In Re Toyota Motor Corp.
785 F. Supp. 2d 883
C.D. Cal.2011Background
- Foreign Plaintiffs allege economic loss from Toyota vehicles with alleged SUA defects; AFELMCC asserts federal and California law claims (RICO, CLRA, UCL, FAL, warranties, fraud, negligence, etc.).
- Two separate motions to dismiss were filed: one under Rule 19 for failure to join indispensable parties, and one under Rule 12(b)(6) for failure to state a claim; TMCC is dismissed with prejudice.
- Court found AFELMCC lacks Article III standing for the foreign Plaintiffs because alleged market effects centered in the United States and fail to show injury-in-fact in home countries.
- Court held unnamed foreign entities are necessary and indispensable under Rule 19(a) and, because the court lacks personal jurisdiction over them, the AFELMCC must be dismissed for nonjoinder.
- Because many claims premised on manufacture/sale of foreign-assembled vehicles involve U.S. Defendants, the court dismissed those contract/warranty claims to the extent they rely on sale/lease of a defective vehicle; unjust enrichment claim also dismissed.
- Court granted leave to replead certain dismissed claims within 60 days and required an offer of proof addressing joinder, manufacturing ties, and potential repleading against TEMA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of foreign Plaintiffs | AFELMCC alleges injury from global market effects and SUA publicity. | No Article III injury-in-fact tied to U.S.-centric market effects; standing lacking. | AFELMCC dismissed for lack of standing. |
| Rule 19 joinder of indispensable foreign parties | Unnamed foreign entities should not be indispensable; can be defended in home countries. | Unnamed entities are necessary to afford complete relief and protect their interests. | AFELMCC dismissed under Rule 19 as joinder is infeasible. |
| Pleading plausibility against U.S. Defendants and extraterritoriality | U.S. Defendants caused worldwide SUA issues; claims plausible. | Claims premised on foreign manufacture/sale are implausible against U.S. Defendants; agency/alter-ego pleadings insufficient. | Fifth–ninth causes of action dismissed to the extent premised on sale/lease of foreign vehicles; paragraph alleging agency/alter-ego struck; unjust enrichment dismissed. |
| Extraterritorial application of RICO, MMA, CLRA/UCL/FAL | Conduct in California and U.S. entities affect foreign Plaintiffs abroad; statutes apply extraterritorially. | RICO, MMA, CLRA/UCL/FAL have no extraterritorial reach; Morrison framework applies. | RICO claims dismissed (extraterritoriality); MMA claims dismissed; CLRA/UCL/FAL claims dismissed for lack of California-connected conduct and Rule 9(b) deficiencies; FAL dismissed. |
| RICO pleading sufficiency | Predicate acts alleged against Toyota and affiliates; enterprise properly alleged. | Lacked specific time/place/role of each defendant; § 1962(a)-(d) elements not adequately pled. | RICO claim dismissed; potential leave to replead under § 1962(c)/(d) granted, but § 1962(a)/(b)/(d) dismissed with prejudice. |
Key Cases Cited
- Morrison v. Nat'l Australia Bank Ltd., 130 S. Ct. 2869 (2010) (presumption against extraterritorial application; focus on domestic focus of statute)
- Norex Petrol., Ltd. v. Access Indus., Inc., 631 F.3d 29 (2d Cir. 2010) (RICO extraterritorial reach is silent; applies where appropriate focus on enterprise)
- Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158 (1993) (distinctness of RICO enterprise from person required)
- Twombly, 550 U.S. 544 (2007) (plausibility standard; mere recital of elements insufficient)
- Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) (heightened pleading requiring plausible claims supported by facts)
- Norwest Mortgage, Inc. v. Superior Court, 72 Cal.App.4th 214 (1999) (California standing/connection requirements for nonresidents (UCL/FAL))