McKinney v. Google, Inc. et al

Filing 106

ORDER GRANTING 83 MOTION TO DISMISS WITH LEAVE TO AMEND. Any amended complaint shall be filed no later than September 30, 2011. Signed by Judge Edward J. Davila on August 30, 2011. (ejdlc2, COURT STAFF) (Filed on 8/30/2011) Modified text on 8/31/2011 (ejdlc2, COURT STAFF). Modified text on 9/1/2011 (ecg, COURT STAFF).

Download PDF
1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 SAN JOSE DIVISION United States District Court For the Northern District of California 10 11 12 MARY MCKINNEY, Plaintiff, v. 13 GOOGLE, INC. and HTC CORP., 14 Defendants. 15 16 ) ) ) ) ) ) ) ) ) Case Number 5:10-CV-01177 EJD (PSG) ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND (Re: Docket No. 83) Presently before the court is Defendant Google, Inc.’s (“Google”) and Defendant HTC 17 Corp.’s (“HTC”) motion to dismiss Plaintiff Mary McKinney’s (“McKinney”) Second Amended 18 Complaint (“SAC”). The court finds it appropriate to take the motion under submission without 19 oral argument. See Civil L.R. 7-1(b). Based on the papers submitted, the court GRANTS 20 Defendants’ motion to dismiss with leave to amend. 21 22 I. BACKGROUND On March 22, 2010, this action was removed from the Superior Court of California. On 23 June 11, 2010, McKinney filed the First Amended Complaint against Google, HTC, and T-Mobile 24 USA, Inc. (“T-Mobile”) alleging violation of the Federal Communications Act, breach of express 25 warranty and implied warranty of merchantability, and violation of the Magnuson-Moss Warranty 26 Act. On November 16, 2010, Chief Judge Ware granted T-Mobile’s motion to compel arbitration 27 and granted Google and HTC’s motion to dismiss the FAC with leave to amend. On December 3, 28 2010, McKinney filed the SAC, in which she alleges the following facts. 1 Case No.: 5:10-CV-01177 EJD ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 McKinney, a Pennsylvania resident, bought a Nexus One mobile device (the “Google 2 Phone”) over the Internet on January 9, 2010. (SAC ¶ 2.) McKinney brings this action on behalf of 3 herself and a putative class of similarly situated Google Phone purchasers. The Google Phone is an 4 advanced mobile cellular phone or “smart phone” which operates using the Android Mobile 5 Technology Platform and an Internet device which provides email and Internet access on the 3G 6 network. (Id. ¶ 41.) Google is a Delaware corporation that marketed and sold the Google Phone 7 throughout the United States. (Id. ¶ 10.) HTC is a Taiwanese corporation that designed and 8 manufactured the Google Phone. (Id. ¶ 11.) Non-Defendant Third Party T-Mobile is an American 9 subsidiary of Germany-based Deutsche Telekom’s T-Mobile International business and was a United States District Court For the Northern District of California 10 provider of the telephone and data service plans for the Google Phone throughout the U.S., 11 including California. (Id. ¶ 12.) Initially, in the Unites States, T-Mobile was the exclusive wireless 12 carrier that allowed the Google Phone to be used on a 3G wireless network. (Id. ¶ 33.) 13 The Google Phone could be purchased online from Google for $529 as an “unlocked” 14 phone usable with any wireless service, or at a discounted price of $179 when purchased with a 15 new two-year contract with T-Mobile’s wireless service. (Id. ¶¶ 44-46.) The Google Phone was 16 designed to operate both on the 2G network, which has a maximum data transfer rate of 237 17 kilobytes per second, and on the 3G network, with a faster transfer rate of up to 7.2 megabytes per 18 second. This 3G transfer is important to many smart phone users who employ their devices to run 19 data-heavy applications. (Id. ¶ 43.) If, however, 3G connectivity was unavailable, the phone and 20 data operations could still be used, but at a substantially lower data transfer rate than the 3G level 21 that was advertised. (Id. ¶ 53). 22 Defendants consistently advertised the Google Phone in tandem with the T-Mobile network 23 as providing 3G data transfer rates. (Id. ¶ 50.) McKinney refers generally to unidentified 24 representations about the Google Phone made by Google and by T-Mobile and other wireless 25 carriers. She specifically identifies the Google Phone advertisement on the Google homepage and 26 the website Google set up to sell its phone,, which she claims has been 27 “scrubbed” of all Google’s promotional materials regarding the Nexus One model of the Google 28 Phone, but she does not state whether these advertisements made any assertions about the Google 2 Case No.: 5:10-CV-01177 EJD ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 Phone’s 3G connectivity. The only representation she specifically identifies about the Google 2 Phone and 3G connectivity is a statement made to her personally by a T-Mobile sales 3 representative that the Google Phone had 3G speed. (Id. ¶ 39). McKinney also was told by an 4 unidentified source that the Google Phone was “essential for web surfing and email.” (Id.) 5 McKinney alleges that, contrary to Defendants’ assertions, she and other members of the 6 putative class experienced connectivity on the 3G wireless network only a fraction of the time they 7 were connected to T-Mobile’s 3G wireless network, or received no 3G connectivity at all for a 8 significant portion of time. (Id. ¶ 54.) This lack of connectivity also caused a significant number of 9 dropped calls. (Id.) Moreover, McKinney alleges that Defendants have failed to provide adequate United States District Court For the Northern District of California 10 11 customer service to assist Google Phone customers in helping to resolve these issues. (Id. ¶ 60.) On the basis of the allegations outlined above, McKinney alleges ten causes of action: (1) 12 violation of California’s Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, et seq.; (2) 13 violation of California’s False Advertising Law, Cal. Bus. & Prof. Code § 17500, et seq.; (3) 14 violation of California’s Consumers Legal Remedies Act, Cal. Civ. Code § 1750, et seq.; (4) 15 breach of express warranty and implied warranty of merchantability; (5) violation of the 16 Magnuson-Moss Warranty Act; (6) negligence; (7) unjust enrichment; (8) negligent 17 misrepresentation; (9) fraud; and (10) declaratory relief. 18 II. LEGAL STANDARDS 19 “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a 20 cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. 21 Centinela Hosp. Center, 521 F.3d 1097, 1104 (9th Cir. 2008). For purposes of a motion to 22 dismiss, “all allegations of material fact are taken as true and construed in the light most 23 favorable to the nonmoving party.” Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-338 (9th 24 Cir. 1996). The court, however, is not required to accept as true allegations that are merely 25 conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden 26 State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A formulaic recitation of a cause of action with 27 conclusory allegations is not sufficient; a plaintiff must plead facts showing that a violation is 28 plausible, not just possible. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citations omitted). 3 Case No.: 5:10-CV-01177 EJD ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 Leave to amend must be granted unless it is clear that the complaint’s deficiencies cannot be cured 2 by amendment. Lucas v. Department of Corrections, 66 F.3d 245, 248 (9th Cir. 1995). III. DISCUSSION 3 4 A. Breach of Warranty 5 1. Implied Warranty of Merchantability 6 Defendants contend that McKinney’s implied warranty claims should be dismissed on the 7 grounds that: (1) McKinney fails to plead facts showing that the Google Phone is not 8 merchantable; (2) Google disclaimed any implied warranty; and (3) McKinney cannot succeed on a 9 claim against HTC because she lacks privity with HTC. Defendants also claim that McKinney’s United States District Court For the Northern District of California 10 warranty claims are preempted by the Federal Communications Act (“FCA”), 47 U.S.C. § 11 332(c)(3)(A). Because the last issue was the basis upon which the court dismissed the state law 12 warranty claims in the First Amended Complaint, the court addresses it first. The state law warranty claims in McKinney’s First Amended Complaint were dismissed 13 14 because the court found that the claims were preempted by the FCA, which provides that “no State 15 or local government shall have any authority to regulate the entry of or the rates charged by any 16 commercial mobile service or any private mobile service.” 47 U.S.C. § 332(c)(3)(A). As explained 17 in the court’s November 16, 2010 Order granting the motion to dismiss McKinney’s First 18 Amended Complaint, “a complaint that service quality is poor is really an attack on the rates 19 charged for the service . . . .” Bastien v. AT&T Wireless Services, Inc., 205 F.3d 983, 988 (7th 20 Cir. 2000). In In re Apple iPhone 3G Prods. Liab. Litig., a court in this district interpreted the 21 Seventh Circuit’s opinion in Bastien and held that warranty claims based on the defendant’s 22 allegedly faulty 3G network were preempted by the FCA. 1 In the November 16, 2010 Order, the court determined that her warranty claims—that 23 24 Defendants knew T-Mobile’s 3G network was not sufficiently developed, deceived McKinney into 25 paying higher prices for a service that Defendants could not deliver, and acted in concert with T- 26 Mobile—were attacks on T-Mobile’s rates and market entry. The court granted McKinney leave to 27 28 1 No. C 09-02045-JW, 2010 U.S. Dist. LEXIS 79054, at *19-20 (N.D. Cal. Apr. 2, 2010). 4 Case No.: 5:10-CV-01177 EJD ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 amend because it determined she may be able to state clams against Google and HTC for actual 2 defects of the Google Phone or its applications. 3 In the SAC, McKinney claims that the ordinary purpose of the phone is to provide 4 consistent connectivity to a supposedly faster 3G network, the phone fails to do so, and “[w]hether 5 the problem is with the Google Phone itself or with [the] wireless carrier’s network, or a 6 combination of the two, is irrelevant.” (SAC ¶ 101.) McKinney also alleges that “the combination 7 of the phone and/or the network made it difficult . . . to receive reliable and sustained connectivity 8 on the 3G wireless network” (id. ¶ 65), that “T-Mobile’s network did not provide consistent 3G 9 performance for Google Phone purchasers” (id. ¶ 58), and that “T-Mobile 3G network was not United States District Court For the Northern District of California 10 11 designed to provide consistent connectivity to its 3G network for Google Phone users” (id. ¶ 59). Thus, McKinney continues to allege that T-Mobile’s 3G wireless network is defective. She 12 has, at most, raised only a mere possibility that an actual defect of the Google Phone caused the 13 inconsistent 3G connection. Because McKinney’s implied warranty claim is based on T-Mobile’s 14 allegedly faulty 3G network, it therefore is preempted consistent with this court’s prior order. 15 Accordingly, the breach of implied warranty claim is DISMISSED. As the court has previously 16 determined that McKinney may be able to state an implied warranty claim based on actual defects 17 of the phone, she is granted leave to amend. 18 1. Express Warranty 19 Defendants similarly argue that the express warranty claim is preempted. Although courts 20 may not apply state law to regulate whether the price or quality of wireless service is adequate, 21 courts can apply state law to determine whether “there was a difference between promise and 22 performance,” In re Wireless Consumers Alliance, Inc., 15 F.C.C.R. 17021, 17035 (2000), and 23 whether a company misrepresented the price or quality of wireless service it would provide, 24 Shroyer v. New Cingular Wireless Services, Inc., 622 F.3d 1035, 1040 (9th Cir. 2010). One such 25 type of promise or representation against which the court may measure Defendants’ performance 26 may be an express warranty. 27 28 Defendants, however, also contend that McKinney fails to allege any factual statement promising connectivity or establishing reasonable reliance thereon. To state a claim for breach of 5 Case No.: 5:10-CV-01177 EJD ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 express warranty under California law, a plaintiff must allege (1) the exact terms of the warranty; 2 (2) reasonable reliance thereon; and (3) a breach of warranty which proximately caused plaintiff’s 3 injury. Williams v. Beechnut Nutrition Corp., 185 Cal. App. 3d 135, 142 (Ct. App. 1986). A 4 plaintiff also must plead that he or she provided the defendant with pre-suit notice of the breach. 5 Cal. Com. Code § 2607. McKinney alleges that Google and HTC breached an express warranty because the Google 6 7 Phone fails to provide a consistent 3G connection. She argues that Defendants’ assertions that the 8 Google Phone has 3G network capability constitutes a warranty. She generally alleges reliance and 9 that the Google Phone’s inability to provide the represented performance and speed caused her United States District Court For the Northern District of California 10 injury. These allegations are insufficient. General assertions about representations or impressions 11 12 given by Defendants about the phone’s 3G capabilities are not equivalent to a recitation of the 13 exact terms of the underlying warranty, much less a warranty that distinguishes McKinney’s claim 14 from a preempted attack on the quality of the T-Mobile 3G network. At the least, McKinney must 15 identify the particular commercial or advertisement upon which she relied and must describe with 16 the requisite specificity the content of that particular commercial or advertisement. 2 See Baltazar 17 v. Apple, Inc., CV-10-3231-JF, 2011 WL 588209, at *2 (N.D. Cal. Feb. 10, 2011). Moreover, 18 McKinney must allege with greater specificity her reasonable reliance on the particular commercial 19 or advertisement. Accordingly, the breach of express warranty claim is DISMISSED. 20 4. Magnuson-Moss Warranty Act 21 McKinney’s Magnuson-Moss Warranty Act (“MMWA”) claim is not viable in the absence 22 of any state law warranty claims because the MMWA merely provides a federal cause of action for 23 state law implied warranty claims. See 15 U.S.C. § 2301(7). Accordingly, the MMWA claim is 24 DISMISSED. 25 26 27 28 2 McKinney argues that she should not be expected to offer more detail regarding the warranty because the transaction was conducted electronically, and she could not print any of the information because she does not own a printer. McKinney’s complaint is insufficient because she has failed to allege facts showing that she was presented with a warranty or that she relied on it, not because she failed to present a copy of that warranty. 6 Case No.: 5:10-CV-01177 EJD ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 B. Fraud Based Claims 2 1. 9(b) Pleading Standard 3 Under Fed. R. Civ. P. 9(b), “in alleging fraud or mistake, a party must state with 4 particularity the circumstances constituting fraud or mistake.” A complaint meets this standard if it 5 alleges “‘the time, place, and content of the alleged fraudulent misrepresentation or omission; the 6 identity of the person engaged in the fraud; and the circumstances indicating falseness’ or ‘the 7 manner in which [the] representations [or omissions] were false and misleading.’” Genna v. Digital 8 Link Corp., 25 F.Supp.2d 1038 (N.D. Cal. 1997) (brackets in original) (quoting In re GlenFed Sec. 9 Litig., 42 F.3d 1541, 1547-58 n.7 (9th Cir. 1994)). United States District Court For the Northern District of California 10 “Where fraud is not an essential element of a claim, only those allegations of a complaint 11 which aver fraud are subject to Rule 9(b)’s heightened pleading standard. Any averments which do 12 not meet that standard should be ‘disregarded,’ or ‘stripped’ from the claim for failure to satisfy 13 Rule 9(b). To the extent a party does not aver fraud, the party’s allegations need only satisfy the 14 requirements of Rule 8(a)(2). Fraud can be averred by specifically alleging fraud, or by alleging 15 facts that necessarily constitute fraud (even if the word ‘fraud’ is not used).” Kearns v. Ford Motor 16 Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (omitting internal citations and quotations). 17 2. Fraud and Negligent Misrepresentation 18 To state a claim for fraud under California law, a plaintiff must allege: (1) 19 misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity 20 (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting 21 damage. Lazar v. Superior Ct., 12 Cal. 4th 631, 638 (1996). “The same elements comprise a cause 22 of action for negligent misrepresentation, except there is no requirement of intent to induce 23 reliance.” Cadlo v. Owens-Illinois, Inc., 125 Cal. App. 4th 513, 519 (Ct. App. 2004). 24 A claim based on a nondisclosure or omission is a claim for misrepresentation in a cause of 25 action for fraud, and it must be pleaded with particularity under Rule 9(b). Kearns v. Ford Motor 26 Co., 567 F.3d 1120, 1127 (9th Cir. 2009). As explained by one court in this district, “to plead the 27 circumstances of omission with specificity, plaintiff must describe the content of the omission and 28 where the omitted information should or could have been revealed, as well as provide 7 Case No.: 5:10-CV-01177 EJD ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 representative samples of advertisements, offers, or other representations that plaintiff relied on to 2 make her purchase and that failed to include the allegedly omitted information.” Marolda v. 3 Symantec Corp., 672 F. Supp. 2d 992, 1002 (N.D. Cal. 2009) 4 Here, McKinney fails to specifically identify any representation by Google or HTC that 5 mentions 3G connectivity, much less one that the Nexus One would maintain consistent 3G 6 connectivity. McKinney also fails to plead facts sufficient to show a misrepresentation by 7 omission was made. Thus, McKinney has not sufficiently pleaded that Defendants made a 8 misrepresentation. 9 Additionally, with respect to both claims, McKinney must allege that she actually relied United States District Court For the Northern District of California 10 upon the misrepresentations. Cadlo, 125 Cal. App. 4th at 519. “Thus, the mere assertion of 11 ‘reliance’ is insufficient. The plaintiff must allege the specifics of his or her reliance on the 12 misrepresentation to show a bona fide claim of actual reliance.” Id. Here, McKinnney merely 13 asserts that she based her decision to buy the Google Phone on Google and HTC’s 14 misrepresentations but has not particularly identified any representation upon which she relied or 15 alleged facts showing her actual and reasonable reliance on any such representations. 16 Thus, McKinney has not pleaded sufficient facts about Defendants’ misrepresentation or 17 her justifiable reliance to meet the Rule 9(b) standard. McKinney’s claims for fraud and for 18 negligent misrepresentation, therefore, are DISMISSED. 19 3. California Consumers Legal Remedies Act 20 McKinney next claims that Google and HTC violated several subsections of Cal. Civ. Code 21 § 1770(a) by making false representations or advertisements. This claim appears to also be based 22 on the Google Phone’s inability to maintain a consistent 3G connection despite Defendants’ 23 alleged representations to the contrary as well as Defendants’ inadequate customer service. 24 Because McKinney’s California Consumers Legal Remedies Act (“CLRA”) claims are based on 25 alleged misrepresentations, they must be pled with Rule 9(b) particularity. 26 As discussed above, McKinney has not pled with specificity the content of the alleged 27 misrepresentations made by Defendants in their commercials and advertisements, either with 28 respect to 3G connectivity or customer service, nor has she alleged facts sufficient to show that she 8 Case No.: 5:10-CV-01177 EJD ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 relied justifiably on those misrepresentations. See Glen Holly Entm’t, Inc. v. Tektronix, Inc., 352 2 F.3d 367, 379 (9th Cir. 2003). 3 Furthermore, “[a]lthough a claim may be stated under CLRA in terms constituting 4 fraudulent omissions, to be actionable the omission must be contrary to a representation actually 5 made by the defendant, or an omission of a fact the defendant was obliged to disclose.” Daugherty 6 v. American Honda Motor Co. Inc., 144 Cal. App. 4th 824, 835 (Ct. App. 2006). Here, McKinney 7 does not identify any affirmative representation concerning the subject of any alleged omissions, 8 nor does she identify any legal obligation on the part of Google or HTC to disclose the material 9 information it allegedly failed to disclose. Accordingly, the CLRA claim is DISMISSED. United States District Court For the Northern District of California 10 4. California False Advertising Law 11 California False Advertising Law (“FAL”) makes it unlawful to make or disseminate any 12 statement concerning property or services that is “untrue or misleading, and which is known, or 13 which by the exercise of reasonable care should be known, to be untrue or misleading[.]” Cal. Bus. 14 & Prof. Code § 17500. McKinney asserts that Defendants’ representations concerning the Google 15 Phone are likely to mislead the public because “[m]arketing the phone by claiming it connects to a 16 3G network lead[s] reasonable consumers, including McKinney, to believe they regularly can 17 obtain 3G network connectivity and significantly higher data transfer rates.” (SAC ¶ 83). Because 18 McKinney’s FAL claim is based on alleged misrepresentations, it must be pled with Rule 9(b) 19 particularity. 20 Although “[m]isdescriptions of specific or absolute characteristics of a product are 21 actionable,” Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1145 (9th Cir. 1997), 22 “[g]eneralized, vague, and unspecified assertions constitute ‘mere puffery’ upon which a 23 reasonable consumer could not rely, and hence are not actionable.” Anunziato v. eMachines, Inc., 24 402 F.Supp.2d 1133, 1139 (C.D. Cal. 2005) (quoting Glen Holly Entertainment, Inc. v. Tektronix, 25 Inc., 343 F.3d 1000, 1005 (9th Cir. 2003)). McKinney does not allege that the phone does not 26 function at least some of the time by connecting to a 3G network. Further, she does not allege that 27 Defendants claimed that the phone would connect to 3G for any specific period of time. 28 McKinney fails to identify a single advertisement or commercial in which HTC or Google made 9 Case No.: 5:10-CV-01177 EJD ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 any statements about the phone and 3G wireless network connections. She has only identified 2 statements from a T-Mobile sales representative that the phone had 3G speed and “was essential 3 for web surfing and email,” which, even if they were attributable to Defendants, would appear to 4 be non-actionable puffery. See, e.g., Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964, 973-74 5 (N.D. Cal. 2008) (finding that manufacturer claims of “higher performance,” “longer battery life,” 6 “richer multimedia experience.” and “faster access to data” were all non-actionable puffery.). 7 Accordingly, the FAL claim is DISMISSED. 8 5. Unfair Competition Law 9 California Business and Professions Code § 17200 et seq. (the “UCL”) prohibits acts of United States District Court For the Northern District of California 10 unfair competition, including “any unlawful, unfair, or fraudulent business act or practice and 11 unfair, deceptive, untrue, or misleading advertising.” Cal. Bus. & Prof. Code § 17200. This statute 12 “was intentionally framed in its broad, sweeping language.” Cal-Tech Communications, Inc. v. Los 13 Angeles Cellular Telephone Co., 20 Cal. 4th 163, 181 (1999). “A plaintiff must have suffered an 14 ‘injury in fact’ or ‘lost money or property as a result of the unfair competition’ to have standing to 15 pursue either an individual or a representative claim under California Unfair Competition Law.” 16 Hall v. Time Inc., 158 Cal App. 4th 847, 849 (Ct. App. 2008). 17 To state a claim under the “fraudulent” prong of the UCL, a plaintiff must allege that the 18 challenged practice is likely to deceive members of the public. Bardin v. Daimlerchrysler Corp., 19 136 Cal. App. 4th 1255, 1274 (Ct. App. 2006). To support liability under the “unfair” prong, the 20 conduct must either “offend[] an established public policy or [be] immoral, unethical, oppressive, 21 unscrupulous, or substantially injurious to consumers,” or be “‘tethered’ to specific constitutional, 22 statutory or regulatory provisions.” Id. at 1268, 1272. A violation of the “unlawful” prong of the 23 UCL may be established by a variety of unlawful acts, including those practices prohibited by law, 24 whether “civil or criminal, federal, state, [] municipal, statutory, regulatory, or court-made.” 25 Saunders v. Superior Court, 27 Cal. App. 4th 832, 838–39 (Ct. App. 1994). 26 McKinney claims that Defendants violated the UCL by misrepresenting the actual speed 27 and performance of the Google Phone and T-Mobile’s 3G wireless network as well as Defendants’ 28 customer service to assist Google Phone customers in resolving connectivity issues. As discussed 10 Case No.: 5:10-CV-01177 EJD ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 above, McKinney has failed to allege any facts showing that Defendants actually stated that the 2 Google Phone would provide 3G connectivity, much less any consistent level of 3G connectivity. 3 McKinney has also failed to allege any representation regarding the level of customer service that 4 Defendants would provide. Thus, McKinney has not sufficiently alleged any specific practice or 5 statement made by Defendants which might deceive members of the public, and thus has failed to 6 state a claim under the “fraudulent” prong of the UCL. Similarly, McKinney has failed to allege a misrepresentation that could state a claim under 7 the “unfair” prong of the UCL, and as discussed above, any general attack on the quality or rates 9 charged for the 3G wireless network would be preempted. 3 McKinney argues that her claim that 10 United States District Court For the Northern District of California 8 customer service was inadequate is sufficient to state a claim under the “unfair” prong, but she has 11 not alleged any facts showing that any lack of support actually caused her any legally cognizable 12 injury or damage. Finally, because McKinney so far has failed to state a viable claim for fraud, negligent 13 14 misrepresentation, breach of warranty, or any other actionable wrongdoing, she has failed to state a 15 claim under the “unlawful” prong of the UCL. 16 C. Negligence To state a cognizable claim for negligence under California law, McKinney “must establish 17 18 four required elements: (1) duty; (2) breach; (3) causation; and (4) damages.” Ileto v. Glock, Inc., 19 349 F.3d 1191, 1203 (9th Cir. 2003). McKinney alleges that Defendants undertook a duty to 20 properly manufacture, design, test, produce, assemble, inspect, distribute, market, package, prepare 21 for use and sell the Google Phone to function as advertised and represented on T-Mobile’s 3G 22 network; they breached this duty; this breach caused McKinney to fail to receive reliable and 23 sustained connectivity to T-Mobile’s 3G network; as a result, McKinney has suffered “injuries, 24 25 3 26 27 28 Defendants argue that all McKinney’s state law claims as currently pleaded are preempted under the FCA because they fail to allege that Defendants made any misrepresentation and thus constitute general attacks on the quality of T-Mobile’s wireless network. The court does not address this argument because dismissal of these claims is warranted on other bases and because the court determines these claims may be pleaded in any subsequent complaint either to allege defects of the Google Phone or to allege an actual misrepresentation. 11 Case No.: 5:10-CV-01177 EJD ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 damages, harm and economic loss” including loss from the purchase of the phone. (SAC ¶¶ 116- 2 120). 3 Defendants argue that this claim fails under California’s economic loss rule. To sustain a 4 claim for negligence, the plaintiff must seek damages for a physical injury. Wells Fargo Bank, 5 N.A. v. Renz, C 08-02561 SBA, 2011 WL 2360060 (N.D. Cal. June 9, 2011) (citing Aas v. Super. 6 Ct., 24 Cal. 4th 627, 635–36 (2000)). “[E]conomic loss alone, without physical injury, does not 7 amount to the type of damage that will cause a negligence or strict liability cause of action to 8 accrue.” County of Santa Clara v. Atl. Richfield Co., 40 Cal. Rptr. 3d 313, 335 (Ct. App. 2006). 9 McKinney argues that the economic loss doctrine does not apply when damage is caused to United States District Court For the Northern District of California 10 other property and alleges that Defendants’ defective software caused damage to the telephone. 11 Nowhere in McKinney’s negligence claim does she mention the phone’s software. Throughout the 12 SAC, McKinney discusses the Google Phone as a single device. The allegations in the SAC make 13 no distinction between the phone, as separate damaged property, and its software, as the defective 14 product. McKinney’s argument is simply not supported by the SAC. 15 As pleaded, the negligence claim does not allege any injury beyond economic loss. 16 Accordingly, the negligence claim is DISMISSED. 17 D. Unjust Enrichment 18 McKinney alleges that Defendants were unjustly enriched because they received money 19 from sales of the Google Phone. McKinney cannot state a claim for unjust enrichment because no 20 such cause of action exists in California. Unjust enrichment is not a separate cause of action but is 21 tied to other causes of action that give rise to a right to restitution. McKell v. Wash. Mut. Inc., 142 22 Cal. App. 4th 1457, 1490 (Ct. App. 2006). The viability of this claim therefore necessarily 23 depends on that of McKinney’s other claims. As all other claims have been dismissed, the unjust 24 enrichment claim also is DISMISSED. 25 E. Declaratory Relief 26 Declaratory relief is an equitable remedy provided by Cal. Civ. Proc. Code § 1060, which is 27 available to an interested person in a case “of actual controversy relating to the legal rights and 28 duties of the respective parties.” In re Claudia E., 77 Cal. Rptr. 3d 722, 727 (Ct. App. 2008). 12 Case No.: 5:10-CV-01177 EJD ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 McKinney seeks a judicial declaration of the rights and obligations of the parties regarding 2 Defendants’ wrongful behavior and requests an order declaring Defendants are obligated to pay 3 restitution for all funds wrongly acquired as a result of Defendants’ illegal conduct. Defendants 4 move to dismiss this claim as duplicative of McKinney’s other claims. As the other claims have 5 been dismissed, the declaratory relief claim is no longer duplicative, but it fails to state an actual 6 controversy. Declaratory relief is not available unless there is a real dispute between parties, involving 7 justiciable questions relating to their rights and obligations. Id. A claim for declaratory relief 9 requires the plaintiff to demonstrate the existence of an actual controversy regarding the legal 10 United States District Court For the Northern District of California 8 rights of the parties. See McClain v. Octagon Plaza, LLC, 71 Cal. Rptr. 3d 885, 898 (Ct. App. 11 2008). Declaratory relief operates prospectively and not merely for the redress of past wrongs. 12 Babb v. Superior Court of Sonoma County, 3 Cal. 3d 841, 848 (1971); Jensen v. Quality Loan 13 Service Corp., 102 F. Supp. 2d 1183, 1188 (E.D. Cal. 2010). The purpose of a declaratory 14 judgment is to set controversies at rest before they cause harm to the plaintiff in the interest of 15 preventive justice, not to remedy harms that have already occurred. See Babb, 3 Cal. 3d at 898. 16 McKinney has not stated any actual controversy relating to the prospective legal rights and duties 17 between herself or any class members and Defendants. Accordingly, the claim for declaratory 18 relief is DISMISSED. 19 IV. CONCLUSION 20 Good cause therefore appearing, the motion to dismiss is GRANTED WITH LEAVE TO 21 AMEND. Any amended complaint shall be filed no later than September 30, 2011. 22 Dated: _________________________________ EDWARD J. DAVILA United States District Judge 23 24 25 26 27 28 13 Case No.: 5:10-CV-01177 EJD ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?