Lux Global Auto Sales, Inc. v. Nissan North America, Inc.

Filing 26

ORDER signed by Senior Judge John A. Mendez on 11/28/2022 GRANTING the #15 Motion to Dismiss. CASE CLOSED. (Spichka, K.)

Case 2:21-cv-02157-JAM-AC Document 26 Filed 11/28/22 Page 1 of 9
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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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LUX GLOBAL AUTO SALES, a
California corporation, and
MARIA VELARDE, on behalf of
themselves and others
similarly situated,

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2:21-cv-02157-JAM-AC

ORDER GRANTING MOTION TO DISMISS

Plaintiffs,
v.
NISSAN NORTH AMERICA, INC.,
and DOES 1 to 10,
Defendants.

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No.

Lux Global Auto Sales and Maria Velarde filed this lawsuit

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against Nissan North America, Inc., and various fictitious

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persons (collectively “Defendants”) for allegedly violating

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§ 17200 of California’s Business and Professions Code—also known

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as California’s Unfair Competition Law.

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(“FAC”) ¶ 69, ECF No. 8.

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voluntarily dismissed its claim against Defendants without

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prejudice.

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(“Plaintiff”) maintained her claims and Defendants filed a motion

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to dismiss and request for judicial notice.

See First Am. Comp.

Thereafter, Lux Global Auto Sales

See Stipulation of Dismissal, ECF No. 11.

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Velarde

See Mot. to Dismiss

Case 2:21-cv-02157-JAM-AC Document 26 Filed 11/28/22 Page 2 of 9
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(“Mot.”), ECF No. 15; see also Req. for Judicial Notice, ECF

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No. 15-1.

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See Opp’n, ECF No. 22; see also Reply, ECF No. 24.

Plaintiff filed her opposition and Defendants replied.

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For the reasons set forth below, the Court GRANTS

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Defendants’ Motion to Dismiss without leave to amend.1

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I.

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BACKGROUND

Plaintiff filed this suit because of Defendants’ alleged

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failures to comply with the California Emissions Warranty

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(“Warranty”).

FAC ¶ 1.

Under this Warranty, car manufacturers—

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like Defendants—must provide additional coverage for specific

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components of Super Ultra Low Emissions Vehicles (“SULEV”) if the

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California Air Resources Board (“CARB”) issued them non-methane

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organic gases or vehicle equivalent credits.

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generally covered for eight years or 100,000 miles; high-mileage

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parts are covered for 112,500 miles (collectively referred to as

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“Extended Coverage”).

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concocted a scheme to deprive Nissan SULEV owners of these

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protections by “unilaterally defining and wrongfully limiting the

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parts that should properly be identified as parts covered by the

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[] Warranty and covered for the Extended Coverage period.”

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¶ 7.

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enables them to curb the costs of its warranty-related repairs

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because “most if not all dealerships or customers will not

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investigate or understand what components should actually and

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correctly be covered under the [] Warranty . . . .”

Id.

Id.

Such parts are

Plaintiff contends Defendants

Id.

Plaintiff argues Defendants’ supposed mischaracterizations

Id. ¶ 8.

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled
for September 13, 2022.
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Plaintiff asserts Defendants’ supposed scheme is

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demonstrated by their refusal to provide Extended Coverage to

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SULEV transmissions, pointing to her own experience as evidence.

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Id.

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In 2019, prior to being driven for 100,000 miles or in use for

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eight years, Plaintiff’s vehicle exhibited “classic symptoms” of

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“transmission slipping” as it would shake and hesitate upon

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acceleration.

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contacted Defendants and was informed her transmission was not

¶ 30.

Plaintiff owns a 2019 Nissan Sentra—a SULEV vehicle.

FAC ¶ 30.

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under warranty.

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assistance, Plaintiff took her vehicle to a local repair shop and

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“paid thousands of dollars out of pocket to have the transmission

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repairs performed.”

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Extended Coverage should have encompassed these repairs because

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the transmission’s malfunctioning increased the vehicle’s

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emission output—which Plaintiff argues triggers such coverage

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pursuant to California Code of Regulations’ Title 13

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§§ 1961(a)(8), 2035, 2037, and 2038.

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Id.

Because of these issues, Plaintiff

Since Defendants denied Plaintiff

Id. ¶ 34.

Plaintiff argues the Warranty’s

Id.

¶¶ 5, 39.

Based on these allegations, Plaintiff initiated this

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diversity action pursuant to 28 U.S.C. § 1332(d)(2)(A) and filed

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her First Amended Complaint consisting of one claim under § 17200

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of California’s Business and Professions Code—also known as

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California’s Unfair Competition Law.

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II.

Id. ¶ 66.

OPINION

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A.

Legal Standard

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Under FRCP 12(b)(6), a court can grant a motion to dismiss

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when the complaint fails “to state a claim upon which relief can

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be granted.”

Generally, affirmative defenses—like res judicata—
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Case 2:21-cv-02157-JAM-AC Document 26 Filed 11/28/22 Page 4 of 9
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cannot be raised in such a motion.

Scott v. Kuhlmann, 746 F.2d

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1377, 1378 (9th Cir. 1994).

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raise disputed issues of fact—such as here—res judicata is

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properly asserted in a motion to dismiss.

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Plex Technologies, Inc. v. Crest Group, Inc., 499 F.3d 1048 (9th

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Cir. 2007) (examining a 12(b)(6) motion’s res judicata defense

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and affirming a district court's dismissal on such grounds).

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Furthermore, when deciding a motion to dismiss, a district court

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can consider matters of judicial notice without turning it into

When, however, the defense does not

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a motion for summary judgment.

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F.3d 903, 908 (9th Cir. 2003)

Id.; see also Intri–

United States v. Ritchie, 342

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B.

Judicial Notice

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Defendants ask the Court take judicial notice of the Order

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and Judgment Granting Final Approval of Class Action Settlement

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and Settlement Agreement entered in Weckwerth v. Nissan North

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America, Inc., Case No. 3:18-cv-00588 (M.D. Tenn. Mar. 10, 2020).

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See Req. for Judicial Notice, ECF No. 15-1; see also Order and J.

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Granting Final Approval of Class Action Settlement (“Judgment”),

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Exh. 1 to Mot., ECF No. 15-2, Settlement Agreement ¶ 34, Exh. 2

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to Mot., ECF No. 15-3.

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court filings and other matters of public record,” Reyn's Pasta

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Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n. 6 (9th Cir.

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2006), and accordingly grants Defendants’ request.

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judicial notice, however, extends only to the existence of these

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documents and not to their substance to the extent it is disputed

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or irrelevant.

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(9th Cir. 2001).

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The Court can “take judicial notice of

The Court’s

Lee v. City of Los Angeles, 250 F.3d 668, 690

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C.

Res Judicata

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The parties dispute whether the doctrine of res judicata (or

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claim preclusion) bars Plaintiff’s claim.

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class action settlement and judgment entered in Weckwerth

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(“Weckwerth Judgment”) precludes Plaintiff’s claim under the

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doctrine of res judicata.

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incorporated the parties’ settlement agreement and released with

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prejudice all past, present, and future transmission-related

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claims for certain vehicles manufactured by Defendants—including

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See Mot. at 4.

Defendants argue the

The Weckwerth Judgment

Plaintiff’s 2013 Sentra—pursuant to the provision below:
“Released Claims” means and includes any and all
claims, demands, rights, damages, obligations, suits,
debts, liens, contracts, agreements, and causes of
action of every nature and description whatsoever,
ascertained or unascertained, suspected or unsuspected,
accrued or unaccrued, existing or claiming to exist,
including those unknown, both at law and equity which
have been brought, which might have been brought, and
which might be brought in the future upon the happening
of certain events, against the Released Parties, or any
of them, based upon or in any way related to
transmission design, manufacturing, performance, or
repair of Class Vehicles, including but not limited to
all claims asserted in the Lawsuits, whether based upon
breach of contract, violation of a duty sounding in
tort, violation of any state or federal statute or
regulation, violation of any state consumer protection
statute or regulation (including any lemon law statute
or regulation), fraud, unjust enrichment, money had and
received, restitution, equitable relief, punitive or
exemplary damages and civil penalties and fines or any
other claims whatsoever under federal or state law. See
Settlement Agreement ¶ 34 (emphasis added); see also
Judgment at n. 1.

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Notably, Plaintiff did not opt out of the settlement agreement.
See Timely Opt Out List, Exh. A to Mot., ECF No. 15-2.

As a

result, Defendants contend Plaintiff’s claim is barred and asks
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the Court to dismiss it with prejudice.

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In opposition, while she does not deny that she did not opt

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of out of the Weckwerth Judgment and concedes it “bars a

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subsequent case,” Plaintiff argues the Weckwerth Judgment

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invalidates the public policy underlying the Warranty’s Extended

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Coverage and is therefore unenforceable.

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support her contention, Plaintiff: (1) states the Weckwerth

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Judgment “shortens the warranty for SULEV transmissions by [one]

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year or 16,000 miles” so that class members do not receive the

See Opp’n at 1-2.

To

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Extended Coverage’s full benefit of eight years or 100,000 miles;

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and (2) cites cases where the California Supreme Court, a

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California Appellate court, or a federal court outside this

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Court’s jurisdiction analyzed contracts or settlements that

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allegedly ran afoul of public policy to render them void.

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2-3.

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contention that her complaint relies on a claim released by the

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Weckwerth Judgment.

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not bar it because the Weckworth Judgment’s “contravenes the

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public policy underpinning” the Warranty’s Extended Coverage.

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Id.

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Id. at

As a result, Plaintiff does not dispute Defendants’

Instead, she only argues res judicata does

Since this is a diversity action, the laws of the forum

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state, California, apply. Bates v. Union Oil Co. of Cal., 944

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F.2d 647, 649 (9th Cir. 1991).

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preclusive effect of a prior federal court judgment is resolved

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pursuant to federal law.

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1230, 57 Cal.Rptr.2d 303 (1st Dist. 1996).

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res judicata applies “whenever there is (1) an identity of

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claims, (2) a final judgment on the merits, and (3) privity

Under California law, the

Lumpkin v. Jordan, 49 Cal.App.4th 1223,

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Under federal law,

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between parties.”

Stratosphere Litig. L.L.C. v. Grand Casinos,

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Inc., 298 F.3d 1137, 1143 n. 3 (9th Cir. 2002) (citing Owens v.

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Kaiser Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir.

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2001)).

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second suit between the same parties or their privies based on

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the same cause of action not only in respect of every matter

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actually litigated, but also as to every ground of recovery or

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defense which might have been presented.”

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rel., Public Service Commission, 547 F.2d 91, 94 (9th Cir. 1976),

A prior valid judgment “operates as an absolute bar to a

Mirin v. Nevada ex

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Cert. denied, 432 U.S. 906, 97 S.Ct. 2952, 53 L.Ed.2d 1079

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(1977).

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order, once rendered, is final for purposes of res judicata until

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reversed on appeal or modified or set aside in the court of

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rendition.”

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Furthermore, under the federal rule, “a judgment or

Stoll v. Gottlieb 305 U.S. 165, 170 (1938).

Given the above caselaw, the Court finds res judicata’s

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elements satisfied.

First, although the legal theory and grounds

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for recovery regarding Plaintiff’s claim differ from those

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underlying the Weckwerth Judgment, the two cases share an

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“identity of claims” because they both concern the warranty of

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Plaintiff’s transmission.

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00389, 2010 WL 3516662, at *2 (E.D. Cal. Sept. 7, 2010)

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(citations omitted).

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because she could have presented her claim to the Weckwerth

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court.

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(9th Cir. 2002) (“Res judicata, or claim preclusion, prohibits

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lawsuits on any claims that were raised or could have been raised

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in a prior action.”).

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approval to the parties’ class action settlement, which “meet[s]

See Hooker v. Simon, No. 1:06-CV-

As a result, Plaintiff’s claim is precluded

Id.; See also Stewart v. U.S. Bancorp, 297 F.3d 953, 956

Second, the Weckwerth court gave final

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the ‘final on the merits’ element of res judicata” and is “as

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conclusive a bar as a judgment rendered after trial.”

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PLS Check Cashiers of California, Inc., 833 F.3d 1106, 110 (9th

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Cir. 2018).

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effect on the released claims described above—such as

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Plaintiff’s.

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Weckwerth class, the parties in this case overlap with those in

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Weckwerth and Plaintiff is bound by the judgment in that class

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action.

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Rangel v.

In turn, the Weckwerth Judgment has a preclusive

Third, because Plaintiff is a member of the

Dosier v. Miami Valley Broadcasting Corp., 656 F.2d

1295, 1298 (9th Cir. 1981).
Because all three elements are met, the Court agrees with

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Defendants that res judicata bars Plaintiff’s claim.

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Furthermore, under federal law, any modification or appeal of

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this judgment lies with the Weckwerth court.

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Gottlieb, 305 U.S. 165 at 170.

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the fact that: (1) Plaintiff fails to cite any caselaw supporting

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her proposition that this Court can invalidate another federal

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district court’s order and judgment approving a class action

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settlement; and (2) the Weckwerth Judgment’s own language stating

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“[t]he Parties and Class Members have irrevocably submitted to

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the exclusive jurisdiction of the [Weckwerth] [c]ourt for any

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suit, action, proceeding or dispute arising out of the

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settlement.”

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to address Plaintiff’s contention that the Weckwerth Judgment

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contravenes public policy and is accordingly unenforceable.

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Lastly, because the Court finds res judicata precludes

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Plaintiff’s claim, the Court finds Defendants’ remaining 12(b)(6)

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arguments moot and need not address them.

See Judgment ¶ 8.

See Stoll v.

This conclusion is supported by

As a result, the Court declines

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Accordingly, the Court dismisses Plaintiff’s claim.

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Dismissal is with prejudice as amendment would be futile.

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Gompper v. VISX, Inc., 298 F.3d 893, 898 (9th Cir. 2002) (finding

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leave to amend need not be granted when amendment would be

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futile).

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III.

ORDER

For the reasons set forth above, the Court GRANTS
Defendants’ Motion to Dismiss.
IT IS SO ORDERED.
Dated: November 28, 2022

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See