McLellan et al v. Fitbit, Inc.

Filing 144

ORDER re 128 Motion to Dismiss. Signed by Judge James Donato on 6/5/2018. (jdlc3S, COURT STAFF) (Filed on 6/5/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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KATE MCLELLAN, et al.,

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Plaintiffs,

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ORDER RE MOTION TO DISMISS

v.

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Re: Dkt. No. 128
FITBIT, INC.,

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Defendant.

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United States District Court
Northern District of California

Case No. 3:16-cv-00036-JD

In this putative class action, named plaintiff Rob Dunn alleges that defendant Fitbit, Inc.

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misled consumers about the ability of Fitbit’s wristband devices to track user heart rate. Dkt. No.

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127-1. Specifically, Dunn alleges that although Fitbit marketed its “PurePulse” technology as

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providing accurate, real-time heart monitoring, particularly during exercise, user experience and

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independent research show that PurePulse-equipped devices are grossly inaccurate and frequently

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fail to record any heart rate at all. Dunn sues under the California Consumer Legal Remedies Act

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(“CLRA”), the California False Advertising Law (“FAL”), the California Unfair Competition Law

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(“UCL”), common-law fraud, fraud in the inducement, unjust enrichment, breach of express

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warranty, breach of implied warranties under the Magnuson-Moss Warranty Act, and the Arizona

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Consumer Fraud Act. Fitbit moves to dismiss the complaint for lack of particularity under Rule

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9(b) and Rule 8. The Court dismisses the unjust enrichment claim. The motion to dismiss is

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otherwise denied, subject to Dunn’s representation that he will amend the complaint to include

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product packaging statements and allegations of reliance.1

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At the hearing on the motion to dismiss, plaintiff agreed to withdraw his claims under the SongBeverly Consumer Warranty Act and revocation of acceptance. Dkt. No. 143 at 22.

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LEGAL STANDARD
Straightforward standards govern the application of Rule 12(b)(6). To meet the pleading

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requirements of Rule 8(a) and to survive a Rule 12(b)(6) motion to dismiss, a claim must provide

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“a short and plain statement . . . showing that the pleader is entitled to relief,” Fed. R. Civ. P.

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8(a)(2), including “enough facts to state a claim . . . that is plausible on its face.” Bell Atl. Corp. v.

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Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face if, accepting all factual

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allegations as true and construing them in the light most favorable to the plaintiff, the Court can

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reasonably infer that the defendant is liable for the misconduct alleged. Ashcroft v. Iqbal, 556

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U.S. 662, 678 (2009). The plausibility analysis is “context-specific” and not only invites but

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United States District Court
Northern District of California

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“requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679.
Rule 9(b) requires that “a party must state with particularity the circumstances constituting

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fraud or mistake.” Fed. R. Civ. P. 9(b). Rule 9(b)’s heightened specificity standards apply to

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Dunn’s consumer fraud and deception claims, because Dunn alleges false and misleading product

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representations that sound in fraud. Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir.

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2009); Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-04 (9th Cir. 2003). The touchstone of

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Rule 9(b) is notice. “A pleading is sufficient under rule 9(b) if it identifies the circumstances

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constituting fraud so that a defendant can prepare an adequate answer from the allegations.”

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Moore v. Kayport Package Exp., Inc., 885 F.2d 531, 540 (9th Cir. 1989). Generally, “[a]verments

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of fraud must be accompanied by ‘the who, what, when, where, and how’ of the misconduct

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charged.” Vess, 317 F.3d at 1106 (internal quotation marks omitted). Conclusory allegations with

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no “particularized supporting detail” do not suffice, but 9(b) “does not require absolute

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particularity or a recital of the evidence . . . . [A] complaint need not allege ‘a precise time frame,’

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‘describe in detail a single specific transaction’ or identify the ‘precise method’ used to carry out

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the fraud.” United States v. United Healthcare Ins. Co., 848 F.3d 1161, 1180 (9th Cir. 2016)

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(citing Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)) (other citations omitted).

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As Fitbit recognizes in its motion, Rule 9(b) does not govern Dunn’s express or implied

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warranty claims, because those claims are based not on fraudulent representations but on Fitbit’s

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failure to deliver devices that track heart rate as promised by device packaging and promotional
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materials. Kearns, 567 F.3d at 1124 (Rule 9(b) only applies to claims where fraud is an essential

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element).
DISCUSSION

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I.

Rule 9(b)

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A good starting point for the Rule 9(b) analysis is the Court’s order in a conceptually
related case, Brickman v. Fitbit, Inc., No. 15-CV-02077-JD, 2016 WL 3844327 (N.D. Cal. July

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15, 2016). The Brickman plaintiffs sued Fitbit under fraud and consumer deception laws in

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connection with Fitbit devices’ ability to track sleep as advertised. The Court found that the

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Brickman plaintiffs satisfied Rule 9(b) because the complaint (1) identified product packaging

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statements that the devices would “TRACK YOUR NIGHT” and “TRACK SLEEP,” including

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United States District Court
Northern District of California

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“Hours slept,” “Times woken up,” and “Sleep quality,” (2) alleged pre-purchase notice and

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reliance on those statements, and (3) cited to “specific documents” as well as “personal

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experience” indicating that the devices track motion only and not sleep. 2016 WL 3844327 at *2.

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At the hearing on the motion to dismiss, Fitbit said the Court should distinguish this case

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from Brickman because Dunn did not include product packaging statements or specifically allege

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that he relied on those statements before making a purchase. Dkt. No. 143 at 23-24. Plaintiff

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represented that the complaint would be amended to include packaging statements and allegations

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of reliance, and shared with the Court and the parties an image of the package for Dunn’s device.

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The box states, “chargeHR/ Heart Rate + Activity Wristband/EVERY BEAT COUNTS,”

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advertises “CONTINUOUS HEART RATE,” and describes the “PUREPULSE™ CONTINUOUS

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HEART RATE” as featuring “Automatic, 24/7 wrist-based heart rate/Continuous workout heart

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rate.” These packaging statements and allegations of reliance, once incorporated into the

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complaint, will fully address Fitbit’s 9(b) objections.

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II.

Actionable representations and omissions

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Fitbit raises a variety of other objections to the plausibility of the fraud and deception

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claims, none of which are well taken. Fitbit argues that some of the representations identified in

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the complaint, like the slogan “Every Beat Counts,” are inactionable puffery. Even if that

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particular slogan when viewed in isolation is inactionable, the complaint is replete with examples
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of actionable “misdescriptions of specific or absolute characteristics of a product.” Cook, Perkiss

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

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quotations omitted). The complaint identifies statements like, “Continuous, automatic heart rate

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tracking,” “Check real time heart rate to ensure you’re working out at the right intensity,” and

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“Check heart rate at a glance to gauge your effort and adjust workouts on the spot.” See Dkt. No.

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127-1 at 5-11. Promotional materials include images of people exercising next to heart rate

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displays and graphs. Id. at 7-8. These are “particularized statements that can be sued on because

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they make measurable claims about a product’s characteristics and functionality.” Brickman, 2016

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WL 3844327, at *3; see also Robb v. Fitbit Inc., 216 F. Supp. 3d 1017, 1029 (N.D. Cal. 2016)
(statements like “continuous, automatic heart rate tracking all day, all night and during workouts”

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United States District Court
Northern District of California

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actionable under federal securities law). Fitbit says these statements have “nothing to do with

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accuracy,” Dkt. No. 128 at 7, but that cannot be reconciled with the plain meaning of its own

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marketing words.

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The complaint also alleges enough to state a claim based on omissions. An omission is

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actionable if it is “contrary to a representation actually made by the defendant, or [is] an omission

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of a fact that the defendant was obliged to disclose.” Daugherty v. American Honda Motor Co.

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Inc., 144 Cal. App. 4th 824, 835 (Cal. Ct. App. 2006). The complaint says that Fitbit knew or

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should have known of PurePulse’s inability to track heart rate, since Fitbit conducted a substantial

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amount of internal research to test its performance. See Dkt. No. 127-1 at 16-17. On the face of

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the complaint, that alleged omission is contrary to Fitbit’s marketing representations. It is also an

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omission that Fitbit was obliged to disclose. Given the magnitude of the aberrant heart rate

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readings and multiple allegations that the devices under-report heart rate, Dunn has plausibly

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alleged an “unreasonable safety hazard” that may arise when users rely on Fitbit heart rate

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readings during exercise. Williams v. Yamaha Motor Co., 851 F.3d 1015, 1028 (9th Cir. 2017);

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Dkt. No. 127-1 at 12, 13, 15, 25. While the Ninth Circuit has found that safety risks may not be

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unreasonable if the defendant “expressly warns consumers” or if the risk is “primarily one of

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accelerated timing rather than the manifestation of a wholly abnormal condition,” those factors do

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not weigh in Fitbit’s favor here. Williams, 851 F.3d at 1029.
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III.

Notice

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Fitbit urges dismissal of the CLRA and warranty claims for lack of pre-suit notice, as well

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as dismissal of the UCL claim to the extent that it hinges on an alleged CLRA violation. The

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CLRA states that a consumer may not commence an action for damages unless the defendant has

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received notice at least 30 days beforehand. Cal. Civ. Code § 1782(a). California law also

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requires pre-suit notice for warranty claims. Cardinal Health 301, Inc. v. Tyco Elecs. Corp., 169

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Cal. App. 4th 116, 135 (Cal. Ct. App. 2008) (citing Cal. Com. Code § 2607).

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But Fitbit received pre-suit notice in November 2015, when plaintiff’s counsel sent Fitbit
a letter on behalf of Kate McLellan, another named plaintiff in this case, and a proposed class of

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consumers who had purchased Fitbit’s PurePulse Devices. Dkt. No. 127-1 Exh. 2. That notice

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United States District Court
Northern District of California

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was sufficient under California law and gave Fitbit the opportunity to cure that the CLRA

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contemplates. See, e.g., Sanchez v. Wal-Mart Stores, Inc., No. CIVS06CV2573DFLKJM, 2007

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WL 1345706, at *3 (E.D. Cal. May 8, 2007); In re Toyota Motor Corp. Unintended Acceleration

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Mktg., Sales Practices, & Prod. Liab. Litig., 754 F. Supp. 2d 1145, 1175 (C.D. Cal. 2010). The

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November 2015 letter also advised Fitbit that plaintiffs intended to pursue claims for breach of

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implied and express warranty, so notice requirements for the warranty claims have also been

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satisfied.

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IV.

Warranty claims

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An express warranty is created by “any affirmation of fact or promise relating to the

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subject matter of a contract for the sale of goods, which is made part of the basis of the parties’

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bargain.” McDonnell Douglas Corp. v. Thiokol Corp., 124 F.3d 1173, 1176 (9th Cir. 1997) (citing

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Cal. Com.Code § 2313(1)(a)). Whether a seller’s statement is an “affirmation of fact or promise”

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that may give rise to an express warranty (as opposed to “merely the seller’s opinion or

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commendation of the goods”) depends on factors including “(1) a lack of specificity in the

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statement made, (2) a statement that is made in an equivocal manner, or (3) a statement which

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reveals that the goods are experimental in nature. . . . It is clear that statements made by a

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manufacturer or retailer in an advertising brochure which is disseminated to the consuming public

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in order to induce sales can create express warranties.” Keith v. Buchanan, 173 Cal. App. 3d 13,

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Dunn adequately alleges that Fitbit made an express warranty about the ability of

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PurePulse devices to accurately track heart rate throughout the day and during exercise. Dunn’s

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express warranty claim cites a number of Fitbit’s representations, including that PurePulse would

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provide “continuous, automatic . . . heart rate monitoring” allowing users to “maintain intensity”

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during exercise, and that the devices “track[] your heart rate all day and during exercise.” Dkt.

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No. 127-1 at 34-35. These statements are not “vague” or “equivocal.” Rather, they specifically

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promise that the devices are capable of giving real-time feedback on heart rate that can be used to

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United States District Court
Northern District of California

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adjust workout intensity.
Dunn also adequately pleads a claim under the Magnuson-Moss Act for breach of implied

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warranty under California Code Section 2314(1). Under that provision, “implied warranty

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‘provides for a minimum level of quality.’ A breach of the warranty of merchantability occurs if

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the product lacks ‘even the most basic degree of fitness for ordinary use.’” Birdsong v. Apple,

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Inc., 590 F.3d 955, 958 (9th Cir. 2009) (quoting Am. Suzuki Motor Corp. v. Superior Court, 37

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Cal. App. 4th 1291, 1296 (Cal. Ct. App. 1995) and Mocek v. Alfa Leisure, Inc., 114 Cal. App. 4th

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402, 406 (Cal. Ct. App. 2003)). According to the complaint, the ability to record heart rate in real

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time and during physical activity is marketed as a key feature of the PurePulse devices, yet in

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reality the products frequently fail to record any heart rate at all or provide highly inaccurate

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readings, with discrepancies of up to 75 bpm. Those facts indicate that the devices lack even a

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basic degree of fitness for use as exercise or activity monitors.

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V.

Unjust enrichment

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The unjust enrichment claim is dismissed with prejudice, since unjust enrichment is a

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remedy and not an independent claim. In re Capacitors Antitrust Litig., 106 F. Supp. 3d 1051,

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1074 (N.D. Cal. 2015).

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CONCLUSION
The unjust enrichment claim is dismissed with prejudice. Provided that Dunn revises his
complaint to include product packaging statements and allegations of reliance, Dunn may proceed
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with his claims under the CLRA, FAL, UCL, common-law fraud, fraud in the inducement, breach

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of express warranty, breach of implied warranties under the Magnuson-Moss Warranty Act, and

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the Arizona Consumer Fraud Act.

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IT IS SO ORDERED.
Dated: June 5, 2018

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JAMES DONATO
United States District Judge

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United States District Court
Northern District of California

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