294 F. Supp. 3d 950
N.D. Cal.2018Background
- Plaintiffs (owners of certain 2011–2016 Ford and Lincoln models) allege a design defect in the door-latch switch/BCM wetting-current system that allows contact contamination, causing false "door ajar" warnings, failure of autolock, interior lights to remain on, battery drain, and occasional doors opening while driving.
- Ford issued a 2014 Technical Service Bulletin instructing dealers to "burn the wires" (a cleaning/work‑around) and later recommended full latch assembly replacement often after warranty expiration; thousands of complaints and warranty claims were alleged and NHTSA investigated and closed without requiring a recall.
- Plaintiffs assert state consumer‑fraud claims (failure to disclose), breach of express warranty (inadequate repairs and unconscionable durational limit), and breach of implied warranty (merchantability); multiple named plaintiffs from different states with differing purchase facts.
- Ford moved to dismiss under Rules 12(b)(6) and 9(b), arguing plaintiffs failed to plead required elements: materiality/knowledge of safety risk, reliance under state laws, adequate notice for warranty claims, privity for implied warranty, and statute‑of‑limitations/unconscionability for express warranty durational limits.
- The court denied dismissal of most consumer‑fraud and implied‑warranty claims (finding plausible defect, materiality, safety risk, and agency/privity in many instances), but: (1) granted dismissal of all express‑warranty claims (holding Ford’s "burn the wires" repairs satisfied the warranty’s remedy language), (2) dismissed certain plaintiffs’ consumer‑fraud and implied‑warranty claims for pleading defects (reliance, notice, privity) with leave to amend, and (3) dismissed some claims as time‑barred without leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to disclose / materiality (post‑warranty) | Ford knew of defect; nondisclosure of defect that creates unreasonable safety risk is actionable | Plaintiff must allege Ford knew defect was safety‑related or violated a specific safety standard | Court: plaintiffs need only plead manufacturer knew of defect and that defect posed an unreasonable safety risk; no need to plead Ford’s subjective belief or specific regulatory violation — DENIED dismissal |
| Reliance under state consumer‑fraud laws (CA, IL, NC, etc.) | Omission claims can be shown by plausible channels of disclosure (dealerships, advertising); reliance can be inferred if material | Plaintiffs must plead actual receipt of defendant communications/advertising to show reliance | Court: Varies by state — allowed for plaintiffs who bought from dealers (inference), dismissed (with leave) for those who bought privately or failed to plead channels; some dismissals without leave where fatal (e.g., Kubber NY time‑barred) |
| Express warranty (adequacy of dealer repair; durational limit) | "Burn the wires" was temporary and thus breach; 3yr/36k mile limit unconscionable given latent defect | Warranty promises repair/adjustment only; temporary fixes that remedy malfunction during warranty satisfy terms; durational limits not unconscionable as a matter of law | Court: All express‑warranty claims DISMISSED (no leave) — Ford’s repair/adjustment complied with warranty; unconscionability challenge failed |
| Implied warranty / privity and merchantability | Vehicles are unmerchantable due to safety/unreliability from defect; dealership agency supplies privity | Plaintiffs lack vertical privity (purchased from third parties) or failed to give pre‑suit notice; some claims time‑barred | Court: Implied‑warranty survives for plaintiffs who plausibly allege dealer agency or gave timely notice; dismissed (with leave) where privity/notice lacking; Michigan claim time‑barred no leave |
Key Cases Cited
- Cousins v. Lockyer, 568 F.3d 1063 (9th Cir.) (pleading standard at motion to dismiss)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility pleading standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading requirement of plausibility)
- Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir.) (Rule 9(b) applies to nondisclosure consumer fraud claims)
- Daniel v. Ford Motor Co., 806 F.3d 1217 (9th Cir.) (actual reliance in omission claims; dealer communications can satisfy disclosure channel requirement)
- Williams v. Yamaha Motor Co. Ltd., 851 F.3d 1015 (9th Cir.) (post‑warranty duty to disclose requires manufacturer knowledge of defect and unreasonable safety hazard)
- In re MyFord Touch Consumer Litig., 46 F. Supp. 3d 936 (N.D. Cal.) (materiality/unreasonable safety risk evaluated from reasonable consumer perspective; sudden malfunction can support claim)