Taleshpour v. APPLE INC.

Filing 75

Order Granting 68 Motion to Dismiss Third Amended Complaint. Amended Complaint due by 8/2/2021. Signed by Judge Edward J. Davila on 7/19/2021. (ejdlc1S, COURT STAFF) (Filed on 7/19/2021)

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 1 of 17

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6

SAN JOSE DIVISION

7
MAHAN TALESHPOUR,

8

Plaintiff,

9
v.

10

ORDER GRANTING MOTION TO
DISMISS THIRD AMENDED
COMPLAINT

APPLE INC.,

11

United States District Court
Northern District of California

Case No. 5:20-cv-03122-EJD

Defendant.

12

Re: Dkt. No. 68

13
14

Plaintiffs Mahan Taleshpour, Rory Fielding, Peter Odogwu, Wade Buscher, Gregory

15

Knutson, Darien Hayes, Liam Stewart, Nathan Combs, and Kendall Bardin bring this action

16

against Defendant Apple Inc. (“Apple”) on behalf of themselves and members of a putative class,

17

asserting eleven claims related to an alleged product defect in certain MacBook Pro laptops.

18

Before the Court is Apple’s Motion to Dismiss the Third Amended Complaint (“TAC”). Mot. to

19

Dismiss Third Am. Compl. (“Mot.”), Dkt. No. 68. The Court finds the motion appropriate for

20

decision without oral argument pursuant to Civil Local Rule 7-1(b). For the reasons below, the

21

Court GRANTS the motion with limited leave to amend.

22

I.

BACKGROUND

23

In 2016, Apple introduced its updated 13- and 15-inch MacBook Pro models. Third Am.

24

Compl. (“TAC”), Dkt. No. 66 ¶ 17. To make these MacBook Pros thinner and sleeker than their

25

predecessors, Apple used thin, flexible backlight ribbon cables to connect the lighting mechanism

26

of the display screen to the display controller board. Id. ¶ 18. These backlight ribbon cables wrap

27

around the display controller board at the hinge of the laptop and are secured by a pair of spring-

28

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
1

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 2 of 17

1
2

loaded covers. Id.
This configuration causes the backlight ribbon display cables rub against the control board

3

when the laptop is opened and closed. Id. ¶ 20. Over time, the rubbing causes the cables to tear,

4

which leads to various problems with the display screen. Id. For example, the tearing of the cable

5

can cause a “stage lighting” effect, consisting of alternating patches of darkness along the bottom

6

of the display. Id. ¶ 21. Further tearing can lead to more serious display issues, such as large

7

blocks of color that obscure portions of the screen, and eventually, can cause the display to fail

8

entirely. Id. ¶¶ 22-23. To varying degrees, these issues with the display screen all allegedly

9

render the laptop unusable and unfit for its ordinary purpose. Id.

10

Plaintiffs allege that the backlight cables tear because they are “too short and do not

United States District Court
Northern District of California

11

provide enough slack to withstand the repetitive opening and closing of the MacBook Pros” (the

12

“Alleged Defect”). Id. ¶ 20. Faced with complaints from numerous consumers about the stage

13

lighting effect and the failure of the display, Apple attempted to remedy the Alleged Defect by

14

making the backlight cables two millimeters longer in the 13- and 15-inch MacBook Pro models

15

released in July 2018. Id. ¶¶ 30, 32.

16

In May 2019, Apple also introduced the “MacBook Pro Display Backlight Service

17

Program,” through which Apple agreed to replace the display on all 13-inch 2016 MacBook Pro

18

models that exhibited the stage lighting effect or a total failure of the display backlight system. Id.

19

¶ 33. Under the service program, Apple will refund the owner of a 13-inch 2016 MacBook Pro

20

who paid to have the display fixed. Id. The service program covers only the 13-inch 2016

21

MacBook Pro; it does not cover the 15-inch MacBook Pro, or any MacBook Pro model released

22

after 2016. Id.

23

Plaintiffs are all owners of 15-inch 2016 MacBook Pro or MacBook Pro models released

24

after 2016 and allege that their laptops all suffered from the same backlight cable defect as the 13-

25

inch version. Id. ¶¶ 35, 41, 46, 51, 56, 61, 66, 71, 76. Plaintiffs all experienced issues with their

26

display screens, including the stage lighting effect or “vertical pink lines,” which ultimately

27

rendered their laptops inoperable. Id. ¶¶ 37, 43, 48, 53-54, 58-59, 63-64, 68, 73-74, 78-79. In all

28

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
2

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 3 of 17

1

cases, these issues manifested after the one-year warranty Apple provided expired. Compare id.

2

¶¶ 35, 41, 46, 51, 56, 61, 66, 71, 76 with id. ¶¶ 37, 43, 48, 53-54, 58-59, 63-64, 68, 73-74, 78-79.

3

II.

LEGAL STANDARD

4

A.

5

Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with enough

Rule 12(b)(6)

6

specificity to “give the defendant fair notice of what the . . . claim is and the grounds upon which

7

it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). A

8

complaint which falls short of the Rule 8(a) standard may therefore be dismissed if it fails to state

9

a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). “Dismissal under Rule
12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts

11

United States District Court
Northern District of California

10

to support a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097,

12

1104 (9th Cir. 2008). When deciding whether to grant a motion to dismiss, the Court must accept

13

as true all “well pleaded factual allegations” and determine whether the allegations “plausibly give

14

rise to an entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). The Court must also

15

construe the alleged facts in the light most favorable to the plaintiff. Love v. United States, 915

16

F.2d 1242, 1245 (9th Cir. 1989). While a complaint need not contain detailed factual allegations,

17

it “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is

18

plausible on its face.’” Ashcroft, 556 U.S. at 678 (quoting Bell Atl. Corp., 550 U.S. at 570).

19

A court generally may not consider any material beyond the pleadings when ruling on a

20

Rule 12(b)(6) motion. If matters outside the pleadings are considered, “the motion must be treated

21

as one for summary judgment under Rule 56.” Fed. R. Civ. P. 12(d). However, documents

22

appended to the complaint, incorporated by reference in the complaint, or which properly are the

23

subject of judicial notice may be considered along with the complaint when deciding a Rule

24

12(b)(6) motion. Khoja v. Orexigen Therapeutics, 899 F.3d 988, 998 (9th Cir. 2018); see also Hal

25

Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990).

26

Likewise, a court may consider matters that are “capable of accurate and ready determination by

27

resort to sources whose accuracy cannot reasonably be questioned.” Roca v. Wells Fargo Bank,

28

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
3

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 4 of 17

1

N.A., No. 15-cv-02147-KAW, 2016 WL 368153, at *3 (N.D. Cal. Feb. 1, 2016) (quoting Fed. R.

2

Evid. 201(b)).

3

B.

4

Consumer protection claims that sound in fraud are subject to the heightened pleading

Rule 9(b)

5

requirements of Federal Rule of Civil Procedure 9(b). See Vess v. Ciba-Geigy Corp. USA, 317

6

F.3d 1097, 1102 (9th Cir. 2003); San Miguel v. HP Inc., 317 F. Supp. 3d 1075, 1084 (N.D. Cal.

7

2018). Rule 9(b) requires that “a party must state with particularity the circumstances constituting

8

fraud.” Fed. R. Civ. P. 9(b). The circumstances constituting the fraud must be “specific enough to

9

give defendants notice of the particular misconduct which is alleged to constitute the fraud
charged so that they can defend against the charge and not just deny that they have done anything

11

United States District Court
Northern District of California

10

wrong.” Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). Therefore, a party alleging

12

fraud must set forth “the who, what, when, where, and how” of the misconduct. Vess, 317 F.3d at

13

1106 (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). “[I]n a case where fraud is

14

not an essential element of a claim, only allegations . . . of fraudulent conduct must satisfy the

15

heightened pleading requirements of Rule 9(b)” while “[a]llegations of non-fraudulent conduct

16

need satisfy only the ordinary notice pleading standards of Rule 8(a).” Id. at 1104–05.
With respect to Plaintiffs’ omissions-based fraud claims, “the pleading standard is lowered

17
18

on account of the reduced ability in an omission suit ‘to specify the time, place, and specific

19

content, relative to a claim involving affirmative misrepresentations.’” Barrett v. Apple Inc., No.

20

5:20-CV04812-EJD, 2021 WL 827235, at *7 (N.D. Cal. Mar. 4, 2021) (quoting In re Apple & AT

21

& TM Antitrust Litig., 596 F. Supp. 2d 1288, 1310 (N.D. Cal. 2008)); see also Falk v. Gen. Motors

22

Corp., 496 F. Supp. 2d 1088, 1099 (N.D. Cal. 2007).

23

III.

24

DISCUSSION
Plaintiffs bring claims for: (1) violation of the California Unfair Competition Law, Cal.

25

Bus. & Prof. Code §§ 17200, et seq. (“UCL”) (Count 1), (2) violation of the California Consumers

26

Legal Remedies Act, Cal. Civ. Code §§ 1761 and 1770 (“CLRA”) (Count 2), and (3) equivalent

27

deceptive trade practice laws in Alaska, Florida, Massachusetts, Michigan, Missouri, New Jersey,

28

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
4

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 5 of 17

1

Texas, and Washington (Counts 4-11) (collectively, “the Deceptive Trade Practice Claims”); and

2

(4) fraudulent concealment (Count 3). Apple seeks to dismiss all of Plaintiffs’ claims pursuant to

3

Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be

4

granted. The Court addresses each claim in turn.

5
6
7

A.

Fraud Claims
1.

Affirmative representations

Plaintiffs allege with respect to each of their fraud claims that Apple committed fraud
through affirmative representations in its 2016 promotional campaign for MacBook Pros. The

9

TAC includes the same allegations from the Second Amended Complaint (“SAC”) concerning

10

Apple’s description of the displays on the relevant MacBook Pro models as the “brightest and

11

United States District Court
Northern District of California

8

most colorful Retina display yet,” as well as an advertisement and an October 27, 2016 press

12

release stating that the new MacBook Pros had “the best Mac display ever.” Compare TAC ¶ 17

13

with Dkt. No. 30 ¶ 16. The TAC also includes new allegations of affirmative representations,

14

specifically that: (1) Apple’s promotional campaign stressed that the new display screens are the

15

best in the computer industry (TAC ¶ 17); (2) “the Retina display on the new MacBook Pro at 500

16

nits of brightness is an amazing 67 percent brighter than the previous generation, features 67

17

percent more contrast and is the first Mac notebook display to support wider color gamut” (id. ¶

18

24); and (3) Apple products will last for a minimum of four years (id. ¶ 16).

19

With respect to the allegations repeated from the SAC, the Court already determined those

20

representations to be nonactionable puffery. Dkt. No. 55 at 14–17 (citing Ahern v. Apple Inc., 411

21

F. Supp. 3d 541 (N.D. Cal. 2019)). With their current amendments, Plaintiffs seek to cure the

22

deficiencies the Court previously identified by distinguishing Ahern. Plaintiffs contend that,

23

unlike the Ahern plaintiffs, they have pled “a product design defect central to the function and

24

operation of their laptops,” not merely a defect affecting “the quality of the user experience.” Pls.’

25

Opp’n to Mot. to Dismiss Third Am. Compl. (“Opp’n”), Dkt. No. 71, at 8 (citing Ahern, 411 F.

26

Supp. 3d at 568); but see Opp’n at 9 (“Plaintiffs here plead Apple’s misrepresentations about

27

MacBook Pro monitor quality.”) (emphasis original). Plaintiffs appear to confuse Ahern’s ruling

28

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
5

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 6 of 17

1

on affirmative misrepresentations with its ruling on fraudulent concealment theories. See Ahern,

2

411 F. Supp. 3d at 568 (discussing pure omission allegations).

3

Instead, Plaintiffs contend that “[w]hen a plaintiff alleges such product ineffectiveness or

4

failure, representations about that product’s superior quality are provably false and thus not mere

5

‘puffery.’” Opp’n at 9. Plaintiffs cite Vigil v. Gen. Nutrition Corp., No. 15-CV-00079-JM-DBHx,

6

2015 WL 2338982 (S.D. Cal. May 13, 2015) and In re Bang Energy Drink Mktg. Litig., No. 18-

7

cv-05758-JST, 2020 WL 4458916 (N.D. Cal. Feb. 6, 2020) in support of this proposition. In

8

Vigil, the district court found the defendant’s statement that its male supplement “[f]ormulated

9

with premium ingredients to provide maximum potency” was not nonactionable puffery because
the statement at issue arguably promised customers that the supplement was capable of having

11

United States District Court
Northern District of California

10

some kind of effect on male potency when viewed in context with other statements on the product

12

label. 2015 WL 2338982, at *8–9 (“If Plaintiff can prove that Staminol is totally incapable of

13

doing so, this statement is provably false to the extent that it makes that representation, or at least

14

contributes to the likelihood that the packaging is deceptive as a whole.”). In Bang Energy, the

15

court found that the defendant’s use of the term “Super Creatine” was an actionable

16

misrepresentation because the defendant used it to qualify an ingredient about which it made

17

specific claims and was therefore capable of being proven true or false. 2020 WL 4458916, at *8–

18

9. Neither of these cases support Plaintiffs’ contention because they concerned statements that

19

were capable of being proven true or false. The Court finds no reason to alter its earlier finding

20

that the statements that the laptops are “revolutionary,” “groundbreaking,” offer “breakthrough

21

performance,” and contain “the best Mac display ever” are subjective and immeasurable assertions

22

and thus constitute nonactionable puffery. Dkt. No. 55 at 17.

23

Turning to the new allegations in the TAC, the Court first addresses the allegation that

24

“APPLE’s promotional campaign for the MacBook Pros stressed that the new display screens are

25

the best in the computer industry.” TAC ¶ 17. The Court perceives this allegation as an attempt to

26

plead an actionable statement akin to those in Beyer v. Symantec Corp., 333 F. Supp. 3d 966 (N.D.

27

Cal. 2018). The Court previously rejected Plaintiffs’ comparison to Beyer, finding that “the

28

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
6

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 7 of 17

1

statement that the MacBook Pro display is ‘the best Mac display ever’ does not imply Apple’s

2

adherence to industry best practices,” as it only compares the display to other Macs. Dkt. No. 55

3

at 16–17. This additional allegation does not support Plaintiffs’ case, however, as the TAC does

4

not contain any actual examples of or quotations from Apple making such a representation. The

5

only example of Apple’s promotional campaign that Plaintiffs provide is the October 2016 press

6

release1, which says nothing about the new MacBook Pro display being the best in the computer

7

industry. Plaintiffs do not address this inconsistency in their opposition brief. See Opp’n. The

8

Court thus finds no factual basis for such an allegation.
With respect to the statement about the Retina display, the Court previously held that this

9

statement was the only actionable statement from the 2016 MacBook Pro advertisement cited in

11

United States District Court
Northern District of California

10

the SAC, because it consisted of more specific statements about the objective characteristics of the

12

MacBook Pro display capable of being proven false. Dkt. No. 55 at 17. However, the Court noted

13

that Plaintiffs had not alleged that those statements were false:

14

Nothing about this Alleged Defect relates to the thickness,
brightness, or color gamut of the MacBook display touted in the
quoted advertisement. Because Plaintiffs do not allege that the
statements in the advertisements are false or that they would lead a
reasonable consumer to draw inaccurate conclusions about the
reliability of useful life of the display, the court dins that these
statements are not affirmative misrepresentations sufficient to
support Plaintiffs’ fraud claims.

15
16
17
18
19
20
21

Id. The TAC asserts that the advertisement’s “representations about the purportedly exceptional
brightness and quality of the MacBook Pro displays, however, are ultimately false,” and that the
Alleged Defect is “the complete opposite of the bright, clear, sharp display APPLE represents it to
be.” TAC ¶ 24. But those allegations still say nothing about the thickness, brightness, or color

22
gamut of the MacBook display. Moreover, Apple argues, Plaintiffs have not alleged any facts
23
suggesting that these statements were false at the time they were made or at the time of sale. Mot.
24
at 8–9 (citing In re Sony Grand Wega KDF-E A10/A20 Series Rear Projection HD TV Television
25
26
27
28

1

Judicial notice of the October 2016 press release is proper, as the release is incorporated in the
complaint. TAC ¶ 17 n.2; Khoja, 899 F.3d at 998.
Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
7

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 8 of 17

1

Litig., 758 F. Supp. 2d 1077, 1090 (S.D. Cal. 2010)). Plaintiffs do not directly address this issue

2

in their opposition brief and do not point to any facts suggesting otherwise. Opp’n at 9.
Last, with respect to the new allegation that Apple represents its products as lasting for a

3
4

minimum of four years, the Court finds that the TAC’s allegations mischaracterize Apple’s

5

statement. The webpage cited as the source of the statement is entitled, “Additional Questions:

6

More answers to your questions about Apple and the environment,” and it appears in the

7

“Environment” section of Apple’s website.2 Apple Inc., Environment – Answers – Apple,

8

Apple.com, https://www.apple.com/environment/answers/ (last visited July 17, 2021). The

9

relevant portion of the webpage reads:

10

2. How does Apple conduct its Product Greenhouse Gas Life Cycle
Assessment?

United States District Court
Northern District of California

11
12

Apple uses five steps when conducting a product life cycle
assessment (LCA):

13

...

14

2. To model customer use, we measure the power consumed by a
product while it is running in a simulated scenario. Daily usage
patterns are specific to each product and are a mixture of actual
and modeled customer use data. For the purposes of our
assessment, years of use, which are based on first owners, are
modeled to be four years for macOS and tvOS devices and three
years for iOS, iPadOS and watchOS devices. Most Apple
products last longer and are often passed along, resold, or
returned to Apple by the first owner for others to use. More
information on our product energy use is provided in our
Product Environmental Reports.

15
16
17
18
19
20

Id. A review of this webpage reveals that the purported four-year lifespan representation concerns

21

modeling assumptions Apple made for the purposes of engaging in an environmental assessment

22

of greenhouse gas emissions resulting from Apple products. Id. Using a particular model for

23

environmental assessment purposes is not equivalent to guaranteeing a product lifespan of four

24

years without repair. It is simply not plausible that a consumer considering whether to purchase a

25
26
27
28

2

Judicial notice of the webpage is proper, as the statement appearing on the page is incorporated
in the complaint. TAC ¶ 16; Khoja, 899 F.3d at 998.
Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
8

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 9 of 17

1

MacBook Pro would seek technical information about the laptop’s specifications from the portion

2

of Apple’s website addressing frequently asked questions about its environmental practices.

3

Moreover, the Court cannot reasonably infer that Plaintiffs actually viewed the environmental

4

questions webpage and relied on it. The TAC alleges that each plaintiff “saw advertisements and

5

marketing materials on APPLE’s website in which APPLE represented the MacBook had the best

6

display to date.” TAC ¶¶ 36, 42, 47, 52, 57, 62, 67, 72, 77. The environmental questions webpage

7

cannot be fairly described as an advertisement or marketing material, and it says nothing at all

8

about the MacBook in particular, much less that it had “the best display to date.”

9

Accordingly, the Court finds that Plaintiffs have not stated any fraud claims based on
affirmative misrepresentations.

11

United States District Court
Northern District of California

10

2.

Fraud by omission

12

Plaintiffs’ fraudulent concealment and various Deceptive Trade Practice Claims all stem

13

from the contention that Apple failed to disclose the Alleged Defect in the MacBook Pros. “To

14

state a claim for fraudulent omission, the omission must be contrary to a representation actually

15

made by the defendant, or an omission of a fact the defendant was obliged to disclose.” In re

16

Apple Inc. Device Performance Litig. (In re Apple II), 386 F. Supp. 3d 1155, 1175 (N.D. Cal.

17

2019) (internal citation omitted) (emphasis added). “When a defect does not relate to an

18

unreasonable safety hazard, a defendant has a duty to disclose when (1) the omission is material;

19

(2) the defect is central to the product’s function; and (3) at least one of the following four factors

20

is met: the defendant is the plaintiff’s fiduciary; the defendant has exclusive knowledge of material

21

facts not known or reasonably accessible to the plaintiff; the defendant actively conceals a material

22

fact from the plaintiff; or the defendant makes partial representations that are misleading because

23

some other material fact has not been disclosed.” Id. at 1176.

24

Apple now contends that no duty to disclose exists where the defect arises only after

25

expiration of the warranty period, and that such an omission is not material (and thus not

26

actionable) as a matter of law except when the defect poses a safety hazard. Mot. at 12–17. The

27

Court’s previous ruling did not address this warranty argument, which Apple made only obliquely

28

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
9

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 10 of 17

1

with respect to the fraud by omission claims.3 See Dkt. No. 33 at 14–19.
As the Ninth Circuit and other courts in this District have acknowledged, “[t]he state of the

2

law on the duty to disclose under California law is in some disarray.” In re Apple Inc. Device

4

Performance Litig. (In re Apple I), 347 F. Supp. 3d 434, 458 (N.D. Cal. 2018). In 2012, the Ninth

5

Circuit concluded based on California state law that in the absence of affirmative

6

misrepresentations, a plaintiff must “allege that the design defect caused an unreasonable safety

7

hazard.” Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1141 (9th Cir. 2012) (citing Daugherty

8

v. Am. Honda Motor Co., 144 Cal. App. 4th 824 (2006)); see also Williams v. Yamaha Motor Co.,

9

851 F.3d 1015, 1026 (9th Cir. 2017) (citing Wilson as “holding that where a defendant has not

10

made an affirmative misrepresentation, a plaintiff must allege the existence of an unreasonable

11

United States District Court
Northern District of California

3

safety hazard”). However, in 2015, the California Court of Appeal appeared to suggest that a

12

plaintiff pursuing a fraudulent omission claim need not always plead an unreasonable safety

13

hazard. See Rutledge v. Hewlett-Packard Co., 238 Cal. App. 4th 1164 (2015) (allowing

14

consumer-protection claims to proceed even without “defects related to safety concerns”). More

15

recently, in 2018, the Ninth Circuit recognized this tension in the cases but declined to decide

16

whether the safety-hazard requirement applies in all circumstances. See Hodsdon v. Mars, 891

17

F.3d 857, 861–62 (9th Cir. 2018) (“While the recent California cases do cast doubt on whether

18

Wilson’s safety-hazard requirement applies in all circumstances, we have no occasion in this case

19

to consider whether the later state-court cases have effectively overruled Wilson.”).
However, the Ninth Circuit does not appear to have directly addressed the question of

20
21

whether a duty to disclose exists when the alleged defect arises only after a limited warranty

22

period expires. The last direct word from the Ninth Circuit on the subject appears in Wilson,

23
24
25
26
27
28

Apple moved for leave to file a motion for reconsideration of the Court’s prior order granting in
part and denying in part Apple’s motion to dismiss the SAC, arguing that the Court committed
manifest error by not considering the warranty argument in analyzing Plaintiffs’ fraudulent
omission claims. Dkt. No. 59. In view of the operative TAC and the fact that the Court is now
considering what would presumably be Apple’s same arguments on the issue, the motion for leave
to file a motion for reconsideration is DENIED as moot.
3

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
10

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 11 of 17

1

which states that “California federal courts have generally interpreted Daugherty as holding that

2

‘[a] manufacturer’s duty to consumers is limited to its warranty obligations absent either an

3

affirmative misrepresentation or a safety issue.’” 668 F.3d at 1141 (quoting Oestreicher v.

4

Alienware Corp., 322 F. App’x 489, 493 (9th Cir. 2009)). Plaintiffs contend that Rutledge and

5

Hodsdon have rejected Wilson’s strict “safety hazard” pleading requirement altogether in omission

6

cases, and that the expiration of a limited warranty period is otherwise irrelevant. Opp’n at 2–6.

7
8
9
10

United States District Court
Northern District of California

11
12
13
14
15
16

The Court disagrees with Plaintiffs’ reading of Rutledge and Hodsdon. In Rutledge, the
California Court of Appeals stated:
HP argues Degenshein and class members similar to him do not
have a claim for fraudulent concealment under the UCL, because
they received notebooks with inverters that functioned for the
duration of the one-year warranty, and were not damaged by HP’s
alleged failure to disclose the fact of the faulty inverter. However, a
claim for fraudulent business practices reflects the UCL’s focus on
the defendant’s conduct, rather than the plaintiff’s damages, in
service of the statute’s larger purpose of protecting the general
public against unscrupulous business practices. The question under
the UCL is related to HP’s conduct in failing to disclose the faulty
inverter, not on whether the notebook’s computer functioned for
one-year. HP’s argument that the expiration of the warranty period
precludes a claim for fraudulent concealment under the UCL is
incorrect.

17

238 Cal. App. 4th at 1175. As Apple correctly observes, the individual Rutledge plaintiff

18

mentioned above experienced the defect prior to the warranty expiration, and the plaintiff who

19

only experienced the defect after the warranty period expired adequately alleged reliance on an

20

affirmative representation. Id. at 1171, 1176 (“Degenshein experienced problems with his display

21

screen blacking out shortly before the expiration of his one-year warranty . . . .”). Rutledge does

22

not appear to stand for the proposition that the expiration of the warranty period is irrelevant to a

23

materiality analysis. Indeed, the Ninth Circuit expressly acknowledged that one possible reading

24

of Rutledge is that “there is a duty to disclose defects that go to the central function of the product

25

and which arise during the warranty period.” Hodsdon, 891 F. Supp. 3d at 863 (emphasis added).

26

Plaintiffs’ proposed application of Rutledge would run afoul of longstanding public policy against

27

disregarding a warranty’s limits. See, e.g., Williams, 851 F.3d at 1029 (“[T]he fact that the alleged

28

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
11

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 12 of 17

1

defect concerns premature, but usually post-warranty, onset of a natural condition raises concerns

2

about the use of consumer fraud statutes to impermissibly extend a product’s warranty period.”);

3

In re Apple II, 386 F. Supp. 3d at 1178 (“California law is clear that its consumer fraud statutes

4

cannot be used to extend a product’s warrant[y].”); Collins v. eMachines, Inc., 202 Cal. App. 4th

5

249, 257 (2011) (“To allow a CLRA claim in these circumstances would be to supplant warranty

6

law; failure of a product to last forever would become a defect and a manufacturer would no

7

longer be able to issue limited warranties.”) (internal quotation and citation omitted).

8
9

District courts within the Ninth Circuit—including the Northern District of California—
discussing the issue post-Rutledge and -Hodsdon have repeatedly held that “a manufacturer has a
duty to disclose any defects that fall within the warranty period, whether relating to safety or to

11

United States District Court
Northern District of California

10

costly repairs, that would have caused the consumer to not purchase the [product] if they had been

12

disclosed.” Baranco v. Ford Motor Co., 294 F. Supp. 3d 950, 960 (N.D. Cal. 2018) (quoting

13

Apodaca v. Whirlpool Corp., No. 13-00725 JVS (ANx), 2013 WL 6477821, at *7 (C.D. Cal. Nov.

14

8, 2013)) (internal quotation marks omitted); see also Sloan v. Gen. Motors LLC, 287 F. Supp. 3d

15

840 (N.D. Cal. 2018), order clarified, No. 16-CV-07244-EMC, 2018 WL 1156607 (N.D. Cal.

16

Mar. 5, 2018), and on reconsideration, 438 F. Supp. 3d 1017 (N.D. Cal. 2020) (same); In re Apple

17

II, 386 F. Supp. 3d at 1178–79 (alleged defect was not material where plaintiffs did not allege that

18

it occurred on devices still under warranty); Zuehlsdorf v. FCA US LLC, No.

19

EDCV181877JGBKKX, 2019 WL 2098352, at *9 (C.D. Cal. Apr. 30, 2019) (noting that

20

“different rules [apply] to claims based on defects that manifest during the warranty period versus

21

after the warranty period”); Loo v. Toyota Motor Sales, USA, Inc., No. 819CV00750VAPADSX,

22

2019 WL 7753448, at *10 (C.D. Cal. Dec. 20, 2019) (acknowledging different materiality

23

standard based on warranty status). But if the defect arises outside of the warranty period,

24

however, then the manufacturer only has a duty to disclose “safety issues.” Baranco, 294 F. Supp.

25

3d at 960; Sloan, 287 F. Supp. 3d at 869 (“With respect to defects that manifested only after the

26

warranty period, Plaintiffs must allege that the defect poses an unreasonable safety hazard.”).

27

“The purpose of this limitation in the post-warranty context is to ensure that durational limits on

28

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
12

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 13 of 17

1

express warranties are not rendered meaningless.” Baranco, 294 F. Supp. 3d at 960; Sloan, 287 F.

2

Supp. 3d at 869.

3

Here, Plaintiffs do not allege that the defect arose before the expiration of the warranty

4

period. See TAC ¶¶ 37, 43, 48, 53-54, 58-59, 63-64, 68, 73-74, 78-79. Consequently, Apple only

5

had a duty to disclose safety issues. Baranco, 294 F. Supp. 3d at 960; Sloan, 287 F. Supp. 3d at

6

869; see also Hodsdon, 891 F. Supp. 3d at 863. Plaintiffs have not alleged that the Alleged Defect

7

presented any particular safety hazard. Accordingly, the Court finds that Plaintiffs have not

8

adequately stated a claim as to the omission-based Deceptive Trade Practice Claims and

9

fraudulent concealment claim.

10

United States District Court
Northern District of California

11
12

B.

UCL Claim
1.

“Unfair” prong

“Under the unfairness prong of the UCL, a practice may be deemed unfair even if not

13

specifically proscribed by some other law.” In re Carrier IQ, Inc., 78 F. Supp. 3d 1051, 1115

14

(N.D. Cal. 2015) (internal citation omitted). California courts have developed at least two tests for

15

“unfairness” within the meaning of the UCL: “(1) the tethering test, which requires that the public

16

policy which is a predicate to a consumer unfair competition action under the unfair prong of the

17

UCL must be tethered to specific constitutional, statutory, or regulatory provisions” and “(2) the

18

balancing test, which examines whether the challenged business practice is immoral, unethical,

19

oppressive, unscrupulous or substantially injurious to consumers and requires the court to weigh

20

the utility of the defendant’s conduct against the gravity of the harm to the alleged victim.”

21

Herskowitz v. Apple Inc., 940 F. Supp. 2d 1131, 1145–46 (N.D. Cal. 2013).

22

With respect to the tethering test, Plaintiff Taleshpour alleges that Apple’s conduct is

23

unfair because it violates California public policy of “requiring a manufacturer to ensure that

24

goods it places on the market are fit for their ordinary and intended purposes.” TAC ¶ 96. In

25

other words, he pleads that Apple’s conduct violated the public policy legislatively declared in the

26

CLRA. For the reasons described above, however, the Court finds that Taleshpour has not stated a

27

claim under the CLRA and therefore has not alleged any violation of public policy. See supra

28

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
13

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 14 of 17

1
2

Section III.A.
With respect to the balancing test, Taleshpour argues that he pleads facts sufficient to state

3

a claim based on Apple’s purported representation that MacBook Pro laptops have a minimum

4

lifespan of four years. Opp’n at 10–11 (citing TAC ¶¶ 97, 100). Under the balancing test, an act

5

or practice is “unfair” if “the consumer injury is substantial, is not outweighed by any

6

countervailing benefits to consumers or to competition, and is not an injury the consumers

7

themselves could have reasonably avoided.” Tietsworth v. Sears, 720 F. Supp. 2d 1123, 1137

8

(N.D. Cal. 2010) (quoting Daugherty, 144 Cal. App. 4th at 839) (internal quotation marks

9

omitted). This test typically requires a fact intensive inquiry, not conducive to resolution at the
motion to dismiss phase. See In re MacBook Keyboard Litig., No. 5:18-cv-02813-EJD, 2019 WL

11

United States District Court
Northern District of California

10

1765817, at *9 (N.D. Cal. Apr. 22, 2019). As discussed above, the Court finds the allegations

12

concerning the alleged four-year lifespan are not plausible. See supra Section III.A.1.

13

Moreover, a “[f]ailure to disclose a defect that might shorten the effective life span of a

14

component part to a consumer product does not constitute a ‘substantial injury’ under the unfair

15

practices prong of the UCL where the product functions as warranted throughout the term of its

16

express warranty.” In re Sony Grand Wega, 758 F. Supp. 2d at 1091; see also Clemens v.

17

DaimlerChrysler Corp., 534 F.3d 1017, 1026–27 (9th Cir. 2008); Daugherty, 144 Cal. App. 4th at

18

838–39. Taleshpour did not experience the Alleged Defect until well after the one-year limited

19

warranty expired. TAC ¶¶ 35, 37.

20
21
22
23

Accordingly, the Court finds that Taleshpour has not adequately pled a substantial injury
and thus does not state a claim under the unfair prong of the UCL.
2.

“Unlawful” prong

Plaintiffs’ claim under the unlawful prong of the UCL is based on their CLRA claim. TAC

24

¶ 94. Because Plaintiffs failed to state a viable claim under the CLRA, they have also “failed to

25

state a claim under the ‘unlawful’ prong of the UCL.” In re MacBook Keyboard Litig., 2019 WL

26

1765817, at *8–9 (citing McKinney v. Google, Inc., No. 5:10-CV-01177 EJD, 2011 WL 3862120,

27

at *7 (N.D. Cal. Aug. 30, 2011)). Accordingly, the Court dismisses Plaintiffs’ UCL claim brought

28

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
14

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 15 of 17

1

under the unlawful prong.

2

C.

3

Apple provides additional argument as to why Plaintiff Stewart fails to state a claim under

New Jersey Consumer Fraud Act Claim

4

the New Jersey Consumer Fraud Act (“NJCFA”). Mot. at 19–20. To state an actionable NJCFA

5

claim, a plaintiff must allege facts establishing three elements: (1) unlawful conduct by the

6

defendant; (2) an ascertainable loss on the part of the plaintiff; and (3) a causal relationship

7

between the defendant’s unlawful conduct and the plaintiff’s ascertainable loss. Duffy v. Samsung

8

Elecs. Am., Inc., No. CIV. 06–5259 (DRD), 2007 WL 703197, at *6 (D.N.J. Mar. 2, 2007); see

9

also Int’l Union of Operating Eng. Local No. 68 Welfare Fund v. Merck & Co., Inc., 929 A.2d

10

United States District Court
Northern District of California

11

1076, 1086 (N.J. 2007).
Apple first contends that Plaintiffs have not alleged unlawful conduct. Plaintiffs disagree,

12

relying in part on their allegations regarding Apple’s representation of a four-year lifespan. Opp’n

13

at 12–13. For the reasons described above, those allegations are not plausible. See supra Section

14

III.A.1. Moreover, “unless a defendant manufacturer knows with certainty that a product will fail,

15

it does not violate the NJCFA by failing to inform its consumers of the possibility of failure.”

16

Dawson v. General Motors LLC, 2019 WL 3283046, at *5–6 (D.N.J. July 22, 2019); see also

17

Priano-Keyser v. Apple Inc., No. 19-09162 (KM)(MAH), 2019 WL 7288941, at *8 (D.N.J. Dec.

18

30, 2019) (noting that “[t]o support a [NJ]CFA cause of action for fraud in the context of a

19

warranted defect, a plaintiff must show that the manufacturer was not in good faith insuring

20

against a risk, but that it actually knew with certainty that the product at issue or one of its

21

components was going to fail”) (internal quotation marks omitted); Mickens v. Ford Motor Co.,

22

900 F. Supp. 2d 427, 442 (D.N.J. 2012) (“In cases . . . where an allegedly defective product was

23

covered by a warranty, [a] claim that a defect may, but has not, manifested itself until after the

24

expiration of the warranty period cannot form the basis of a claim under the [NJ]CFA. Rather, a

25

plaintiff must sufficiently allege that the defendant manufacturer knew with certainty that the

26

product at issue or one of its components was going to fail.”) (emphasis original; internal

27

quotation marks omitted). Here, the TAC does not contain any allegations that Apple knew with

28

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
15

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 16 of 17

1
2

certainty that the Alleged Defect would manifest.
Apple also argues that Plaintiffs are unable to allege ascertainable loss, because “failure of

3

a product after its warranty is not an ascertainable loss under the NJCFA.” Mot. at 20 (citing

4

Duffy, 2007 WL 703197, at *8; Nobile v. Ford Motor Co., No. 10–1890 (PGS), 2011 WL 900119,

5

at *5–6 (D.N.J. Oct. 1, 2012)). “[A] plaintiff cannot demonstrate ‘ascertainable loss’ under the

6

NJCFA where the allegedly defective [ ] component outperforms its warranty period.” Davidson

7

v. Apple, Inc., No. 16-cv-4942-LHK, 2017 WL 3149305, at *16 (N.D. Cal. Jul 25, 2017) (quoting

8

In re Porsche Cars N.A., Inc., 880 F. Supp. 2d 801, 857 (S.D. Ohio 2012)) (internal quotation

9

marks omitted); see also Mickens, 900 F. Supp. 2d at 442 (“[W]here an allegedly defective
product was covered by a warranty, [a] claim that a defect may, but has not, manifested itself until

11

United States District Court
Northern District of California

10

after the expiration of the warranty period cannot form the basis of a claim under the [NJ]CFA.”).

12

Here, Plaintiff Stewart did not experience the Alleged Defect until well after the warranty period

13

ended and therefore cannot plead an ascertainable loss. TAC ¶¶ 66, 68; Davidson, 2017 WL

14

3149305, at *16 (“Plaintiffs cannot state a claim under the NJCFA because the only New Jersey

15

Plaintiff experienced the touchscreen defect after the expiration of the 1-year Limited Warranty

16

period.”).

17

Accordingly, the Court dismisses the NJCFA claim.

18

D.

19

While leave to amend generally is granted liberally, the Court has discretion to dismiss a

Leave to Amend

20

claim without leave to amend if amendment would be futile. Manzarek v. St. Paul Fire & Marine

21

Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008); Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1051

22

(9th Cir. 2008) (“Dismissal without leave to amend is proper if it is clear that the complaint could

23

not be saved by amendment.”).

24

With respect to the fraud claims based on affirmative representations, the Court finds that

25

leave to amend would be futile and prejudicial to Apple, given that Plaintiffs have amended their

26

complaint three times already. Leadsinger, Inc. v. BMF Music Publ’g, 512 F.3d 522, 532 (9th Cir.

27

2008) (“The decision of whether to grant leave to amend nevertheless remains within the

28

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
16

Case 5:20-cv-03122-EJD Document 75 Filed 07/19/21 Page 17 of 17

1

discretion of the district court, which may deny leave to amend due to ‘undue delay, bad faith or

2

dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments

3

previously allowed, undue prejudice to the opposing party by virtue of allowance of the

4

amendment, [and] futility of amendment.’”) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).

5

With respect to the fraud claims based on fraud by omission, the Court grants Plaintiffs leave to

6

amend to plead a safety hazard arising out of the Alleged Defect. The Court further grants

7

Plaintiffs leave to amend the NJCFA claim to plead facts suggesting that Apple knew with

8

certainty that the Alleged Defect would occur.

9

IV.

10

United States District Court
Northern District of California

11
12
13

CONCLUSION
For the foregoing reasons, the Court GRANTS Apple’s motion to dismiss with limited

leave to amend. Plaintiffs shall file an amended complaint by August 2, 2021.
IT IS SO ORDERED.
Dated: July 19, 2021

14
15
16

EDWARD J. DAVILA
United States District Judge

17
18
19
20
21
22
23
24
25
26
27
28

Case No.: 5:20-cv-03122-EJD
ORDER GRANTING MOT. TO DISMISS 3D AM. COMPL.
17