Jekowsky v. BMW of North America, LLC

Filing 34

ORDER REGARDING DEFENDANT'S MOTION TO DISMISS. Signed by Judge Jeffrey S. White on 12/13/13. (jjoS, COURT STAFF) (Filed on 12/13/2013)

1
2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7
FOR THE NORTHERN DISTRICT OF CALIFORNIA
8
BARRY JEKOWSKY,

10

Plaintiff,

11
For the Northern District of California

United States District Court

9

12

No. C 13-02158 JSW

v.
BMW OF NORTH AMERICA, LLC,

13

ORDER REGARDING
DEFENDANT’S MOTION TO
DISMISS

Defendant.
/

14
15

Now before the Court is the motion to dismiss filed by defendant BMW of North

16

America, LLC. (“BMW”). Having carefully reviewed the parties’ papers and considered their

17

arguments and the relevant legal authority, and good cause appearing, the Court denies BMW’s

18

motion to dismiss.1

19

BACKGROUND

20

Plaintiff leased a BMW Z4 equipped with BMW alloy wheels in February 2011. (First

21

Amended Compl. (“FAC”), ¶¶ 8, 12.) Plaintiff contends that the alloy wheels are defective and

22

brings a purported class action on behalf of purchasers of and persons who leased a BMW Z4

23

equipped with these wheels. (Id., ¶ 1.) Plaintiff further alleges that the alloy wheels were

24

defective in materials and workmanship. It was this defect that caused the wheels to crack

25

during the warranty period. (Id., ¶ 47.)

26
27
28
The Court HEREBY GRANTS BMW’s request for judicial notice. See Fed. R.
Evid. 201.
1

1

Plaintiff alleges that the alloy wheels are prone to cracking under normal driving

2

conditions after being used for as little as 10,000 miles. (Id., ¶ 2.) The cracking creates a safety

3

hazard. (Id.)

4

The vehicles with these alloy wheels come with a factory four year/50,000 mile

5

warranty, but BMW has refused to honor this warranty. (Id., ¶ 2.) Plaintiff alleges that the fault

6

for the cracking “lies more with the particular allow of metal used by BMW than the owner’s

7

driving.” (Id., ¶ 3.)

8
9

Plaintiff alleges that BMW knew or should have known that the alloy wheels were prone
to cracking during the warranty period. (Id., ¶ 4.) To support this allegation, Plaintiffs rely,
inter alia, on consumer complaints, watchdog reports, and federal regulatory databases. (Id., ¶¶

11
For the Northern District of California

United States District Court

10

4, 18.) Additionally, authorized dealerships in California were receiving “an inordinate number

12

of complaints from dealers regarding cracked Alloy Wheels during the warranty period.” (Id., ¶

13

5.)

14

In late September 2012, after driving the vehicle for less than 19,300 miles, Plaintiff

15

discovered that one of his rear wheels had developed cracks in multiple locations. (Id., ¶ 13.)

16

Three months later, Plaintiff began experiencing difficulty maintaining tire pressure in another

17

wheel. By that time, Plaintiff had driven the vehicle only 23,000 miles. Upon inspection by the

18

dealer, Plaintiff discovered that the wheel was cracked in multiple locations. (Id., ¶ 16.)

19
20

Driving on a cracked wheel presents a safety hazard. The crack may spread and cause
the wheel to weaken and separate. (Id., ¶ 14.)

21

Based upon these allegations, Plaintiff brings claims for violation of the Magnuson-

22

Moss Warranty Act, 15 U.S.C. §§ 2301, et seq., breach of express and implied warranties in

23

violation of the California Song-Beverly Consumer Warranty Act (“Song-Beverly Act”),

24

California Civil Code §§ 1790, et seq., violations of the California Consumer Legal Remedies

25

Act (“CLRA”), §§ 1750, et seq., and violations of California Unfair Competition Law (“UCL”),

26

California Business & Professions Code §§ 17200, et seq.

27

The Court will address additional facts as necessary in the remainder of this order.

28

ANALYSIS
2

1

A.

Applicable Legal Standard on Motion to Dismiss.

2

A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the

3

pleadings fail to state a claim upon which relief can be granted. The Court’s “inquiry is limited

4

to the allegations in the complaint, which are accepted as true and construed in the light most

5

favorable to the plaintiff.” Lazy Y Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).

6

Even under the liberal pleading standard of Federal Rule of Civil Procedure 8(a)(2), “a

7

plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than

8

labels and conclusions, and a formulaic recitation of the elements of a cause of action will not

9

do.” Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 555 (2007) (citing Papasan v. Allain,

11
For the Northern District of California

United States District Court

10

478 U.S. 265, 286 (1986)).
Pursuant to Twombly, a plaintiff must not merely allege conduct that is conceivable but

12

must instead allege “enough facts to state a claim to relief that is plausible on its face.” Id. at

13

570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the

14

court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”

15

Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at

16

556). If the allegations are insufficient to state a claim, a court should grant leave to amend,

17

unless amendment would be futile. See, e.g., Reddy v. Litton Indus., Inc., 912 F.2d 291, 296

18

(9th Cir. 1990); Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 246-

19

47 (9th Cir. 1990).

20

In addition, when a plaintiff alleges fraud, Federal Rule of Civil Procedure 9(b) (“Rule

21

9(b)”) requires the plaintiff to state with particularity the circumstances constituting fraud,

22

including the “‘who, what, when, where, and how’” of the charged misconduct. See United

23

States ex rel Ebeid v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (quoting Vess v. Ciba Geigy

24

Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003)); United States ex rel. Lee v. Smithkline

25

Beacham, Inc., 245 F.3d 1048, 1051 (9th Cir. 2001) (“Complaints brought under the FCA must

26

fulfill the requirements of Rule 9(b).”) “[T]he plaintiff must set forth what is false or

27

misleading about a statement, and why it is false.” Ebeid, 616 F.3d at 998 (omitting internal

28

quotations and citations).
3

1

As a general rule, “a district court may not consider any material beyond the pleadings

2

in ruling on a Rule 12(b)(6) motion.” Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994),

3

overruled on other grounds, Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002)

4

(citation omitted). However, documents subject to judicial notice may be considered on a

5

motion to dismiss. In doing so, the Court does not convert a motion to dismiss to one for

6

summary judgment. See Mack v. South Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir.1986),

7

overruled on other grounds by Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104

8

(1991).

9

B.

BMW’s Motion to Dismiss.
1.

11
For the Northern District of California

United States District Court

10

The Song-Beverly Act provides that “every sale of consumer goods that are sold at retail

Plaintiff’s Implied Warranty Claim Under California Law.

12

in [California] shall be accompanied by the manufacturer’s and the retail seller’s implied

13

warranty that the goods are merchantable.” Cal. Civ. Code § 1792. The implied warranty “is

14

coextensive in duration with an express warranty which accompanies the consumer goods,” but

15

“in no event shall such implied warranty have a duration of less than 60 days nor more than one

16

year following the sale of new consumer goods to a retail buyer.” Cal. Civ. Code § 1791.1(c).

17

Here, neither party contests that, due to the express warranties at issue, Plaintiff’s implied

18

warranty under the Song-Beverly Act had a one-year duration.

19

BMW contends that because Plaintiff alleges that he did not discover the cracking of his

20

alloy wheels until September 2012, more than one year after Plaintiff leased the vehicle,

21

Plaintiff cannot state a claim for violation of an implied warranty under the Song-Beverly Act.

22

Plaintiff responds that the latent defect, although not discovered by him until more than a year,

23

was present when he leased the vehicle.

24

In Mexia v. Rinker Boat Co, Inc., 174 Cal. App. 4th 1297, 1304 (2009), the court held

25

that “[t]he implied warranty of merchantability may be breached by a latent defect

26

undiscoverable at the time of sale.” The court explained that “[u]ndisclosed latent defects ... are

27

the very evil that the implied warranty of merchantability was designed to remedy,” and

28

stressed the “distinction between unmerchantability caused by a latent defect and the
4

1

subsequent discovery of the defect.” Id. at 1305. “In the case of a latent defect, a product is

2

rendered unmerchantable, and the warranty of merchantability is breached, by the existence of

3

the unseen defect, not by its subsequent discovery.” Id. As for the suggestion “that latent

4

defects must be discovered and reported to the seller within the specified time,” the court

5

concluded it “has no support in the text of the statute.” Id. at 1310.
This Court “must defer to the California Court of Appeal’s interpretation [of a state

6

matter differently.” California Pro–Life Council, Inc. v. Getman, 328 F.3d 1088, 1099 (9th Cir.

9

2003). In Ehrlich v. BMW of North America, LLC, 801 F. Supp. 2d 908, 924 (C.D. Cal. 2010),

10

the district court determined that the federal district court cases disagreeing with the holding in

11
For the Northern District of California

statute] unless there is convincing evidence that the California Supreme Court would decide the

8

United States District Court

7

Mexia were “not ‘convincing evidence’ that Mexia would be rejected by the California Supreme

12

Court.”2 This Court concurs with the finding in Ehrlich. As noted by another district court,

13

“Mexia is a thoroughly reasoned, published opinion by a California Court of Appeal that is less

14

than five years old. The court took into account the statutory history, its language, and its

15

purpose in reaching its decision. It ultimately concluded that applying the durational limits to

16

latent defects that existed at the time of sale and manifest after those limits expire is

17

‘unsupported by the text of the statute, legal authority, or sound policy.’” Majdipour v. Jaguar

18

Land Rover North America, LLC, 2013 WL 5574626, *23 (D.N.J. Oct. 9, 2013) (quoting Mexia,

19

174 Cal. App. 4th at 1311); see also Cholakyan v. Mercedes-Benz USA, LLC, 796 F. Supp. 2d

20

1220, 1243 (C.D. Cal. 2011) (“A vehicle that operates for some time after purchase may still be

21

deemed ‘unfit for ordinary purposes’ if its components are so defective that the vehicle becomes

22
In support of the proposition that Mexia is contrary to California law, the district
court cases rely on two California cases, neither of which expressly address the issue of the
discovery of latent defects. See Larsen v. Nissan North Amer., 2009 WL 1766797 (2009)
(unpublished); Atkinson v. Elk Corp., 142 Cal. App. 4th 212 (2006). Moreover, in both of
those cases, the claims were filed more than four years after the products were sold, thus,
even under the analysis under Mexia, those claims would have been barred by the four-year
statute of limitations period. Additionally, the reasoning underlying those district cases is
that the holding of Mexia would indefinitely extend the implied warranty. However, as
explained by the Court in Mexia, the four-year statute of limitations period still provides an
outside limitation on claims for breach of an implied warranty. Mexia, 174 Cal. App. 4th at
1306, 1311. Additionally, a plaintiff would still need to prove that the alleged defect existed
during the one-year duration period, even if the defect was not discovered until the one-year
duration period had expired. See Mexia, 174 Cal. App. 4th at 1308.
2

23
24
25
26
27
28

5

1

inoperable within an unacceptably short period of time.”); Keegan v. Amer. Honda Motor Co.,

2

Inc., 838 F. Supp. 2d 929, 948-49 (C.D. Cal. 2012).

3

Notably, in the four years since Mexica was issued in 2009, no California case has

4

explicitly criticized Mexia or determined that its holding was contrary to California law.

5

Moreover, at least one recent published California case has cited Mexia with approval. See

6

Donlen v. Ford Motor Co., 217 Cal. App. 4th 138, 149 (2013) (“Indeed, a defect that first

7

appears after a warranty has expired does not necessarily mean that the defect did not exist

8

when the product was purchased.”) (emphasis in original) (citing Mexia, 174 Cal. App. 4th at

9

1308).
Here, Plaintiff alleges that when the vehicle was delivered to him, it was equipped with

11
For the Northern District of California

United States District Court

10

allow wheels “that were defective in materials and workmanship.” (FAC, ¶ 47.) The defect

12

caused the wheels to crack and “required the wheels, and in many instances the tires, to be

13

replaced after being used for as little as 10,000 miles.” (Id.) The fact that Plaintiff did not

14

discover the cracking until February 2012 does not necessarily mean that Plaintiff cannot prove

15

the existence of a defect within the one-year duration period. Plaintiff has adequately alleged

16

the existence of a breach of the implied warranty within the one-year duration period.

17

Accordingly, the Court denies BMW’s motion as to Plaintiff’s claim for breach of the implied

18

warranty under the Song-Beverly Act.

19

2.

20

BMW argues that Plaintiff has not sufficiently stated a claim for breach of express

21

warranty under the Song-Beverly Act because he has not alleged that BMW tried but was

22

unable to fix the claimed defect or that he asked BMW to repurchase his vehicle. To state a

23

claim for breach of an express warranty under the Song-Beverly Act, a plaintiff must allege the

24

following elements: “(1) the product had a defect or nonconformity covered by the express

25

warranty; (2) the product was presented to an authorized representative of the manufacturer for

26

repair; and (3) the manufacturer or its representative did not repair the defect or nonconformity

27

after a reasonable number of repair attempts.” Robertson v. Fleetwood Travel Trailers of

28

California, Inc., 144 Cal. App.4th 785, 798-99 (2006). Whether the number of repair attempts

Plaintiff’s Express Warranty Claim Under California Law.

6

1

was reasonable “is a question of fact to be determined in light of the circumstances, but at a

2

minimum there must be more than one opportunity to fix the nonconformity. . . . Each occasion

3

that an opportunity for repairs is provided counts as an attempt, even if no repairs are actually

4

undertaken.” Id. at 799 (internal citation omitted).

5

Plaintiff alleges that he brought his car to BMW or its authorized agent twice and that

6

BMW refused to repair the wheels and tires under the warranty. (FAC, ¶ 13, 15-17.) Whether

7

the two opportunities Plaintiff provided to BMW were sufficient to satisfy the reasonableness

8

requirement is a question of fact which the Court may not determine at this procedural stage.

written warranty, any claims for breach of express warranty must be limited to those premised

11
For the Northern District of California

BMW argues, and Plaintiff does not dispute that, based on the language within BMW’s

10

United States District Court

9

on a manufacturing defect, and not a design defect. According to BMW, Plaintiff’s complaint

12

addresses only design defects. “California recognizes two distinct categories of product

13

defects: manufacturing defects and design defects.” McCabe v. Am. Honda Motor Co., 100 Cal.

14

App. 4th 1111, 1119 (2002). “A manufacturing defect exists when an item is produced in a

15

substandard condition. . . . Such a defect is often demonstrated by showing the product

16

performed differently from other ostensibly identical units of the same product line.” Id. at

17

1120 (internal citations omitted). In contrast, “[a] design defect . . . exists when the product is

18

built in accordance with its intended specifications, but the design itself is inherently defective.”

19

Id.

20

Plaintiff does allege that “the fault for the cracking lies more with the particular alloy of

21

metal used by BMW than the owner’s driving.” (FAC, ¶ 3.) However, Plaintiff also alleges

22

that the vehicles were “defective in materials and workmanship” when they were delivered.

23

(Id., ¶ 47.) Although Plaintiff may only pursue this claim to the extent it is based on an alleged

24

manufacturing defect, Plaintiff pleads sufficient facts to state such a claim. To the extent

25

Plaintiff ultimately will be successful in demonstrating that each car purchased or leased during

26

the class period suffered a manufacturing defect, as opposed to a design defect more commonly

27

affecting an entire class, remains to be determined. Moreover, Plaintiff’s ultimate ability to

28

pursue this claim on a class-wide basis may not be successful. However, these are issues that
7

1

the Court may not address on a motion to dismiss for failure to state a claim. The Court denies

2

BMW’s motion to dismiss as to Plaintiff’s claim for breach of an express warranty under the

3

Song-Beverly Act.

4

3.

Magnuson Moss Warranty Claim.

5

BMW moves to dismiss Plaintiff’s claim under the Maguson-Moss Act on the grounds

6

that Plaintiff’s state law warranty claims fail. See Daugherty v. American Honda Motor Co.,

7

Inc., 144 Cal. App. 4th 824, 833 (2006) (“failure to state a warranty claim under state law

8

necessarily constituted a failure to state a claim under Magnuson-Moss”); see also Kanter v.

9

Warner-Lambert Co., 99 Cal. App. 4th 780, 798 (2002) (finding that failure to allege state law
claim for breach of express or implied warranty was fatal to Magnuson-Moss Act claim because

11
For the Northern District of California

United States District Court

10

state law governs such claims). However, as discussed above, the Court is not dismissing

12

Plaintiff’s state-law warranty claims. Therefore, the Court denies BMW’s motion to dismiss on

13

this ground.

14

4.

15

Plaintiff’s UCL and CLRA claims are premised on BMW’s omissions. BMW argues

16

that Plaintiff fails to allege sufficient facts to show that BMW had a duty to disclose because,

17

according to BMW, Plaintiff fails to allege that BMW was aware of the defect at the time of

18

sale. Upon review of Plaintiff’s FAC, the Court finds that Plaintiff pleads sufficient facts to

19

show that BMW was aware of the defect. Therefore, the Court denies BMW’s motion to

20

dismiss on this ground.

21

Plaintiff’s UCL and CLRA Claims.

BMW further argues that Plaintiff fails to sufficiently allege a safety-based need for

22

disclosure. However, as Plaintiff argues, and BMW does not dispute, there is no need to allege

23

a safety risk with respect to a defect that manifests within the warranty period. “[A]

24

manufacturer has a duty to disclose any defects that fall within the warranty period, whether

25

relating to safety or to costly repairs, that would have caused the consumer to not purchase the

26

car if they had been disclosed.” Decker v. Mazda Motor of America, Inc., 2011 WL 5101705,

27

*4 (C.D. Cal. Oct. 24, 2011). Because Plaintiff alleges a defect that manifested within the

28
8

1

warranty period, the Court need not determine whether Plaintiff sufficiently alleged a safety risk

2

and denies BMW’s motion on this ground.

3

BMW also moves to dismiss Plaintiff’s UCL and CLRA claims on the grounds that

4

Plaintiff fails to sufficiently allege reliance. To allege reliance on an omission, Plaintiff must

5

allege that had the omitted information been disclosed, he would have been aware of it and

6

would have behaved differently. Mirkin v. Wasserman, 5 Cal. 4th 1082, 1093 (1993).

7

Although Plaintiff alleges that had the omitted information been disclosed, he would have

8

behaved differently, he does not allege any facts which, if true, would support an inference that

9

he would have been aware of the disclosure. Accordingly, he fails to sufficiently allege
reliance. Therefore, the Court will dismiss Plaintiff’s UCL and CLRA claims but will provide

11
For the Northern District of California

United States District Court

10

leave to amend.

12

CONCLUSION

13

For the foregoing reasons, the Court DENIES IN PART and GRANTS IN PART

14

BMW’s motion to dismiss. The Court GRANTS the motion to dismiss with respect to

15

Plaintiff’s UCL and CLRA claims and DENIES the motion as to the remainder of Plaintiff’s

16

claims. The Court is providing Plaintiff leave to amend his UCL and CLRA claims. If Plaintiff

17

elects to amend these claims, he shall file an amended complaint by no later than January 10,

18

2014. Moreover, if Plaintiff files an amended complaint, he shall also file by January 10, 2014,

19

a side-by-side comparison of the FAC and the amended complaint, or a redline version of the

20

two complaints.

21

IT IS SO ORDERED.

22
23

Dated: December 13, 2013
JEFFREY S. WHITE
UNITED STATES DISTRICT JUDGE

24
25
26
27
28
9