnuson-Moss Act claims.”). Because plaintiffs fail to plead an actionable state warranty claim, their Magnuson-Moss claim is precluded. V. PLAINTIFFS’ SONG-BEVERLY ACT CLAIMS FAIL Plaintiff Creps’ claim under California’s Song-Beverly Consumer Warranty Act fails as a matter of law because that statute applies only to transactions where title is taken within California. The Act expressly states it applies to “goods that are sold at retail in this state.” Cal. Civ. Code § 1792. Both the California Supreme Court and federal district courts refuse to apply Song-Beverly to transactions where title was taken outside California. See Barabino v. Dan Gamel, Inc., No. 2:04-cv- Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 26 of 32 Page ID #:654 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 -19- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS 2359-MCE-PAN, 2006 WL 2083257, *3 (E.D. Cal. 2006) (“California law is clear that where title passes outside of California, the Song-Beverly Act does not apply.”); Cummins, Inc. v. Superior Ct., 36 Cal. 4th 478, 493 (Cal. 2005) (reversing appellate court that found Song-Beverly applied to a vehicle sold outside California because “the Legislature intended the Act to apply only to vehicles sold in California”). Plaintiff Creps purchased her car from a dealership in Auburn, Maine (Compl. ¶ 31), and nowhere alleges titled passed to her within California. Therefore, the Song- Beverly Act does not apply to her. Plaintiffs Stanczak’s, Centko’s, and Lazar’s claims under the Song-Beverly Act fail because the statute bars claims made more than a year after the purchase of the good. The Song-Beverly Act provides that “in no event shall [the] implied warranty have a duration of less than 60 days nor more than one year following the sale of new consumer goods to a retail buyer.” Cal. Civ. Code § 1791.1(c) (emphasis added). Here, plaintiffs Stanczak, Centko, and Lazar do not allege that they experienced any symptoms of the alleged defect within the first year that they purchased their vehicles. They allege that their cars experienced problems approximately two years after they purchased their vehicles. Compl. ¶¶ 20, 48; see Peterson v. Mazda Motor of Am., Inc., 44 F. Supp. 3d 965, 971-72 (C.D. Cal. 2014) (“[T]here should at least be allegations that symptoms of the defect manifested during the warranty period.”). As such, their claims fall outside the Song-Beverly Act’s maximum one-year implied warranty period. See Grodzitsky, 2013 WL 2631326, at *11 (“Because the [products] at issue in this case did not begin to fail until well more than a year after they were purchased, Plaintiffs’ Song-Beverly Act claim is barred by Section 1791.1(c).”); Atkinson v. Elk Corp. of Texas, 142 Cal. App. 4th 212, 231-32, 48 Cal. Rptr. 3d 247 (2006) (noting the one-year warranty period provided for in Section 1791.1(c) was barred); Larsen v. Nissan N. Am., No. A121838, 2009 WL 1766797, at *5-6 (Cal. Ct. App. June 23, 2009) (“[T]he Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 27 of 32 Page ID #:655 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 -20- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS warranty of merchantability implied as a matter of law in California is limited to one year after purchase.”).11 Finally, plaintiffs’ claim under the Song-Beverly Act fails because plaintiffs fail to state a claim for breach of implied warranty. Birdsong v. Apple, Inc., 590 F.3d 955, 958 n.2 (9th Cir. 2009) (“Both parties agree that the plaintiffs’ claims under California's Song-Beverly [Act] and the federal Magnuson-Moss Warranty Act [ ] require the plaintiffs to plead successfully a breach of state warranty law.”). VI. PLAINTIFFS FAIL TO STATE A CLAIM FOR BREACH OF THE DUTY OF GOOD FAITH AND FAIR DEALING Plaintiff Creps’ claim for breach of the duty of good faith and fair dealing fails because Maine does not recognize any “duty of good faith and fair dealing except in circumstances governed by specific provisions of the Uniform Commercial Code.” Haines v. Great Northern Paper, Inc. et al, 808 A.2d 1246, 1250 (Me. 2002). The Uniform Commercial Code, in turn, does not recognize an independent action for the breach of the covenant of good faith and fair dealing. 11 Although a small number of California courts have followed Mexia v. Rinker Boat Co., Inc., 174 Cal. App. 4th 1297 (2009) and concluded defects discovered after the one-year period do not bar recovery under the Act, the better reasoned majority have held that allowing recovery for a defect that arises outside of the one - year statutory period would contravene the plain text of the Song-Beverly Act. See Grodzitsky, 2013 WL 2631326, at *10-11 (internal quotation marks and citations omitted) (“The flaw in Mexia's reasoning is readily apparent: its holding renders meaningless any durational limits on implied warranties, as every defect that arises could conceivably be tied to an imperfection existing during the implied warranty period.”) (emphasis in original). Several federal courts have noted that Mexia’s reasoning is “contrary to established California case law with respect to the duration of the implied warranty of merchantability.” Marchante v. Sony Corp. of Am., Inc., 801 F. Supp. 2d 1013, 1022 (S.D. Cal. 2011) (quoting Hovsepian v. Apple, Inc., No. 08-5788 JF (PVT), 2009 WL 2591445, at *8 n.7 (N.D. Cal. Aug. 21, 2009)); see also Tietsworth v. Sears, Roebuck & Co., No. 5:09-CV-00288 JFHRL, 2009 WL 3320486, at *12 n. 6 (N.D. Cal. Oct. 13, 2009) (“Mexia appears to be something of an outlier”). Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 28 of 32 Page ID #:656 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 -21- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS Chartier v. Farm Family Life Ins. Co., 113 A3d 234, 237 (Me. 2015) (Maine does not recognize “breach of the implied covenant of good faith and fair dealing” as an independent action). Rather, a failure to comply in good faith with the applicable provisions of the U.C.C. constitutes an element of a breach of contract claim. Chartier, 113 A.3d at 237. As plaintiff Creps fails to identify any U.C.C. provisions that Kia purportedly violated, her claim must be dismissed. Id. Similarly, plaintiffs’ claims under California law must also be dismissed. “To establish a breach of an implied covenant of good faith and fair dealing, a plaintiff must establish the existence of a contractual obligation, along with conduct that frustrates the other party’s rights to benefit from the contract.” Edejer v. DHI Mortgage Co., No. C 09-1302 PJH, 2009 WL 1684714, at *9-10 (N.D. Cal. 2009) (citing Racine & Laramie, Ltd. v. Dep’t of Parks & Recreation, 11 Cal. App. 4th 1026, 1031-32 (1992)) (dismissing a breach of the covenant of good faith and fair dealing claim because plaintiff failed to allege the existence of a contractual obligation). As explained above, plaintiffs do not allege their vehicles were still covered by the express warranty, i.e. a contract. California law also does not permit a claim for breach of the implied covenant of good faith and fair dealing to “rely on the same alleged acts or simply seek the same damages or other relief already claimed in a companion contract cause of action.” Env’t Furniture, Inc. v. Bina, No. CV 09-7978 PSG (JCz), 2010 WL 5060381, at *3 (C.D. Cal. Dec. 6, 2010) (citation omitted). Consequently, “if the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged act, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.” Trinity Hotel Investors, LLC v. Sunstone OP Prop., LLC, No. SA CV 07-1356 AHS (MLGx), 2009 WL 303330, at *3-4, 11 (C.D. Cal. Feb. 6, 2009) (citation omitted) (dismissing claim for breach of covenant Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 29 of 32 Page ID #:657 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 -22- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS of good faith and fair dealing because it was “subsumed within plaintiffs’ breach of contract claim”). Here, plaintiffs’ claims for breach of the duty of good faith and fair dealing and for breach of express warranty arise from the same allegation that Kia purportedly leased or sold plaintiffs vehicles with defective rod bearings. (Compare Compl. ¶¶ 180-181 (Kia breached express warranty by selling vehicles with latent defects, concealing existence of defect, and failing to honor warranty when defect became apparent), with ¶ 213 (Kia breached covenant of good faith and fair dealing by failing to notify plaintiffs of defect and failing to repair the defect)). The claim for breach of the implied covenant of good faith and fair dealing is thus duplicative. See Davis v. Apperience Corp., No. C 14-00766 WHA, 2014 WL 5528232, at *6 (N.D. Cal. 2014) (dismissing a claim for a “breach of the implied covenant of food faith and fair dealing where those claims failed to go beyond the breach of contract claims”); Synopsys, Inc. v. ATopTech, Inc., No. C 13-cv-02965 SC, 2013 WL 5770542, at *13 (N.D. Cal. 2013) (same). VII. PLAINTIFFS LACK STANDING TO ASSERT CLAIMS RELATING OTHER VEHICLE MODELS A court can and should strike class allegations that on their face cannot be certified. Sanders v. Apple Inc., 672 F. Supp. 2d 978, 990 (N.D. Cal. 2009) (“Where the complaint demonstrates that a class action cannot be maintained on the facts alleged, a defendant may move to strike class allegations prior to discovery.”). Although named plaintiffs often argue that class determinations should await discovery, courts recognize that where, as here, discovery would simply expend the resources of the parties and the court without altering the result, discovery is unwarranted. Pilgrim v. Universal Health Card, LLC, 660 F.3d 943, 949-50 (6th Cir. 2011) (affirming a district court’s granting of a motion to strike class allegations at the pleading stage and rejecting the argument that the plaintiff needed additional time and opportunity for discovery before confronting class certification). Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 30 of 32 Page ID #:658 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 -23- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS Here, plaintiffs’ claims on behalf of purchasers or lessees of other vehicles should be dismissed for lack of standing. Plaintiffs leased or purchased only a 2015 Sorento or 2015 Optima, yet seek to certify a nationwide class of all purchasers of every 2011-2016 Optima, Sorento and Sportage vehicle equipped with Theta 2.0- liter and 2.4-liter gasoline direct injection engines. (Compl. ¶ 1). Plaintiffs fail to allege any facts showing group treatment of these vehicles is warranted.12 Instead, plaintiffs simply lump them together under the term “Class Vehicles.” Even could plaintiffs allege such facts, they would still be precluded from asserting claims based on the 2011-2016 Kia vehicles they did not lease or purchase. To have standing as to those vehicles, plaintiffs “must have suffered an injury in fact” with respect to them. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (internal quotations omitted). That plaintiffs’ claims are brought in the class action context has no consequence, as “named plaintiffs . . . must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class.” Lewis v. Casey, 518 U.S. 343, 357 (1996). For this reason, where, as here a plaintiff attempts to assert claims based on purported defects in products they did not purchase or suffer injury from, courts regularly disallow such claims at the pleading stage. See, e.g., Mlejnecky v. Olympus Imaging Am. Inc., No. 2:10-cv-02630 JAM-KJN, 2011 WL 1497096, at *4 (E.D. Cal. Apr. 19, 2011) (dismissing for lack of standing claims based on product the named plaintiff did not purchase, even though the product appeared in the same advertisements as the one she did purchase and plaintiff alleged the same underlying defect in both products); Johns v. Bayer Corp., No. 09CV1935 DMS (JMA), 2010 12 Plaintiffs contend without supporting allegations that all class vehicles contain “a latent defect that results in the restriction of oil flow through the connecting rod bearings” which “will cause the Class Vehicles to experience vehicle stalling during operation and catastrophic engine failure.” (Compl. ¶ 2). There are no well-pleaded, plausible allegations that every Kia Optima, Sorento and Sportage vehicles over a 6-year period suffers from the purported defect. Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 31 of 32 Page ID #:659 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 -24- Case No. 8:17-cv-00838 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS WL 476688, at *5 (S.D. Cal. Feb. 9, 2010) (dismissing action and noting that named plaintiff “cannot expand the scope of his claims to include a product he did not purchase”); Chin v. Gen. Mills, Inc., No. 12-2150 (MJD/TNL), 2013 WL 2420455, at *2-4 (D. Minn. June 3, 2013) (dismissing claims because named plaintiff lacked standing to sue for products he did not purchase). Plaintiffs do not allege any injury arising from a vehicle other than the 2015 Kia Sorento or 2015 Kia Optima, and they may not assert claims based on those vehicles “through the backdoor of a class action.” Green v. Green Mountain Coffee Roasters, Inc., 279 F.R.D. 275, 280 (D.N.J. 2011) (dismissing claims based on products named plaintiff did not purchase). The class allegations should be stricken except as related to the 2015 Kia Sorento or Optima. Case 8:17-cv-00838-JLS-JDE Document 55 Filed 12/21/17 Page 32 of 32 Page ID #:660