440 F.Supp.3d 1157
S.D. Cal.2020Background
- Hsieh purchased a 2018 Jeep Grand Cherokee covered by an express written warranty and experienced repeated engine problems (popping, engine failure while driving, loss of power, no-starts).
- Hsieh alleges defendants (FCA US LLC and Stericycle, Inc.) failed to repair, replace, or provide restitution during the warranty period.
- Hsieh filed suit in state court asserting 13 causes of action (Song-Beverly Act claims, breach of express and implied warranty, Magnuson-Moss, various fraud, negligent misrepresentation, negligence, UCL, and conspiracy); defendants removed to federal court.
- Stericycle moved to dismiss and sought judicial notice that it is not an automobile manufacturer (based on its website); FCA moved to dismiss the tort causes of action.
- The court denied Stericycle’s request for judicial notice of its website and, because the complaint alleges Stericycle is a manufacturer, allowed the Song-Beverly Act claims to proceed against Stericycle.
- The court held FCA’s tort-based claims (claims 7–11) are barred by California’s economic-loss rule and dismissed those tort claims without leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Judicial notice of Stericycle’s business/manufacturer status | Hsieh alleges Stericycle is a manufacturer in the complaint | Stericycle asked the court to judicially notice its website to show it is not a manufacturer | Court denied RJN; declined to take judicial notice of Stericycle’s website content |
| Viability of Song-Beverly Act claims against Stericycle | Stericycle is a manufacturer as alleged, so Song-Beverly claims are proper | Stericycle argued it is not a manufacturer and sought dismissal | Because complaint alleges Stericycle is a manufacturer, Song-Beverly claims survive Stericycle’s motion |
| Whether tort-based claims are barred by economic-loss rule | Hsieh urged Robinson exception and sought leave to amend; alleged safety risks | FCA argued tort claims seek only economic losses tied to the product and are barred by the economic-loss rule | Court held tort claims (7–11) are barred; Robinson exception inapplicable (claims are omissions and not independent affirmative misrepresentations); dismissed without leave to amend |
| Leave to amend tort claims | Hsieh requested leave to amend to clarify allegations | Defendants argued amendment would be futile | Court denied leave to amend for the tort claims as futile |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must contain factual allegations sufficient to state a plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (applies plausibility standard to dismiss legal conclusions)
- Robinson Helicopter Co. v. Dana Corp., 34 Cal.4th 979 (2004) (narrow exception to the economic-loss rule for reliance on affirmative misrepresentations that cause exposure to personal liability)
- North Am. Chem. Co. v. Superior Court, 59 Cal.App.4th 764 (1997) (economic-loss rule bars tort recovery for purely economic losses from defective products)
- Victaulic Co. v. Tieman, 499 F.3d 227 (3d Cir. 2007) (cautions against taking judicial notice of corporate website content)
- Ladore v. Sony Computer Entm't Am., 75 F.Supp.3d 1065 (N.D. Cal. 2014) (refused judicial notice of online materials; discussed economic-loss applications)
- Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988 (9th Cir. 2018) (limits judicial notice of disputed facts in public records)