890 F. Supp. 2d 1210
C.D. Cal.
2011
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Background

  • Plaintiffs allege a braking defect in Model Year 2010 Prius and 2010 Lexus HS 250h ABS that increases stopping distance on rough or slick surfaces.
  • Vehicles were manufactured January 2009 to February 2010; Toyota voluntarily recalled in February 2010 and offered a software update.
  • Plaintiffs claim Toyota knew of the defect since July 2009 but concealed it and advertised safety and reliability.
  • Plaintiffs seek relief under CLRA, UCL, FAL, plus breach of implied warranty of merchantability and breach of contract.
  • Toyota moves to dismiss under Rule 12(b)(6) for mootness and primary jurisdiction, and to strike portions of the complaint; also seeks denial of class certification.
  • Court denies dismissal on mootness/primary jurisdiction grounds in most respects and grants in limited part the motion to strike.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Does the recall moot the CLRA/UCL/FAL damages claims? Recall did not cure the defect and may not moot damages claims. Voluntary recall moots damages claims under CLRA §1780(b). Recall does not moot CLRA/UCL damages claims at pleading stage.
Is there a heightened pleading requirement under Rule 9(b) for CLRA/UCL/FAL claims? Fraud-based omissions and misrepresentations are pled with particularity. Claims lack the required specificity under Rule 9(b). Plaintiffs' CLRA/UCL/FAL claims meet Rule 9(b) particularity requirements.
Whether CLRA claim is pled for fraudulent omissions and duty to disclose. Toyota knew of the defect and concealed it, creating a duty to disclose. No actionable omission or duty or reliance established. Plaintiffs adequately pleaded a CLRA claim based on omissions and duty to disclose.
Is the implied warranty of merchantability claim viable given the recall and alleged defect? Vehicle defect renders cars not merchantable and plaintiffs are intended third-party beneficiaries. Recall cures defects and remedies limited to repairs; vertical privity issues apply. Plaintiffs pleaded viable implied warranty claim; recall does not foreclose it at the pleading stage.
Should Kramer’s claims be deferred under primary jurisdiction or dismissed for failure to cure before NHTSA? Claims are California-based; no need to defer; NHTSA actions not a bar. Kramer’s claims should be deferred or addressed by NHTSA due to recall. Primary jurisdiction and deferral not warranted at the pleading stage; Kramer may proceed.

Key Cases Cited

  • Gilligan v. Jamco Dev. Corp., 108 F.3d 246 (9th Cir. 1997) (pleading standard: assume true for 12(b)(6))
  • Moyo v. Gomez, 32 F.3d 1382 (9th Cir. 1994) (pleading standard and liberal view)
  • Barron v. Reich, 13 F.3d 1370 (9th Cir. 1994) (documentary evidence and judicial notice)
  • Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009) (Rule 9(b) heightened pleading in fraud claims)
  • Vess v. Ciba-Geigy Corp., U.S.A., 317 F.3d 1097 (9th Cir. 2003) (who/what/when/how of fraud required)
  • Daugherty v. Am. Honda Motor Co., 144 Cal.App.4th 824 (Cal. Ct. App. 2006) (duty to disclose omitted facts in CLRA claim)
  • Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (Cal. 2011) (clarifies CLRA/UCL standards (recall context))
  • Anunziato v. eMachines, Inc., 402 F.Supp.2d 1133 (C.D. Cal. 2005) (vertical privity and third-party beneficiary concepts)
  • Isip v. Mercedes-Benz USA, LLC, 155 Cal.App.4th 19 (Cal. Ct. App. 2007) (implied warranty viability for consumers)
  • Drum v. San Fernando Valley Bar Ass’n, 182 Cal.App.4th 247 (Cal. Ct. App. 2010) (unfair prong standards under UCL)
  • Continental Airlines v. McDonnell Douglas Corp., 216 Cal.App.3d 388 (Cal. Ct. App. 1989) (advertising statements actionable when related to safety)
  • Robertson v. Fleetwood Travel Trailers of California, Inc., 144 Cal.App.4th 785 (Cal. Ct. App. 2006) (period of cure and administrative interplay)
  • Bussian v. DaimlerChrysler Corp., 411 F.Supp.2d 614 (M.D.N.C. 2006) (primary jurisdiction in recall context (distinguishing here))
  • Clark v. Time Warner Cable, 523 F.3d 1110 (9th Cir. 2008) (administrative considerations and court proceedings)
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